d7.1 business strategy for the music industry ict...

Project Acronym: #MusicBricks Project Full Title: Musical Building Blocks for Digital Makers and Content Creators Grant Agreement: N°644871 Project Duration: 18 months (Jan. 2015 - June 2016)

Deliverable Status: Final File Name: #MusicBricks_7.1.pdf Due Date: January 2016 Submission Date: January 2016 Dissemination Level: Confidential Task Leader: Fraunhofer

Authors: Steffen Holly (Fraunhofer); Michela Magas (Stromatolite); Sasha Grollmisch (Fraunhofer), Marta Arniani (SO)

D7.1 Business Strategy for the Music Industry ICT Innovation Value Chain

!

This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement n°644871

D7.1 – Business Strategy for MI ICT Value Innovation Chain ■ January 2016 ■ Fraunhofer The #MusicBricks project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement n°644871 Page of 2 29

The #MusicBricks project consortium is composed of:

SO Sigma Orionis France

STROMATOLITE Stromatolite Ltd UK

IRCAM Institut de Recherche et de Coordination Acoustique Musique France

UPF Universitat Pompeu Fabra Spain

Fraunhofer Fraunhofer-Gesellschaft zur Foerderung der Angewandten Forschung E.V Germany

TU WIEN Technische Universitaet Wien Austria

Disclaimer

All intellectual property rights are owned by the #MusicBricks consortium members and are protected by the applicable laws. Except where otherwise specified, all document contents are: “©#MusicBricks Project - All rights reserved”. Reproduction is not authorised without prior written agreement.

All #MusicBricks consortium members have agreed to full publication of this document. The commercial use of any information contained in this document may require a license from the owner of that information.

All #MusicBricks consortium members are also committed to publish accurate and up to date information and take the greatest care to do so. However, the #MusicBricks consortium members cannot accept liability for any inaccuracies or omissions nor do they accept liability for any direct, indirect, special, consequential or other losses or damages of any kind arising out of the use of this information.


Revision Control

Version Author Date Status

0.1 Steffen Holly (Fraunhofer)

25th January 2016 Initial Draft


25th January 2016 Revised Table of Contents

0.3 Marta Arniani (Sigma) 26th January 2016 Internal Quality Check

0.4 Michela Magas (Stromatolite)

27th January 2016 Review

0.5 Sascha Grollmisch (Fraunhofer)

28th January 2016 Corrections


28th January 2016 Final Corrections

0.7 Michela Magas (Stromatolite)

28th January 2016 Final Review

0.8 Marta Arniani (Sigma) 29th January 2016 Final Review and Submission


Table of Contents

Executive summary 6 ............................................................................................................1. Introduction 7 ....................................................................................................................2. IPR Terminology & IP protection measures 8 .................................................................

2.1.Background 8 .................................................................................................................2.2.Foreground and ownership 8 .........................................................................................2.3.Innovation Party IP 8 .....................................................................................................2.4.IP protection measures 9 ...............................................................................................

3. Description of possible business models and exploitation options 11 .......................3.1.Exploitation options / channels 11 .................................................................................

3.1.1 IPR sale / assignment versus IPR licensing 11 .................................................3.1.2 Consulting and contractual R&D 12 ..................................................................3.1.3 Spin-Off versus joint venture incl. relevant business model considerations 12 .

4. Definition of benchmarks for a future business potential 14 ......................................4.1.From incubation to offering 14 .......................................................................................4.2.Segmentation by market approach 14 ...........................................................................

4.2.1. Performance Product 14 ..................................................................................4.2.2. Fun Product 14 .................................................................................................4.2.3. Functional Product 14 ......................................................................................

4.3.The business DNA 14 ....................................................................................................4.4.The Lean Startup Model and the MVP 15 .....................................................................4.5.The team 15 ...................................................................................................................4.6.The benchmarks 16 .......................................................................................................

5. Market segment overview and potential partners 17 .....................................................5.1.Music Technology 17 .....................................................................................................5.2.Consumer Electronics 17 ...............................................................................................5.3.ICT & Others 17 .............................................................................................................

6. Evaluation of business potential 18 .................................................................................6.1.Airstrument 18 ..............................................................................................................6.2.Bionic Ear 18 ................................................................................................................6.3.Dolphin 19 6.4.Enboard 19 ...................................................................................................................6.5.FindingSomething_BondingSound 19 ..........................................................................6.6.Gesture-based Interactive Remix Dance Floor (GIRD) 20 ...........................................6.7.High Note 20 .................................................................................................................6.8.Interactive Cube 20 .......................................................................................................6.9.LightBeat 21 ..................................................................................................................6.10.Manuphonia 21 ...........................................................................................................6.11.Sound in Translation 22 ..............................................................................................

7. Results and Presentation 23 .............................................................................................8. Open Innovation assessment 25 ......................................................................................9. Conclusions 27 ..................................................................................................................10.Appendix A - References 28 ............................................................................................11.Appendix B: The #MusicBricks Consortium Agreement 29.........................................


Executive summary

The present document is a deliverable of the #MusicBricks project, funded by the European Commission’s Directorate-General for Communications Networks, Content & Technology (DG CONNECT), under its Horizon 2020 research and innovation programme.

#MusicBricks is pioneering novel models to define and support the ICT innovation value chain within the music industry (and beyond, as demonstrated by the wide range of application fields covered by the incubated projects). The knowledge transfer format proper to creative testbed events, the creation of the MARL (Market Adoption Readiness Levels) and the efficient incubation methodology are just some of the models and processes being shaped ‘hands-on’ by #MusicBricks.

The literature, models and parameters presented here represent a starting benchmark to measure whether the incubated projects can evolve into competitive products. The document outlines the #MusicBricks approach to IP, describes possible business models for the prototypes issued from WP6, defines benchmark to evaluate the potential of each project and presents the market and potential partners. Finally, it describes a first attempt to evaluate each of the 11 incubated projects, on the basis of their present advancement and with reference to the parameters presented in the previous parts of the document. The analysis of each project is expected to evolve as teams finalise and polish their prototypes and prepare for meeting investors in the final showcase event.


1. Introduction

During the development of #MusicBricks it quickly became apparent that monetisation is not only possible for the product prototypes generated from the #MusicBricks toolkit, but that market opportunities are available for layers in the Open Innovation value chain:

1) The #MusicBricks toolkit has witnessed a great demand for deployment by industry partners and industry IP has been offered for inclusion to the toolkit. Partners are currently in negotiation with both manufacturing and market partners who see the potential of monetisation of the toolkit and its individual components.

2) The product prototypes developed from seed ideas generated during the creative test beds provide a range of market opportunities and different types of applications.

3) At least a couple of products have demonstrated the potential of becoming product platforms for further development of content.

4) Products which can be built upon with further developer engagement or creative content provide an opportunity for monetisation to content creators.

In this report we focus predominately on the methodology to assess the second category - the product prototypes and their teams.


2. IPR Terminology & IP protection measures

IPR regulations, as outlined in the Consortium Agreement (CA), form the basis for all discussions on exploitation. Exceptionally, in #MusicBricks, the CA has been altered to include a new section dedicated to the Innovation Party IP. This new IP structure is presented in order to enable IP protection for all of the stakeholders in the Open Innovation value chain (see the full document in the Annex to this deliverable).

In the case of #MusicBricks, partners will produce no new IPR and they have agreed to license their IPR used from all incubated projects individually and direct with the project team, when it comes to exploitation.

2.1.Background “Background is information and knowledge (including inventions, databases, etc.) held by the participants prior to their accession to the Grant Agreement, as well as any intellectual property rights which are needed for carrying out the project or for using foreground.” [x3]

Comments:

• “Hold” means that background does not only include what a partner owns, but also the related IPR (e.g. through licensing agreements)

• “Needed for carrying out the project or for using foreground”: the background is essential for the implementation of the project and for the development of the foreground (see the CA or below for the foreground definition.

2.2.Foreground and ownership The European Commission defines Foreground and ownership as follows:

“Foreground means the results, including information, materials and knowledge, generated in a given project, whether or not they can be protected. It includes intellectual property rights (IPRs such as rights resulting from copyright protection, related rights, design rights, patent rights, plant variety rights, rights of creators of topographies of semiconductor products), similar forms of protections (e.g. sui generis right for databases) and unprotected know-how (e.g. confidential material). Thus, foreground includes the tangible (e.g. prototypes, micro-organisms, source code and processed earth observation images) and intangible (IP) results of a project. Results generated outside a project (i.e. before, after or in parallel with a project) do not constitute foreground” [x3]

As a summary, the following IP can be distinguished:

• Background: generated by partners before the start of the #MusicBricks Innovation Action

• Foreground: generated during the R&D collaboration only through the incubated projects and by teams

2.3.Innovation Party IP

In order to enable an Open Innovation value chain, the #MusicBricks CA distinguishes two types of Foreground IP, and two types of IP owners:

“Research Results” D7.1 – Business Strategy for MI ICT Value Innovation Chain ■ January 2016 ■ Fraunhofer The #MusicBricks project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement n°644871 Page of 8 29

For the implementation of the Project: Research Results means results of WP3 and WP4, and any subsequent iterations following Innovation Party feedback.

“Innovation Results” For the implementation of the Project: Innovation Results means results of WP5, WP6 and WP7, where Research Results are one of the components of the Innovation.

“Research Party” For the implementation of the Project: Research Party is the Project Partner responsible for generating Research Results, subject to the Grant Agreement. This definition is used for the avoidance of doubt in the Consortium Agreement Section 10: Innovation Results. Elsewhere the Research Party is referred to as “Party”.

“Innovation Party” For the implementation of the Project: Innovation Party is the third party engaged in generating Needed Innovation Results, subject to a third party contract with the project’s Research Parties.

The original #MusicBricks toolkit, comprising APIs, GUIs and TUIs derived from partner Background IP, form the projects Research Results.

Any original innovation elements developed by the #MusicBricks incubatees, which incorporate components of Research Results, form the project’s Innovation IP. This IP has been introduced as an incentive for developers, creatives and entrepreneurs engaging with the #MusicBricks toolkit, to have a vested interest in their projects and continue the Open Innovation value chain.

Success of the above IP structure has been demonstrated by one of the #MusicBricks incubated projects - Dolphin by Sohrab Gharibpour - which was seeded at the end of Month 5, completed incubation in Month 9 and initiated a patenting process for the invention already in Month 10.

The #MusicBricks innovative IP structure has therefore served as a tool for speeding up the Open Innovation process, enabling the products to be first in a rapidly evolving and competitive market.

2.4.IP protection measures The list below outlines the most diffused ways of protecting IPR , with the measures that are likely to be most 1

relevant for the project in bold:

Formal protection, including:

• Patents: “A patent grants property rights on inventions, allowing the patent holder to exclude others from making, selling or using the invention. You obtain a patent by filing an application […]” [x7]

• Utility models: to protect intellectual creations with an aesthetic goal

• Copyrights: “Copyrights protect original works of authorship, such as literature, music, artistic works, and computer software. As the holder of a copyright, you have the exclusive right to reproduce, adapt, and distribute the work. A copyright exists from the moment the work is created […]” [x7]

• Trademarks: to protect names and logos.

Semi- formal protection based on contracts, including:

The list / structure is derived from [x5], but explanations are modified1


• Non-disclosure agreements

• Non-competition clauses

• Agreements about the ownership of IPR

• Agreements that forbid reverse engineering and product modifications

• Agreements on the compensation for employee inventions, et cetera.

Informal protection, including:

• Non-disclosure / trade secrets: “A trade secret is a formula, process, device, or other business information that companies keep secret to give them an advantage over their competitors.” [x7]

• Publishing: creating a reputation as a barrier to imitation

• Restriction about using knowledge: limiting access to critical information

• Commitment of personnel: to reinforce staff loyalty

• Task allocation or swiping of tasks - to reduce dependence on key personnel

• Documentation: to reduce the risk of losing knowledge

• Fast innovation cycles: to maintain a lead time advantage

• Technical protection: encoding, security keys, etc.

Patents and possibly utility models are protection measures which are likely to be relevant for partners, but require an application process and involve a more or less significant investment of effort and money. Copyrights will be relevant throughout the project and come to existence automatically with the creation. Surely also relevant will be trade secrets, which do not require an investment, but confidentiality, which is not always realistic.

Publishing of research results is a must for any R&D project, and proper documentation a must for any reasonable further use and exploitation activities. Despite being an IA, #MusicBricks produced valuable research results, attested by publications and by the evolution of some of the incubated projects.

