Category: Law

Do Due Diligence

Do your due diligence or you may never end up on the big stage.

Due diligence is a phrase that is thrown around the legal world on a daily basis.  “Is that borrower credit worthy?  We’ll have to do our due diligence.”  “Do we want to purchase that gas station?  We will only know after we complete our due diligence.”  Does the concept of completing due diligence in the music world ever come into play?

The answer is that it should.  Just like a business looking to buy out its competitor or a bank trying to figure out if it should issue a credit line to a borrower, a musician should always complete due diligence before making any decision related to his career.

In my quest to get musicians treat their music like a business, I have often compared a music career to any other type of business.  However, even though being a musician is similar to being a manufacturer of tires or a having a shoe store, there are different rules and procedures in the music industry.  These different rules and standards are due partially because of the slick talkers and stereotypical music industry professionals but mostly from a successful system that has been in place for decades.  If it ain’t broke, don’t fix it has been the mantra of the major label music industry for years.  In this system, the typical scenario played out as follows:  a musician breaks onto the scene or discovered by an A&R rep, the musician blindly signs a multi-album record deal, a manager is provided by the label and the label would control the musicians career for the length of the contract and beyond.  As we all know, this system is no longer the norm.  Due to the failures of the record industry over the last several years, the system has changed and the process for building a career as a musician has changed along with it.

While a musician was happy to sign the first contract that came from a “reputable” label in the past, that musician now has the ability to conduct her own due diligence.   For a musician his or her music is her work product.  Today, when that work product gets to a level where it is ready to share with the public and the public wants to hear it, several doors may open for the musician.  Behind every door, however, is another business who wants to make money off of the musician’s work product.  A manager, business manager, lawyer, label, publicist, publishing company, etc. etc. are all examples of businesses who make money off of your work product.  But just like a business owner who is looking to hire a new CEO, a musician must conduct diligence before making a long term committment which may direct the musicians career and check book for the next several years.

So what should you look for as a musician who is looking to sign with a third party (a label, producer, manager, etc.)?  How does a musician conduct his own due diligence?  First, conduct your own research:  google the hell out of the company or individual that is looking to work with you; talk to people in the industry to see what their experience has been with that company or individual; and spend a lot of time talking and observing what that individual or company is really like to work with.  A label might have a good reputation, but that reputation could have been built on a success 10 years ago; what have they done lately?  Ask for a specific plan for you and your band.  How will the label help you get tours?  How will the manager deal with finances?  How will the lawyer bill you?  We know that Sub-Pop has been successful with many of thier artists, but how do their contracts work?  Will they enter into a license deal or maybe they are only a 360 deal label?  Just because a label or management company has a good name doesn’t mean that they are a good fit for you.

It is always exciting to have someone interested in working with you and in some cases offer you money to work for them.  But in today’s music world, you have to ask: is it worth it?  Maybe you can do it on your own.  Maybe you make your own start and then go with a label.  Maybe your best friend is ok to work as your manager for a regional tour.  All of these things must be thought about before signing on the dotted line. In the business world if one business is looking at buying out another business, the due diligence period may take months (years even).  Lawyer pour over the existing contracts, the amount of money coming in and out of the company, the people working at the company, the systems in place that are working or need to be fixed.  Why should your music career be any different?

Musicians should focus on music.  That is what they are inherently good at and why they have the exciting prospect of people paying them for what they create.  However, saying that “I only want to make music” and ingorning the decisions that effect your career as a musician can have devastating results.  Do your due diligence before you make decisions that will effect your ability to continue to make music for a living.  Once you have made smart decisions on who makes up your professional team, you can go back to what you are truly meant to be doing:  making music.

Section 181 Back on Track???

Only time for a quick update folks.  Now that the Health Care proposal is out of the House and on its way to the Senate, the tax folks have more time (although not that much more time) to focus on tax incentives and credits that are set to expire at the end of this year.  For our purposes Sections 181 and 199 are really the only one matter.

According to a staff tax attorney at the Ways and Means Committee, the focus has been shifted and if Section 181 has a chance of renewal or extension, it will occur in the next two weeks.  Please note that even if the renewal of Section 181 is proposed in the next week, there is no guaranty that the bill which carries the renewal proposal will pass.  To that point, you will not see a renewal of Section 181 in a proposal by itself.  Any renewal of the film incentive statute will be included on a larger and broader “Extender” package introduced to Congress before the end of the year.

So, I suppose this is good news.  However, if you can get started on your films, do it now or forever hold your peace!

 

Step Outs and Side Projects: Proceed With Caution

What happens when an artist decides to “help out a buddy” or lend a verse or bass line on the whim?  Most of the time not much, but sometimes, the song ends up in places you never imagined; like in a movie, the internet or as a commercial jingle for a new adult diaper.

The more popular you or your band get. the likelier your friends or your acquaintances will start asking you for stuff.  Everything from showing up to their concert, to posing for pictures, to recording a song.   Think of it like a lottery winner finding out that he has third cousins, twice removed, that are in desperate need for money to fix their trailer.  An endorsement or involvement from a popular musician is worth a dozen or so trailer repairs.

