User-Generated Content and Music Rights Management with DDEX
Andrew Mazur
Senior Business Development Manager @ DataArt | Driving Technology Transformation
With the global music streaming market expected to grow to $41.4B by 2030, the value of music in user-generated content (UGC) keeps growing. Music technology experts are working diligently to resolve the rights management complexities with social media platforms. In this article, Russell Karp looks back at the long road to monetizing music in user-generated content and explores the development of efficient data exchange among various stakeholders in the music industry.
The convergence of music and social media has always been profound, and UGC has become a vital component of modern music business. In contrast to conventional broadcasting and publishing, UGC operates within a peer-to-peer dynamic. Through social media and various internet platforms, a revolutionary media landscape emerges, enabling virtually anyone to host their own content. Individual creators play a significant role in the growing share of consumed content, spanning from photos and videos to reviews, blogs, and social media updates.
This surge has catalyzed the development of new streaming platforms that do not function as traditional digital service providers. These emerging platforms integrate aspects of social networking with music streaming, heralding the era of "social streaming." This emerging trend enables users to share playlists, track their friends' musical preferences, and even collaborate on creating musical content. In February 2024, YouTube hit a milestone of 100 million Music and Premium subscribers, highlighting the growing appeal of social streaming services.
Yet, tensions between non-traditional platforms and established music industry entities have become evident. Universal Music Group's (UMG) decision to withdraw its entire catalog from TikTok highlighted the growing discontent among record labels regarding how their music is utilized and monetized. Moreover, legislative actions, such as the recent US Senate bill that could force TikTok’s sale or banishment in the United States, demonstrate the necessity for the music industry to devise new strategies for artist promotion and fan engagement.
But how can rights holders guarantee that they receive their share of the UGC pie? Let’s review how music companies integrate with social platforms to monetize music through UGC.
The Long Road to Monetizing Music in UGC
The potential for monetizing UGC in the music industry is vast, yet this revenue stream has only begun to be fully explored. While much UGC relies on music, the average individual lacks the means and understanding to obtain legal licenses for songs. Consequently, a significant amount of content has been uploaded without proper licensing, leading to unpaid royalties and legal disputes between music rights holders and social platforms. This led to social media platforms such as Facebook, YouTube and TikTok to work out how much licensed music can be used in a post. The many complexities involved in licensing deals have made this a cumbersome and difficult process for many creators, platforms and labels alike.
One of the most significant steps to monetizing music in UGC was YouTube’s implementation of Content ID. Rights holders, such as artists or labels, upload audio files and related metadata to the company, which subsequently generates and stores digital fingerprints. New content uploaded to YouTube is automatically compared to this database and is flagged for copyright infringement if it matches content stored in the Content ID database; resulting in the unlicensed content either being blocked or monetized via advertisements, based on settings controlled by the owner of the copyrighted content.
Despite some criticism about undervaluing music and offering inadequate compensation, YouTube's role in generating revenue for the music industry is growing. In the last quarter of 2023, YouTube's ad revenues significantly increased, reaching $9.2 billion, marking a 15.3% year-on-year growth. The increase in advertising revenue indicates a more robust financial performance compared to a year earlier, when the platform experienced a 7.8% decline.
YouTube isn’t the only big player in this growing marketplace. Facebook has made its own move into music. For years, the perceived promotional and marketing advantages have been deemed more significant than concerns over copyright infringement or the absence of monetization on the world's largest social media platform. In 2018, however, the situation finally changed. Facebook entered into deals with Warner Music Group, Universal Music Group and Sony/ATV Music to license the labels’ music publishing catalogs for usage in videos and messages that users share on Facebook, Messenger, Instagram and Oculus. Facebook's payout per stream comes out to be $0.057 per use, making them one of the highest payers in the industry after years of paying artists nothing.
In 2022, Facebook took another step forward with the introduction of Music Revenue Sharing - a feature that enables creators to include licensed music in their Facebook videos and earn a portion of the in-stream ad revenue. This model allowed both creators and music rights holders to benefit from the monetization of videos featuring popular tracks from artists.
It doesn’t end at the major labels either; additional licensing agreements have been made between Facebook and Merlin, Kobalt Music Publishing, TuneCore, SECAM, ICE Services and other important players in the music licensing ecosystem. As legislation continues to catch up with the realities of the modern music market, there’s no question that the revenue derived from these licenses will only grow more and more significant as a source of income for artists, labels and all other rights holders.
TikTok, as a relative newcomer to the social media arena, has entered the scene at a pivotal time when music rights in UGC have become a focal point of industry discussions. From the outset, the platform has been proactive in addressing the complexities of music royalties, securing multiple licensing agreements that allow its users access to a broad library of songs and audio clips. These tracks can be freely used in their content, with TikTok compensating the artists with royalties each time their music is streamed.
TikTok also promotes emerging artists by enabling the use of their songs for exposure instead of music royalties—a practice that is somewhat controversial, but undeniably responsible for catapulting several new artists to stardom in recent years alone. Whether compensated monetarily or through increased visibility, TikTok has rapidly emerged as one of the most effective platforms for artists to make a significant impact—both financially and in terms of recognition.
However, recent developments have intensified the scrutiny of TikTok's practices. UMG withdrew its catalog from TikTok and criticized the platform for low compensation rates and inadequate protections against misuse of content, such as AI deepfakes and user safety standards. This withdrawal not only disrupted the music ecosystem on TikTok but also signalled broader industry challenges as music rights holders demand fairer valuation and control over their works.