For future exploitation activities, it is likely that additional non-disclosure agreements will be used, and for the case of software licensing, agreements that forbid reverse engineering and product modifications would not be unusual, and could make manipulation and misuse of the software for unintended purposes more difficult, see “self-imposed constraints” in the last chapter. The same goes for fast innovation cycles, which are also crucial for a long-term strategic cooperation for exploitation, and technical protection, which is somewhat inherent to the security measures implemented into the system, in order to avoid unauthorized access and misuse of the system by means of fine-grain access control and high-assurance logging.


3. Description of possible business models and exploitation options

Once a product or a service is at market prototype stage and IPR is defined, the business has to focus on earning money for the creators. The team has to chose the right business model, which often is a combination of existing and completely new models which can be risky and disruptive. When a product is initiated with a creative process of innovation, the business model and monetisation of the idea are usually poorly considered. For this reason the incubated #MusicBricks projects are subject to a standard business assessment, in order to determine commercialisation potential and create an appropriate business strategy.

3.1.Exploitation options / channels The following will outline several important concepts for exploitation, which are meant to serve as a basis for further discussions and decisions within the consortium:

• IPR sale / assignment versus IPR licensing

• Consulting and contractual R&D and standardisation

• Spin-Off versus joint venture incl. relevant business model considerations

3.1.1 IPR sale / assignment versus IPR licensing

IPR Sale / assignment A sale is a permanent transfer of IP ownership from one party (assignor) to another party (assignee), including a financial compensation in the opposite direction.

Potential advantages Potential disadvantages

Cash flow (which can e.g. be reinvested in other R&D work)

Requires thorough documentation and handover by the assignor

No further responsibility for IP management (regarding payment of fees, checking possible infringements)

Loss of control over IPR and its use for the assignor(s); further R&D work and commercial use will be blocked, except for limited uses defined and included in the respective agreement)

No further licensing obligations for the assignee Legal conflicts with existing agreements, especially in the case of background, can make a sale extremely complicated or entirely impossible

The assignee might not have all necessary skills or interest to valorise IPR and continue R&D (especially if research aspects are important); the benefit for an assignee will be the more limited, the more open R&D challenges for the IPR and its use exist

An IPR owner working towards a sale does not have an interest in R&D in the IPR domain beyond the sale: long-term R&D issues and activities will be dropped

Vice versa, an assignee does not have an incentive to cooperate with an assignor that has no long-term interest in an R&D topic anymore


IPR licensing In a license agreement, the IP holder (licensor) grants permission to use an asset to another person (licensee), including a financial compensation in the opposite direction. For a license agreement, many conditions on use, payment, scope etc. can be defined, which make it a very flexible and versatile tool for exploitation.

3.1.2 Consulting and contractual R&D

Consulting includes research or advisory services provided by partners to clients. Contractual research and development, in contrast, involves the generation of new knowledge according to client requirements, and the client typically has far-reaching rights regarding the respective results. Background from partners, however, is typically not affected by contractual R&D.

3.1.3 Spin-Off versus joint venture incl. relevant business model considerations

Spin-off / company creation A spin-off is when a company is created by “exporting” operations and/or IP into a separate entity. In the context of collaborative projects, a spin-off typically refers to a company that is created to bring IP onto the market, to transform project technology / know-how into products and services. It is the preferred instrument for know-how transfer, and a mean of technology transfer between the research and industry sectors. In some cases, the transfer may be concluded through the acquisition of the spin-out company by a larger company.

Potential advantages Potential disadvantages

Early access to markets and financial compensation Requires proper documentation by the licensor (but not as critical / far-reaching as for IPR sale)

Due to its flexibility regarding conditions (payment, application scope, extent of exclusivity), licensing allows "optimized", fine-grained control over IPR, considering the needs of all parties involved, typically including conditions that require payments depending on the market success of the licensee

Continuous licensing and IPR management obligations for the licensor (however, the licensor has an interest in that, in order to get continuous financial compensation in return); on the other hand, the licensee depends on the licensor support and availability for further R&D (however, the licensor has an interest in providing this support)

The licensee does not need all necessary skills or interests to valorise the IPR - licensee and licensor can engage in a cooperation for this purpose that is supported by the agreement

It is necessary to understand the needs and wishes of licensor and licensee before designing an agreement; if an agreement is not designed carefully, especially regarding too generous exclusivity (which, as a general comment, should not be granted at all, or time- and/or scope-limited), there are risks similar to the aforementioned risks for IP sale, diminishing cooperation opportunities

The licensor has a long-term interest in related R&D and in the cooperation with the licensee

The licensee has a long-term interest in IP use and in the cooperation with the licensor


Joint venture When partners/entities work together in order to achieve a specific goal, they form a joint venture. In our context, partners from research and industry would jointly commit resources and efforts into projects, and respective research activities would be carried out jointly to develop and provide products and services, and respective marketing.

Business model considerations For a possible spin-off creation or joint venture, it will be important to outline the business model (BM) early on, describing how the spin-off or joint venture will create, deliver, and capture economic and social value.

For this purpose, the V4 BM Framework could be applied, which introduces four main dimensions encapsulating sixteen elements [xb]:

• “Value Proposition: This dimension implies that a BM should include a description of the products/services a digital organization offers, or will offer, along with their related information. Furthermore, the BM needs also to describe the value elements incorporated within the offering, as well as the nature of targeted market segment(s) along with their preferences.

• Value Architecture: portrays the concept as a holistic structural design of an organization, including its technological architecture, organizational infrastructure, and their configurations.

• Value Network: depicts the cross-company or inter-organization perspective towards the concept and has gained much attention in the BM literature.

• Value Finance: depicts information related to costing, pricing methods, and revenue structure”

One specific business model example that might be used as a basis for this could be the value-added reseller (VAR) business model:

“(VAR) is a company that adds features or services to an existing product, then resells it (usually to end-users) as an integrated product or complete "turn-key" solution […] The added value can come from professional services such as integrating, customizing, consulting, training and implementation. The value can also be added by developing a specific application for the product designed for the customer's needs which is then resold as a new package. VARs incorporate platform software into their own software product packages. […] The term is often used in the computer industry, where a company purchases computer components and builds (for example) a fully operational personal computer system usually customized for a specific task (such as non-linear video editing). By doing this, the company has added value above the cost of the individual […] components. Customers would purchase the system from the reseller if they lacked the time or experience to assemble the system themselves.” [xa]

This model seems applicable, at least in principle, to a possible spin-off or joint venture in which there will be a significant and continuous need for customization, consulting, training and additional implementation for that purpose based on the project outcome, and integration of further R&D work depending on specific end-user needs. The spin-off / joint venture would create significant value above the cost of the individual components.


4. Definition of benchmarks for a future business potential

4.1.From incubation to offering At the end of WP6 the incubated ideas are in their final development at the industry testbed. Task 7.1 describes a process, on how the best and most unique cases can get the chance to develop the model for a potential market, after they have put together the building blocks of APIs, libraries and content.

Even if everybody is trying to develop their ideas as fast as possible, they also have to prove their disruptive potential. By setting benchmarks based on usual business aspects, which are also valid for startups and entrepreneurs, we are evaluating each project from the industry testbed to measure not only their achievements, but mostly their unique value proposition for the future.

Having assessed the readiness of ideas and aptitude of the creators to take forward, there have to be workshops with the candidates to check and improve their skills in a closed round in order to:

• Advise them on market research

• Help them find the right target market

• Evaluate all costs and risks on a local and/or global estimation of a product realisation

• Deal with all possible licensing issues, such as traditional, cc, free etc.

• Start building strategies for a successful launch including possible business models

4.2.Segmentation by market approach Based on the general “need” of a product, we are going to divide the resulting projects into three categories, which can be described as:

4.2.1. Performance Product By combining music and technology with a very individual approach, the result often can not be used by anybody else then the creators, which are users with a very special and dedicated experience. In such cases the outcome is of course a product as well, but it can be only reproduced in a certain environment or by special people, resulting in a musical or technical performance. A performance product can for instance become a show with a paying audience, or be used by companies as a promotional channel.

4.2.2. Fun Product While music is a big part of ##MusicBricks, #MusicBricks innovation can become part of gaming or entertainment technologies, as standalone products or a components of an existing one, adding the “fun" factor to the product marketability.

4.2.3. Functional Product If there is a real "need", a real "job-to-get-done" useful to the market, then the product is defined as “functional”, in that it can solve a problem or enhance existing products.

4.3.The business DNA An investor or partner wants to see a precise value proposition from a new idea or startup. The idea is based on the common understanding of a successful business model, which is used in nearly all training and accelerator programs [x1] and it is also known as the Business Model Canvas [x4].


The first question to be answered is “What jobs are your customers and users trying to get done" followed by these questions:

• What is the target group of customers / users?

• What is the pain and the gain of your customer / user?

• Through which channels can you reach your customers?

The most important piece is the offering, the Core Value or Unique Selling Point (USP), which shall be created for the customers and users.

The term Competitive Advantage refers to a technology or a product that has high entry barriers, especially if it is very hard to copy, i.e. it is subject to patentable IPs.

Of course it is important to have partners in business (DNA) as well as external resources and processes to deliver the offering.

If an incubated team can define precisely the their customers Use Case, the Core Value or Unique Selling Point (USP) of their product proposition, and the Competitive Advantage, they reach the first benchmark for a valid business model.

4.4.The Lean Startup Model and the MVP People coming from an innovative and very creative environment may not think about the users problem first, and they lack resources to make market research or analysis. In the short process that brings together people who have never met before at a hack event the result is often based on intuition and experimentation.

However once a first prototype has been developed from the creative seed ideas, it has to be evaluated very quickly with real customers and real users. This is why the Lean Startup Model, described as a scientific approach for creating and managing startups and their products faster, is a good model to use for benchmarking the results of the incubated products. [x2]

With the Lean Startup methodology the process of build-measure-learn is used as a feedback loop. Based on the definition of the minimum viable product (MVP), the product with the highest return on investment versus risk, the incubated projects have to reach this stage of development by figuring out the needs they can satisfy. Once the MVP is established the process of learning and measuring can start, comparing everything to actionable numbers.

4.5.The team In the #MusicBricks incubated projects, which came together at the hacking events during the Music Tech Fest, the Music Hack Day Barcelona and the Waves Festival, one category of expert was missing, which is usually needed to complete a successful startup team: the “number cruncher”. This is an individual who is very experienced in operations, management, finance or similar. But even if this person can´t be found in the teams, there are other important factors, which one could benchmark to orient the team’s future steps. It is true to say that: You can have success with a good team and a bad product, but you will never win with a bad team, even if you have a good product! Beside the limitations mentioned above we are going to measure the team according to these characteristics:

• Are there two complementary roles minimum, somebody as the typical “leader” delivering the show product and the technical “brain”?


• Is there an additional role like an artist component, the “creator” as a 3rd person in the team? • How did they manage their communication within the incubation period? • How did they come across their challenges within the incubation period? • Are they willing to tap into the future with this project?

4.6.The benchmarks It is of course very unusual and very difficult to set up a matrix which evaluates the actual status and future potential of a product born through trial and error, and produced very quickly from a creative seed idea with adopted academic technological innovation. It is possible however, to judge, if the projects and their teams have more or less potential. Based on the experience of the SMEs and the business people who are part of the #MusicBricks consortium, on the ranking and the measures based on the facts of paragraphs 2, 3 and 4 of this deliverable, as well as on the table in section 7 (which shows a good overview for the development of each project), it is possible to provide advice for further improvements and the right input for a successful exploitation at a later stage.

For evaluating the business DNA of the candidates, we give 1–3 points if they are “not good”, “ok” or “good” in the following categories: “job to get done”, “core value”, “Competitive Advantage”, “partners” (existing or not) and if the “MVP” is or will be ready for demonstration.

Since the team is the 2nd important component, we give 1–2 points for: if their skills are “complementary”, if they have an additional “creative part” in the team structure (as 1 bonus point), if their “communication” is very good, if the product really makes “progress” and how we are evaluating their “future”.

By adding everything, the sum will show a rough benchmark (up to 24 maximum points), based on the actual status and the estimation for the scheduled final event in the end of May. We call the result here as “Business Readiness Level” (1 – 5) as a new measure, which should show if an idea coming from a short track of innovation will be ready to become a product or service compared to the classic startup and company descriptions.

