Record labels and publishers strike deals with SongLily, a licensing platform
In recent months, major record companies and publishers have struck agreements with a startup called SongLily, a music-licensing platform aimed at videogame and mobile-app builders. There are about 19 million of these software developers world-wide, according to Evans Data’s 2016 Global Developer Population and Demographic Study.
The deals allow SongLily to offer some of the labels’ well-known songs to game and app developers for an annual flat fee, currently about $1,440 per major-label song, for up to 100,000 app downloads or unique registered players.
That is a bargain to some app developers, since recognizable music can be a big draw but has typically been difficult and more expensive for smaller players to access.
But the price is also attractive for the music industry at more than 10 times what the average subscriber pays per year to streaming services such as Spotify AB and Apple Inc.’s Apple Music, companies it is counting on for growth.
The music business, which has shed 60% of its global value since 2000 and has flatlined for the past few years, is in need of new revenue streams. While paid streaming services are growing fast, generating about $2 billion of the industry’s total $15 billion in revenue last year, free sites such as Alphabet Inc.’s YouTube—which pay far less per user—are also ballooning, while sales of both CDs and digital albums and songs continue to decline.
But the music industry historically hasn’t made licensing easy. Part of the licensing problem stems from the fact that many songs have several owners. One big record company may own the master recording while a separate music publisher (or publishers) may own the underlying composition. It can take years for would-be users to seek permission from each entity.
Access Industries’ Warner Music Group has explored building its own platform to license the subset of songs for which it owns both the recording and publishing rights, but now believes it may be more cost effective to let third-party services such as SongLily do the legwork, a person familiar with the matter said.
While big videogame companies have the bandwidth to navigate the process, sometimes shelling out millions in advance fees and royalties for famous songs by acts like Led Zeppelin and Kanye West, smaller developers often buy custom background music or little-known tunes by independent artists at a fraction of the cost and hassle. Games still generate much less licensing revenue for the major labels than film, commercials and TV.
“The label will want to review their app and ask for their cut of the proceeds,” SongLily’s website says. “For developers planning to create a free app, this cost can be a deal breaker.”
Plenty of general-purpose music-licensing startups have launched in recent years, with varying success and limited amounts of major-label material. Seven-year-old Epidemic Sound caters to YouTube creators among others, while Getty Music also offers a range of stock music for a flat fee, though it is now also selling its music through SongLily’s platform.
Several years ago, record labels and publishers tried to build a platform where wedding videographers and DJs could easily license music for wedding videos, though that plan has since fallen by the wayside.
But few have targeted these stores to gaming and app developers. Mobile gaming generated $37 billion in revenue last year, up 21% from 2014, according to gaming research firm NewZoo.
Mark Ettle, a 46-year-old game developer for Cobra Mobile, said he typically spends between $20,000 and $200,000 to create a single game. He recently paid SongLily $1,440 to license “Ace of Spades” by English metal band Motörhead for a trailer for a game called “iBomber 3.”
Hit music can lure gamers and keep them playing longer. “You might hardly notice it,” said Mr. Ettle. But “when it’s not there it’s like a big sore thumb.”
Co-founded by Les Borsai—a music and tech consultant who also manages country singer Wynona Judd, SongLily is still building its catalog but sells production music that ranges from $360 to $960 per track per year. Original Disney gaming music costs $240 per track, indie tracks start at $120 and sound effects cost $12 a pop. Of the fees, SongLily takes a 20% cut while the publisher and label split the rest evenly.
Larry Marcus, managing director at Walden Venture Capital and an early investor in Pandora Media Inc., said he made a personal investment in SongLily because until now app makers trying to use well-known music have “thrown up their hands.”
“There’s a reason you hear a lot of bad music on games,” Mr. Marcus said.
Karp, Hannah. "Music Industry's New Revenue Stream: Videogame-App Makers." WSJ. Accessed August 08, 2016. http://www.wsj.com/articles/music-industrys-new-revenue-stream-videogame-app-makers-1470562201.