Now that we’ve all had enough time to reflect on, (and recover from) our time at SXSW, we want to share a couple prominent themes we feel highlighted our own experience at the conference: striking change and profound gratitude.

If you’ve been attending SXSW for a while like we have, one thing is clear: the music industry has undergone massive changes, and nowhere are those changes reflected more intensely than at South by Southwest.

Since its inception over 20 years ago, SXSW has evolved from parking lot performances, bbqs and Shiners into a $65 million dollar event which attracts representatives from the world’s most powerful brands, industry heavy weights and thousands of musicians. The still-sizable and ever-changing industry descends on Austin, all seeking their piece of the pie. But what our conversations at the conference revealed is that this pie’s recipe has changed.

Clearly sugar, water, flour just aren’t going to cut it anymore.

Companies and individuals who were deeply entrenched and seemingly in a position of ever-lasting power have been swiftly unseated. New players have quickly emerged, whose foresight allowed them to gamble smart and win big on new online trends, social media and mobile technology. What we saw at SXSW this year were industry pros who were finally coming to the grips with the fact that they may have missed the boat.

The theme of many of our meetings went something like this: How are you guys succeeding? Why am I going to lose my job at a major label when you guys keep opening offices in new locations? How did you get involved with working directly with brands? Are you hiring?

Now, as you all know, the Music Dealers company and brand philosophy is and will always be: Artists First.

Which leads to our next point: Profound Gratitude.

We are nothing without you. This basic principle helped us build our core business, and will forever guide our day-to-day activities. For some reason, the old industry somehow forgot this, or will simply not accept it. Without music, there is no music industry. How can a company possibly succeed in this industry if they think about the music and artists after they think about themselves?

By putting our artists first, our clients and customers know what they are getting. They know that what we offer is legitimate art from the best emerging artists all over the world. Our clients understand the value in that and the weight that it carries with the consumer. Our core belief of Artists First will continue to give us collective opportunities that had previously been unattainable for independent companies and independent musicians.

While SXSW and the music industry may have changed, we can assure you that one thing has not: without hard-working musicians, neither would exist.

Thank you,

Your friends at Music Dealers

There have been numerous editorials, blogs, tweets etc. that have dismissed SXSW as washed up, too corporate, EXPENSIVE, and too cluttered.  I think I agree with the last three.

In preliminary discussions with our partners in Austin it became painfully clear that if we wanted to continue with the L4M showcase at the same magnitude as the years past, we would have to partner (i.e. get money from) several companies and probably become an “official showcase”.  While that was a possibility, partnering and becoming official means that you cannot choose your roster, venue or time slot.  Not sure why we would host a showcase with artists we don’t work with at a location we have not selected ourselves.  If we were just hosting a party to host a party it would make sense, but our purpose has always been to showcase our artists and give them a platform to express themselves in front of an audience of fans and industry folks.  With the number of large companies and sponsors and limited quality venues, our goal seemed unattainable.

This year we are heading down for interactive to see if the popular claim: “You can actually get business done at Interactive” rings true.  So far (after two days) it has become apparent that interactive really means plugged in; as in plugged into any electrical outlet.  While there are amazing entrepreneurs here, it is hard to have an actual conversation with anyone as the vast majority of attendees are “interacting” with their handheld devices, laptops (L4M is guilty of this) or other new dew hickey.   Definitely some cool stuff here, but hard to really feel connected (other than to an outlet).

More to come…

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.

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!

In a remarkable act of sanity by Washington, Congressman Jared Polis (NY) has introduced new legislation that aims to simplify, clarify and end speculation as to the true meaning of the US Copyright laws as they relate to sound recordings.  The Sound Recording Simplification Act (HR 2933) is not wordy or complicated (yet).  Rather it seeks to completely federalize all copyright laws thereby eliminating the existing confusion and contradiction created by conflicting state copyright laws.

