Almost $1.5B in Royalties Go Unpaid to Artists Every Year. Memphis-based Sound Credit is Fixing That.

July 29, 2021
6 min read
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“You can’t throw a rock in Memphis without hitting a guitar player.”

That’s how Gebre Waddell describes the music-saturated city he grew up in, which is also home to the company he founded, Sound Credit. The company, which Bee Partners invested in during the last quarter of 2020, aims to “hit” all those guitar players – and a whole host of others who contribute to making recorded music – not with rocks, but rather with the credit they are long overdue for their work. 

If you’ve ever checked out the liner notes of a CD case or looked at the jacket of a vinyl album to see who played bass or provided backup vocals you’ve seen how credits used to be shared. But how will the industry credit contributors in the era of streaming? Sound Credit solves this problem, so music contributors get paid the royalties due to them, and the platforms that stream music can finally be compliant with industry standards.

In 2006, these platforms, which include Apple, Amazon, Pandora, Spotify and more than 30 other major music industry organizations, formed the Digital Data Exchange (DDEX), a consortium focused on developing metadata standards. 

Metadata is the digital information embedded in an audio file, such as the title of the song, the names of the artists and engineers who made it, and its genre. The Recording Information Notification (RIN) standard that DDEX established allows producers to automatically capture and share metadata that is then communicated to record labels. Then, publishing and distribution companies can ensure musicians and engineers are credited properly every time. 

But this has historically been a predominantly manual and labor-intensive process, replete with errors and omissions. That meant contributors often didn’t get due credit...and pay. Indeed, the music industry fails to pay musicians, engineers, vocalists, and even visual artists over a billion dollars in royalties a year.

Cast that problem against the backdrop of revolutionary changes – both positive and negative – in the music industry over the past 20 years. While other industries were thriving amid digital transformation in the early 2000s, the music industry has taken years to adapt and overcome challenges such as file sharing. Since it made the switch to digital, however, it has exploded with success. In 2019, streaming represented 80 percent of the music market, with a 13 percent increase in revenue from the prior year. Those revenues grew 12 percent in only the first half of 2020. Currently, Spotify is seeing up to 60,000 uploads of tracks per day, with a new track uploaded to its platform every 1.4 seconds.

Growth has not been without difficulties. As more musicians make music worldwide the problem of tracking who those people are, properly crediting them in metadata, and effectively sharing that information, has lacked a solution.  

Sound Credit is the music industry's first platform that can be deployed anywhere at all stages of the recording process, allowing users to input the full array of metadata needed for contemporary music royalty and lyric tracking – all while providing exports and reports in a format expected by publishers, labels, streaming services and unions. It’s available on a cross-platform desktop and mobile app, in-studio kiosks, and in digital audio-workstation plugins that allow users to enter, edit and export music credits.

Bee Partners first learned of Waddell and Sound Credit in the summer of 2020, when Bee Partner Tim Smith and Waddell were both judges for a competition sponsored by the National Black MBA Association. The two Memphis natives share a love of music and a passion for supporting hometown startups. 

We sat down with Waddell to learn more about his mission to credit music-makers and the profit in creating technical efficiency in the music industry. 

How do changes in the music industry (e.g., new tools available to make music) contribute to the need for a credit solution?
With streaming, more recording is happening in more places than ever, and music creators must be credited and paid. Right now, there is about $1.4 billion in unpaid music royalties every year, mostly because there isn’t a system to collect credits and distribute them. There has also been decades of work on supply chain standards like the Recording Information Notification Standard, but there was no platform that implemented those standards until we came along.

The idea of tracking metadata associated with albums and songs isn’t new. Why is there an opportunity now and why haven’t the big labels created a solution like this? 
This problem certainly is not new and has not been solved. However, with two decades of conferences, committees and awareness campaigns, the industry organically galvanized the major players on this issue, with agreement on an industry-wide data standard.

Music is one of the last industries that still has structural inefficiencies that technology can improve. Historically, digital has revolutionized all these other industries, but the focus for the music industry was survival while we battled major digital shifts like file sharing. We’re moving beyond that now. Four years ago, Goldman Sachs predicted that the music industry would double in the next ten years — since then, growth has outpaced that model by at least five percent. There are very few industries with that much growth that haven’t yet been improved by technology.

As for me, I was born and raised in Memphis. When you think about Memphis, you think about music. Maybe to a lesser degree, you think about FedEx and supply chain innovation. If you put those historical elements of music and the supply chain together, you get Sound Credit.

I was a mastering engineer for years and I’m the author of a best-selling book on audio mastering, which included a chapter about music metadata. I had the first vision of collecting music credits in a workstation plug-in during its writing. There are so many stories musicians will tell you about the records they worked on where they weren’t credited. When they tell you about those uncredited records, the disappointment in their eyes is unforgettable. I’ve heard those stories my entire life, and I’ve always wanted to address this issue.  

Do Taylor Swift and the music elite want this solution to exist? Does anyone lose?
Top artists are already on board with making sure the people they make music with get credited. Organizations spend millions trying to correct information after the fact, only to face claims for the details that slip through the cracks. Word documents, scribbled notes, and emails have been the status quo for too long to hold the career lifeblood for music creators. This inefficiency benefits no one. Sound Credit presents a win-win throughout the music industry.

How will we know when Sound Credit has “made it”? What does that look like?
There are a few data points we’re looking for. We already have Sound Credit software included with leading membership and trade organizations’ member perks. The music industry will know that Sound Credit has made it when a Sound Credit kiosk is in every major recording studio in the world. 

Another data point is when the majority of music creators in the U.S. and U.K. have a Sound Credit ID card or digital ID, allowing them to check in. 

And finally, music creators will know Sound Credit has made it when they feel that something has gone wrong if their credit isn’t registered with Sound Credit after they’ve added their hard-earned skill to a musical work.

To learn more about Sound Credit, visit their website or
follow them on LinkedIn for regular company updates.

About Bee Partners
Founded in 2009, Bee Partners is a pre-Seed venture capital firm that partners with revolutionary Founders working at the forefront of human-machine convergence across technologies that include robotics, AI, voice, i4.0, and synthetic biology. The firm leverages a singular approach to detecting new and emerging patterns of business as well as inside access to fertile but often overlooked entrepreneurial ecosystems to identify early opportunity in large, untapped markets. Bee’s portfolio companies consistently realize growth at levels that outstrip industry averages and secure follow-on capital from the world's top VCs.

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