The Spotify Conundrum

10 01 2012

Update:  Check out what Coldplay’s Manager has to say about the Spotify Conundrum:  CLICK HERE FOR DIGITAL MUSIC NEWS ARTICLE

To stream or not to stream?  That is the .0007 cents per stream question.

Recently top name bands like Coldplay, The Black Keys and Arcade Fire have spoken out against streaming.  Citing the “gross underpayment” to artists per stream, bands are pulling their music from sites like Spotify or simply prohibiting the placement of their songs altogether.

Let’s look at some projected numbers from streaming on Spotify (courtesy of Digital Audio Insider):

Spotify Per-Stream Payouts August 2009 to March 2011

Smallest: 0.02056 cents
Largest: 1.1456 cents
Average: 0.2865 cents

These numbers are strictly estimates and we have heard that some of the deals that major labels have entered into with Spotify have the per stream at a MUCH lower number then those above.  Regardless, to make some actual money through Spotify, an artist will need millions of streams.  No problem for Justin Beiber and Lady Gaga, but what about the little guy?  Apparently, it’s not just the little guy that is worried/pissed.  As mentioned above, Coldplay and The Black Keys have been very vocal about their overall disdain of streaming providers.  In a recent VH1 interview, The Keys drummer said the following:

“We decided for this album, to not allow streaming services to stream the entire album,” Keys drummer Patrick Carney said.  “It’s becoming more popular, but it still isn’t at a point where you can replace royalties from record sales with royalties from streams.  So it felt unfair to those that purchased the album to allow people to go on a website and stream the album for free whenever they want it.”

Independent labels and artists are outraged with the seemingly enormous underpayment to artists and there are consistent stories of indies pulling their music and catalog from the site.  The question remains however, will their protest pay off or are they really missing out on a new untapped method of reaching millions of fans?

The founders of Spotify continuously hammer home the message that their’s is a music discovery tool.  By having all the published music in one spot, fans will be able to discover deeper cuts or new artists or even new genres of music that they didn’t already appreciate.  Following their logic, once you discover these things your are more apt to actually go out and purchase your new discoveries or better yet, go to a show the next time the “new” band is in town.

From personal experience, I actually tend to side with Spotify (probably not the most popular opinion on this site).  You can stream virtually every song known to man somewhere on the Internet.  Whether it is on YouTube (the new radio for kids), Pandora, blogs, hacker/torrent sites or on artists’ websites, you can typically find a song if you really work Google over for a while.  Spotify puts it all in one handy dandy place for you.  Then it takes it a step further.  In its recently updated version the artists’ radio stations suggest similar music to that of the artist, album or track you originally searched.   I have found this to be a great way (much better than Pandora) to discover new music that I like and then support.

This is not the first time that the music industry has had to deal with a game changer (not even close to the first time).  As we have mentioned ad nauseum on this site, the Internet fundamentally changed the music industry.  Moving at a painfully slow pace, the label infrastructure was not ready for the shift.  Look what happened to them.  Now that the Internet is out of its infancy and new and creative ways to bring music to fans are being created on a daily basis, will the existing labels and, more significantly, the independent artists be ready to play ball?  Or will they stamp their feet and and cry “UNFAIR, DO OVER!”?

Rather than complaining about the system in place and the uber small price per stream (which we agree is way to small and should be changed a bit), we suggest that bands get creative with streaming networks.  Give fans extras and incentives to stream.  Be discovered and it should lead to better results for your music.


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Categories : making money as a musician, money, Music and Business, Music Deals, Music Licesnsing, Performing RIghts Organizations, Uncategorized

What Can Musicians Be Thankful For In 2011?

26 11 2011

This Dancing Turkey is Definitely Thankful to Be Alive.

Perusing the local trade magazines or attending a music based conference can lead a musician (or someone who works with musicians) to believe that Armageddon is truly here.  If we hear one more speech or read one more article about the end of the music industry as we know it, we will certainly collectively go nutso. 

The truth is the entire economy is in the crapper.  We don’t know one industry that hasn’t been touched (well, maybe crime, if that is an industry).  Music has certainly not been immune.  However, we here at L4M are here to say that Debbie Downer needs to turn her frown upside down.  While the days of multi-multi platinum records and huge advances are certainly on death’s doorstep, the savvy musician can do more than just eek out a living.  Here are some things we think musicians should be happy about:

1.  The Internet.  Long hailed as the assassin of the music industry, the world-wide web offers more opportunities than it does problems if you know how to ride the waves.  Not only has the internet introduced the fan to new (and mostly legitimate) ways of finding new music, collaborative websites now allow musicians a means to create, promote and distribute their music.  Sites like TopSpin, BeatPort, BandCentral, SoundCloud and Facebook have become essential and typically inexpensive methods for sharing talent, ideas and product.  If utilized properly, the internet’s social media platforms can completely replace a label based pr system.  Access, affordability and a global reach are definitely something that the Internet provides to the musician willing to navigate it.

