Are Artists Getting Paid What They’re Owed? Inside the Fight to Recover Millions in Music Royalties

Musicians may be leaving millions of dollars in royalties unclaimed, and AI is adding new complexity to how artists get paid. Notes.fm says it has already identified more than $10 million in missing royalties, helping artists take greater control of their earnings. Joining us now to talk through all of this with us and more is Tim Lucio, co-founder and CEO of Notes.fm. Thank you so much for being here, Tim. We really appreciate it. Thanks. Thanks for having me on. Of course, this is such an interesting concept that I think a lot of viewers might not be familiar with. So first of all, walk us through notes.fm, what the platform actually does and what problem you're really trying to solve. Yeah. So our main goal is making things simpler for musicians and music companies when it comes to collecting their money. And the truth is music is very fragmented. So there's a lot of places to register, a lot of places to collect from. And Notes is kind of a classic internet company in that we're making that easier for more people. And we're lucky that here in the United States, there's hundreds of millions of dollars for them to claim today. And so we're trying to help them do that faster. Yeah, it's just incredible to think about all of this money basically being left on the table that they're not getting. Talk to us a little bit about why it's so hard for them to get money. Again, you know, you've mentioned it's a bit fragmented. For those of us who aren't in the music industry, why is it so challenging for them to actually be collecting the money that is truly owed to them? I think it's mainly because you're expected to do multiple deals with multiple parties in order to collect all of your royalties instead of being able to just use a platform that can do it. And so a lot of the money that is going missing is somebody who maybe has distributed music on the recording side, but they haven't registered on the songwriting side. And so that is extremely common. We found money for 95% of the people that have used the platform to date. Yeah, it really seems like, again, like you're talking about this money is just like sitting there and waiting to be claimed in a way. Why did you feel like right now was the right time to have Notes.fm really come to the forefront? And also tell us a little bit more about how it works on the back end and all the work that you guys need to do running the company. Yeah, so we're a partner with an organization in the United States called the Mechanical Licensing Collective, the MLC, and they've been designated to help with this problem on a government level. And so they have hundreds of millions of dollars in their databases, essentially, that you need to help musicians go in and verify and claim. And so what we're doing at Notes is making it really easy using Spotify for most artists to let them just kind of select songs for us to review. We'll review it. We find problems if there are any, and then we can actually help fix the problems to claim the money as well. And so we are really focused on the MLC right now and getting as much money out of the MLC for musicians as possible. But there are also many more platforms beyond that as well. Yeah, it really seems like there's so much that's just not being tapped here and that notes.fm is really doing that. Talk to us a little bit about the early traction that you've been able to have here and some of that help that you've been able to give. I mean, more than $10 million in previously unclaimed royalties. That's a lot. Tell us a little bit about how you've kind of gotten this traction so far. Yeah, you know, fortunately, I have done other companies in the space before this, including one called STEM, which was a distribution business that just sold to Concord. And so I have experience moving royalties for large artists and companies in the space. And it was kind of not that hard to go back to a lot of those parties and say, hey, I found you $50,000, do you want it? And so for us, a lot of it came down to the technology of being able to search these MLC databases and find things for any given song. And then thankfully, my team and I have been in the industry for some time. And so a lot of it was just reconnecting with people we knew and convincing them it was real, frankly. And, you know, it helps when you can put the money in the bank account. And so for us, a lot of our early support has really come from people that we were able to do that successfully with and for. And, you know, our goal is really serving those artists as much as we can. Yeah, it really seems like the technology and the kind of tools that come with that have really made this possible, as well as obviously all of your experience. But when you look at all of this technology and where everything's going, I mean, as AI-generated music really does become more common, how do you see that really changing the way that artists are credited and compensated? And do you think it can even make royalty tracking even harder moving forward? Yeah. So my opinion is that I think that the music industry should not repeat the mistakes of the Napster era. I think Napster could have greatly helped the music industry rather than having that dip for many years. It could have kind of been straight up from the beginning of streaming. And so for us, we look at some of these platforms as great revenue opportunities. Not