Matt Pincus-backed HIFI, the brainchild of music tech entrepreneur Damian Manning, launches with two ... [+]
Is HIFI, a new business management platform that automates the process through which music artists find and collect their royalties across disparate revenue streams, the financial holy grail musicians have been waiting for?
Thousands of artists and managers across the major and indie sectors have applied for membership since the company—the brainchild of music tech entrepreneur Damian Manning that’s backed by industry stalwart Matt Pincus—soft-launched with two products in July. The platform is available to US residents now, with plans to expand in the UK and across Europe.
Royalties Dashboard, which aggregates data from labels, distribution services, performing rights organizations, music publishers and other sources, is free to use and widely available. Cash Flow, currently in use by HIFI charter members, is an electronic system that twice-monthly pays out a uniform amount to artists based on their projected annual earnings. The service effectively transforms the nontraditional pay model of advances and one-offs into a salary-like scenario. HIFI takes a percentage of an artist’s earnings, which Manning characterizes in the “low single digits” as an administrative fee. It also absorbs any monetary deficit should the projection fall short.
Manning’s goal with HIFI is to build products and services that help artists and songwriters achieve greater financial control and independence. It’s an increasingly uphill battle. What used to be a release schedule that spanned several years has evolved into a near-constant flow of new material and collaborations across multiple distribution avenues—and a tangle of associated earnings housed primarily in walled gardens.
“Many of today’s music professionals are juggling several initiatives, each with their own distinct set of royalty streams, and it’s much more challenging to wrap their arms around all those silo’d streams and all those dashboards,” says Manning, who’s a founding venture partner at early-stage capital firm DEV, previously co-founded direct-to-fan commerce company Echospin, and served as an executive at Digital Strategy Partners and MTV Networks.
“People have the ability to focus on only so many things at once. Pieces fall through the cracks,” he explains. “And those different royalty organizations and services that pay artists don’t really interoperate with one another. We recognized being able to pull all those different pieces together into a single place immediately helped put artists in a better position to understand what they are earning.”
Those earnings are especially importance these days, and HIFI’s launch comes at a time when artists are particularly cash-strapped.
With touring largely sidelined and ancillary merch revenue way down, “Artists and their teams are suddenly focused on the royalty side of their revenue, which historically has been something that hasn’t been given a lot of attention because it’s so convoluted,” Manning says. “The question every artist is facing, and so then is every manager, is: Since there is less money coming in, what can we leverage that can return a repeating income of some sort. And royalties are more or less the only game in town.”
His concept of tackling one of the creator community’s biggest pain points is catching fire. Investors include Pincus—founder of SONGS Music Publishing, which was acquired by a fund managed by Kobalt Capital—and venture capital firms Lerer Hippeau and Flybridge Capital. Platoon’s Denzyl Feigelson, Splice’s Steve Martocci, and Will Page, Spotify’s former chief economist, are among advisers helping steer HIFI’s launch.
Managers Knocking On The Door
HIFI has particularly piqued the interest of artist managers and business managers. Among those taking its services for an early spin are Max Gredinger of Foundations Music, the management company of Lauv and Young The Giant; Justin Kobay, partner at LL Business Management, whose clients include Lil Nas X and Timbaland; Mike Merriman, whose Parr3 client roster includes producer Louis Bell (Post Malone, Taylor Swift) and Alison Wonderland; and Andrew McInnes, founder of TMWRK Management, who counts Diplo, Major Lazer and TV On the Radio among clients.
“The system is set up to create negligence,” notes Merriman, who says “royalty hunting” takes up a hefty amount of his staff’s time. “The number of deals that get done and the number of artists that get signed and songs that come out every year is not supported by enough accounting bandwidth to actually distribute all the money that gets collected. If you’re not actively nudging all sources at all times, your clients can get overlooked and literally miss out on payments that should be coming to them.”
McInnes points to another widespread issue HIFI can help solve. “Artists pass away and technically their [royalty earnings] are inherited, bands break up or for a variety of circumstances artists stop working in the industry and stop paying attention,” he says. “And all these companies are sitting on hundreds of millions of dollars that [could] end up going to government. So there’s a problem for people who can’t figure out the system and don’t have a means to get paid.”
Royalties Records In The Palm Of Your Hand
Enter Royalties Dashboard. Artists install the software on their phone, select the various industry services they work with, log into those services through the dashboard, and HIFI takes it from there. The system is able to continuously pull down all royalty earnings data and files and creates a digestible analysis artists can access on-demand. HIFI notifies artists when an update is available, or when they have a balance.
Because HIFI operates outside of the disparate channels, Manning says it is complementary to the label portals, rights, publishing and other organizations. “HIFI is intentionally an independent organization that has worked hard to avoid the sorts of channel conflicts that make it difficult to collaborate in the music industry,” Manning says. “There’s a shared goal in the market to help artists get paid. Our goal is to make that process more seamless and more fair for more artists. So far, we’ve had good working relationships with the organizations that originate those royalty payments.”
As such, he’s fielding conversations with artists and teams working across the industry spectrum.
“Early on we expected to have immediate interest from the emerging class of artists and music professionals. That happened pretty quickly. What we hadn’t anticipated was the immediate traction from established artists, those already in the major label system or who previously were signed to a label,” he says. “They have the same kind of challenges. It’s just that the stakes are higher.”
Expanding Offerings, Growing A Community
With HIFI’s flagship product out the door, Manning is working to expand the community aspect of the service and develop the next offerings to bolster the suite.
Members “want the ability to talk about their challenges in a forum with their peers and speak to experts and get guidance on how to address their challenges. There are so many questions and so much misinformation out there in the market,” he says.
Credit services, expense tracking mechanisms, discography/catalog tracking, book-keeping solutions, health insurance products, insurance for instruments and gear, and tour financing are among the topics on the table based on conversations with artists and their teams.
Of the latter area, he notes: “Once there is touring in the future, the question has to be asked, Will there be the guarantees and the advances we’ve seen in the past? I would argue likely not. In that scenario, who’s financing those tours? We’re looking closely at that.”
