[Interview] GIDEEN Founder Heiko Schmidt

By Carolyn Heneghan

The Economics of Music Licensing: GIDEEN Creates a Revolutionary New Market

Music licensing can be a complex and finicky process, wrought with potential pitfalls for new and established musicians alike. Soon to be launched, GIDEEN takes an entirely new approach to the licensing process and gives consumers and music licensees the power to buy into the future income of these songs, taking personal pride in ensuring the success of artists and their songs. We spoke with GIDEEN founder Heiko Schmidt about the GIDEEN project and how it is destined to change the music industry.

SoundCtrl: Where did the initial idea for GIDEEN come from?

Heiko Schmidt: The basic idea was born in 2007. I’ve been running music companies for 25 years and one of the really difficult things is you get great music and people are asking you to pitch it to opportunities. Sometimes you succeed, but most of the time you don’t because your network is not large enough. We want to find a home for every song, such as a film, TV commercial or whatever. I tried hard, and most of the time I failed. So we were thinking about how we could restructure that old model. One guy came up with the idea, saying there is no solution in the current world, so you have to crowdsource. Basically, you have to set incentives right. We have to let you participate in the future income. That was in a company meeting, and it was a tech guy, actually, who came up with the idea, and ever since, we’ve started working on that business model.

There’s a lot of legal problems with that, like copyright law, and each country’s different, and you have to make a solution for the whole world which fits all the copyright laws in all countries. And there’s so many copyright connection societies that have their own rules that you have to work around, so that took us awhile to figure all that out and make it right.

We asked music supervisors and other people we know what they thought of the system. They said they might have a conflict of interest because they’re working for a big company as a music supervisor or employee, etc. So we came up with the idea that we can name a beneficiary, which could be yourself, friends or family or your employer.

So say a filmmaker or film studio is looking for the right music. What you can do as a music supervisor is you can select the right music for the film and then buy your employer in as a beneficiary into the music income stream for the future, so they have a refinancing of the music license request. Or if your contract allows, you can write yourself into it and make a fortune for yourself. Or this can be a new type of gift that doesn’t exist. You can give music away to someone, and the music will make money for him in the future—it’s a kind of mixture between gift and investment.

What is your intended goal with GIDEEN?

GIDEEN is a completely new vehicle, and most people don’t realize that. It’s a music company which crowdsources marketing and expectations. I started writing a blog about this, but the microeconomics is that you have a shift in consumer behavior of the world from consuming music to making music because more and more people in the world love to make music rather than consume music, and there’s a lot of market data proving that. If 1 out of 8 people are making music, that would be 900 million. Many of them are making music because it’s fun, not because of the money, and they are doing it on the side or as a hobby.

Now, the music market is messed up by business models. This is because most people don’t have a macroeconomic view of it. It’s quite simple: if 900 million people are making music, and everyone can record his album in his bedroom, then you have about 650 million songs at the moment that have no marketplace to go, and that’s a conservative estimate. Because there is so much supply in the market, prices are going down.

Millions of these songs are uploaded to YouTube every day, but 99 percent of the music used is unauthorized because there is no way right now for a non-music professional to license music in a cheap and quick way. Historically, there are so many parties involved trying to get a piece of the cake, and they fight each other, and it’s completely destructive and doesn’t solve the problem. But the millions of daily videos where you could license the music and make an incredible amount of money for everyone involved cannot be used because the complex structure of licensing is such that no one could get it right. GIDEEN is doing exactly that.

We bring in these songs on our platform, and we match them with the people who are making films or TV commercials by incentivizing crowdsource marketing so that he can buy himself into the future income of this music, the alignment of financial interest. If you are invested into something, you want to make it work for you. It buys you the right to promote the song and earn from the promotion of the song a part of the future income. And because that is such a strong incentive, we can open up the licensing market. You find the right music, you buy yourself into the future music income for $29, then you have it for your film, licensed in under two minutes. And there’s nothing else like that out there.

We have musicians making $100 million per year, and then we have people who are making zero dollars with their songs. We give them a marketplace. They may not make $100 million per year, but maybe $20 per song? This is not much and doesn’t sound sexy, I know, but if you have 100 songs and can make $20 per year on them, then we’re talking $2,000. So we are opening a secondary market for music that cannot find a home in the primary market.

How much you can make depends on multiple factors. When you upload the song, it makes very little money, but we also generate a video out of it. It’s your song plus your artwork automatically uploaded to the GIDEEN YouTube channel and the Facebook channel. You get two links sent via email so that you can start promoting it. You also have real-time charts ranking songs by popularity based on social networks and our formula. Being high in the charts, your product is more attractive for buyers. Charts are the best guides for them, and there are different charts of all kinds.

I can’t say how much you’ll make from buying into a song because of legal restrictions, and I can’t predict if the right promoter will pick your song. But you have nothing to lose. Even if you get a bad promoter, $5 is better than zero, and that’s without financial risk, all you have to do is promote your link through YouTube and Facebook, which you would do anyway. It all depends on how the song is promoted.

GIDEEN is not for everyone. GIDEEN is especially focused on two target groups: the musicians who are doing it on the side with lack of marketing money and network to promote their music and the top professionals, songwriters and producers, with successful careers, because these guys completely understand the value proposition. There’s always several songs they have that they’ve never done anything with, so they appreciate what we are doing and understand it. If you have songs in your portfolio that are making money, don’t upload that to GIDEEN. I don’t want to take existing value. I want to create value.

 

How do you think GIDEEN will impact the music industry?

It will change the industry completely. The DNA for GIDEEN is wired for success because you align financial interest, and no one is doing that right now. Everybody in the marketplace is trying to make money from one or the other. Record labels are trying to make money on the backs of artists and publishers on the backs of songwriters and so on. And everyone’s trying to get money out of the consumer. This is the old system. What we do is change it. We align the interests between consumer, marketer and musician, and we align the financial interests between all three of them and get them invested together. So basically, they make money together, or they don’t make money at all. That is a complete shift from everything you know in the music market because that will finally be so successful because everyone wants to be involved and make money from it.

Anything else to add?

I would love to start a discussion, getting the creativity of everyone in the world. Let’s say you could buy into the future music income, which you can with GIDEEN, so what is your creative idea to make money with it? I want people to be able to discuss these opportunities. So I started a blog called Making Music and Making Money, and I want to have that as an open discussion.

Keep an eye out for the March launch of GIDEEN and its revolutionary take on music licensing.

 

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