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Accountability, profit distribution in a changing music industry

Our next two blog posts focus upon a problem of vast and growing dimensions that is of utmost importance to the owners of intellectual property rights to musical works.

Indeed, a recent article on the matter of accounting and fairly distributing profits to parties with proprietary musical rights calls the equitable division and allocation of funds in this realm "one of the greatest challenges faced by distributors of music."

At one time, things weren't so perplexing and difficult.

Today they are, with the above-cited article noting a recent report that "paints a picture of an industry gnarled in complexity by both nature and design."

Why has that come to be? What factors have entered the picture to make a fair money distribution to rights holders so laden with difficulties?

For starters, the growing global market plays a central role in much of the murkiness that has developed. In bygone decades, the music of a widely popular artist or group in the United States might additionally be played in a few select -- and well developed -- foreign markets, as well. Tracking it accurately could be somewhat difficult, of course, but hardly an insuperable task.

By contrast, today's global music market is, well, truly global, with the aforementioned article referring to intellectual property rights "that can differ … from nation to nation." An absence of one uniform set of standards obviously adds a layer of uncertainty and complexity to tracking musical play and distributing royalties.

Another problem: Distribution channels have grown progressively fragmented and decentralized. In addition to record companies that make CDs, there are so-called "consumption methods" that include online streaming platforms, iTunes, Amazon and a host of counterfeited products.

Techniques for revenue accounting, states the above overview, "are falling woefully behind."

We will take a closer look at the changing industry in our next post, and cite one prominent report's recommendations for enhancing transparency and royalty accounting in the music industry.

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