Figures In Music: Notes.fm Founder Tim Luckow

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Tim Luckow is an experienced music industry entrepreneur who started the successful music distribution platform, Stem, that was recently acquired by Concord. Now for his new venture, Notes.fm, he is expanding his focus to all types of royalties, ensuring any artist, no matter how big or small, gets paid properly for their music.

Notes.fm does all the dirty work with royalties, digging into the weeds created by royalty splits, catalog ownership, and the separation of publishing and recording rights. The service finds who owns the rights, so the money can flow properly.

“That's my main argument for the company. Complexity is the enemy. It's not bad companies or bad actors. It's too much for people to do. Even people with business managers and lawyers are using Notes because we're more affordable than a paralegal, and we do a much better job,” Luckow says. “This is a computer job. This is not a human job. A human job is creating the art, marketing the art, and connecting with people. It's not checking databases.”

To ease some of the complexity for readers, here are definitions for two terms:

  • Mechanical Licensing Collective (MLC) - A service that retains publishing royalties when streaming services and other sources do not have the proper information on where to send the money.
  • SoundExchange - A similar service to the MLC, but for recording royalties instead of publishing royalties.

Luckow recently opened a beta for Notes.fm and of the limited artists who participated, “Over 90% of the artists in our beta, from emerging artists to arena headliners, have identified issues impacting songs with a collective 50 billion plus streams of unclaimed royalties.” 

Read on to learn how Luckow finds all these royalties, gets them in the pockets of musicians, and implements his artist-first approach to the company. 

“We've now claimed over $200,000 for musicians directly out of the MLC, and just last week, we paid a single songwriter $40,000. That is a lifeline to him, and that's exciting to me.”

How do you track royalties for so many artists?

Most platforms today focus on the artist level, like for Mt. Joy, the band. They don't check songs individually in every way for all five members. Most platforms just share the artist-level data and end their process there. That's something we are doing differently and a big part of why we're finding unclaimed royalties for so many people. The search results are drastically improved. I love it when I get pushback from a major label or publisher. “They're only a songwriter or a performer.” No, as a musician they're both and more.

It's really as simple as getting your catalog correct, which is the list of songs you have credits and ownership, and your legal registered name right. Then Notes does the rest. We can review that every song is registered. If it’s not, we'll collect the verified split, fix any issues, and claim the royalties to put in your bank account. 

The level of artists and the volume of problems have been fascinating. As an entrepreneur, it's exciting, but as a musician and music fan, it is unfortunate. If things were built correctly, the problem wouldn't exist. They exist because streaming platforms don't know who to pay, and they need a place to put the money. That's what the MLC is. We are checking if the publishers and PROs [performance rights organizations] are doing their job collecting royalties before they get there, and when they are in the MLC. 90% of musicians finding issues speaks for itself.

There are many things that lead to unclaimed royalties. For example, is every song in your catalog 100% claimed or not? The song might be fully registered for an 80% split in the MLC, but then 20% is unclaimed. Some of the big paydays that we find are that situation.

What happens when an artist signs up for Notes?

All we need is their artist name and musician name to get started. Internally, you have Royalty Review; Sync, which syncs data; and then Registration, which is the “fix-it” button.

Royalty Review gets the right list of songs without requiring a ton of work. It's really easy to add and remove songs from the catalog. When musicians find out there's $5,000-$20,000 in there, and we can get it for them, they usually don't believe it until it's done. 

Registration is correcting the problem. That could be adding a name with a percentage, matching a recording, or connecting a label, so that the performer can collect. blink-182 was missing a registration on “All The Small Things.” The same week they got the billion-stream plaque from Spotify, we found that. We're getting better at matching and fixing because we don't want to be a platform that tells you that you've got a problem. We want to be a solution.

Royalty Review and Registration are ongoing in the sense of matching recordings, but the big, historical-to-date claim happens once. From there, we fixed it, and then the money flows. We're not making estimates. We are looking at actual financial statements. That's what Sync does. When you sync a platform account, we are pulling every financial statement to verify ownership.

The distributors are not getting paid to do this work, and so they're not doing it. You need a new party like Notes to come in and say, “We're getting paid by the musician, so we're going to do it for them.”

One of the three members was missing their shares in the MLC. It turned out they had sold their catalog to a fund who didn't register it. So it wasn't the musician missing out on the money, because I emailed the manager and lawyer, and they said, “Oh, we sold it to this fund.” Then they connected me with a fund, I talked to them, and the next day it was fixed. 

That's actually a win to me, because that means the money's at least getting collected versus being recycled, or disappearing, which is how these agencies work. It was a good, clear example for us of a massive song by a massive artist that you would never expect to have a problem that did. It's hard to really ballpark how much money it is, but I guess I will just say it was billions of streams. It wasn't the only one, either.

What are the data points you're using to help these artists get paid?

It's a combination of the artist and musician name, and then anything verifiable helps. Every song is a to-do list. On that song, we’re looking, is there an ISRC? Is there an ISWC? Is there a UPC? If all of those are “no,” it’s very likely going to have missing royalties to claim.

I gotta give a shout-out here. We use Chartmetric API to help us gather data, and ultimately, we're trying to get better at filling in the profile. 

When we get an artist, Chartmetric is one of the sources that we check the songs against. Once we've identified if a song has issues in the MLC or in SoundExchange, through Chartmetric, we can see how many streams it has across platforms. Since it's completely unregistered and unmatched, we would guess [the royalties are] going to be around this amount.

My goal is — and this is something that we're excited about with Chartmetric and other platforms like it — how do we take that original artist name and musician name, and literally fill in the entire catalog and musician profile with that information?

Do you take a percentage of the royalties you secure?

We actually don't. We don't get to work with many artists if we take a percentage. We're a subscription model. Not taking a percentage is a primary selling point of the platform.

We're going for scale. All the big artists are just for attracting other artists. We're doing a campaign with James Blake. We found significant issues for him on the publishing side. Literally a quarter of his songs were missing. James saw the review results, and that's when we talked. 

One of my best lessons from the Stem days was when we distributed Blonde for Frank Ocean. After that, Stem changed forever. We had so much inbound volume because so many artists looked up to Frank Ocean. 

We're going to try to work publicly with large artists that musicians love and attract them that way. Notes is a tool. We're not going to be exclusive and say, “Only you can join.” There's going to be upgrade paths and nicer UX for pro accounts, but ultimately, the $5 a month, $50 a year—just about everyone in our beta found more than that. If you can repeat that a million times, you have a pretty good business.