RightsFlow Purchased by Google

BETHLEHEM, PA  December 12, 2011,  Originate Ventures is pleased to announce today that Google purchased RightsFlow.

Google purchased RightsFlow (see announcement below) as part of its global strategy to extend their presence in the music and video markets, and provide a platform for new growth initiatives. RightsFlow’s team is uniquely qualified with its licensing and royalty technology platform designed for the digital music, interactive media, Internet, and entertainment markets. The leadership team, led by Patrick Sullivan, has proven to be exceptionally nimble in successfully redefining and automating a mature market. They also created a wonderful Company culture, just recognized last week as one of the top 10 places to work in NYC!

Google Acquires Music-Royalty Manager RightsFlow

By Ethan Smith

Mountain View, Calif.

YouTube said it has acquired RightsFlow Inc., a small company backed by Originate Ventures that tracks and processes royalty payments to songwriters and music publishers.

The acquisition gives YouTube, a video-sharing service owned by Google Inc., access to technology to help it manage its relationship with one of the most fragmented and unwieldy parts of the music industry: music publishing. Music publishing concerns the copyrights on songs’ lyrics and melodies, as distinct from a particular recording of a given song.

Music publishers have long made money collecting large numbers of small royalty payments. That dynamic has been accelerated as music consumption has moved from CD sales and commercial radio airplay to digital downloads and online streaming via YouTube and services such as Spotify AB.

Where a single CD sale might generate around $1 in publishing royalties, an individual song download generates a royalty of about 9 cents. A single stream of a song on YouTube or Spotify generates just fractions of a cent for the writer of the song.

Managing royalties amid such fragmentation has proven difficult. In the RightsFlow statement, Chief Executive Patrick Sullivan said YouTube “shares in our vision of solving the really challenging problem of copyright management.”

Terms weren’t disclosed. A Google spokeswoman declined to make executives available or to comment beyond statements posted on a YouTube blog and RightsFlow’s website. The statements didn’t say how, if at all, the Google acquisition could affect RightsFlow’s working relationships with other online music services.

Music publishers have long felt slighted by YouTube and other technology companies that feature music on their online services. Typically such companies have devoted significant time, energy and money to securing licenses from record companies and have sought publishing deals later, if at all. Owning RightsFlow could help YouTube regain a steadier relationship with publishers by ensuring more timely, accurate payments.

YouTube’s blog posting said in part: “By combining RightsFlow’s expertise and technology with YouTube’s platform, we hope to more rapidly and efficiently license music on YouTube, meaning more music for you all to enjoy, and more money for the talented people producing the music.”

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