• BRL 5: 23 – 24 points -> excellent, team + product exit ready

• BRL 4: 19 – 22 points -> very good, growing potential

• BRL 3: 15 – 18 points -> ok, but development needed

• BRL 2: 10 – 14 points -> critical, depends on basic improvements and decisions

• BRL 1: 0 – 9 points -> no future, just a bunch of people having fun while hacking something, eventually called “Punks”.


5. Market segment overview and potential partners

With the collected business experience and the existing network of industry contacts the incubated projects have to be connected to stakeholders, business angels and partners. In their companies and networks. There are three interesting market segments for the outcome of #MusicBricks in general.

5.1.Music Technology The music technology market provides both hardware and software products to users, and often an additional piece of hardware generates more value to the customers. The #MusicBricks APIs and products growing out of the hacking events have potential to become such an additional value. Because of the good connections to the sponsors and partners of #MusicBricks and MusicTechFest, there is a good relation with a lot of manufactures from that field like:

- Native Instruments, Ableton, Soundcloud, Steinberg, MAGIX, Mod Devices

A number of R&D stakeholders from these companies are very interested about the outcome of #MusicBricks and will be exposed to the most promising results evaluated within tasks 7.2. and 7.3.

5.2.Consumer Electronics A lot of consumer electronics manufacturers are looking for additional applications to enhance the value chain of their products or their existing portfolio, often with new concepts of usability. The creative products born during the hacking events are possibly good candidates for this use case scenario. Of course with the limited timeline of #MusicBricks one can only raise the attention of a few global brands such as:

- Philips, Sennheiser, Samsung

In the discussion with the research and development divisions of these companies we have found out, that there is a high interest in testing new limits based on some very creative and unusual approaches, which can only be created and tested in very rare environments such as the #MusicBricks one.

5.3.ICT & Others In reaching out to the traditional music industry partners of the MusicTechFest, it has become apparent that #MusicBricks are of great interest to their Managing Directors, Heads of Creative and Digital, and Managers of Industry Incubators. Two major Music Industry partners have been following the project since its first testbed at #MTFScandi, and have since requested partnerships with #MusicBricks: Abbey Road Studios (now part of the global empire of Universal Music), and Warner Music.

Abbey Road Studios are interested particularly in conjunction with their startup incubator, their education institute, as well as in the bricks potential to disrupt the traditional Recording Studio setup.

Warner Music have expressed demand to engage a variety of artists with the #MusicBricks toolkit and incubatees, and unleash new types of creativity.


6. Evaluation of business potential

The technical details of all incubated projects using the #MusicBricks are described in other deliverables, like D6.1. and D5.3. In this document we are concentrating on the idea and the business description, as well as the projected potential and barriers for a successful business or product according to the previous mentioned parts 2-4.

With a basic SWOT-Analysis we define the strengths, weaknesses, opportunities and threats as well as the kind of product segment, the exploitation options and the possible business models for each project. The metrics from 4.6 are applied and the results are shown in a table, where the points are summarised.

6.1.Airstrument

Ariel Angel, Matan Berkowitz, Rani Dar (Israel)

Airstrument is a gesture-driven instrument that solely works “in the air” through a wristband with motion and gesture sensors. It is planned to turn the prototype into a consumer product, but the structure and the competence of the team has to be developed and communication issues have to be solved. Fraunhofer and Stromatolite are investing their efforts in helping the team to define an effective collaboration model.

Strength – demonstration near MVP, good „sales“ communication (external presentation)

Weakness – design of a real good wristband or input device

Opportunities – if design, presentation and prototype work perfectly together and everything arrives „on time“

Threats – the competition is faster or the team is not able to manage their communication and co-operation

6.2.Bionic Ear

Cárthach Ó Nuanáin, Ángel Faraldo, Martin Hermant, Daniel Gómez (Spain)

The "Bionic ear" (originally “e-ear” or “ear we go”) was created to help musicians get in tune with an existing musical ambience. It starts analysing the music and estimates the chord as well as other useful features such as the spectral profile. In the producer’s Digital Audio Workstation, an application (i.e. a sampler) is ready to play pre-analyzed snippets of music so the performer is in time and in tune with the performance. On the other hand, the digital artist also receives the analysed musical information and uses it as real time data to animate the visuals. The Ear Mobile will be a mobile app for Android and iOS tablets and smartphones, capturing features such as key, tempo, and several spectral features to be then transferred through a Wi-Fi network.

Strength – demonstration near MVP, a working mobile application

Weakness – IPs belonging to basic research output of the Music Technology group at Pompeu Fabra University

Opportunities – finished application proves outcome of research, can be implemented in further developments, input and additional learning, as it shows co-operation of research and exploitation in progress; open access via Github provides opportunities for other commercial teams and community of developers to build upon results


Threats – comes to a standstill if research and funding runs out

6.3.Dolphin

Rojan Gharibpour (Sweden)

The Dolphin platform is about generation and playing of sounds and music in relation to head movements and head gestures. The framework provides the application with input data from the R-IoT sensor like current orientation and/or produces 3D sounds to be played on behalf of the currently running application for spatial location and direction of sound sources. It can be used to navigate menu structures or virtual worlds. The main potential lies in applications for Augmented Reality and some well-known and already evaluated scenarios from the real world i.e. an interface for heavy machinery.

Strength – genuine approach for a wide field of applications, patent pending

Weakness – One-man show (but with help from #MusicBricks partner and Umea University), a challenge to find the first and right use case scenario

Opportunities – new methods of user input to software and hardware tools; the creative developer has partnered with a business manager to strengthen the team

Threats – long road to a prototype before ROI

6.4.Enboard

Team: Juan Felipe Gómez, Steven Bolaños (Spain/Colombia)

Enboard aims to generate a unique audio-visual live experience by mapping skating sounds and movements through microphone input and sensor data. Following an impressive initial concept, the team is currently stuck in discussions about the use case scenarios, which could become the product focus. Besides the technical problems related to placing the equipment on the board, the creators seem to be frequently demotivated as they face technical challenges. One strength of the project is their strong focus on performance, but a great potential lies in the adoption of the principle in mapping movements with audio-visual input in sports and entertainment.

Strength – only if demonstration surpasses the gaps in the concept

Weakness – no real use case scenario focus, lack of technical skills, insufficient rapid learning

Opportunities – mapping live audio-visual with movements in sports and entertainment, multiple market segments, product as platform for gamers, skaters and music makers.

Threats – demotivation, lack of real strategy

6.5.FindingSomething_BondingSound

Francisco Teixeira (Portugal), Horacio Tome-Marques (Portugal), Fanni Fazakas (Hungary)

FindingSomething_BondingSound is an audiovisual performance involving movement sensors and neuro-feedback from brainwave sensors (brain-computer-interfaces). The performance itself is very outstanding and impressive, so it is a product in the world of entertainment already, which can appear in several environments and one can set a price tag on it. For the future this unique combination of neuro feedback and


sensors (i.e. from movements) has to find a way into behaviour or mood tracking on a real new level. Based on the constant research and improvements the team is heavily working on that.

Strength – unique performance, unique combination

Weakness – mostly a performance at the moment

Opportunities – new methods for tracking mood and behaviour of users (crowds)

Threats – spending a lot of efforts and resources into a potential business application (exploitation)

6.6.Gesture-based Interactive Remix Dance Floor (GIRD)

Tracy Redhead, Jonathan Rutherford (Austria / Australia)

A gestural based interactive dance floor experience where the lighting in the environment plays a vital role. An individual or group can interact in an immersive world using the R-IoT gesture sensor within a wearable bracelet or object. Based on individual’s movements they are able to manipulate stems or trigger loops and samples in order to remix, recontextualise and compose music.

Strength – a strong team, making productive pivots based on creative ideas

Weakness – underlying technology (low entrance barrier for competition)

Opportunities – strong and convincing setup once they can find the extra, unique flavour on top

Threats – make the wrong pivot at the wrong time

6.7.High Note

Vahakn Matossian (UK), Rolf Gehlhaar (UK), Pere Calopa Piedra (Spain)

High Note is a hands free wireless accessible musical instrument that uses breath control, head movements and other gestures to control music via a MIDI interface. The project’s aim is to design and develop a device that allows people with severe accessibility impairments the opportunity to express themselves through music. Once the main principles of interaction can be cemented, a lot of adoption can be expected based on the experience and the principle of helping people communicate with the world in new and more intuitive ways. Starting with music, the team follows this great vision.

Strength – highly experienced and motivated team with a unique approach

Weakness – fragile technological combination between breath sensor and head tracking

Opportunities – once demonstrated in the musical world, it will open up a myriad of possibilities

Threats – spending a lot of efforts and resources on experimental ideas.

6.8.Interactive Cube

Balandino Di Donato (UK), Per-Olov Jernberg (Sweden)

The Interactive Cube, awarded at the #MTFScandi hackathon, allows to control and manipulate audio via a cube display. The colour and size of the sphere, as well as the VU audio meters, are regulated by the audio signal. This kind of new way to interact, where gestures can be tracked and translated into audio, have great D7.1 – Business Strategy for MI ICT Value Innovation Chain ■ January 2016 ■ Fraunhofer The #MusicBricks project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement n°644871 Page of 20 29

potential, especially if all participants within the sound field get audio feedback. However the team's progress faced difficulties and they currently lack strategic direction.

Strength – the nice idea of translating gestures into audio feedback

Weakness – lack of impressive prototype demonstration

Opportunities – emotional feedback with music/audio, an inspiring and fun tool, interest from both Warner Music and Abbey Road Studios

Threats – stalling before having an MVP

6.9.LightBeat

Stefan Salcher, Adrian Jandl (Austria)

The LightBeat idea adds to music reproduction an immersive light environment by analyzing the beats of the sound. By incorporating music analysis technology, pre-analyzed music is visualized on a range of connected devices. The goal is to build a device agnostic light control platform and a consumer friendly interface so that any home user can use it with a large range of light systems. Based on the experience of an existing (app) product of the team, the proof of concept can work as an added value for this product. But once established, the principle can apply to a lot of other applications as well and can open a variety of licensing possibilities for the crew.

Strength – the user application, user data gathered in conjunction with commercial (hospitality) environments

Weakness – university obligations by one of the developers, a very young team

Opportunities – exploitation in progress, a very strong market focus, opportunity of working with drinks brands

Threats – the ability to take the project to completion in time to beat competition

6.10.Manuphonia

Maya Lekova (Bulgaria), Terhi Marttila (Germany / Finland), Kristjan Sešek, Rok Milošič, Adrijana Bundalo, Ernest Beličič (Slovenia)

Use R-IoT sensor module to recognise different gestures and make sound based on it.

Android app under construction.

The core idea of this project is to make music by using gestures, which has already been demonstrated by various researchers and developers. A new approach can be realised, if a group of users are able to play with the system in real time together. If the Android application will implement a library for effective gesture recognition combined with samples for different instruments and a library of predefined sounds, such a control app will be able to activate a certain community to play with the system.

Strength – multi-user mobile application, a very good team (communication, progress)

Weakness – commodity aspect


Opportunities – viral effect once a community is playing with the IoT application, strong chance of building a global community

Threats – no marketing, the application doesn´t reach traction in app stores

6.11.Sound in Translation

Timothy Schmele (Germany), Juan José Bosch (Spain), Andrés Bucci (Spain)

The prototype of this project creates musical loops from the user’s musical collection which have certain rhythmic similarity compared to an input audio. Sound in Translation is able to enhance musical creativity by reducing the time it takes someone to browse through his/her data collection. But within the realisation of the MVP the team is questioning two alternative exit scenarios, even though the prototype still requires finalising.

Strength – real use case scenario based on a real user’s need. The team have renewed motivation inspired by the potential of great artists testing their product at the final major #MusicBricks Industry Testbed in Berlin (May 2016)

Weakness – currently the presentation is weak

Opportunities – where there is a need, there will be a price.

Threats – ignoring the core value, stopping before completely finished


7. Results and Presentation

Based on the principles of benchmarking of the incubated projects in section 4. and the descriptions in section 4.6, all the teams and ideas have been assessed in this table, which gives a good overview of the current status. It shows the critical aspects, and points to actions and tasks which can be taken by the team, while the #MusicBricks consortium is able to define the right person to help the project to get to the next stage.

This spreadsheet is not finished and every change, improvement and progress of the team and their product has to be documented until the final event.