necessarily through lawsuits, more so through systems like YouTube Content ID and how that works for Viacom and others. So we think that songs by original musicians are going to be used more and more in things like training these data sets, creating songs on these platforms, etc. And interestingly, you kind of need a boring system like ours that has verified real musicians and real splits and things like that to be able to go and actually monetize these more complicated AI music platforms. So we've been setting the groundwork for the future that you're talking about, and we're very excited about that future. And I actually think that these platforms are probably going to be some of the biggest sources of income for musicians over the next several years. Yeah, the positive outlook on that is so nice to hear with a lot of doom and gloom about a lot of these subjects. So it's so nice to see that there is a positive path forward here. And also a lot of that I know can come from partnerships and who you can work with in the industry. And Notes.fm recently partnered with Stripe. So tell us a little bit about how that partnership really works and how bringing publishing and money management together really can help artists operate in a more independent and really more efficient way. Yeah, we're very big fans of Stripe. It's been very exciting to get to build with them over the last year. And our whole goal has been making it easier for these musicians to actually get the money once they've done the claim. And so with Stripe, we're able to make financial accounts for musicians and companies that actually earn interest. We're also able to pay their team automatically and pay collaborators through our network and things like that. And so Stripe really enables us to expand worldwide faster and hopefully move more money to more musicians, which is really our goal. Yeah, no, it's amazing to think about getting that money to musicians. And in speaking of that, you're also not taking a percentage of the artist's distribution and publishing royalties, right? Instead, it's a flat rate, kind of a monthly subscription. So tell us a little bit about how the business model works and why you wanted to build it that way. Yeah, we're very inspired by the fact that anybody can pay for a note subscription regardless of their deals in the music industry. That's kind of an unusual setup compared to everybody traditionally trying to take percentages of earnings and this kind of thing. I'm very inspired by Anthropic, truthfully. I pay a pretty decent quad bill every month and I pay overage and these different things. And I think that musicians should have a similar path in companies, especially in catalog funds. If they want to distribute a lot of content or publish a lot of content, they should be able to do that. And if I'm just kind of delivering to a platform and collecting money and statements and things, I don't know that I'm earning a percentage of those earnings from that creative work. I think that we can model the cost of goods sold in a way where it kind of works out better for everybody because we can serve more people at scale and they can benefit from essentially cost savings compared to current deals. That cost savings is so important, especially when you think about a lot of these artists who are really just trying to get their music out there for the first time or, again, get it out to more people. And as you look ahead at the kind of prospects of being able to do this, what do you think the future of artist independence really looks like? And also, what do you think needs to change to make musicians have more transparency and control of their money? And as their work kind of keeps getting out there more and again, with these other kind of technological side, again, AI and other kind of technological advances. that can help but also can hurt. Yeah. I mean, my view is they should use notes.fm. And ultimately, we're doing a lot of work to bring all these data sources into one place so that them and their team can understand it easily, as well as, you know, move the money automatically. And so I think for us, it's very hard to actually register, even if you know how it all works, which so few people really understand the full system. It's hours and hours of work to do these things if it's not through computers. And so, you know, I think. Simplification is incredibly important in kind of building a place where them and their collaborators can all look at the same thing. And we're very interested in how do you validate sources of truth in this AI era? How many sources say this thing is true? There's a lot of platforms that are very large that are delivering tons of songs to Spotify and all the platforms every day. And nobody knows who to pay for a lot of these songs. So for us, it's all about getting it right on the way in and on the way out to the original fans. And if you do that before the royalties are earned, it's much easier to do what we're talking about here. So that's really our ambition is get as many musicians, ideally a million or more onto this platform. And then, you know, essentially claim the money that is unclaimed and claim the future money directly. Well, this is a very exciting business model and something that we look forward to keeping our eye on as we move forward. Tim Luko, co-founder and CEO of Notes.fm. Thank you so much for being here today. We really appreciate it. Thank you. Thanks for having me.