2.  Music Festivals.  Music festivals breath new life and huge opportunities to major label talent as well as emerging bands.  Bringing great music to enormous crowds coupled with innovative festival organizers oftentimes bring great results.  Not only are festivals bringing tremendous revenues to musicians and the organizers, they offer great opportunities to buzz bands to play in front of huge crowds and important taste makers.  On top of that, every festival brings with it industry parties, opening slots for after shows, and tons of press.  Emerging bands who strategically plan ahead for a visiting festival can really cash in (maybe not as much as Perry Farrell, but still…).

3.  Music Licensing.  It used to be that in order to get your music licensed your label or publisher would have to cozy up to a music supervisor.  With the amount of media content around the world growing at a record pace (think tv, radio, satellite radio, internet programming, commercials, film etc.) there is a matching need for quality music.  Jingles are a thing of the past.  Ad agencies with unlimited budgets for music is also rare at best.  Quality music that may originate from lesser known musicians but do not carry with it the rigors of publisher and label demands has become imperative.  Musicians who work to get their music to savvy music libraries can make money on both up front music licensing sync fees as well as the oftentimes lucrative performance royalties. 

4. The Remix.  Want to resurrect an old single?  Want to make some money as a producer by resurrecting that old singer?  Never before has the remix been more important.  DJ’s like Skrillex and Guetta have become über rich by making a name for themselves as talented remixers as well as great djs.  For popular musicians, remixes by producers or other bands can lead to revitalized sales of a falling single.  The remix is a handy promotional tool as well (Lady Gaga will be ever-present again for a while as she announces the release of an entire remix album).  Another means of collaboration, oftentimes between artists who would not otherwise work together is definitely a trend that we can all be thankful for in 2011. 

5.  Vinyl.  The LP appears to be back for good.  Collectors as well as a  new generation of music purchasers appear to be favoring holding something cool in their hands and not just in an electronic file living in an Ipod.  While still expensive to manufacture, vinyl sales in 2011 continue to defy the rest of the industry.  A positive trend that began several years ago, there does not seem to be a slow down to the sale of the old school vinyl record. 

What about you?  What are you thankful for as a musician or a music fan in 2011?  Please comment below.  Let’s stay positive and bring in the joy during this holiday season.  Having trouble doing so, slap on the collector’s edition of Justin Bieber’s Christmas album.  We have no doubt that you will soon be smiling!


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Categories : Concert Series, Internet, Licenses, live performance, Lollapalooza, making money as a musician, Music and Business, Music and Business Law, Music Deals, Music Festivals, Music Licesnsing

Back to Basics: Performance Rights Organizations

30 08 2011
 

Back to the Basics of the Music Industry

We here at L4M had an original goal of making the music industry LESS confusing for musicians by attempting to simplify and decode the mythical “industry standards” that generations of music executives and attorneys had crafted.  In our opinion, the standard of the industry was to confuse musicians so that they would willingly give up rights that they needn’t relinquish.  The combination of a monumental change in the music industry (with the introduction of the internet) and the easier access to information (such as sites like ours), musicians no longer have an excuse when they enter into horrific label agreements.

If you look over the last several articles posted on L4M, we admittedly have wandered away from the path of simplicity.  So, hand in hand with all the kids going back to the classroom this week, we will be returning to the basics.  Today’s lesson, what do Performance Rights Organizations or PRO’s actually do and why do you need to register with one?  

Most folks in the music industry and many outside of the industry have heard of ASCAP or BMI.  However, the numbers decrease signficantly when you ask those individuals what ASCAP or BMI actually do for artists. 

ASCAP (American Society of Composers, Authors and Publishers), BMI (Broadcast Music Inc.) and SESAC (Society of European Stage Authors and Composers) are the three performing rights organizations in the US.  They have international presence as well, but for this post we’ll just focus on their doings in the US.  As their names suggest, PRO’s work with writers who have their music published and broadcast to the masses.  They issue licenses to any one or any thing which broadcasts music for more than merely personal enjoyment.  As part of those licenses they collect royalties to the composers of music which is broadcast to the public.  According to ASCAP itself it:

“protects the rights of its members by licensing and distributing royalties for the non-dramatic public performances of their copyrighted works. ASCAP’s licensees encompass all who want to perform copyrighted music publicly. ASCAP makes giving and obtaining permission to perform music simple for both creators and users of music.” www.ascap.com/about

Think of it this way:  You drive your car over to your favorite shopping mall.  While en route you jam out to your local rock radio station (if it still exists).  After parking, you saunter into the mall which is broadcasting some easy listening jams over its PA system.  You wander into Abercrombie & Fitch to see if you can grab that hoodie that The Situation wore on last night’s episode of Jersey Shore and in the darkened perfumed laced store you are accosted by much too loud ska music.  Working up a hunger, you then meander into TGIF where you are immediately accosted by 30 flat screen tv’s blasting a Black Keys track over a Cadillac commercial.  Exhausted, you get back in your car and switch over to the smooth jazz channel for a relaxing drive home. 

