New York, NY, May 15, 2008 –- The New York-based startup RightsFlow on Monday announced a deal with Harry Fox Agency (HFA) to integrate its outsourced music rights licensing services with HFA’s bulk digital music licensing capabilities. This will enable RightsFlow to provide licensing services more efficiently to the music download services that constitute part of RightsFlow’s target customer base.

RightsFlow, which went into business last Fall, represents the part of the digital music business that ensures that songwriters get paid, even if consumers don’t pay directly for music downloads. Licensing and royalty tracking are arcane business functions that seem to exist in an alternate parallel universe from more glamorous aspects of the music business, such as website development and A&R at labels.

But these functions represent the part of the music business that is still relatively healthy. Even an online service that offers free music downloads with advertising, as we7 started doing two weeks ago, still pays royalties.
HFA is the most important royalty collecting society in the United States for so-called mechanical royalties, which are paid to music publishers (for the most part) whenever copies of recorded music are created. HFA represents music publishers that do not do their own mechanical royalty collection, which means many independent music publishers that aren’t represented by Warner/Chappell (WMG), Universal Music Publishing (UMG), or any other big player.

RightsFlow’s management team includes veterans of HFA, eMusic, and other music licensing concerns. Although RightsFlow officially launched its outsourced royalty management services last month, its deal with HFA really puts the company on the map; without it, RightsFlow’s ability to process mechanicals for independent music publishers efficiently would be hampered. RightsFlow has picked one of the areas of online music that should be relatively safe as the industry turns toward indirect revenue: it enables music websites to focus on the customer experience rather than on back-office accounting issues.