Table 1: ranking and estimation of future success of the incubated projects and teams A- F


#MusicBricks project Airstrument Bionic Ear Dolphin Enboard FS_BS

Product Segement Need Fun Need Fun Performance

Exploitation OptionLicensing, Company,

JointVentureLicensing

Licensing, Company,

JointVenture, R&D

Not clear

Licensing, Artist ("Company"), Consulting/

R&D

Business Model Sale (per unit)Sale (per unit),

ad revenue (app)

SDK/API, License (per

unit/use)Not clear

Sale (per product,

performance)Business Readiness Level (BRL based on Points) 12 18 20 13 21

Business D.N.A. 7 10 13 5 12

Use Case 1 2 2 1 2

Core Value 2 2 2 1 2

Competitive Advantage 1 1 3 1 3

Partners 1 2 3 1 2

MVP Ready 2 3 3 1 3

Team 5 8 7 8 9

Complementary (2) 1 2 1 2 2

Creative Part (+1) 1 0 0 1 1

Communication 1 2 2 2 2

Progress 1 2 2 2 2

Future 1 2 2 1 2

Table 2: ranking and estimation of future success of the incubated projects and teams G – S

#MusicBricks project GIRD HighNote Interactive Cube LightBeat Manuphoni

a

Sound in Translatio

n

Product Segment Fun Need Fun Need Fun Fun

Exploitation Option

Licensing, Company,

Joint Venture

Licensing, Company,

Joint Venture

Licensing, Company,

Joint Venture

Licensing, own

product

Licensing, Company,

Joint VentureLicensing

Business Model License (per unit)

License (per unit)

Sale (per unit)

Sale (per unit),

License (per unit)

License (per unit)

License (per unit)

Business Readiness Level (BRL based on Points) 20 21 12 16 17 14

Business D.N.A. 11 12 5 9 8 8

Use Case 2 2 1 2 2 2

Core Value 2 2 1 2 2 2

Competitive Advantage 2 3 1 2 1 1

Partners 2 2 1 1 1 1

MVP Ready 3 3 1 2 2 2

Team 9 9 7 7 9 6

Complementary (2) 2 2 2 2 2 2

Creative Part (+1) 1 1 0 0 1 1

Communication 2 2 2 2 2 1

Progress 2 2 1 1 2 1

Future 2 2 2 2 2 1


8. Open Innovation assessment

Aside from the above assessment for monetisation of the individual product concepts, #MusicBricks is an early experiment in building an Open Innovation Ecosystem, and offers the possibility to assess alternative values of technologies and concepts, linked to community engagement and data yield, which have in recent years proven to attract investment.

The #MusicBricks proposal has led to a rethink of the creative applications value chain, with the creation of the Market Adoption Readiness Levels (MARLs), which have since been recognised and recommended by both the H2020 Connect Advisory Forum (CAF), and the European Alliance for Internet of Things Innovation (AIOTI). See the CAF position paper for the Programme 2016-2017, the recommendations by the AIOTI for the building of Innovation Ecosystems in Large Scale Pilots, and the new CAF Open Innovation White Paper, to be presented on the 3rd of February 2016, in the Second Advisory Session of the H2020 Programme 2018/2019.

The following criteria have been proposed:

1) Examine the level of risk implicit in the technology - Is the technology or product low risk? E.g. Is the proposal dealing with medical technologies placing the

patient at high risk, or with a creative application that can be tested on users at experimental stage?

2) Analyse the target stakeholders and their potential for early adoption - Is the application aimed at “users with needs”, “problem owners” or “content creators”? The definition of

target stakeholders will affect their ability to adopt the tools early. - Is the platform adding value to the sharing economy? Low risk experimental platforms can attract a large

number of Early Adopters if they are perceived as adding collective value. - If Early Adopters are reduced to small numbers (e.g. high risk medical applications), what is the

estimated number of end users? An investor may justify investing in a technology which is high risk and requires TRL9 if the Estimated Number of End Users is in the millions of users.

3) Assess the potential to yield data - How quickly can the project yield data? E.g. Early Adopters can in some cases generate a considerable

amount of valuable data already at early stages of deployment. - How high is the quality of data yield? High risk investment may be justified for scenarios where there is a

high quality data yield. - How much valuable data can the project produce? The value of companies is often assessed as high,

based on its ability to gather a large quantity of valuable data. 4) Technology readiness - Is the technology at early or advanced prototype level at the start of the ecosystem-building process? - How quickly can the technology be deployed? If the technology can be deployed quickly, does it already

have a market (e.g. “users with needs”)? - What is the potential of the technology to create a new market (e.g. “problems we didn’t know we had”)? - Does the project involve “content creators”? If so, can it rely on feedback loops for growth and market

competitiveness?


Taking account of the criteria of the Market Adoption Readiness Levels, the Open Innovation potential of the project is assessed as follows (marked 0-low; 1-medium; 2-high):

The above tables reflect the current state of the #MusicBricks product prototypes, and these figures are subject to alterations over the final 5 months of the project.

#MusicBricks project GIRD HighNote Interactive Cube

Lightbeat

Manuphonia

Sound in Translation

Open Innovation potential 6 5 4 7 7 6

Reduced Risk 2 1 1 2 2 2

Early Adopters 2 1 1 2 2 2

Data Yield 1 2 1 2 2 1

Technology Readiness 1 1 1 1 1 1

#MusicBricks project Airstrument Bionic Ear Dolphin Enboard FS_BS

Open Innovation potential 6 7 7 3 5

Reduced Risk 1 2 1 0 1

Early Adopters 2 1 2 2 0

Data Yield 2 2 2 1 2

Technology Readiness 1 2 2 0 2


9. Conclusions

The principal goal of deliverable D7.1 is selecting the right candidates and final participants for a potential commercialisation of the #MusicBricks product prototypes. The benchmarking has led to an overall and detailed rating, which is an important guideline to the readiness of the ideas and the teams which are to be taken to the Market Testbed.

Members of the consortium advised the teams on licensing issues and market research through workshops and individual consultations, and started to learn more about their possible target group and a potential business model. It is a very positive sign that industry partners such as Abbey Road, Philips and Native Instruments are interested in future outcomes of #MusicBricks, and that the establishment of #MusicBricks as a Limited Company after the project end will enable industry partners to continue to contribute toolkit components to this open platform.

Even though the assessment defined by the Business Readiness Levels of the projects reflects the current state, the matrix shows clearly that some projects are better prepared and have made more progress than others. Mostly importantly, the Business Readiness table shows very clearly the level of competence or innovation, and what the team needs to do to improve their market status.

In addition to the Business Readiness Levels, partners are assessing the #MusicBricks product prototypes for their Open Innovation potential. Following examples of large investments into creative industry startups which are community and data-rich, but have no evidence of monetisation, these guidelines provide an overview of alternative values for the market.

The whole process of iteration which was started by innovative seeding of ideas with little commercial thought, is developing to a stage where it is possible to identify the most prominent business opportunities for ideas which can grow as a startup. The 3 to 4 most promising projects are ready to go to the next level, where they will be connected to industry partners, stakeholders, advisors and investors, so that they can learn and adapt their product for a successful commercialisation. Other projects will be motivated to fill the gaps in their business assessment and catch up with more developed projects by the time of the final event.


10.Appendix A - References

[x1] The business design game, http://orangehills.de/en/index.php

[x2] “The Lean Startup” by Eric Ries, http://theleanstartup.com

[x3] Guide to Intellectual Property Rights for FP7 projects v3, http://ec.europa.eu/research/participants/data/ref/fp7/89593/ipr_en.pdf

[x4] The business model canvas - Wikipedia, https://en.wikipedia.org/wiki/Business_Model_Canvas

[x7] Intellectual Property Protection - Four Types of IP Protection, https://www.upcounsel.com/intellectual-property-protection

[x5] Import and export rules - Trade - European Commission, http://ec.europa.eu/trade/import-and-export-rules/

[xa] Value-added reseller - Wikipedia, https://en.wikipedia.org/wiki/Value-added_reseller

[xb] Developing a unified framework of the business model concept, Al-Debei and Avison, European Journal of Information Systems 19 (3), 2010, p. 359-376


http://orangehills.de/en/index.php

http://theleanstartup.com

http://ec.europa.eu/research/participants/data/ref/fp7/89593/ipr_en.pdf

https://www.upcounsel.com/intellectual-property-protection

http://ec.europa.eu/trade/import-and-export-rules/

https://en.wikipedia.org/wiki/Value-added_reseller

11.Appendix B: The #MusicBricks Consortium Agreement


#MusicBricks Consortium Agreement, version 1, 2015-01-21

Consortium Agreement based on DESCA 2020 Version 1.1


TABLE OF CONTENTS CONSORTIUM AGREEMENT

Section 1: Definitions 5

1.1 Definitions 5 1.2 Additional Definitions 5

Section 2: Purpose 6

Section 3: Entry into force, duration and termination 6

3.1 Entry into force 6 3.2 Duration and termination 6 3.3 Survival of rights and obligations 7

Section 4: Responsibilities of Parties 7

4.1 General principles 7 4.2 Breach 7 4.3 Involvement of third parties 8

Section 5: Liability towards each other 8

5.1 No warranties 8 5.2 Limitations of contractual liability 8 5.3 Damage caused to third parties 8 5.4 Force Majeure 8

Section 6: Governance structure 9

6.1 General structure 9 6.2 Members 9 6.3 Operational procedures for the General Assembly 10 6.4 Coordinator 12 6.5 Management Support Team 13 6.6 External Expert Advisory Board (EEAB) 13

Section 7: Financial provisions 14

7.1 General Principles 14 7.2 Budgeting 14 7.3 Payments 14

! / !2 38


Section 8: Research Results 15

8.1 Ownership of Research Results 15 8.2 Transfer of Research Results 16 8.3 Dissemination 16

Section 9: Access Rights 18

9.1 Background included 18 9.2 General Principles 18 9.3 Access Rights for implementation 18 9.5 Access Rights for Affiliated Entities 19 9.6 Access Rights for Needed Innovation Party Innovation Results 19 9.7 Access Rights for Parties entering or leaving the consortium 20 9.8 Specific provisions for Access Rights to Software 20 9.9 Additional Access Rights 23

Section 10: Innovation Results 23

10.1 Ownership of Innovation Results 23 10.2 Transfer of Research Results for use with Innovation Results 24 10.3 Innovation Party contractual obligation 24 10.4 Ensuring Innovation Party compliance with the GA 24 10.5 Dissemination of Research Results via Innovation Results 24

Section 11: Non-disclosure of information 25

Section 12: Miscellaneous 26

12.1 Attachments, inconsistencies and severability 26 12.2 No representation, partnership or agency 26 12.3 Notices and other communication 27 12.4 Assignment and amendments 27 12.5 Mandatory national law 27 12.6 Language 27 12.7 Applicable law 27 12.8 Settlement of disputes 27

Section 13: Signatures 29

Attachment 2: Accession document 38

! / !3 38


CONSORTIUM AGREEMENT

THIS CONSORTIUM AGREEMENT is based upon REGULATION (EU) No 1290/2013 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 11 December 2013 laying down the rules for the participation and dissemination in “Horizon 2020 – the Framework Programme for Research and Innovation (2014-2020)” (hereinafter referred to as “the Rules”), and the European Commission Multi-beneficiary General Model Grant Agreement and its Annexes, and is made on January 1, 2015, hereinafter referred to as the Effective Date

BETWEEN: SIGMA ORIONIS - The Coordinator STROMATOLITE LTD - The Innovation Coordinator INSTITUT DE RECHERCHE ET DE COORDINATION ACOUSTIQUE MUSIQUE (IRCAM) UNIVERSITAT POMPEU FABRA FRAUNHOFER-GESELLSCHAFT ZUR FOERDERUNG DER ANGEWANDTEN FORSCHUNG E.V. TECHNISCHE UNIVERSITAET WIEN

hereinafter, jointly or individually, referred to as ”Parties” or ”Party”

relating to the Action entitled MusicBricks: Musical Building Blocks for Digital Makers and Content Creators

in short MusicBricks

hereinafter referred to as “Project”

WHEREAS: The Parties, having considerable experience in the field concerned, have submitted a proposal for the Project to the Funding Authority as part of the Horizon 2020 – the Framework Programme for Research and Innovation (2014-2020) The Parties wish to specify or supplement binding commitments among themselves in addition to the provisions of the specific Grant Agreement to be signed by the Parties and the Funding Authority (hereinafter “Grant Agreement”). The Parties are aware that this Consortium Agreement is based upon the DESCA 2020 model consortium agreement.