The passage of this Act would help to eliminate a hurdle in songwriters recapturing their rights by eliminating the labels/publishers creative arguments of conflicting copyright statutes.  Stay tuned to watch the progress of the Act.

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.

Copyrights are an All in the Family Affair.

What if your now deceased spouse, parent or grandparent entered into a publishing or record deal and the termination period is coming up?  Do you have any rights to the masters or underlying compositions?  As we know, copyrights can be left to an estate (think Jimi Hendrix, John Lennon, Bob Marley, etc).  So, the answer is “yes.”  Let’s take a look at how this works.

First, remember, for post 1978 works the termination for an assignment (not a work made for hire) is 35-40 years after the grant was made. Feel free to take a look back at the first installment of this subject (Click Here for First Installment) to get reacquainted with the time frames.  Assuming the time frame is coming up, what can you do?

Let’s look at who can terminate.  The original author or creator can obviously exercise the right to terminate.  However, a surviving spouse and children can also terminate an assignment.  If the children are deceased then the grandchildren of the author or creator can exercise this right. 

100% of the termination rights will be divided up between the spouse and children or the spouse and grandchildren, as the case may be.  The way this is divided is 50% to the surviving spouse and 50% split equally among the children or grandchildren. Let’s look at a couple of examples, shall we? 

1.  Surviving spouse with no children. 

2.  Surviving spouse with four children.

3.  Surviving spouse with no surviving children and three surviving grandchildren.

Again, in all of these scenarios, the spouse has 50% of the termination rights.  In #1 the surviving spouse has 100% of the termination rights.  In #2 the spouse has 50% and each child has 12.5% of the termination rights (50% ÷ 4) .  Finally in #3, the spouse again has 50% and each grandchild has 16.67% of the termination rights (50% ÷ 3).

Why do these percentages matter?  Well, to serve proper notice and to exercise termination rights, over 50% of the interests in termination rights must agree and serve notice.  You see how this can cause some family strife, right?  If you thought Thanksgiving dinner was stressful, can you imagine this conversation?  “I am happy with the royalties we are getting, let’s just leave this alone.”  Your sibling, “I want these copyrights back because I think we can do a lot more with them and preserve Mom’s legacy. Can you pass the dinner rolls?” 

This is all assuming the spouse wants to terminate.  What if the children or grandchildren want to terminate and the spouse does not?  Or what if the spouse wants to and none of the children or grandchildren want to terminate?  Pass the wine, please.

If the spouse wants to recapture the copyrights, he/she must convince at least one child to join him/her.  More wine please.

Assuming everyone agrees to terminate, this would not be an issue.  It is just something everyone should be aware of when dealing with copyrights and recapture. 

Next up in the series is dealing with works written or recorded prior to 1978.  Stay tuned.

In today’s industry where quantity over quality overwhelms, true artists are taking a step back and re-evaluating how to present themselves and their music.  While most independent musicians crave exposure, there is always a counter to that (if you have the patience):  put out quality music and let the fans find you. 

Recently some bands have been finding success using this “less is more concept”.  Post a song on a taste-maker website and let the pieces fall into place.  Obviously, this is not the right path for all bands.  As with everything that we write about, we are always assuming that (a) your music is good and (b) you plan on making music for a living.  Rather large assumptions, but if you don’t believe in your own music and career, who else will?

Enjoy the article:  CLICK HERE

The Library of Congress is going to be a busy place thanks to recapture rights.

Suppose you are a publisher or a record label and I am a 25 year old writer or artist.  You are impressed with my music and we begin talking.  After a couple of weeks of proper courting we decide to consummate the relationship.  You present me with a contract.  The language states you give me money as an advance; in exchange, I give you my music and the copyrights linked to the music for the life of the copyrights.  This seems like an awfully long time, no? After all, life of copyright is 70 years after my inevitable death.  You, as publisher or label, want me to assign my copyright to you, basically, forever.  So, assume I sign the contract in ink (or blood or something).  Is that it?  Will my work remain with your company for the next 100 years or so?  No.  Not necessarily. 

