onboarding music rights holders with payments platform

Photo Credit: William Hall

Did you know that more than 120,000 new tracks hit digital service providers (DSPs) like Spotify every single day? Nearly every music platform now faces the challenge of ingesting large numbers of rights owners and licensors—each coming with their own associated metadata and payout details.

With such a large amount of data being processed in the industry every single day, thousands of new accounts are created daily with varied inputs. But a well-architected, automated payments system can vastly simplify the process and virtually eliminate issues related to missing metadata, downstream payment problems, and ownership conflicts. With that in mind, Digital Music News and Tipalti teamed up to create a Playbook to showcase how scalable systems can reduce workload and increase compliance.

Music streaming fraud is also becoming a bigger concern on many music platforms, particularly on DSPs and user-generated content (UGC) platforms. With well-regimented on-boarding processes and ‘Know Your Customer’ protocols, music businesses can dramatically lower fraud and virtually eliminate penalties.

By setting up self-service client and supplier portals, music platforms can streamline process workflows and manage and pay vendors in the supply chain. The result is more accurate data entry, faster payments, and increased transparency for everyone involved in the process. Employees and support staff are also liberated to focus on edge cases and exceptions that need excellent customer support—rather than every day onboarding new artists and labels.

Manual payout systems are proving incapable of managing the demands of today’s music environments. They simply burn too many resources, cost too much, and can’t keep up with the thousands (or millions) of payees that DSPs and distributors may deal with.

Music industry companies that deploy mass payout systems enjoy a critical edge over the competition. A streamlined mass payout system has become crucial for survival in the modern-day music business. The good news is that many payment operations can be radically overhauled in a short period of time to reduce administration chores by more than 90%, with the added benefit of payment turnaround times dramatically quickened for those receiving payments.

Mass payouts or ‘batch payments’ as they are sometimes called, involve a system for paying multiple recipients simultaneously in a streamlined manner. With a solid setup, payments can be made regardless of the recipients’ currency, location, ownership percentage, associated license, taxation specifics, or preferred payment method.

Traditionally, mass payouts have been labor-intensive and time-consuming and prone to human error. But with the rise of digital payment systems, mass payouts have undergone a significant transformation.

Mass payments are popular with music companies who process a large number of transactions on a regular basis, but also popular with industries, like:

    • The gig economy
    • E-commerce platforms
    • Online marketplaces
    • Affiliate marketing
    • Adtech businesses
    • Multinational companies with a global workforce
    • Or any company with a high number of contractor or part-time workers

Establishing mass payouts for a music business requires establishing payment needs. That includes the total amount to be paid, the number of recipients, and their desired payment method. Mass payouts help automate the entire payment process, eliminating the need for time-consuming, manual tasks like writing checks and manually remitting payments to thousands of individuals. It significantly reduces administrative overhead and enables companies to allocate their resources more efficiently to focus on core operations.

It’s also easier for businesses to meet regulatory requirements using mass payout solutions. Services like Tipalti help ensure compliance with industry standards and offer features like 1099 reporting, tax withholding, and audit trails. These tools streamline financial operations while reducing compliance-related risks.

Want to know more? Check out Tipalti and DMN’s Playbook for getting people paid in the music industry to learn more.