Every step of the way during your epic mall journey, songwriters were collecting performance royalties.  Let’s take them one at a time. 

1. Your car ride to the mall:  The local radio station licenses its playlist from the PRO’s and pays a set amount for each song it broadcasts to the appropriate PRO (which is the PRO that the songwriter signed up with and registered its songs).  The PRO then allocates the correct portion of that payment amongst the writers of each song which was broadcast.  Eventually, the radio’s payment trickles down to the songwriters themselves.

2.  The mall itself has a license with the PROs to broadcast its easy listening jams.  The same process ensues.  PRO’s collect from the mall owners and pay out the appropriate writers. 

3. Franchises like Abercrombie and Fitch also have direct licenses with the PRO’s in order to continuously broadcast music to their patrons.  So similar to the radio stations and the mall, individual stores will also pay a license fee to the PRO’s to pay for the right to broadcast music.

4.  The network which broadcast the Cadillac commercial on television will also pay a license fee to ASCAP.  See our article on Licensing to see the other compensation that may be owed for this type of use.

5. See number 1.

The amount of money paid every time a song is broadcast varies.  How much does it vary?  Well that depends (sorry, but it’s true).  The PROs negotiate individual licenses and rates with its licensees.  The terms of the licenses depend on a large number of variables including the size of the audience, the time of day of the broadcast, the method of broadcast and even the current financial climate.  A song that is featured on a top network drama played at primetime on a Thursday night will surely be worth more in performance royalties as compared to a song that is played over the loudspeaker at Steak and Shake in rural Georgia.  However, if you do not register your work with a PRO you will receive the same amount for either broadcast: $0.00. 

We are often asked which PRO is better?  BMI and ASCAP as the biggest PROs have standard answers as to why they are better than the other.  However, as with most things in the music industry, we feel that it comes down to relationships.  If you develop a relationship with a representative from a PRO you should stick with him/her.  Finding someone to help you through the registration process and explanations as to what royalties are owed is invaluable to any artist.  Neither of the organizations have long term contracts, but you have to be pro-active to know when to terminate or they will continuously renew. 

This is obviously only a very cursory overview of a much more complicated subject.  But, it is a start.  If you have more questions, please contact us.


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Categories : ASCAP, BMI, Licenses, making money as a musician, Music and Business, Music and Business Law, Music Licesnsing, Music Marketing, Performance Rights Act, Performing RIghts Organizations

Cloudy With a Chance of Music

15 02 2011

 

Forecast for Musicians: Storm Clouds

Recently I was on a panel at Northwestern Law School with another lawyer, a musician (who happens to ba lawyer too) and an ASCAP representative.  Our topic was the effect that cloud or subscription based music services will have on performers and songwriters.  While I definitely had my own opinions on the topic, it was ear/eye opening to hear from my fellow panelists. 

Most music lovers seem to have their own private way to listen and enjoy their music.  While there is a lot of overlap amongst listeners (iPods, satellite radio, pandora, car radios, home stereos) everyone has their own unique method to purchase, stream, listen and (now most importantly )travel with their collection.  In the past we would break out our record collection and play records in the family room.  Then came the cassette and the walkman.  Our record collections became somewhat mobile and we could grab our favorite tapes and walk around or drive while listening to our collection of music.  Technology allowed for better sounding recordings to travel along with us with the invention of the CD.  However, like one of my panel compatriots aptly pointed out, a music fan was a prisoner to his cd collection; still rather bulky and highly scratchable, you would have to lug a box/book of cds with you on each road trip and hope that they did not fall between the seats or get scratched on the dashboard. 

Enter the MP3. A computer file that is quickly dowloaded and containes cd quality sound.  The digital album revolutionized the way we consume music.  As with most revolutions, the infrastructure that existed prior to the revolution (the big music label system) fell.  Brilliant entrepreneurs and crafty opportunists from Apple to Napster entered the fray and came out making billions of dollars from the shift.  For the everyday consumer of music, it became easier to listen to music wherever you wanted to do so.  Your entire record collection can now fit into the palm of your hand, be programmed to your car’s stereo or be shared with people in your office with a click of a button. 

Now that the digital age of music is over a decade old, there is yet another shift occurring.  Technology again is making it easier for people to listen to their music collection regardless of where they are.  The clouds have come rolling in. 

Pandora has already helped put the cloud on the map with approximately 80 million users (1 new user every second per the www.digitalmusicnews.com).  But services such as Spotify, Sony’s Qriocity and Google’s delayed cloud service will take it one step further.  While Pandora allows you to listen to music based on bands or songs you tell it you like, the cloud subscription services allow you to pick all of your music.  Essentially, you will no longer have to actually purchase a song, let alone an album.  Rather, you will pay a monthly fee that will allow you to pick your favorite songs, categorize them, rank them, etc. and, most importantly, take them with you.  Whether you are listening on your hand-held device (smart phone or iPod type device), on your computer, in your car or listening to your home stereo system, your music will be there waiting for you.  As long as you keep paying the monthly fee, that music will be with you. 

