If you’re reading this, you probably have heard my company’s big news by now: we’ve been acquired by the performing rights organization SOCAN. I hadn’t written anything about it until now because I’ve been traveling and jet-lagged, but I’m very excited about this development.

There’s a lot of talk in the industry about “transparency”, which I’ve written about before. SOCAN is working to make it easier for music content creators to track their payments, and the integration of our rich data into their business will get them there. As I’ve written before, we’re obsessive about data accuracy!

The refrain we hear a lot is that of the “black box” in the music industry. I don’t favor that term because it hints at nefarious, sleight-of-hand activities. While that may have been present in the past – the mob was involved in the industry, after all – I don’t think that’s the case today. There are just a lot of parties involved in the release of a recording.

Here is the quick explanation of music rights that friends sometimes ask me to give (after a couple of beers): When you listen to a song on a digital service, there are a lot of entities that are entitled to money. First, someone – or maybe a couple of someones – wrote the song, so they’re considered the songwriter. Their money is collected by a publishing company, which the songwriter may have established themselves, or maybe they asked an existing publisher to handle it for them. The songwriter is also represented by a performing rights organization (PRO), which is kind of like a songwriter’s union. (SOCAN is a PRO.) Next, you have a recording artist. This may be the same person as the songwriter, or it could be someone totally different. Maybe there’s a band, or studio musicians, so they all earned money on this play. In the traditional case, they have the backing of a record label, who signed a contract with them. This contract may have covered things like a cash advance to the recording artist so they could make a record. The label also handles things like touring, merchandise, and marketing for the artist. (They sometimes have a claim to some of that publishing income, but that’s a topic for a different day.) Maybe the label is a small one, so they rely on a distributor to get their music out into the world.

These entities all have contracts to get paid for the services they provide. These agreements are made behind closed doors, so – for instance – while a recording artist may know the terms of their contract with a record label, they aren’t a party to the contract between their record label and a streaming music service.

Some of this “black box”-ness is necessary, so it’s always going to be there. What we can – and should – fix, though, is the links between all the parties that should get paid through a play. There is currently no global rights database, so sometimes it’s not obvious who contributed to a recorded track. It’s the industry’s biggest problem, and it’s one we’re working to fix.