RightsFLow: NYC’s Mechanical Animals of Music Licensing

THE FLATIRON DISTRICT, MANHATTAN: Who gives you the right? If you’re a label, artist or music service of some sort, it just may be RightsFlow.

rightsflow_icon_web3This NYC company was born in the bedroom of President/CEO Patrick Sullivan in 2007, and less than three years later stands as a fast-growing player in the digital music landscape. Seeing a need for streamlined mechanical licensing and royalty reporting, the company has quickly entered into license agreements with thousands of publishers who wanted an easier way to collect on the mechanical license monies that are owed to them.

On the other side of the coin, bands, record labels and distributors got a more efficient path to mechanical rights — so putting a cover song on iTunes, streaming a compilation album, or ringing up a Ramones ringtone would speed up.

SonicScoop hooked up with Scott Sellwood, their Senior Vice President and General Counsel, to get the down low on RightsFlow. A rockin’ guitarist as well as an international litigator, Sellwood can see exactly how licensing locks into the big picture.

Q: Why is a company like RightsFlow needed today?

A: Because obtaining publishing licensing in the US is such a challenge. You can go get the master rights from a few large record label conglomerates, but when you need to actually get the rights to the musical work underlying all those masters, you’re dealing with thousands of publishers.

Someone was needed in the market to provide access to all of those publishers. In short, that’s what we do. And we developed some technology that automates the process, making it a question of technology rather than person power.

So whether you’re a label, or a music service looking for rights to music that you put up on iTunes, someone like us is needed to get those licenses to play it. Once you have those licenses, you need to account for and pay those royalties, which requires an accounting department. A lot of indie labels just don’t have the resources.

So we’ll pay the publishers in accordance with their needs and specifications. Some want the royalty report on Excel, for example, some want it in another format. Everyone wants it in a certain way, and we automate the process soup-to-nuts.

Why is this lawyer smiling? Scott Sellwood, Sr. VP/General Counsel of RightsFlow

Why is this lawyer smiling? Scott Sellwood, Sr. VP/General Counsel of RightsFlow

Q: Mechanicals aren’t something you hear that much about, but they’re obviously important to RightsFlow. Why is mastery of mechanical licensing so important now?

A: My personal opinion is that publishing is one aspect of the music industry that can’t be downsized. The music industry is based on copyrights, and the musical work is already underlying the master recording. To grow the industry, especially in the digital space, we need to find ways to clear the mechanical rights as quickly and efficiently as possible so there can be more music online, and therefore more consumers purchasing music online. We want to grow the pot. I think that mechanical licensing is a crucial, crucial component.

Q: Interesting. So is that why RightsFlow was an attractive company for you to come and work for, with your background?

A: I’ve paid the bills over the last decade as a lawyer. And with my long history as a touring artist, it seemed to be the perfect interface between exciting legal issues — cutting edge legal problems — and a chance for me to maintain my connections with the indie music and artists.

And the concept of a crew of musicians forming a company to pay songwriters — what could be better? I got the spirit of it immediately, and I’m thrilled to be a part of it.

Q: So let’s drill down a little. What companies do you target for partnerships – why would a publisher like The Royalty Network, who you recently connected with for instance, partner with RightsFlow?

A: The Royalty Network is a publishing administrator. They’re content owners. We spend a lot of time doing outreach to publishers, letting them know who we are, and letting them know if they tell us what songs they administer, it’s a lot easier for us to pay them. We represent around 10,000 indie record labels, as well as a number of online music services, and they are accruing royalties with the intent of paying songwriters.

For someone like The Royalty Network, who I think is a forward-thinking royalty administrator, if they come to us it makes it easy for them to license their content and get paid faster. It just makes the payment process so much faster. It’s pretty simple.

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