As a consumer, I think cloud based systems are the bees knees.  Technology should make things easier and better.  Allowing me to go from my office to my car without missing a beat of the song I was just listening to (I’m very fast) and without plugging anything in, is amazing.  As a lawyer who represents musicians and songwriters, I’m worried.  For interactive internet based music providers (where the user gets to select the songs he/she wants to listen to) the royalty rates are negotiated between the labels/publishers and the cloud provider.  This means that the labels and big publishers negotiate pre-determined revenue shares for each stream of a song; typically a teeny tiny fraction of a dollar (in England the rate is thought to be around 0.00085 pound).  A famous example of how potentially horrible these rates can be is the report that Lady Gaga who had over one million streams of Poker Face on Spotify in the UK earned $167.00 (click here for more on that). 

The labels and publishers in the US are fighting for more per stream.  But don’t go rooting for them quite yet.  They are negotiating deals so that they actually get an equity or ownership stake in the cloud based service.  So while it appears as though they are fighting for the artists (which some of them might actually be doing), they are also positioning themselves to make as much money as they can in the process.  If the clouds make it unnecessary to ever download and actually own a song, how are the songwriters and artists going to recapture that lost income?  As of now, the songwriter lobbyists are doing a good job of asking that question and fighting to establish fair payments for musicians. 

The laws in place that cover interactive internet radio and subscription services did not imagine the day when streaming would eclipse downloads.  That day has clearly arrived: “Streams of music are eclipsing everything,” Universal Music Group UK chief David Joseph recently told the Guardian.  “It’s a different digital currency to downloading. You’re dealing with 175 million single tracks bought a year compared to 7 billion streams of music.” (from The Digital Music News).  Just as technology has adjusted, the laws dealing with fair payments to the providers of content need to be modified. 

The bottom line is that just as the cassette replaced the record, the cd replaced the tape and the mp3 replaced the cd, the cloud is going to replace the downloaded mp3.  The clouds are rolling in and the artists may be left in the impending dark.


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Categories : 360 Deals, live performance, making money as a musician, Music and Business, Music and Business Law, Music Deals, Music Licesnsing, Performance Rights Act, Publishing, Royalties, Singers, Songwriters

Collaborating in the Studio? Does Spoonman Hold the Power?

12 01 2011

 

So you are in the studio working on your latest masterpiece.  However, you and your band mates decide that one of your songs needs a little something extra.  Whether that something extra is a guest rapper, vocalist, guitar player, percussionist, cowbell expert or Spoonman; there are few things to keep in mind before you bring that superstar, indie hero or friend into the studio.

Ponder upon these questions:  Who will own the master recordings? Who will own the publishing?  Who can license the song for use in TV shows, commercials, movies or video games?  There is another biggie: If your guest is signed to a label, can you release the song at all?

Let’s take each issue in turn.  First, who will own the master recordings?  Often, the label or entity paying for the recording, mixing and mastering sessions will own the masters.  In today’s music industry scene, where more artists are self-financing and recording themselves, the band or group will own the masters.  In these instances, the performers will collectively own the masters.  Since our guest is a performer does she or he own part of the master?  Ready for your favorite answer?  Here we go—-maybe.  It all depends on what agreements, if any, you have with our guest. 

If there is no agreement in place the master could be considered a joint work in which case any master owner could license the master.  Now, if our guest came in to do a small part you probably would not be too happy to find that he/she licensed the song without asking you.  Thus, you should probably have an agreement in place.  If our guest was performing under your direction and guidance or if the performance is specially commissioned you could have our guest enter into a work made for hire agreement.  Under this scenario ownership of the master would vest in you.  You should address terms such as payment, royalties, credit and so forth within the agreement.  If our guest was not performing under your direction or otherwise did not qualify as a work made for hire, the other option is to have our guest assign any ownership over to you.  In an assignment our guest would transfer any ownership he or she may have to you within that assignment. Again, you would address payment and royalties.  Lastly, you could allow our guest to retain ownership, via a license, while at the same time keeping the exclusive right to license the song. 

Next, let’s think about the publishing in the song.  As we all know the publishing is made up of the melody and lyric (yes lyric, not lyrics) of a song.  So, did our guest assist in writing any of the melody or lyric of the song?  This seems an easy question and answer, but oftentimes leads to band breakups and costly court battles.  Again, we emphasize the importance of filling out split sheets.  It may hurt our bottom line, but will save you years of anger, time and frustration.   Under copyright law, when there are two or more authors for a song  and the authors intend for the work to be one song they are considered joint authors.  If there is no writing stating otherwise, any author can license the song as long as they share royalties and the use doesn’t diminish the value of the work.  How do you prove diminishing value?  Good question.  It is almost impossible to answer.  So, we will leave that alone for now.  If someone came in and suggested a lyric change , slight key change or tempo change is that person an author?  Probably.  How would you feel if our guest went ahead and started licensing the song without asking you?  Not upset?  Wonderful.  You may be happy with some exposure and a chance at some money.  What if you were negotiating a license and then found out the song had already been licensed by our guest?  Not so wonderful? The way to avoid this is to have something in writing stating who can license the song.  It can be all the authors, a majority of authors, a key member or anything you feel works for everyone.  This could (and should) be part of your inter-band agreement.  But, if our guest isn’t in the band you will need a separate agreement to cover his or her contribution.  Again, the ways to do this are: i) work made for hire, ii) assignment or iii) license. 