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

! / !4 38


Section 1: Definitions

1.1 Definitions

Words beginning with a capital letter shall have the meaning defined either herein or in the Rules or in the Grant Agreement including its Annexes.

1.2 Additional Definitions

“Consortium Plan” Consortium Plan means the description of the action and the related agreed budget as first defined in the Grant Agreement and which may be updated by the General Assembly.

"Funding Authority" Funding Authority means the body awarding the grant for the Project.

“Defaulting Party” Defaulting Party means a Party which the General Assembly has identified to be in breach of this Consortium Agreement and/or the Grant Agreement as specified in Section 4.2 of this Consortium Agreement.

“Research Results” For the implementation of the Project: Research Results means results of WP3 and WP4, and any subsequent iterations following Innovation Party feedback.

“Innovation Results” For the implementation of the Project: Innovation Results means results of WP5, WP6 and WP7, where Research Results are one of the components of the Innovation.

“Research Party” For the implementation of the Project: Research Party is the Project Partner responsible for generating Research Results, subject to the Grant Agreement. This definition is used for the avoidance of doubt in the Consortium Agreement Section 10: Innovation Results. Elsewhere the Research Party is referred to as “Party”.

“Innovation Party” For the implementation of the Project: Innovation Party is the third party engaged in generating Needed Innovation Results, subject to a third party contract with the project’s Research Parties.

“Needed” means:

For the implementation of the Project: Access Rights are Needed if, without the grant of such Access Rights, carrying out the tasks assigned to the recipient Party would be

! / !5 38


impossible, significantly delayed, or require significant additional financial or human resources.

For exploitation of own Results: Access Rights are Needed if, without the grant of such Access Rights, the Exploitation of own Results would be technically or legally impossible.

“Software” Software means sequences of instructions to carry out a process in, or convertible into, a form executable by a computer and fixed in any tangible medium of expression.

Section 2: Purpose

The purpose of this Consortium Agreement is to specify with respect to the Project the relationship among the Parties, in particular concerning the organisation of the work between the Parties, the management of the Project and the rights and obligations of the Parties concerning inter alia liability, Access Rights and dispute resolution.

Section 3: Entry into force, duration and termination

3.1 Entry into force

An entity becomes a Party to this Consortium Agreement upon signature of this Consortium Agreement by a duly authorised representative.

This Consortium Agreement shall have effect from the Effective Date identified at the beginning of this Consortium Agreement.

An entity becomes a Party to the Consortium Agreement upon signature of the accession document (Attachment 2) by the new Party and the Coordinator. Such accession shall have effect from the date identified in the accession document.

3.2 Duration and termination

This Consortium Agreement shall continue in full force and effect until complete fulfilment of all obligations undertaken by the Parties under the Grant Agreement and under this Consortium Agreement.

However, this Consortium Agreement or the participation of one or more Parties to it may be terminated in accordance with the terms of this Consortium Agreement.

If the Grant Agreement a) is not signed by the Funding Authority or a Party, or b) is terminated,

! / !6 38


c) or if a Party's participation in the Grant Agreement is terminated,

this Consortium Agreement shall automatically terminate in respect of the affected Party/ies, subject to the provisions surviving the expiration or termination under Section 3.3 of this Consortium Agreement.

3.3 Survival of rights and obligations

The provisions relating to Access Rights, Publication and Confidentiality, for the time period mentioned therein, as well as for Liability, Applicable law and Settlement of disputes shall survive the expiration or termination of this Consortium Agreement.

Termination shall not affect any rights or obligations of a Party leaving the Consortium incurred prior to the date of termination, unless otherwise agreed between the General Assembly and the leaving Party. This includes the obligation to provide all input, deliverables and documents for the period of its participation.

Section 4: Responsibilities of Parties

4.1 General principles

Each Party undertakes to take part in the efficient implementation of the Project, and to cooperate, perform and fulfil, promptly and on time, all of its obligations under the Grant Agreement and this Consortium Agreement as may be reasonably required from it and in a manner of good faith as prescribed by Belgian law.

Each Party undertakes to notify promptly, in accordance with the governance structure of the Project, any significant information, fact, problem or delay likely to affect the Project.

Each Party shall promptly provide all information reasonably required by a Consortium Body or by the Coordinator to carry out its tasks.

Each Party shall take reasonable measures to ensure the accuracy of any information or materials it supplies to the other Parties.

4.2 Breach

In the event that a responsible Consortium Body identifies a breach by a Party of its obligations under this Consortium Agreement or the Grant Agreement (e.g. improper implementation of the project), the Coordinator or, if the Coordinator is in breach of its obligations, the Party appointed by the General Assembly, will give formal notice to such Party requiring that such breach will be remedied within 30 calendar days.

If such breach is substantial and is not remedied within that period or is not capable of remedy, the General Assembly may decide to declare the Party to be a Defaulting Party and to decide on the consequences thereof which may include termination of its participation.

! / !7 38


4.3 Involvement of third parties

A Party that enters into a subcontract or otherwise involves third parties (including but not limited to Affiliated Entities) in the Project remains responsible for carrying out its relevant part of the Project and for such third party’s compliance with the provisions of this Consortium Agreement and of the Grant Agreement. It has to ensure that the involvement of third parties does not affect the rights and obligations of the other Parties under this Consortium Agreement and the Grant Agreement.

Section 5: Liability towards each other

5.1 No warranties

In respect of any information or materials (incl. Results and Background) supplied by one Party to another under the Project, no warranty or representation of any kind is made, given or implied as to the sufficiency or fitness for purpose nor as to the absence of any infringement of any proprietary rights of third parties.

Therefore, a) the recipient Party shall in all cases be entirely and solely liable for the use to which it

puts such information and materials, and b) no Party granting Access Rights shall be liable in case of infringement of proprietary

rights of a third party resulting from any other Party (or its Affiliated Entities) exercising its Access Rights.

5.2 Limitations of contractual liability No Party shall be responsible to any other Party for any indirect or consequential loss or similar damage such as, but not limited to, loss of profit, loss of revenue or loss of contracts, provided such damage was not caused by a wilful act or by a breach of confidentiality.

A Party’s aggregate liability towards the other Parties collectively shall be limited to once the Party’s share of the total costs of the Project as identified in Annex 2 of the Grant Agreement provided such damage was not caused by a wilful act or gross negligence.

The terms of this Consortium Agreement shall not be construed to amend or limit any Party’s statutory liability.

5.3 Damage caused to third parties

Each Party shall be solely liable for any loss, damage or injury to third parties resulting from the performance of the said Party’s obligations by it or on its behalf under this Consortium Agreement or from its use of Results or Background.

5.4 Force Majeure

! / !8 38


No Party shall be considered to be in breach of this Consortium Agreement if it is prevented from fulfilling its obligations under the Consortium Agreement by Force Majeure.

Each Party will notify the competent Consortium Bodies of any Force Majeure without undue delay. If the consequences of Force Majeure for the Project are not overcome within 6 weeks after such notification, the transfer of tasks - if any - shall be decided by the competent Consortium Bodies.

Compensation claims shall be excluded in case of Force Majeure or any restriction resulting from import or export laws and regulations and/or any delay of the granting or extension of the import or export license or any other governmental authorization in the event that a Party uses reasonable efforts to fulfil its tasks properly and in time.

Section 6: Governance structure

6.1 General structure The General Assembly is the decision-making body of the consortium

The Coordinator (defined in the DoA as ‘Administrative Coordinator’) is the legal entity acting as the intermediary between the Parties and the Funding Authority. The Coordinator shall, in addition to its responsibilities as a Party, perform the tasks assigned to it as described in the Grant Agreement and this Consortium Agreement.

The Innovation Coordinator is responsible for the innovation coordination of the MusicBricks Project, and ensures the quality of its results. The IC works in close cooperation with the Administrative Coordinator to ensure that the Consortium activities are carried out in accordance with the timing and budget constraints outlined in the Description of Action and respecting appropriate quality levels.

The Project Coordination Team assists the General Assembly and the Coordinator.

6.2 Members

The General Assembly shall consist of one representative of each Party (hereinafter referred to as “Member”).

Each Member shall be deemed to be duly authorised to deliberate, negotiate and decide on all matters listed in Section 6.3.6 of this Consortium Agreement.

The Coordinator shall chair all meetings of the General Assembly, unless decided otherwise by the General Assembly.

The Parties agree to abide by all decisions of the General Assembly. This does not prevent the Parties from submitting a dispute for resolution in accordance with the provisions of settlement of disputes in Section 11.8 of this Consortium Agreement.

! / !9 38


6.3 Operational procedures for the General Assembly

6.3.1 Representation in meetings Any Member:

a) should be present or represented at any meeting; b) may appoint a substitute or a proxy to attend and vote at any meeting; c) and shall participate in a cooperative manner in the meetings.

6.3.2 Preparation and organisation of meetings

6.3.2.1 Convening meetings: The chairperson shall convene ordinary meetings of the General Assembly at months 6, 10, 14 and 18 and shall also convene extraordinary meetings at any time upon written request of any Member.

6.3.2.2 Notice of a meeting: The chairperson shall give notice in writing of a meeting to each Member as soon as possible and no later than 30 calendar days preceding an ordinary meeting and 7 calendar days preceding an extraordinary meeting.

6.3.2.3 Sending the agenda: The chairperson shall send each Member a written original agenda no later than 14 calendar days preceding the meeting, or 7 calendar days before an extraordinary meeting.

6.3.2.4 Adding agenda items: Any agenda item requiring a decision by the Members must be identified as such on the agenda. Any Member may add an item to the original agenda by written notification to all of the other Members no later than 7 calendar days preceding the meeting.

6.3.2.5 During a meeting of the General Assembly the Members present or represented can unanimously agree to add a new item to the original agenda.

6.3.2.6 Any decision may also be taken without a meeting if the chairperson circulates to all Members a written document which is then signed by the defined majority of Members (see Section 6.3.3 of this Consortium Agreement). Such document shall include the deadline for responses.

6.3.2.7 Meetings of the General Assembly may also be held by teleconference or other telecommunication means.

6.3.2.8 Decisions will only be binding once the relevant part of the minutes has been accepted according to Section 6.3.5 of this Consortium Agreement.

6.3.3 Voting rules and quorum

6.3.3.1 The General Assembly shall not deliberate and decide validly unless two-thirds (2/3) of its Members are present or represented (quorum).

! / !10 38


6.3.3.2 Each Member shall have one vote.

6.3.3.3 Defaulting Parties may not vote.

6.3.3.4 Decisions shall be taken by a majority of two-thirds (2/3) of the votes cast.

6.3.4 Veto rights

6.3.4.1 A Member which can show that its own work, time for performance, costs, liabilities, intellectual property rights or other legitimate interests would be severely affected by a decision of the General Assembly may exercise a veto with respect to the corresponding decision or relevant part of the decision.

6.3.4.2 When the decision is foreseen on the original agenda, a Member may veto such a decision during the meeting only.

6.3.4.3 When a decision has been taken on a new item added to the agenda before or during the meeting, a Member may veto such decision during the meeting and within 15 days after the draft minutes of the meeting are sent.

6.3.4.4 In case of exercise of veto, the Members shall make every effort to resolve the matter which occasioned the veto to the general satisfaction of all Members.

6.3.4.5 A Party may not veto decisions relating to its identification as a Defaulting Party. The Defaulting Party may not veto decisions relating to its participation and termination in the consortium or the consequences of them.

6.3.4.6 A Party requesting to leave the consortium may not veto decisions relating thereto.

6.3.5 Minutes of meetings

6.3.5.1 The chairperson shall produce written minutes of each meeting which shall be the formal record of all decisions taken. He shall send draft minutes to all Members within 10 calendar days of the meeting.

6.3.5.2 The minutes shall be considered as accepted if, within 15 calendar days from sending, no Member has sent an objection in writing to the chairperson with respect to the accuracy of the draft of the minutes.

6.3.5.3 The chairperson shall send the accepted minutes to all the Members of the General Assembly, and to the Coordinator, who shall safeguard them. If requested the Coordinator shall provide authenticated duplicates to Parties.

6.3.6 Decisions of the General Assembly

The General Assembly shall be free to act on its own initiative to formulate proposals and take decisions in accordance with the procedures set out herein.

