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Despite its young age, Paperchain, a startup founded by Rahul Rumalla M.A. ’17, has already managed to create an impact in the industry. The company recently reported that there are currently 60 million cases of unclaimed royalties and unidentified rights owners, totalling an estimated value of $2.5 billion. These unpaid royalties go into royalty black boxes until the owner is identified. “We’re helping music rights owners uncover any unallocated royalties through PURA, a platform we built aimed at labels, publishers, rights organisations, and service providers,” he says.
The PURA platform allows rights owners to upload their catalogs —which are checked against Paperchain’s database across the supply chain— to help them file a claim for their royalties. Right now, Paperchain is running a pilot with around 10 potential clients. “This topic was actually my master’s degree thesis at Berklee. I started looking into music copyrights early on, from my interest in blockchain technology applications for music,” Rumalla says.
For Rumalla, the digital music revolution has drastically changed the music industry’s landscape, although issues around rights owner identification and unattributed royalties have always been present. Paperchain’s research pointed out that there is a huge need for low-cost, highly efficient systems in the music industry to help small- to mid-sized labels and publishers run their administrative and operational tasks, like metadata registrations, usage reporting, auditing, or royalty accounting. Due to a lack of high-quality systems, says Rumalla, the data introduced even at the very beginning of the supply chain is incorrect or frequently missing. “Most of the unallocated money gets disbursed to the organizations’ local members per their market share. While this is ‘a solution,’ it cannot be ‘the solution,’” he adds.
Rumalla cofounded Paperchain with Daniel Dewar after they met online. “He was looking for someone with a technology background to develop blockchain applications for music,” he recalls. They built the company remotely, and it was just around five months ago when they finally met in person at the Midem conference in Cannes, France. “It was a 21st-century kind of a startup, building things remotely,” he says. Paperchain is currently formed by three members in the core team, including Tanya Niesvizky M.A. ’17, and a few other personnel.
Exploring Solutions for an Ongoing Problem
Prior to graduating with a Master of Arts in Global Entertainment and Music Business, Rumalla worked in software development, where he led and managed teams while building enterprise-level software. “I came to Berklee to learn about it and build a company of my own. The Global Entertainment and Music Business program’s entrepreneurship practicum has greatly helped me hone my skills as an entrepreneur and set up my business,” he says.
To set up Paperchain, Rumalla and Dewar spoke to professionals working in various accelerators and venture capital firms to get feedback on what they were looking for in a startup and to validate the problem and understand their business challenges and needs. “During my time at Berklee, I was mainly exploring the problem-solution fit for the business and understanding the music supply chain in depth,” he says.
The pair attended accelerator programs like the Wallifornia Music Tech accelerator in Liège, Belgium, and European Innovation Academy’s Extreme Entrepreneurship Program in Cascais, Portugal. Both of these programs helped them move ahead in terms of refining the shape of the startup. “At Wallifornia we had the opportunity to pitch to investors and executives from the music industry,” Rumalla recalls.
To solve the issue of royalty black boxes, Rumalla advocates for a higher education in understanding what scenarios could affect one’s catalog and where to look and verify if this catalog is affected. “Unfortunately, there is no such platform out there that consolidates all the data effectively and in a cost-effective manner. This is where we are hoping to make the most impact,” he says. The startup is currently in the process of producing industry reports sourced from surveys, case studies, and interviews to create a high-quality knowledge base.
As for the way streaming services work, Rumalla explains that the tracks that come into the supply chain and eventually to the streaming services do not actually collect publishing information. “If that information was never captured during delivery, there is obvious room for failure when it comes to mechanical royalties. And matching recording data with composition data while relying on track names and artist names is an absolute nightmare,” he says.
Rumalla was one of the speakers at the 2017 New York Media Festival, his first-ever presentation at a conference, where he unveiled Paperchain’s findings under the title "Understanding the Music Industry’s Black Box Royalties. “I've received very good feedback, and this validation was critical, especially because everyone in the audience were already established leaders, executives in the music rights vertical of the industry,” says Rumalla. At the end of the talk, he announced a collaboration with MusicAlly to create an industry-wide publication that would serve as a knowledge base, and he shared how Paperchain's platforms and solutions could help curb the issues around unattributed royalties and unidentified rights owners.