Lastly, what if our guest is in a record deal?  Record deals usually require the artist to provide exclusive services for the label.  Thus, any recording done by that artist must be cleared with the label (the label can also deny or claim ownership).  The artist may have a “sideman” clause in the record deal which allows him or her to do outside projects in which he or she is not featured.  You can enter into a “step-out” deal which allows you to use the performance of our guest and release and license the sound recording.  If our guest is involved in the development of the melody and lyric and is also in a publishing deal you will have to get permission from the publisher.  The publisher will want some copyright ownership and may want some administration rights.   So, it will save you time and stress if you ask our guest what type of deals, if any, he or she is currently in.

Collaborations can be great.  Collaborating with other artists can bring new life to a song.  Your creativity may be enhanced by working with artists that you do not normally work with and can, often times, lead to a song you never envisioned.  So collaborate away.  Just be cognizant of the issues that come along with it.


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Categories : band member agreements, making money as a musician, Music and Business, Music and Business Law, Singers, Songwriters

What is a One Stop Shop in the Music Business?

29 11 2010

One stop shop for musicians? Better ask some questions.

Lately we’ve noticed a growing trend in the independent music scene.  Specifically in the businesses that work with independent musicians.  Many companies and individuals who used to have a job or a business that covered one specific element of the music scene are now presenting themselves as the “one stop shop” for musicians.  As you know, we like to dissect things around here, especially when catch phrases or “industry” speak is thrown around as if it has one universal meaning.

To me, a one stop shop conjures up images of a major highway gas station where you can get gas for your car, a slim jim, bait for your fishing trip, a slice of pie and possibly take a shower (I would not recommend the last one).  Basically a one stop shop should give a consumer an option to purchase all that he or she needs in one location.  Transfer the phrase to the music industry and it is not quite as clear what a one stop shop is or should be. 

We know that in the past a label was supposed to be a one stop shop, with a massive amount of employees handling everything from A&R to press to accounting for its signed musicians.  With the decline of the label system the number of employees at labels feel as dramatically as the number of records sold at Tower Records.  Thus, the services once offered by a label were no longer present.  The displaced label personnel did not simply bury their heads in the sand.  Rather, they started showing up as specialty boutiques offering the specific services they once provided to labels direct to the musicians or independent labels.  Because the music industry is still based on who you knew, these boutiques served a pretty powerful purpose for quite some time.  For example a boutique full of ex-Warner Brothers PR experts could utilize all of the same contacts it once had at a label directly to musicians for a discounted price (lower overhead).

Still, as the economy worsened, the boutiques had a difficult road ahead of them.  Boutique employees were cast off too.  So now you have a bunch of skilled and connected music industry folks milling about and looking for a new way of doing what they used to get paid to do by the labels and the speciality boutiques.  A PR executive befriends a merchandising expert who then befriends a music web designer and so on and so on.  The displaced experts then form a “one stop shop” for musicians.  Essentially becoming a lean-mean label which, ideally, avoids the red-tape and bureaucracy of the traditional label system. 

However, each one of these self-proclaimed one stop shops must be examined a bit more closely prior to agreeing to work with them.  Here are some questions you should ask:  Do you have distribution (usually digital is enough, but physical, think vinyl, is still important)?  Do you have press contacts and the ability to do an actual push to garner the attention you need (in the markets that make sense) for the release of your music?  Do they have connections with booking agents?  Do they have connections to a legal team that understands music and corporate law?  Have they managed a band before or do they have a management team in place?  What type of connections do they have to other musicians, producers and studios? 

All of these questions are important when choosing to work with any business out there purporting to be a one stop shop.  Oh yes, there is also that little issue of money.  All the connections in the world don’t matter if you don’t have the money to fund the project.  Typically, a one stop shop is not going to operate with the budgets of the labels or the indie boutiques.  The shop will be more of a facilitator, a connector of the dots, rather than a bank roll.  As a musician, you will want to make sure you have your music production ready to roll (whether it’s an EP or an album) before agreeing to work with a one stop shop.  Otherwise, you may be stuck at their shop without the cash to buy the goods. 

The model for these shops is similar to the license arrangements indie labels used to enter into (some still do) back in the day.  You bring your finished product to the shop, they market it and sell it to the masses.  But the shops go one step farther by attempting to manage your band, book you shows, protect you legally and sometimes keep your corporate books and records.  That is why it is so important to know what you are getting into before signing anything.

