Social networks are in for a rude copyright awakening. A new European Union law called Article 17 essentially eradicates safe harbor and requires that they’ve made their “best effort” to get licenses from rights holders for all content on their platform. If a user uploads a video with a popular song in the background, tech platforms can’t just take it down if requested. They’ll be liable if they didn’t already try to get permission.
That’s good news for musicians and film producers who are more likely to get paid. But it could hurt influencers and creators whose clips and remixes might be blocked or have their revenue diverted. It will certainly be a huge headache for content-sharing sites.
That’s where Pex comes in. The profitable royalty attribution startup founded in 2014 scans social networks and other user-generated content sites for rightsholders’ content. Pex then lets them negotiate licensing with the platforms, request a take-down, demand attribution and/or track the consumption statistics. It has collected a database of over 20 billion audio and video tracks found on YouTube, Facebook, Instagram, TikTok, Twitch, Twitter and more. It’s like an independent YouTube ContentID.
Today that business gets a big boost as Pex is acquiring Dubset, which has spent 10 years tackling the problem of getting remixes and multi-song DJ sets legalized for streaming on services like Spotify, to some success. The $11.3 million-funded Dubset does fingerprinting of 45 million tracks from over 50,000 rights holders down to the second so the artists behind the source material get paid.
Pex has come a long way from when CEO Rasty Turek tried to build a Shazam for video. “It took me years to figure out how to do it technically, but there was no market for it,” he tells me. Turns out that the technology was perfect for spotting illegal usage of copyrighted songs.
Now Pex will gain Dubset’s connections to tons of record labels and other rightsholders in what two sources close to the deal say is an acquisition priced between $25 million and $50 million. “There are very few companies in the music business that have successfully licensed as much catalog as Dubset, and the music rights database they’ve built is massive and rare,” Turek tells TechCrunch exclusively before the deal’s formal announcement tomorrow.
Together, they’ll be pushing Pex’s new Attribution Engine that establishes a three-sided marketplace for content. Instead of just working with rightsholders, the fresh tech can plug directly into big platforms and instantly identify copyrighted audio and visual files as short as one second. It can even suss out cover versions of songs via melody matching, as well as compressed, cropped and modified variations. Creators can also use it to ensure the source material they’re remixing or turning into memes is given proper attribution or a cut of revenue.
The Attribution Engine earns money by facilitating the licenses and payments between platforms, rightsholders and creators. It’s free to register content with the service as well as for platforms to perform identification scans.
Indeed, the Attribution Engine is free for rightsholders to register their content and free for platforms to run identification scans on what’s uploaded to them. The hope is that by creating a simpler path to cooperation and revenue sharing, more rightsholders will make their content accessible for use on social networks or in remixes. It could also grant platforms protection from Article 17 liability as they’ll be able to say that Pex made its best effort to get content usage approval from rightsholders.
“Basically every platform in the world that operates in the EU will have to identify all copyrighted content on their platform as it comes in, or go back and identify all of it,” says Dubset chief strategy officer Bob Barbiere who’s now Senior VP of Digital Rights for Pex. “Dubset was really built to serve at the DJ or content creator level . . . doing it purely for the purposes of mix and remix content. Pex does it in a much bigger way for the platforms.”
For up-and-coming platforms like TikTok competitors Dubsmash or Triller, Pex’s business model is a gift. They don’t have to pay for the ID service until they’re ready to cut licensing deals with rightsholders, when Pex adds a fee on top. Trying to build this stuff from scratch could be slow and hugely expensive, given YouTube’s still perfecting its ContentID system eight years in.
Pex will have to manage the careful balance of staying ahead of regulation but not so far that it’s building technology people won’t need for a long time. European Union states have until June 21, 2021 to implement Article 17 with local laws. “We don’t want others to out-innovate us, but we also don’t want to out-innovate ourselves out of existence by being too early and then waiting for the market to catch up to us,” Turek explains.
The internet needs this kind of infrastructure because we’re still at the beginning of the age of the remix. TikTok has proven how recontextualizing a song or vocal track with new visuals can create chains of jokes and content that go massively viral. The app productizes the Harlem Shake phenomenon, whereby people promote their own takes on a piece of content, drawing attention to the original and all the other versions. But these webs of remixes could be severed if platforms and rightsholders can’t forge licensing agreements.
“I hope that thanks to Pex, 20 years from now people will not have to think about copyright,” Turek concludes. “Any content they produce and distribute on the open internet will be automatically attributed to them and generate revenue if they so choose.” That could allow more people to turn their passion for creation into their profession, whether they’re building an app, writing a song or remixing a song into a meme for an app.