Social Media Platforms Speak DDEX. Or Do They?
DataArt has been working with music companies for almost a decade, and we’ve experienced first hand the challenges of integrating and properly managing music rights in UGC on social media platforms. The necessary technical infrastructure is still in development, with numerous unanswered questions lingering. These include concerns about whether labels and platforms are adequately equipped to fulfill recent licensing agreements and the optimal approach to advancing, whether through existing APIs or a completely new system like DDEX, to standardize the digital supply chain.
"DDEX is the ultimate solution for data standardization... we are constantly evolving those standards. They are complex, because the industry is complex." - Niels Rump, Secretariat of DDEX.
Digital Data Exchange (DDEX) has gained a significant foothold in the music industry in recent years. Established as a collaboration among prominent media firms, music licensing entities, digital music platforms, and technical intermediaries, DDEX was formed with the aim of creating a unified set of standard XML messages for business-to-business communication among organizations within the digital media supply chain. In contrast to other formats utilized in the music industry, like the Common Works Registration (CWR) format, DDEX's standards for musical works cater to various specific needs. These include facilitating the licensing procedure, conveying UGC policies, transmitting audio files related to a work (e.g., for audio fingerprinting), and more. The DDEX standards are publicly accessible, and a standard implementation license can be obtained at no cost.
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Arguably, DDEX provides the best uniform mechanism to exchange metadata and other information on claims of ownership of musical UGC. For that reason, DDEX has been adopted by Facebook in its evolving technical infrastructure for communicating with music companies. And YouTube has mostly replaced its original XML feed with DDEX messages, transitioning to a more standardized way to support the efficiency of its Content ID (though the “older” YouTube xml is still in use, it is not recommended for any new integrations).
YouTube and Facebook use the Electronic Release Notification (ERN) standard, which is one of the most popular DDEX standards in the recorded music segment. It is typically sent to communicate release information from a record label to a digital music retailer, metadata companies, and music licensors and to claim rights for music works in UGC. Recognizing the challenges of a metadata-based approach, DDEX recently updated the ERN standard. The enhancement improved the functionality of ERN, integrating features to support immersive audio data, authorize user-generated content, and provide more detailed visibility dates for albums.
"We need to make sure that the music industry not only adheres to standards but evolves into more simplistic forms of communication so that we can bring new entrants into the space. DDEX shouldn't be a scary barrier for anyone to step into it." - Edward Ginis, Co-Founder at OpenPlay.
Claim Rights with DDEX Integration
DDEX allows rights owners to claim particular A/V resources and communicate certain policies that can be applied to existing and new content uploaded to the platform. In very general terms, this is how the process of communication between rights holders and social media partners will work:
There are three major policies that can be communicated to the platforms to regulate the usage of music works in UGC:
According to these guidelines, platforms have the authority to remove copyright-infringing content, implement ad-supported or alternative monetization strategies, or furnish statistical data to rights holders. Given that music agreements frequently contain numerous territory-specific and other individual stipulations, more intricate directives may be conveyed to address more complex policies stemming from these regulations. Nevertheless, YouTube and Facebook do not uniformly support all of these provisions, and each partner's content feed will necessitate separate validation.
The important thing to remember when using DDEX’s XML feed is that every new message must convey all relevant information about a resource and corresponding policies; since every new message effectively invalidates the previous instructions. From that perspective, the biggest issue in complying with DDEX standards for music labels and publishers often arises from complex and often uncoordinated internal systems. Based on our experience, there’s rarely a single database or rights management system that can effectively integrate with external UGC partners. The data that populates the feed usually comes from multiple internal sources in various formats and needs to be carefully transformed and validated. In such cases, we recommend that music companies should develop a custom interface which serves the purpose of processing both incoming and outgoing feeds, converting local XML messages to DDEX standards and storing history of all transactions.
Here are a few other tips from our development teams that help avoid hidden pitfalls of DDEX integration with YouTube and Facebook:
Generally, the success and efficiency of integration largely depends on the quality of metadata within the music company. While YouTube has a more established system that has operated for years, Facebook is still developing its technical infrastructure and some of the core DDEX features may not yet be available or may only operate in a limited capacity.
The Bottom Line: Managing Music Data Pipelines
All in all, many complexities remain in the realm of music rights in UGC. At the same time, music technology experts and other industry players are working diligently to determine the answers required to comprehensively move forward with a simple yet effective system for managing music rights in the rapidly growing world of UGC. There’s no denying that music rights management is one of the most important parts of a music company or digital service provider’s data strategy.
"As soon as you provide rich metadata, music usage goes up by a significant amount of time. To some extent, it's puzzling why not many companies are jumping on that bandwagon. But, considering discussions with DSPs and record companies, they are now in the process of starting to." - Niels Rump, Secretariat at DDEX.
Any such strategy must include effective data pipelines at its core. DataArt has the skills, the knowledge, and the tools to help music businesses streamline their operations and prioritize a music data strategy that treats music rights management with the importance it demands. On a larger scale, building efficient data pipelines for music companies typically requires the identification of correlations between the repertoire the company manages and its performance. To establish these connections, businesses often have to integrate a range of incompatible systems to enable them to communicate with each other. Without this communication, the digital music supply chain cannot operate successfully. Download the white-paper to learn more about bridging the gaps in music streaming with data pipelines.
Originally published here.