The one stop shop idea can work.  Due your diligence, ask the right questions, demand everything in writing (and have it reviewed in writing) and continue to do your own job as a musician: make great music.


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Categories : making money as a musician, Music and Business, Music and Business Law, Music Deals, Music Licesnsing

BANDS, GET NOTICED! PR PR PR

7 10 2010

 

 

Notice the angry guy?

 

We are constantly writing about the pitfalls of the music industry, the changes in the music scene today and the problem with the overal label system.  Let’s focus on some of the positives of today’s music industry (there are more than you may expect, especially if you read our content regularly).

It has never been easier to get music recorded, produced and distributed to the masses.  With today’s software, the home studio has become a reality for a ton of musicians.  That means that the prohibitive costs of a studio, a producer and studio musicians can be avoided.  While sound quality may not be as amazing as it would be if you spent the money to record at Abbey Road or Paisley Park, decent recordings can be done with equipment you can pick up at Best Buy.

Once the recordings are complete, the plethora of web sites and web based software that offers digital distribution is pretty amazing.  Whether it is through www.tunecore.com, www.cdbaby.com or one of the hundreds of other sites out there, your music can be on the world wide web in a matter of minutes for little to no cost.  The question then is: NOW WHAT??????

Getting noticed in today’s music industry has become the biggest obstacle for bands.  The quality of music that is out there hasn’t necessarily dropped, there is just so much music on the web that trying to find something worth while is near impossible.  In speaking to some industry experts, including major music supervisors and licensing agents, trying to get noticed by posting your music on myspace, facebook, bandcamp,etc. or by submitting unsolicited discs to supervisors and labels is pretty much a waste of time.  The ease of production and manufacturing has left everyone in the music industry drowning in its own cash crop: music.

In the past, spending money on a radio campaign could help break a band.  However, terrestrial radio has lost millions of listeners to the internet and satellite radio, so paying to get your music on the radio doesn’t even work anymore.  If you can’t get noticed by creating a wicked cool website, submitting your music to supervisors/labels or paying to get your music on the radio, what is a band to do?

Fear not our loyal minions, we think we have some viable options.  We’ll explore one at a time over the span of several posts.  Here’s the first way:

1.  The missing link in today’s independent music scene is competent, affordable and effective PR.  As discussed above, a band can produce its own music, package that music in a brilliant way, promote the music to its own fans in its own region and send the music out to anyone it sees fit.  However, without the right contacts and knowing where to send the music or the link or the super sweet low budget video that your cousin shot last night, your project, just like so many before you, will fall into a black hole.

In the old days labels had scores of PR/Marketing employees who got paid to promote their clients to radio stations, concert promoters, magazines, television stations etc.  Now, those employees are looking for jobs and the labels have either cut way back on in house PR or outsource PR just like independent bands need to do.

Today, there are some really solid PR/Marketing companies out there servicing both major and independent labels.  While a healthy budget is still required, we have worked with some PR companies by getting creative with budgets.  Check out Riot Act, Flower, and Big Hassle to get some ideas.  If you can scrounge together enough money to pay one of these companies to help you get your music in the right places, it will be one of the smartest investments your band can make.

What if you have a budget of $500 or less?  Time to hire interns!  Get your friends, class mates or family members together.  Figure out which one understands your music and where you want your music heard.  Make sure they have a computer and access to the internet and then…start posting!  Smart teens and 20 somethings know where they go for new music (usually free).  Figure out submission policies and be relentless.   Finding the right blogs (the “tastemaker sites”) and getting your band’s music, or better yet your band itself featured on such a site can be a huge boost.  If your music finds its way onto HypeMachine or Allhiphop or even Pitchfork, more doors will open.  We’ve seen bands featured on these sites end up with sponsors or even tours.  After that, if capitalized correctly, the added exposure can actually lead to money, which in turn, may lead to the ability to hire a PR company to expand the reach.

Obviously everything that a band does is predicated on actually having a playlist of high quality music.  If your music is bad, eventually, the public will reject it (regardless of your budget).  Speaking of good music, here’s our SHAMELESS PROMOTION OF THE MONTH:  CHECK OUT ELEPHANT STONE.  Our Canadian friends are on tour and will be hitting up CMJ.  Find out more about them here:  ELEPHANT STONE


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Categories : live performance, making money as a musician, Music and Business, Music and Business Law, Music Deals, Music Licesnsing, Music Marketing, Music Merchandise

Streams of Revenue: How Songwriters Make Money.

22 08 2010

Hello? I'm looking for the writer of Toxic. I think I owe him money.

Music is everywhere.  You turn on your tv, see a youtube video or turn on the radio and  hear a famous artist performing a song.  But who makes money when the public hears or sees a performance? 

It is a common misperception to think that the artist you see or hear is making all of the money from that song.  In the pop world, especially, this is not true.  Don’t get me wrong, the famous artist probably has more money than you or I could ever dream of.  However, the main revenue streams come from songwriting.  Oftentimes, pop stars do not write their own songs.  Songwriting for bands or artists can bring in huge amounts of money.  The main areas of revenue from songwriting come from mechanical royalties, performance royalties and synchronization licenses. 