The following decisions shall be taken by the General Assembly:

! / !11 38


Content, finances and intellectual property rights

a) Proposals for changes to Annexes 1 and 2 of the Grant Agreement to be agreed by the Funding Authority

b) Changes to the Consortium Plan c) Modifications to Attachment 1 (Background Included) d) Additions to Attachment 3 (List of third parties for simplified transfer according to

Section 8.2.2)

Evolution of the consortium

e) Entry of a new Party to the consortium and approval of the settlement on the conditions of the accession of such a new Party

f) Withdrawal of a Party from the consortium and the approval of the settlement on the conditions of the withdrawal

g) Identification of a breach by a Party of its obligations under this Consortium Agreement or the Grant Agreement

h) Declaration of a Party to be a Defaulting Party i) Remedies to be performed by a Defaulting Party

j) Termination of a Defaulting Party’s participation in the consortium and measures relating thereto

k) Proposal to the Funding Authority for a change of the Coordinator l) Proposal to the Funding Authority for suspension of all or part of the Project m)Proposal to the Funding Authority for termination of the Project and the Consortium

Agreement

In the case of abolished tasks as a result of a decision of the General Assembly, Members shall rearrange the tasks of the Parties concerned. Such rearrangement shall take into consideration the legitimate commitments taken prior to the decisions, which cannot be cancelled.

6.4 Coordinator

6.4.1 The Coordinator shall be the intermediary between the Parties and the Funding Authority and shall perform all tasks assigned to it as described in the Grant Agreement and in this Consortium Agreement.

6.4.2 In particular, the Coordinator shall be responsible for:

a) monitoring compliance by the Parties with their obligations b) keeping the address list of Members and other contact persons updated and available c) collecting, reviewing and submitting information on the progress of the Project and

reports and other deliverables (including financial statements and related certification) to the Funding Authority

d) preparing the meetings, proposing decisions and preparing the agenda of General Assembly meetings, chairing the meetings, preparing the minutes of the meetings and monitoring the implementation of decisions taken at meetings

e) transmitting promptly documents and information connected with the Project,

! / !12 38


f) administering the financial contribution of the Funding Authority and fulfilling the financial tasks described in Section 7.3

g) providing, upon request, the Parties with official copies or originals of documents which are in the sole possession of the Coordinator when such copies or originals are necessary for the Parties to present claims.

If one or more of the Parties is late in submission of any project deliverable, the Coordinator may nevertheless submit the other parties’ project deliverables and all other documents required by the Grant Agreement to the Funding Authority in time.

6.4.3 If the Coordinator fails in its coordination tasks, the General Assembly may propose to the Funding Authority to change the Coordinator.

6.4.4 The Coordinator shall not be entitled to act or to make legally binding declarations on behalf of any other Party or of the consortium, unless explicitly stated otherwise in the Grant Agreement or this Consortium Agreement.

6.4.5 The Coordinator shall not enlarge its role beyond the tasks specified in this Consortium Agreement and in the Grant Agreement.

6.5 Management Support Team

The Management Support Team, referred as Project Coordination Team in Annex 1, is made of the Administrative Coordinator (SIGMA) and the Innovation Coordinator (Stromatolite). The Management Support Team shall provide assistance to the Coordinator for executing the decisions of the General Assembly. It shall be responsible for the day-to-day management of the Project. It will ensure that the Consortium activities are carried out in accordance with the timing and budget constraints outlined in the Description Of Action and respecting appropriate quality levels.

6.6 External Expert Advisory Board (EEAB)

The MusicBricks Project includes an External Expert Advisory Board (EEAB) – referred as international Innovation Advisory Board (IAB) in the Description of Action - which will provide strategic advice to the Project Coordination Team on the overall innovation and application directions of the project, as well as to support the Consortium in networking with other relevant initiatives. The EEAB will be appointed by the GA.

The Innovation Coordinator is authorised to execute with each member of the EEAB a non-disclosure agreement, which terms shall be not less stringent than those stipulated in this Consortium Agreement, no later than 30 calendar days after their nomination or before any confidential information will be exchanged, whichever date is earlier. The template NDA to be used shall be made in coordination with all Parties in advance. The template must be approved by the Parties and may then only be signed by the Innovation Coordinator in the exact form that was approved. Any amendments shall require new approval. The Innovation Coordinator shall write the minutes of the EEAB meetings and prepare the implementation of the EEAB's suggestions. The EEAB members shall be allowed to participate in General Assembly meetings upon invitation but have not any voting rights.

! / !13 38


Section 7: Financial provisions

7.1 General Principles

7.1.1 Distribution of Financial Contribution

The financial contribution of the Funding Authority to the Project shall be distributed by the Coordinator according to: a) the Consortium Plan b) the approval of reports by the Funding Authority, and

c) the provisions of payment in Section 7.3.

A Party shall be funded only for its tasks carried out in accordance with the Consortium Plan.

7.1.2 Justifying Costs

In accordance with its own usual accounting and management principles and practices, each Party shall be solely responsible for justifying its costs with respect to the Project towards the Funding Authority. Neither the Coordinator nor any of the other Parties shall be in any way liable or responsible for such justification of costs towards the Funding Authority.

7.1.3 Funding Principles

A Party which spends less than its allocated share of the budget as set out in the Consortium Plan or – in case of reimbursement via unit costs - implements less units than foreseen in the Consortium Plan will be funded in accordance with its actual duly justified eligible costs only. A Party that spends more than its allocated share of the budget as set out in the Consortium Plan will be funded only in respect of duly justified eligible costs up to an amount not exceeding that share.

7.1.4 Financial Consequences of the termination of the participation of a Party

A Party leaving the consortium shall refund all payments it has received except the amount of contribution accepted by the Funding Authority or another contributor. Furthermore a Defaulting Party shall, within the limits specified in Section 5.2 of this Consortium Agreement, bear any reasonable and justifiable additional costs occurring to the other Parties in order to perform its and their tasks.

7.2 Budgeting The budget set out in the Consortium Plan shall be valued in accordance with the usual accounting and management principles and practices of the respective Parties.

7.3 Payments 7.3.1 Payments to Parties are the exclusive tasks of the Coordinator.

In particular, the Coordinator shall:

! / !14 38


a) notify the Party concerned promptly of the date and composition of the amount transferred to its bank account, giving the relevant references

b) perform diligently its tasks in the proper administration of any funds and in maintaining financial accounts

c) undertake to keep the Community financial contribution to the Project separated from its normal business accounts, its own assets and property, except if the Coordinator is a Public Body or is not entitled to do so due to statutory legislation.

With reference to Articles 21.2 and 21.3.2 of the Grant Agreement, no Party shall before the end of the Project receive more than its allocated share of the maximum grant amount from which the amounts retained by the Funding Authority for the Guarantee Fund and for the final payment have been deducted.

7.3.2 The payment schedule, which contains the transfer of pre-financing and interim payments to Parties, will be handled according to the following:

Funding of costs included in the Consortium Plan will be paid to Parties after receipt from the Funding Authority without undue delay and in conformity with the provisions of the Grant Agreement. Costs accepted by the Funding Authority will be paid to the Party concerned.

The Coordinator is entitled to withhold any payments due to a Party identified by a responsible Consortium Body to be in breach of its obligations under this Consortium Agreement or the Grant Agreement or to a Beneficiary which has not yet signed this Consortium Agreement. The Coordinator is entitled to recover any payments already paid to a Defaulting Party. The Coordinator is equally entitled to withhold payments to a Party when this is suggested by or agreed with the Funding Authority.

Section 8: Research Results

8.1 Ownership of Research Results

8.1.1 Research Results are owned by the Party that generates them.

8.1.2 Joint ownership

Where Research Results are generated from work carried out jointly by two or more Parties and it is not possible to separate such joint invention, design or work for the purpose of applying for, obtaining and/or maintaining the relevant patent protection or any other intellectual property right, the Parties shall have joint ownership of this work. The joint owners shall, within a six (6) month period as from the date of the generation of such Research Results, establish a written separate joint ownership agreement regarding the allocation of ownership and terms of exercising, protecting, the division of related costs and exploiting such jointly owned Research Results on a case by case basis. However,

! / !15 38


until the time a joint ownership agreement has been concluded and as long as such rights are in force, such Research Results shall be jointly owned in shares according to their share of contribution (such share to be determined by taking into account in particular, but not limited to, the contribution of a joint owner to an inventive step, the person months or costs spent on the respective work etc.) to the Research Results by the joint owners concerned. Where no joint ownership agreement has yet been concluded: a) each of the joint owners shall be entitled to Use their jointly owned Research Results on a royalty-free basis, and without requiring the prior consent of the other joint owner(s), and b) neither of the joint owners shall be entitled to grant non-exclusive licenses to third parties.

8.2 Transfer of Research Results

8.2.1 Each Party may transfer ownership of its own Research Results following the procedures of the Grant Agreement Article 30.

8.2.2 It may identify specific Third Parties it intends to transfer the ownership of its Research Results to in Attachment (3) to this Consortium Agreement. The other Parties hereby waive their right to prior notice and their right to object to a transfer to listed third parties according to the Grant Agreement Article 30.1.

8.2.3 The transferring Party shall, however, at the time of the transfer, inform the other Parties of such transfer and shall ensure that the rights of the other Parties will not be affected by such transfer. Any addition to Attachment (3) after signature of this Agreement requires a decision of the General Assembly.

8.2.4 The Parties recognize that in the framework of a merger or an acquisition of an important part of its assets, it may be impossible under applicable EU and national laws on mergers and acquisitions for a Party to give the full 45 calendar days prior notice for the transfer as foreseen in the Grant Agreement.

8.2.5 The obligations above apply only for as long as other Parties still have - or still may request - Access Rights to the Research Results.

8.3 Dissemination

8.3.1 Dissemination of own Research Results

8.3.1.1 During the Project and for a period of 1 year after the end of the Project, the dissemination of own Research Results by one or several Parties including but not restricted to publications and presentations, shall be governed by the procedure of Article 29.1 of the Grant Agreement subject to the following provisions.

Prior notice of any planned publication shall be given to the other Parties at least 45 calendar days before the publication. Any objection to the planned publication shall be made in accordance with the Grant Agreement in writing to the Coordinator and to the Party or Parties proposing the dissemination within 30 calendar days after receipt of

! / !16 38


the notice. If no objection is made within the time limit stated above, the publication is permitted.

8.3.1.2 An objection is justified if: (a) the protection of the objecting Party's Research Results or Background would be adversely affected (b) the objecting Party's legitimate academic or commercial interests in relation to the Research Results or Background would be significantly harmed.

The objection has to include a precise request for necessary modifications.

8.3.1.3 If an objection has been raised the involved Parties shall discuss how to overcome the justified grounds for the objection on a timely basis (for example by amendment to the planned publication and/or by protecting information before publication) and the objecting Party shall not unreasonably continue the opposition if appropriate measures are taken following the discussion.

The objecting Party can request a publication delay of not more than 90 calendar days from the time it raises such an objection. After 90 calendar days the publication is permitted, provided that Confidential Information of the objecting Party has been removed from the Publication as indicated by the objecting Party.

8.3.2 Dissemination of another Party’s unpublished Research Results or Background

A Party shall not include in any dissemination activity another Party's Research Results or Background without obtaining the owning Party's prior written approval, unless they are already published.

8.3.3 Cooperation obligations

The Parties undertake to cooperate to allow the timely submission, examination, publication and defense of any dissertation or thesis for a degree which includes their Research Results or Background subject to the confidentiality and publication provisions agreed in this Consortium Agreement.

8.3.4 Use of names, logos or trademarks

Nothing in this Consortium Agreement shall be construed as conferring rights to use in advertising, publicity or otherwise the name of the Parties or any of their logos or trademarks without their prior written approval.

! / !17 38


Section 9: Access Rights

9.1 Background included

9.1.1 In Attachment 1, the Parties have identified and agreed on the Background for the Project and have also, where relevant, informed each other that Access to specific Background is subject to legal restrictions or limits.

Anything not identified in Attachment 1 shall not be the object of Access Right obligations regarding Background.

9.1.2 Any Party can propose to the General Assembly to modify its Background in Attachment 1.

9.1.3 The Parties agree that all Background not listed in Attachment 1 shall be explicitly excluded from Access Rights. The Parties agree, however, to negotiate in good faith additions to Attachment 1 if a Party asks them to do so and those are needed.

For the avoidance of doubt, the owner is under no obligation to agree to additions of his Background to Attachment 1.

9.2 General Principles 9.2.1 Each Party shall implement its tasks in accordance with the Consortium Plan and shall bear sole responsibility for ensuring that its acts within the Project do not knowingly infringe third party property rights.

