Managerial toolkit for choosing a monetization channel for music intellectual property: streaming or synchronization licensing payouts

Abstract

A management toolkit is developed that allows a music label to choose between streaming monetization in streaming services and payments from sync when commercializing music rights. The relevance of the research topic is due to the fact that in practice, channel selection is often carried out situationally, without a comparable risk and profitability model, which increases the likelihood of incorrect pricing and transaction losses. 

The methodological basis of the study is Design Science Research, with the help of which the requirements for a management decision are formulated, a set of procedures and metrics is designed, and approbation is performed. The toolkit includes an IP Audit Map to capture the chain of rights and restrictions, a Strategy Tree is used to select a channel based on transaction terms and risk profile, a Royalty Valuation Model is used to calculate expected flows, a Deal Pipeline is used to set milestones, and a KPI panel is used to monitor the quality of rights and actual profitability. 

The testing is carried out on five synchronization transactions (non-exclusive, territory is the whole world, term is the entire period of validity of rights, and distribution is 50/50) with a comparison of streaming revenue in a threemonth window ‘before/after’. There is no steady growth in streaming income (– 0.74% in the sample), while payments from synchronization provide the copyright holder with the equivalent of 1.1–20.9 months of basic streaming (median is approximately 5.3 months).