Suppose you write a song and a major artist (for this post let’s use Justin Timberlake) decides he wants to record your song and put in on his next album.  If your song has never been released to the public his label will have to pay you a First Use Mechanical License.  This gives Mr. Timberlake the right to be the first person to reproduce and distribute your song.  The rate for a First Use is negotiable and varies widely.  You have to weigh the exposure of being on Justin Timberlake’s next album vs. your leverage in getting paid.  But, keep in mind; this will not be your only source of revenue.  Let’s say you and Timberlake’s label settle on $15,000 for the First Use right (this could be and probably is higher or lower). 

So, you now have $15,000 in your pocket but cannot be the first one to record and release your own song.  That tradeoff is up to you.  Let’s assume you think it is worth it.  What other sources of revenue streams can you now expect from this song? 

First off, for every copy of the song reproduced you should receive 9.1 cents.  Usually, this is only paid on each copy sold (digital or physical).  So, for every album sold you should received 9.1 cents.  If your song happens to be the single or a hit, chances are your song will sell digitally as a single more than the entire album.  So, for every 99 cent download you should receive 9.1 cents.  If the single or single and album combined sell 1,000,000 you should receive $91,000.  Not bad.  Not bad at all.  Keep in mind that label contracts and tricky accounting can lower these numbers.  However, the 9.1 cent rate is set by the government.

Another lucrative source of revenue is from synchronization licenses.   Every time a song is placed with a visual (think on a tv show, in a video game or in a movie) the writer and publisher must grant a synchronization license.  This is a negotiated rate.  A hit movie can pay in the hundreds of thousands of dollars for a theme song or a song that plays in the climax of a movie.  A television show will pay less but this difference can be made up in performance royalties.

Did someone say performance royalties?  Yes.  In addition to getting paid to have your song in a movie or television show you will also receive money each time the tv show airs, the movie is shown outside the U.S. or shown on tv.  Lastly, if your song is a single and receives radio airplay or is played on the internet you will receive performance royalties.  All of these performance royalties are collected and distributed by performance rights organizations.  In the U.S. we have three;  ASCAP, BMI and SESAC. 

As you can see being a songwriter can be a very lucrative business.   You will have access to multiple revenue streams.  Think of the writers of the song “Toxic” by Britney Spears.  She did not write that song.  However, every time it aired on MTV or radio the writers received performance royalties; every time her album sold or someone bought “Toxic” the writers received a mechanical royalty.  If anyone wanted to use the song in a video game, movie or tv show , the writers would get paid multiple times.  Also, if any cover versions are done the writers would receive mechanical royalties.  I really wish I wrote that song.

Protecting yourself as a songwriter is not an easy proposition.  Seek counsel if anyone wants to buy your song or if you are going start publishing your own material.

SHAMELESS SELF PROMOTION OF THE WEEK:

Come check out L4M and a ton of other experts on music and advertising at the Billboard Music and Advertising Fall seminar on September 15-16, 2010 at the Westin on Michigan Avenue right here in Chicago.  We are on a panel and will be floating around all weekend.  Follow up the seminar on the 16th with a L4M sponsored show at Bottom Lounge featuring Blah Blah Blah.   More info coming soon.

www.MusicAndAdvertisingFall.com


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Categories : making money as a musician, Music and Business, Music and Business Law, Music Deals, Publishing, Songwriters

Should Performers Get Royalties?

8 04 2010

Did you know that the U.S. is grouped with China and Ghana as one of the only countries that does not pay royalties to the performers of a song that is aired publicly (Radio/TV)?  Weird, right?  Well this odd and troubling (for some) fact may be changing soon.  Here is my fellow L4M’er, Eric Malnar with his take on the Performance Rights Act and what changes may be on the horizon:

The Performance Rights Act (the “PRA”) was introduced in the U.S. Senate (S.379) and the House of Representatives (H.R. 848) in February of last year.  So why are we talking about this now?  Well, as most of you should now, L4M was recently in Austin, Texas for the 2010 SXSW festival and the PRA was the topic of an interesting and heated panel.  Interestingly, all sides of the issue were represented, except of course the radio stations (these are the guys who are supposedly adversely affected by the bill).  Perhaps invitations were sent but nobody from the radio world wanted to appear on the panel…who knows.  It is a shame because it would have been nice to hear their perspective especially since it appears as though the Obama administration is supporting the PRA and it might actually become law.

As a musician or someone who makes money through music,  should you care about the Performance Rights Act?  Well, it depends on what you do.  As many of you know, every time a song is played on terrestrial radio a royalty is supposed to be paid to the songwriter.  However, there is no payday for the artist who appeared on the song (singer, guitar player, chime and etc).  For example, if I wrote a song for a famous pop singer I would receive the royalty not the singer.  This is currently the system for terrestrial radio.  Think of Aretha Franklin singing RESPECT.  Everyone in the world has probably heard that song, but every time it is played the royalties for public performance go to the writer (specifically his estate) Otis Redding.