9.2.2 Any Access Rights granted expressly exclude any rights to sublicense unless expressly stated otherwise.

9.2.3 Access Rights shall be free of any administrative transfer costs.

9.2.4 Access Rights are granted on a non-exclusive basis.

9.2.5 Research Results and Background shall be used only for the purposes for which Access Rights to it have been granted.

9.2.6 All requests for Access Rights shall be made in writing. The granting of Access Rights may be made conditional on the acceptance of specific conditions aimed at ensuring that these rights will be used only for the intended purpose and that appropriate confidentiality obligations are in place.

9.2.7 The requesting Party must show that the Access Rights are Needed.

9.3 Access Rights for implementation

Access Rights to Research Results and Background Needed for the performance of the own work of a Party under the Project shall be granted on a royalty-free basis, unless otherwise agreed for Background in Attachment.

9.4 Access Rights to Research Results for Exploitation

! / !18 38


9.4.1 Access Rights to Background and Research Results if Needed for Exploitation of a Party's own Results shall be granted on Fair and Reasonable conditions.

Access rights to Research Results for internal research activities shall be granted on a royalty-free basis, unless otherwise agreed for Background in Attachment 1.

9.4.2 Access Rights to Background and Research Results if Needed for Exploitation of a Party's own Research Results shall be granted on Fair and Reasonable conditions.

9.4.3 A request for Access Rights may be made up to twelve months after the end of the Project or, in the case of Section 9.7.2.1.2, after the termination of the requesting Party’s participation in the Project.

9.5 Access Rights for Affiliated Entities Affiliated Entities have Access Rights under the conditions of the Grant Agreement Articles 25.4 and 31.4.

Such Access Rights must be requested by the Affiliated Entity from the Party that holds the Background or Research Results. Alternatively, the Party granting the Access Rights may individually agree with the Party requesting the Access Rights to have the Access Rights include the right to sublicense to the latter's Affiliated Entities. Access Rights to Affiliated Entities shall be granted on Fair and Reasonable conditions and upon written bilateral agreement.

Affiliated Entities which obtain Access Rights in return fulfil all confidentiality and other obligations accepted by the Parties under the Grant Agreement or this Consortium Agreement as if such Affiliated Entities were Parties.

Access Rights may be refused to Affiliated Entities if such granting is contrary to the legitimate interests of the Party which owns the Background or the Research Results.

Access Rights granted to any Affiliated Entity are subject to the continuation of the Access Rights of the Party to which it is affiliated, and shall automatically terminate upon termination of the Access Rights granted to such Party.

Further arrangements with Affiliated Entities may be negotiated in separate agreements.

9.6 Access Rights for Needed Innovation Party Innovation Results

9.6.1 Innovation Parties directly involved in the creation of Needed Innovation Results shall grant Access Rights to the Party that owns the Background or Research Results Needed for the creation of such Innovation Results, on a royalty-free basis during the course of Innovation development, for use in internal research activities. This provision shall be included in all contracts issued by Research Parties to Innovation Parties.

9.6.2 Access Rights to Innovation Results used for Commercial Exploitation shall be granted to the Research Party that owns the Background or Research Results which are being exploited in the creation of such Innovation Results, on Fair and Reasonable conditions. This

! / !19 38


provision shall be included in all contracts issued by Research Parties to Innovation Parties.

9.7 Access Rights for Parties entering or leaving the consortium 9.7.1 New Parties entering the consortium

As regards Research Results developed before the accession of the new Party, the new Party will be granted Access Rights on the conditions applying for Access Rights to Background.

9.7.2 Parties leaving the consortium

9.7.2.1 Access Rights granted to a leaving Party

9.7.2.1.1 Defaulting Party Access Rights granted to a Defaulting Party and such Party's right to request Access Rights shall cease immediately upon receipt by the Defaulting Party of the formal notice of the decision of the General Assembly to terminate its participation in the consortium.

9.7.2.1.2 Non-defaulting Party A non-defaulting Party leaving voluntarily and with the other Parties' consent shall have Access Rights to the Research Results developed until the date of the termination of its participation. It may request Access Rights within the period of time specified in Section 9.4.3.

9.7.2.2 Access Rights to be granted by any leaving Party

Any Party leaving the Project shall continue to grant Access Rights pursuant to the Grant Agreement and this Consortium Agreement as if it had remained a Party for the whole duration of the Project.

9.8 Specific provisions for Access Rights to Software

9.8.1 Definitions relating to Software

“Application Programming Interface” means the application programming interface materials and related documentation containing all data and information to allow skilled Software developers to create Software interfaces that interface or interact with other specified Software.

"Controlled Licence Terms" means terms in any licence that require that the use, copying, modification and/or distribution of Software or another work (“Work”) and/or of any work that is a modified version of or is a derivative work of such Work (in each case, “Derivative Work”) be subject, in whole or in part, to one or more of the following:

a) (where the Work or Derivative Work is Software) that the Source Code or other formats preferred for modification be made available as of right to any third party on request, whether royalty-free or not;

! / !20 38


b) that permission to create modified versions or derivative works of the Work or Derivative Work be granted to any third party;

c) that a royalty-free licence relating to the Work or Derivative Work be granted to any third party.

For the avoidance of doubt, any Software licence that merely permits (but does not require any of) the things mentioned in (a) to (c) is not a Controlled Licence (and so is an Uncontrolled Licence).

“Object Code” means software in machine-readable, compiled and/or executable form including, but not limited to, byte code form and in form of machine-readable libraries used for linking procedures and functions to other software.

“Software Documentation” means software information, being technical information used, or useful in, or relating to the design, development, use or maintenance of any version of a software programme.

“Source Code” means software in human readable form normally used to make modifications to it including, but not limited to, comments and procedural code such as job control language and scripts to control compilation and installation.

9.8.2. General principles

For the avoidance of doubt, the general provisions for Access Rights provided for in this Section 9 are applicable also to Software as far as not modified by this Section 9.8.

Parties’ Access Rights to Software do not include any right to receive Source Code or Object Code ported to a certain hardware platform or any right to receive Source Code, Object Code or respective Software Documentation in any particular form or detail, but only as available from the Party granting the Access Rights. The intended introduction of Intellectual Property (including, but not limited to Software) under Controlled Licence Terms in the Project requires the approval of the General Assembly to implement such introduction into the Consortium Plan.

9.8.3. Access to Software

Access Rights to Software which is Research Results shall comprise: Access to the Object Code; and, where normal use of such an Object Code requires an Application Programming Interface (hereafter API), Access to the Object Code and such an API; and, if a Party can show that the execution of its tasks under the Project or the Exploitation of its own Research Results is technically or legally impossible without Access to the Source Code, Access to the Source Code to the extent necessary.

Background shall only be provided in Object Code unless otherwise agreed between the Parties concerned.

9.8.4. Software licence and sublicensing rights

9.8.4.1 Object Code

! / !21 38


9.8.4.1.1 Research Results - Rights of a Party

Where a Party has Access Rights to Object Code and/or API which is Research Results for Exploitation, such Access shall, in addition to the Access for Exploitation foreseen in Section 9.4, as far as Needed for the Exploitation of the Party’s own Research Results, comprise the right:

to make an unlimited number of copies of Object Code and API; and to distribute, make available, market, sell and offer for sale such Object Code and API as part of or in connection with products or services of the Party having the Access Rights;

provided however that any product, process or service has been developed by the Party having the Access Rights in accordance with its rights to exploit Object Code and API for its own Research Results.

If it is intended to use the services of a Innovation Party for the purposes of this Section 9.8.4.1.1, the Parties concerned shall agree on the terms thereof with due observance of the interests of the Party granting the Access Rights as set out in Section 9.2 of this Consortium Agreement.

9.8.4.1.2 Research Results - Rights to grant sublicenses to end-users

In addition, Access Rights to Object Code shall, as far as Needed for the Exploitation of the Party’s own Research Results, comprise the right to grant in the normal course of the relevant trade to end-user customers buying/using the product/services, a sublicense to the extent as necessary for the normal use of the relevant product or service to use the Object Code as part of or in connection with or integrated into products and services of the Party having the Access Rights and, as far as technically essential:

a) to maintain such product/service; b) to create for its own end-use interacting interoperable software in accordance

with the Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the legal protection of computer programs

9.8.4.1.3 Background

For the avoidance of doubt, where a Party has Access Rights to Object Code and/or API which is Background for Exploitation, Access Rights exclude the right to sublicense. Such sublicensing rights may, however, be negotiated between the Parties.

9.8.4.2 Source Code

9.8.4.2.1 Research Results - Rights of a Party Where, in accordance with Section 9.8.3, a Party has Access Rights to Source Code which is Research Results for Exploitation, Access Rights to such Source Code, as far as Needed for the Exploitation of the Party’s own Research Results,

! / !22 38


shall comprise a worldwide right to use, to make copies, to modify, to develop, to adapt Source Code for research, to create/market a product/process and to create/provide a service. If it is intended to use the services of a Innovation Party for the purposes of this Section 9.8.4.2.1, the Parties shall agree on the terms thereof, with due observance of the interests of the Party granting the Access Rights as set out in Section 9.2 of this Consortium Agreement.

9.8.4.2.2 Research Results – Rights to grant sublicenses to end-users In addition, Access Rights, as far as Needed for the Exploitation of the Party’s own Research Results, shall comprise the right to sublicense such Source Code, but solely for purpose of adaptation, error correction, maintenance and/or support of the Software. Further sublicensing of Source Code is explicitly excluded.

9.8.4.2.3 Background For the avoidance of doubt, where a Party has Access Rights to Source Code which is Background for Exploitation, Access Rights exclude the right to sublicense. Such sublicensing rights may, however, be negotiated between the Parties.

9.8.5 Specific formalities

Each sublicense granted according to the provisions of Section 9.8.4 shall be made by a traceable agreement specifying and protecting the proprietary rights of the Party or Parties concerned.

9.9 Additional Access Rights

For the avoidance of doubt any grant of Access Rights not covered by the Grant Agreement or this Consortium Agreement shall be at the absolute discretion of the owning Party and subject to such terms and conditions as may be agreed between the owning and receiving Parties.

Section 10: Innovation Results

10.1 Ownership of Innovation Results

10.1.1 Innovation Results are owned by the Party that generates them.

10.1.2 Research Results used for the creation of Innovation Results are owned by the Party that generates the Research Results.

10.1.3 Joint ownership

Where Innovation Results are generated from work carried out jointly by the Innovation Party and one or more Research Parties and it is not possible to separate the Innovation

! / !23 38


Results and Research Results of such invention, design or work for the purpose of applying for, obtaining and/or maintaining the relevant patent protection or any other intellectual property right, the Innovation Party and Research Parties shall have joint ownership of this work. The joint owners shall, within a six (6) month period as from the date of the generation of such Innovation Results, establish a written separate joint ownership agreement regarding the allocation of ownership and terms of exercising, protecting, the division of related costs and exploiting such jointly owned Innovation Results on a case by case basis. However, until the time a joint ownership agreement has been concluded and as long as such rights are in force, such Innovation Results shall be jointly owned in equal shares by the joint owners concerned. This provision shall be included in all contracts issued by Research Parties to Innovation Parties.

10.2 Transfer of Research Results for use with Innovation Results

10.2.1 During the implementation of the project Research Results shall be made available to Innovation Parties for use in generating Innovation Results on a royalty-free basis.

10.2.2 The licence to use Research Results for Commercial Exploitation of Innovation Results to Innovation Parties utilising such Research Results, shall be granted on Fair and Reasonable conditions.

10.3 Innovation Party contractual obligation

During the implementation of the Project the Research Parties whose Research Results are being utilised in Innovation Results are obliged to issue a contract to the Innovation Party to ensure compliance with the Grant Agreement and Project Deliverables.

An Innovation Agreement shall be drafted by the General Assembly in preparation of engagement of Innovation Parties by the project Month 5.

10.4 Ensuring Innovation Party compliance with the GA

The Party or Parties whose Research Results are used to generate Innovation Results must ensure that the Innovation Party use of their Research Results is in compliance with their obligations under the GA.

10.5 Dissemination of Research Results via Innovation Results

The right to use a Party’s materials, documents and information includes the right to authorise Innovation Parties to act on its behalf or sub-license the modes of use set out in Points (b),(c),(d) and (f) of Article 38.2.1 of the GA to third parties if needed for the communication and publicising activities of the Commission. The Research Party must ensure that such use by an Innovation Party complies with its obligations under the GA.

