Flipagram has been around since late 2013, and a big deal for years. Basically, it’s an easy-to-use photo app that allows users to create fun slideshows, usually accompanied by popular, top-charting music. It’s a lot of fun to use, and makes infinite sense given the extreme amount of photos people take every day — often in social situations.
Flipagram is now incredibly massive. The app is currently used by millions across iOS and Android, and a top-ranked free app in over 85 countries, according to the company. Even as early as 2014, it was ranked as the top free app on both the iTunes App Store and Google Play, with millions of Flipagrams created every single day.
“We did it kind of like entrepreneurs do sometimes, we kind of just did it and [figured] we’d ask for permission after.”
The only problem is that those millions of Flipagrams were largely using content without permission, with massive copyright infringement committed. And this is not a secret: even Flipagram CEO Farhad Mohit is saying it out loud with little concern. “We did it kind of like entrepreneurs do sometimes, we kind of just did it and [figured] we’d ask for permission after,” Mohit recently told Re/Code. “It took a good year and a quarter or so from the first outreach and the first set of deals coming in. It’s a very complicated rights environment that’s been created in music copyright. Suffice to say I had a pretty good education in music rights management by the end of it.”
Additionally, Mohit flatly admitted how critical music is to his core model. It’s not just an add-on, it’s a core ingredient that is absolutely necessary for Flipagram to succeed work. “At its core, a Flipagram is a video story,” Mohit waxed. “Think of it as a mini movie. Imagine a horror movie without a horror soundtrack.
“The music plays such an important role in the tonality and emotional leverage of that movie.”
These days, Flipagram enjoys licenses with major labels Warner Music Group, Sony Music Entertainment, and Universal Music Group, not to mention indie rights through the Orchard and Merlin. But what about the year-plus period before that? The unabashed admission by Mohit raises serious questions about an industry that destroys a teenaged developer with a half-backed ‘Popcorn Time’ idea, but doesn’t even touch a Sequoia-backed company with $70 million in financing.
It also underscores an industry that lacks any decipherable roadmap for how to properly license, while forgiving massive infringers who carry enough cash. Indeed, many music industry executives and rights owners were wondering for years how Flipagram had secured the necessary rights to such a massive quantity of songs, and what their secret handshake was. In fact, at least one Flipagram competitor contacted Digital Music News and set up a meeting with us about two years ago, wondering why they were waiting for years to get licenses from the label while Flipagram somehow obtained the necessary licenses.
They wanted to know what they were missing. The answer, of course, is that Flipagram never initially secured proper licenses at all. They simply raised tons of cash, and subsequently used that cash to secure licenses down the road, without suffering any penalties or lawsuits. And, unlike Spotify, they never got dragged into court, never got vilified by the artist community, and never got broiled by high-profile media publications.
The question is whether that coveted ‘seek permission later’ mantra of Silicon Valley will ultimately haunt Flipagram. Enter activist (and litigious) actors like David Lowery and Yesh Music, who are not only changing awareness around unpaid royalties, but dragging unwitting tech giants into court. And, playing vigilante for an industry that refuses to play bad cop.
This is why this exists for 2016:
http://n2one.us
There is no way that this company got licensed by all the majors and merlin and the orchard, if they did not compensate them for all their music used from the beginning.
Also, if it took over a year to get these licenses, that is more the mark of a broken system than of a bad actor.
Why should anyone wait years to get the licenses? Sounds like the process is as broken as the federal government. No business can sit for years waiting to sign a contract. Their product will be stale by the time they launch it.
Why aren’t they being forced to pay up for the infringements?
Because there *was* a secret handshake deal that allowed Flipagram to use that music without getting sued, in return for equity (that they won’t be sharing with the artists), and possibly other g$o$o$d$i$e$s down the road. Call it “an educated guess.”
This company is lame. Since a compulsory license exists for the compositions they could have immediately begun the licensing process. But they didn’t simply cause they didn’t want to pay. No other explanation. And BTW if they have licenses from majors and not indies they have all the same liabilities as Spotify. And the CEOs statement is an admission of guilt. Sue away.
Compulsory licenses are not an option for sync.
This is just the tip of the iceberg..you can add Dubsmash, Musical.ly and many more to the list. These guy are all laughing all the way to the bank as they have gotten a free ride during the most critical stage of a startup which is proving traction. The only people, once again, who are getting screwed are the artists who saw nothing from the 12-18months of pirated use nor are they likely seeing anything from the “forgive me” payments when these companies valuations have skyrocketed and their pockets are lined w/ VC money to finally pay up. I’m sure the labels and publishers are quite deliberate in their decisions to look the other way knowing that they are lying in wait till the VC money comes in to extract their share. Ironically the artists who are so vocal about getting screwed are jumping on these platforms as active users/promoters themselves which only contributes to the problem. Artists need to be consistent in their diligence if they expect to be credible in their pleas for being compensated. When you have artists like Garth Brooks running exclusive promotions on a pirating platform like this it destroys the credibility of holding out content from other platforms who do pay. Same goes for Taylor Swift , Katy Perry and other big names who won’t license to those who are trying to do things legally yet apps like these get a free pass. Its also clear the big VC’s are in on the game too as Sequoia was in very early supporting the approach of infringe now pay later.
As someone who’s spoken to companies like this on licensing matters, I can say with 100% confidence that the delays and difficulty in getting apple like this licensed stems from the fact that they have absolutely no idea what licensing, mechanical rights, publishing, performing rights are, and very little motivation to learn or care. 0
Follow the money: 1% -> VC’s -> tech startups -> label cartel.
Until that flow is broken, nothing will change.