Give it to me. Give it to me. Give it to me. R-O-Y-A-L-T-I-E-S!

Digital sources of music are governed under a different law.  Under the Digital Performance Right in Sound Recordings Act of 1995 (“DPRSRA”) digital music providers are required to pay performance royalties for performance of the sound recordings.  Many feel that the difference in the way royalties are paid for terrestrial radio versus digital providers is unfair. The PRA would remedy this scenario by requiring a royalty for the singer as well as the background musicians.  So as you can imagine, the digital folks, like Pandora and LALA are excited about the passage of the PRA because they feel it will provide a level playing field.

Another often heard argument in favor of the PRA is the fact that other countries do not have the same terrestrial radio exception that we have here in the States.  In other words, money is being collected overseas for American artists but it is not being paid because the U.S. does not have a reciprocal system.

Wow, so this all sounds too good to be true, what is the catch you ask?  Well terrestrial radio stations are not happy about the PRA.  They argue that this will drive up costs and either put them out of business or force them to change their format to talk radio.  Thus the dilemma, is it worth receiving new rights under the PRA to the potential detriment of your opportunity (as an artist) to have your music played on terrestrial radio?  Back in the day when my band was struggling to get exposure we would have done almost anything to get played on big radio.  If the radio industry, which claims to be struggling, pulls music from most of its stations, another avenue for musicians to get exposed is closed.

Regardless of what happens it is important for every artist to understand his or her rights as a songwriter, performer or both.  As recording contracts morph into more intricate deals (e.g. 360 Contracts) artists need to be versed on all avenues of revenue.  It is no fun talking about music and money in the same sentence but at the end of the day, you need to pay the bills so you can live to play another day.

Stay tuned for updates on the PRA and more insight into some of the hot topic areas of music in film.


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Categories : 360 Deals, making money as a musician, Music and Business, Music and Business Law, Publishing, Songwriters

CMJ Recap and Proof of Change

1 11 2009
french_horn_rebellion_01

French Horn Rebellion Ripped it Up at CMJ 09

I’m finally fully recovered from my week in NYC.  While many of the topics discussed by panels at CMJ this year were slightly on the negative side (not too surprising when your industry is in constant flux), there was an air of renewed hope and positivity that musicians and those who are dependent on music to make a living may be turning the corner.

Huge issues, such as how to compensate musicians who have content ripped off or used without permission on Goliath’s like You Tube, do not seem to be any closer to being resolved.  One lawyer from a large internet file sharing site expressed her frustration that it took her client 8 years to work out a comprehensive license deal with the labels.  The labels countered that with a complaint that the country’s Anti-Trust laws prohibit the labels from meeting in the same room let alone coming up with a unilateral price for licensing music and come up with a fair price for licensing; music.  The result will be years of musicians losing out on mechanicals and licensing revenue.

But, like I said, the weekend was not without some optimism.  Focus groups discussed new ways for musicians to make money and reach their fan groups.  Several of the methods they discussed were ideas that this site previously discussed (Click Here and Here).  Using new and creative ways to get your music to your fan base (USB drives, t-shirts, treasure hunts) and utilizing social media were stressed by those in the know.  Creating an interactive experience with the buyer should be the ultimate goal of musicians.  With all of the utilities currently available, the one on one fan/artist experience is easier to achieve.

The byproduct of the new methods of reaching and interacting with fans is the steady decline of the traditional album (Something I mentioned in last week’s post:  See White Chocolate and the Soul Berries).  Rolling Stone is picking up on this trend as it is reaching beyond the indies and making headway with some major artists.  In Issue 1090, October 29, 2009, David Browne cited to the death of the traditional album in his article entitled “Artists Break Free of the Album”.  In the article, several artists, including Billy Corgan, Modest Mouse, Sppon, Blitzen Trapper and Radiohead, are testifying to the need and the appeal of a new model for getting music to the masses.  Finally catching up to the public trend (or disease, depending on how you feel) of severe Attention Deficit Disorder, the music industry is coming to the realization that if you are going to get new music out and grab the public’s attention, you better do it quickly and in a new and interesting way.  EP’s are becoming the new LP’s and on-line releases, once deemed leaks, are becoming a cheaper and easier way to reach the entire world and not just the big box store customer. 

The industry insiders and taste makers at CMJ were not necessarily revealing any new or earth shattering information that the informed musician did not already know.  Yet, it is important to realize the significance of the simple fact that these industry and label types are finally catching on to the truth.  If you really needed proof that the industry is not what it once used to be and the old model of releasing a cd, touring, sitting back and living off of royalties is dead, then hearing it from a label owner, label lawyer and label A&R executive is all you hopefully ever need.

blog-deficit-disorder-badd

Did A.D.D. kill the LP?

 

 


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Categories : Events, making money as a musician, Music and Business, Music and Business Law

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