! / !24 38


Section 11: Non-disclosure of information

11.1 All information in whatever form or mode of communication, which is disclosed by a Party (the “Disclosing Party”) to any other Party (the “Recipient”) in connection with the Project during its implementation and which has been explicitly marked as “confidential” at the time of disclosure, or when disclosed orally has been identified as confidential at the time of disclosure and has been confirmed and designated in writing within 15 calendar days from oral disclosure at the latest as confidential information by the Disclosing Party, is “Confidential Information”.

11.2 The Recipients hereby undertake in addition and without prejudice to any commitment of non-disclosure under the Grant Agreement, for a period of 4 years after the end of the Project:

a) not to use Confidential Information otherwise than for the purpose for which it was disclosed;

b) not to disclose Confidential Information to any third party without the prior written consent by the Disclosing Party;

c) to ensure that internal distribution of Confidential Information by a Recipient shall take place on a strict need-to-know basis; and

d) to return to the Disclosing Party on demand all Confidential Information which has been supplied to or acquired by the Recipients including all copies thereof and to delete all information stored in a machine readable form. The Recipients may keep a copy to the extent it is required to keep, archive or store such Confidential Information because of compliance with applicable laws and regulations or for the proof of on-going obligations.

11.3 The Recipients shall be responsible for the fulfilment of the above obligations on the part of their employees or third parties involved in the Project and shall ensure that they remain so obliged, as far as legally possible, during and after the end of the Project and/or after the termination of the contractual relationship with the employee or third party.

11.4 The above shall not apply for disclosure or use of Confidential Information, if and in so far as the Recipient can show that:

a) the Confidential Information becomes publicly available by means other than a breach of the Recipient’s confidentiality obligations;

b) the Disclosing Party subsequently informs the Recipient that the Confidential Information is no longer confidential;

c) the Confidential Information is communicated to the Recipient without any obligation of confidence by a third party who is to the best knowledge of the Recipient in lawful possession thereof and under no obligation of confidence to the Disclosing Party;

d) the disclosure or communication of the Confidential Information is foreseen by provisions of the Grant Agreement;

e) the Confidential Information, at any time, was developed by the Recipient completely independently of any such disclosure by the Disclosing Party; or

f) the Confidential Information was already known to the Recipient prior to disclosure or

! / !25 38


g) the Recipient is required to disclose the Confidential Information in order to comply with applicable laws or regulations or with a court or administrative order, subject to the provision Section 11.7 hereunder.

11.5 The Recipient shall apply the same degree of care with regard to the Confidential Information disclosed within the scope of the Project as with its own confidential and/or proprietary information, but in no case less than reasonable care.

11.6 Each Party shall promptly advise the other Party in writing of any unauthorised disclosure, misappropriation or misuse of Confidential Information after it becomes aware of such unauthorised disclosure, misappropriation or misuse.

11.7 If any Party becomes aware that it will be required, or is likely to be required, to disclose Confidential Information in order to comply with applicable laws or regulations or with a court or administrative order, it shall, to the extent it is lawfully able to do so, prior to any such disclosure a) notify the Disclosing Party, and

b) comply with the Disclosing Party’s reasonable instructions to protect the confidentiality of the information.

Section 12: Miscellaneous

12.1 Attachments, inconsistencies and severability

This Consortium Agreement consists of this core text and Attachment 1 (Background included) Attachment 2 (Accession document) Attachment 3 (List of third parties for simplified transfer according to Section 8.2.2)

In case the terms of this Consortium Agreement are in conflict with the terms of the Grant Agreement, the terms of the latter shall prevail. In case of conflicts between the attachments and the core text of this Consortium Agreement, the latter shall prevail.

Should any provision of this Consortium Agreement become invalid, illegal or unenforceable, it shall not affect the validity of the remaining provisions of this Consortium Agreement. In such a case, the Parties concerned shall be entitled to request that a valid and practicable provision be negotiated which fulfils the purpose of the original provision.

12.2 No representation, partnership or agency

Except as otherwise provided in Section 6.4.4, no Party shall be entitled to act or to make legally binding declarations on behalf of any other Party or of the consortium. Nothing in this Consortium Agreement shall be deemed to constitute a joint venture, agency, partnership, interest grouping or any other kind of formal business grouping or entity between the Parties.

! / !26 38


12.3 Notices and other communication

Any notice to be given under this Consortium Agreement shall be in writing to the addresses and recipients as listed in the most current address list kept by the Coordinator.

Formal notices: If it is required in this Consortium Agreement (Sections 4.2, 9.7.2.1.1, and 12.4) that a formal notice, consent or approval shall be given, such notice shall be signed by an authorised representative of a Party and shall either be served personally or sent by mail with recorded delivery or telefax with receipt acknowledgement.

Other communication: Other communication between the Parties may also be effected by other means such as e-mail with acknowledgement of receipt, which fulfils the conditions of written form.

Any change of persons or contact details shall be notified immediately by the respective Party to the Coordinator. The address list shall be accessible to all concerned.

12.4 Assignment and amendments

Except as set out in Section 8.2, no rights or obligations of the Parties arising from this Consortium Agreement may be assigned or transferred, in whole or in part, to any third party without the other Parties’ prior formal approval.

Amendments and modifications to the text of this Consortium Agreement not explicitly listed in Section 6.3.6 require a separate written agreement to be signed between all Parties.

12.5 Mandatory national law

Nothing in this Consortium Agreement shall be deemed to require a Party to breach any mandatory statutory law under which the Party is operating.

12.6 Language This Consortium Agreement is drawn up in English, which language shall govern all documents, notices, meetings, arbitral proceedings and processes relative thereto.

12.7 Applicable law

This Consortium Agreement shall be construed in accordance with and governed by the laws of Belgium excluding its conflict of law provisions.

12.8 Settlement of disputes The parties shall endeavour to settle their disputes amicably.

Any dispute, controversy or claim arising under, out of or relating to this contract and any subsequent amendments of this contract, including, without limitation, its formation, validity, binding effect, interpretation, performance, breach or termination, as well as non-contractual claims, shall be submitted to mediation in accordance with the WIPO Mediation Rules. The place of mediation shall be Brussels unless otherwise agreed upon. The language to be used in the mediation shall be English unless otherwise agreed upon.

! / !27 38


If, and to the extent that, any such dispute, controversy or claim has not been settled pursuant to the mediation within 60 calendar days of the commencement of the mediation, it shall, upon the filing of a Request for Arbitration by either Party, be referred to and finally determined by arbitration in accordance with the WIPO Expedited Arbitration Rules. Alternatively, if, before the expiration of the said period of 60 calendar days, either Party fails to participate or to continue to participate in the mediation, the dispute, controversy or claim shall, upon the filing of a Request for Arbitration by the other Party, be referred to and finally determined by arbitration in accordance with the WIPO Expedited Arbitration Rules. The place of arbitration shall be Brussels unless otherwise agreed upon. The language to be used in the arbitral proceedings shall be English unless otherwise agreed upon.

! / !28 38


Section 13: Signatures

AS WITNESS: The Parties have caused this Consortium Agreement to be duly signed by the undersigned authorised representatives in separate signature pages the day and year first above written.

1. STROMATOLITE INNOVATION LAB

Signature(s)

Name(s)

Title(s)

Date

! / !29 38


2. SIGMA ORIONIS

Signature(s)

Name(s)

Title(s)

Date

! / !30 38


3. IRCAM - Institut de Recherche et Coordination Acoustique/Musique

Signature(s)

Name(s)

Title(s)

Date

! / !31 38


4. Universitat Pompeu Fabra - Music Technology Group

Signature(s)

Name(s) Angel Lozano

Title(s) ViceRector for Research

Date

! / !32 38


5. Fraunhofer-Gesellschaft zur Förderung der angewandten Forschung e.V.

Signature(s)

Name(s) Rüdiger Dorner Martin Paulmichl

Title(s) Head of Department Legal Counsel Public and EU Projects Public and EU Projects

Date

! / !33 38


6. Technische Universität Wien

Signature(s)

Name(s)

Title(s)

Date

! / !34 38


[Attachment 1: Background included]

According to the Grant Agreement (Article 24) Background is defined as “data, know-how or information (…) that is needed to implement the action or exploit the results”. Because of this need, Access Rights have to be granted in principle, but parties must identify and agree amongst them on the Background for the project. This is the purpose of this attachment.

PARTY 1

As to STROMATOLITE, it is agreed between the parties that, to the best of their knowledge

No data, know-how or information of STROMATOLITE shall be Needed by another Party for implementation of the Project (Article 25.2 Grant Agreement) or exploitation of that other Party’s Results (Article 25.3 Grant Agreement).

This represents the status at the time of signature of this Consortium Agreement.

PARTY 2

As to SIGMA ORIONIS, it is agreed between the parties that, to the best of their knowledge

No data, know-how or information of SIGMA ORIONIS shall be Needed by another Party for implementation of the Project (Article 25.2 Grant Agreement) or exploitation of that other Party’s Results (Article 25.3 Grant Agreement).


PARTY 3

As to IRCAM, it is agreed between the parties that, to the best of their knowledge (please choose),

Option 1: The following background is hereby identified and agreed upon for the Project. Specific limitations and/or conditions, shall be as mentioned hereunder:

Describe Background Specific limitations and/or conditions for implementation (Article 25.2 Grant Agreement)

Specific limitations and/or conditions for exploitation (Article 25.3 Grant Agreement)

IAE (Interactive Audio Engine) C++ library for real-time sound feature extraction and granular and concatenative sound synthesis

Access right to source code excluded

Access right to source code excluded. Access right to non commercial exploitation subject so specific agreements.

! / !35 38



PARTY 4

As to UPF-MTG, it is agreed between the parties that, to the best of their knowledge (please choose)


UPF-MTG states hereby that the Background to which it can definitely grant Access Rights is only UPF-MTG’s Background that has been generated solely by UPF-MTG researchers participating in the Project on research topics that are specifically subject of the Project activities as described in Annex I (Description of Action) of the Grant Agreement, to which UPF-MTG is not prevented from granting Access Rights due to third party rights and where the grant of Access Rights would not conflict with UPF-MTG legitimate interests (including commercial interests). UPF-MTG will consider in good faith any requests to grant Access Rights to other UPF-MTG Background IP, but may chose in its sole discretion whether or not to do so.


PARTY 5

As to Fraunhofer-Gesellschaft zur Förderung der angewandten Forschung e.V., it is agreed between the parties that, to the best of their knowledge

Wave Web Audio Components Javascript components for sound and motion analysis and sound synthesis

BSD3-clause license BSD3-clause license



Freesound Available as SaaS API available under commercial licence

Essentia Source code available under AGPLv3 license

Dual licence (AGPLv3 + proprietary license)

! / !36 38


no data, know-how or information of Fraunhofer-Gesellschaft shall be Needed by another Party for implementation of the Project (Article 25.2 Grant Agreement) or exploitation of that other Party’s Results (Article 25.3 Grant Agreement).


PARTY 6

As to TUW, it is agreed between the parties that, to the best of their knowledge (please choose),





TUW Java Audio Feature Extractor Available under Apache License V. 2.0; Libraries used within this SW are that follow their own respective licensing rules are listed under http://ifs.tuwien.ac.at/mir/audiofeatureextraction-java/license.html

Available under Apache License V. 2.0; Libraries used within this SW are that follow their own respective licensing rules are listed under http://ifs.tuwien.ac.at/mir/audiofeatureextraction-java/license.html

! / !37 38


Attachment 2: Accession document

ACCESSION

of a new Party to

[Acronym of the Project] Consortium Agreement, version […, YYYY-MM-DD]

[OFFICIAL NAME OF THE NEW PARTY AS IDENTIFIED IN THE Grant Agreement]

hereby consents to become a Party to the Consortium Agreement identified above and accepts all the rights and obligations of a Party starting [date].

[OFFICIAL NAME OF THE COORDINATOR AS IDENTIFIED IN THE Grant Agreement]

hereby certifies that the consortium has accepted in the meeting held on [date] the accession of [the name of the new Party] to the consortium starting [date].

This Accession document has been done in 2 originals to be duly signed by the undersigned authorised representatives.

[Date and Place]

[INSERT NAME OF THE NEW PARTY] Signature(s) Name(s) Title(s)

[Date and Place]

[INSERT NAME OF THE COORDINATOR] Signature(s) Name(s) Title(s)

! / !38 38

d7.1 business strategy for the music industry ict...

Documents