What is surprising, though, is how much work it takes to put together an authorized lyrics database, such as the one that digital media company Gracenote announced Tuesday to accompany Yahoo's music service.

"There are three enormous challenges in building a lyrics library," said Craig Palmer, Gracenote's President and CEO, "and Gracenote has been working for the last two to three years to solve them."

Three Lyrics Challenges

The challenges listed by Palmer include obtaining the rights to reproduce a digital version of song lyrics, putting together a large enough library of lyrics to be commercially meaningful, and figuring out how to compensate the myriad rights holders.

As they started to look at the rights issue alone, Palmer said, "we learned that most music companies have the right to produce lyrics on the CD liners as part of the 'album art.' But when you start talking about using a digital version of the lyrics, then those rights are retained by the publisher and the individual artists."

Palmer said that Gracenote ultimately succeeded in negotiating digital lyrics rights from 99 companies, representing approximately 10,000 different publishing entities and most of the North American catalogue of popular tracks.

The next step, Palmer explained, was to build the actual database of lyrics. To standardize the storage and display of information, Gracenote created a 40-page book with rules for handling lyrics, including such tricky issues as explicit lyrics or background lyrics.

After mining Yahoo's search engine and music data, Gracenote identified the 400,000 most popular music tracks and assembled their lyrics to launch the service. Additional lyrics will be added to Yahoo Music each month.

Generating Income

"The final challenge," Palmer said, "and perhaps the most important, is figuring out how to divide revenues flowing from the lyrics. A given song might have several authors, each entitled to a fraction of whatever tiny amount is generated by the lyrics to that song." To handle payments, Gracenote has partnered with the Canadian Musical Reproduction Rights Agency, so that when Yahoo Music pays Gracenote, the company sends a portion of that money to CMRRA for distribution to the copyright holders.

Palmer said that one of bigger challenges in the lyrics project was dealing with the century-old music industry. "We actually spent a lot of time plowing new ground with the music companies on ways to use lyrics in a digital world," Palmer laughed. "Until now, their use of lyrics mostly consisted of album art, lyric books, and karaoke."

In the new digital world, lyrics will generate income in several different ways, including revenues from ads displayed around lyrics, downloaded lyrics, purchases through subscription services, and lyrics used in consumer devices. Palmer said that Gracenote already has been successful in building CD-recognition information into car entertainment systems, and lyrics would be a natural addition.