Thanks for amplifying this issue DMN…so many journalists only want to write about how popular this app is… giving them free publicity and propping them up like SuperStars…when they are admittedly breaking the law and building their success off the backs of others…we need more coverage and visibility so artists can wake up and stop supporting platforms like this.
But wait, isn’t Flipagram’s userbase primarily made up of porn bots and penis pill bots?
This article is lame and so are all the comments. No license would be provided by any music company unless past use penalties have been paid. So there is no chance they should be sued unless they didn’t pay penalties, which how could they have not. They would have had to in order to secure the licenses. This article is nothing but a bunch of words that the author probably knows nothing about. I would be more interested to know about how they are dealing with the music industry.
Agreed. Also do we not acknowledge the fact that Flipagram has actually gone the legal route? There are so many other companies like musicaly and dubsmash that just operate unlicensed and no one is writing about them. Why would you sue the licensed company that is probably paying out the butt but leave the violators alone. Personally I think it’s nice to see a company trying to do the right thing instead of just claiming its user generated content and they can’t control it.
I think you guys are missing the point here. Regardless of whether Flipagram has made amends and properly covered their royalty obligations (which I’m not sure of), why is it that they get the free pass, and some other company gets sued out of existence? Why is it that a similarly-situated startup, just like Flipagram, sat waiting for licenses under the threat of litigation while Flipagram doesn’t? I know this because I met with that company, and you will never hear about them because they never got off the ground.
There’s no process, there’s no transparent marketplace, only secret handshakes that favor companies with $70 million in financing. That’s not how an industry is built, it’s just a racket.
Paul. The secret payoff comes by appointing music business executives (current and former) to boards. Sometimes, Genius for instance, set up some kind of ownership/equity deal with at least one key manager. It’s likely the idea was to get manager to leverage music publishers.
I was using Flipagram way before they had any music in the application. They didn’t launch their application with the ability to use clips of popular music so I don’t think the comparison to another company is accurate.
We have no idea how much discussions they had with the music industry when they decided to add this feature. For all we know they jumped through just as many hoops as other companies. It just so happens they already had a product that didn’t rely on music and didn’t even have any music offerings. Which definitely wasn’t breaking any laws.
“We did it kind of like entrepreneurs do sometimes, we kind of just did it and [figured] we’d ask for permission after,”
— Flipagram f-ing CEO!
Uh… think there was TONS of major label stuff on there before they officially licensed it
Maria R. did you read the article? The CEO admits they deliberately chose to ignore the pursuit of licensing. I happened to know for a fact exactly what happened and like others this was a deliberate strategy at the expense of the artists whom they were exploiting and a violation of the copyright laws. B4 Farhad came in and cleaned up the product and positioned music as a centerpiece Flipagram was just another struggling app w/ little to no meaningful traction.
They did not jump thru any hoops, they became extremely well funded, hired the best lawyers, wrote a nice size check, and got a deal done in record time.
Not sure what your relationship is w/ them but unless you are a supporter of piracy then I’m not sure how you justify how they have screwed artists while lining their own pockets…Do you work for Flipagram?
David R I did read the article and happen to work in PR for music artists. I don’t work for the company so I very much can be wrong since I am speculating everything I’m writing from my experience with the music industry. What I do think is funny is you say screwed the artists. Do you even understand music licensing? The artists don’t ever see anything from the major labels. Licensing really only lines the pockets of the labels. Artists get such a tiny stake…that’s a real problem that people should be writing about.
Also having worked in PR I can attest to how quotes can be used out of context and misinterpreted. Again, I’m not trying to say they haven’t had fault, just that we know nothing about the situation and anyone who takes a puff piece at face value is a fool 😉
Thanks for shining a light on this Paul. There is absolutely no excuse for this sort of thing. Adobe came to Songfreedom last year before launching its Vibe app (similar to FG) because they wanted to make sure to secure proper licenses out of the gate. The app did not even go to Apple for approval prior to us securing sync and performance licenses by artists like One Republic and American Authors.
Again, absolutely no excuse for this on FG’s part. If they wanted to do things the right way there are plenty of helpful resources out there.
Why write an article about the one company that did bother getting licenses (and obviously paid past use penalties since they’re not tied up in sixteen lawsuits right now) when Musical.ly is still using essentially all the music in the world without licensing, ranking higher than Flipagram in the App Store, and has artists like Rihanna on board using the app? If artists want apps to pay them, they need to stop promoting the apps that don’t and put their energy into the few like Flipagram that make SOME effort. Something is better than nothing. Musical.ly is even pitch-shifting copyrighted music with apparent impunity to make Chipmunks-style remixes users can use and share. And even if they do someday get licenses, I doubt they’ll turn off the feature that lets users upload any track to their catalog and share it with others, so anything (e.g. Taylor Swift) they can’t license will just be pirated by users. Where’s your exposé on THAT?
Your right Phyllis Flipagram is just one of the many culprits, you can add dubsmash along w/ Musical.ly whom you mentioned…so hopefully all these companies will get exposed and artists will stop supporting their apps as you say. You must be another Flipagram employee. Its not Paul’s fault that Flipagram CEO is so arrogant that he admits to the press that he ignored the copyright laws. While you may try to justify Flipagram’s behavior by the fact that they have now made amends, the only people who are fat and happy are the FG execs, VC’s, label and publisher execs..the artists got nothing from those retribution payments.
Majority of all the Flipagram videos get uploaded to YouTube and I’m sure their CMS was able to pick up on the videos and monetize certain songs. (like what Audiam does) I guess after awhile, the labels came in and decided to make a deal with them. Now, if you see a flipagram video, they have a description of the song, etc.. which wasn’t there before. Bottom line, the labels were already getting something out of it through YT.