Despite what many think and despite the language of the contract, you may be able to get your copyrights back. There are strict time lines and certain formalities that must be followed; which, if done timely and correctly, will result in you getting your copyrights back.  These guidelines are set forth in a little discussed portion of the 1976 Copyright Act (Section 203 to be precise). Note: This does not apply for works made for hire which we will discuss in a future post. 

 Section 203 provides a chance for authors to terminate their assignments and recapture their copyrights. For works after January 1, 1978 (the year the 1976 Act went into effect) grants, assignments and licenses can be terminated during a five year window starting 35 years after such grant was made.  For the termination to be effective a letter requesting that the copyrights revert must be sent no more than 10 years prior and no less than two years prior to the effective termination date.  There are certain other formalities such as recording a termination notice with the Copyright Office. 

Here’s how Section 203 works: suppose a song was written and assigned on January 2, 1978; the writer could get his/her copyright back between the years 2013 – 2018 (1978 + 35 years + 5 year window).  Termination letters could be sent beginning in 1993 and no later than 2016 (10 years prior to 2013 and less than two years before 2018). If done correctly and timely, publishers cannot deny these termination letters. As an added bonus you cannot waive your rights in advance.  Thus, the contract you had me sign granting you my copyrights for life of copyright would not affect my right to recapture my copyrights.  In fact, right now, there are writers and artists in this exact position requesting their copyrights revert back to them.   However, if you do not send a proper termination letter during the proper time frame, the contract will then go back into effect and the publisher or record label would continue to own your copyrights for life of the copyright. 

So what’s the big deal about getting your copyrights back?  What do you do if you get your copyrights back?  Suppose you don’t have any business experience and have no idea what to do to market and get your material out to the public?  Fear not readers.  You can use this as a negotiating tool.  For example: suppose your contract allowed for a future advance of x dollars and a money split of x%.  Well, you could renegotiate all your terms.  You could ask for three times x and a money split of x+10%.  I will let you fill in the x’s, percentages and numbers until you are happy because that is how you could (and should) handle negotiations of this type.  You should see what would make you happy to stay with the same company.  Another option would be to take your copyrights and move to another company on more favorable terms.  Yet another option would be to recapture your copyrights and start a company to start selling or licensing your copyrights.   There are countless options available if you decide to recapture your copyrights. 

It is important to remember the value of a label or a publisher is the value of the copyrights it owns and controls.  Think of how many albums the Beatles, Stevie Wonder, The Who, Led Zeppelin, Ray Charles, etc. still sell (click here to read about the revenue still generated by Ray Charles).  Think of how many times you hear those same artists on the radio or in movies or on television or in video games.  (Labels currently do not receive money for terrestrial radio play.  Please see the post on the Performance Rights Act). Now, you may not be as well known as the artists just mentioned but think of how much you could do if you had the rights to.  A label usually only pushes an album for about 12-18 months; after that the album slowly fades into obscurity.  However, they still own the copyrights.  If the label does not push it; no one can.  Now, if you had your rights back you could go out and try to get your music placed on television shows, movies, video games and commercials and reap 100% of the money.  There are several companies out there that pitch and place music in all these areas (for a fee or commission).  Another source of income could be repackaging and selling your album yourself.  Whether it is on iTunes or at the local indie shop; you could sell your own cds and keep your own money.  No one will ever care about your music more than you.  If you are back in control of your songs and master recordings, your music may get a new push and find opportunities you never thought possible.  

This is an exciting time in the music industry.  Every year new writers and artists start entering the termination period for copyrights.  New business models, new marketing techniques and new interest in older songs are going to emerge.  I, personally, cannot wait to hear a great song that some label or publisher forgot about back in 1978. 

This is an extremely interesting and complicated issue.  We at L4M will have many more articles about this issue and how it relates to you.  Future posts will discuss pre-1978 works, sound recordings, works made for hire, heirs’ rights and the importance of record keeping.  Stay tuned…