Here’s the problem, if you don’t set out the terms of the music that you nonchalantly give away, it may not be clear who owns it.  Lending your voice to a song might qualify as a “featured” artist or it might be it is your creation which actually “features” your buddy who asked you help out.  Without clearly stating whose song it is and what percentage split you will receive you are asking for trouble (usually in the form of a law suit).

This guy is about to Step Out unprotected.

This guy is about to Step Out unprotected.

One easy way to fix the problem is to simply register the song with the copyright office either before (as a pre-registration) or immediately after recording and release.  Both the lyrics and the sound recording itself can and should be registered with the US copyright office (www.copyright.gov).  The fee is only $35 and it can all be done on-line.  The form is a bit tricky but with a little experience and guidance, it’s a no-brainer.

Registering the song as a copyright not only provides statutory protection in case the song is ripped off, it also clearly identifies the author of the song, the performer of the song and if there are any other entitled people involved (samples/publishers).  The approach for any musician who is asked to participate in someone else’s song is that she will not lend her voice until the copyright registration is filled out.

The next step is to register the recording with your publishing rights organization.  This will also allow you to identify who owns what for an individual track.  Whether it is BMI, ASCAP or SEASAC, registering a title with a PRO not only allows you to collect every time the song is publicly performed (not in a concert but over the radio, tv, internet, etc.) but will end any debate as to who actually owns the song.

Creating music is clearly a creative process.  Collaborations bring about some of the best music.  Think of the hip hop and R&B world.  How many songs are currently featuring Lil Wayne or have Ciara singing a verse?  The formula for featuring another artist is a time tested winner.  But just as with everything else in the music industry, set out your creative collaboration in writing before you enter the studio.  It will allow everyone, especially your lawyers and managers, to sleep better at night.

lil wayne and his grill have been featured in 100s of songs.

lil wayne and his grill have been featured in 100s of songs.

Mos Def(initely) a Great Idea

Buy and Wear Mos Def's new product

Buy and Wear Mos Def's new product

Some of us who work with businesses that are on the periphery of the music industry (clothing manufacturers, software and computer companies etc.) have been babbling about the trend of coupling music with another consumer product for some time now.  Finally the idea of bundling or packaging new music with other merchandise appears to be taking off.  Artists like Mars Volta, ACDC, Mos Def and, oh yeah, the Beatles, are getting into the game providing major steam to the indirect music sales category.

Most of the readers of this page are not signed to major labels (at least I don’t think so).  So the idea of getting your next single on Guitar Hero IV is not very realistic.  However, in the past we have discussed creative ways of getting your music out to the masses.  Mos Def, a true indie hip hop legend, has taken this approach with his latest release: The Ecstatic.  As Pitchfork, Digital Music News and NME have reported, Mos Def’s newest release will be presented to the public via a “Music T-Shirt”.  Each t-shirt will have a unique code that will allow the buyer to download the album (not to mention rock a new sweet t at the same time).

This cross marketing and cross selling idea is clearly the wave of the future for music sales.  With continuous drops in physical cd sales, limited and dwindling numbers of stores selling cd’s and the tight economy, musicians and their labels have to think of new and creative methods for getting the new music to the people.  The majors may be too slow and too entrenched to re-invent their sales method in time, but creative indies and mid-size labels can definitely get on board.

The t-shirt idea is brilliant, but how about including music with the purchase of a particular sneaker.  If Converse knows that their shoes sell particularly well to the hipster community, why not include download codes for music from Passion Pit, Santigold or MGMT?   If you are a band that has identified your target audience, approach a company whose products are popular amongst your fans.  For young bands, their fans probably only buy music digitally.  Why not get custom usb drives made with music embedded on it and sell those at your concert instead of cds?  The cost is about the same (check out CustomUSB and Molotalk ) and the chances of a fan buying a wicked cool usb drive far outweigh a crappy cd with a handwritten label.

Musicians are creative by nature so the possibility for this secondary revenue stream for the sale of new music is seemingly endless.  As with all licensing and merchandise deals, the same “lawyerly” warnings apply.  As this trend grows and more non-music companies approach musicians to ask for music, more shady deals will be presented.  As always, be careful before you agree to sell, license or give your music to anyone.  That sweet t-shirt compilation idea may wind up as a not so awesome singing laxative container.

SHAMELESS SELF PROMOTION OF THE WEEK

I already plugged (no pun intended) them in this article, but check out Custom USB.  They have already worked with many big named musicians on really  cool USB drives that can come in any shape, size or quality.  They can embed software that not only includes music, but also creates a fan based intranet site that pops up once the device is plugged into your computer.  Awesome stuff.

another custom usb, picture courtesy of Molotalk.com

another custom usb, picture courtesy of Molotalk.comged into your fan's computer. Awesome stuff.

USB/Bracelets for Wathzisface's SXSW performance, pic courtesy of Molotalk.com

USB/Bracelets for Wathzisface's SXSW performance, pic courtesy of Molotalk.com

My New Band Name: Jon Bovi

The Newest Rock Sensation:  JON BOVI!

The Newest Rock Sensation: JON BOVI!

Similar to songs titles, there seems to be an infinite number of band names to pick from.  However, unlike song titles, band names can be protected.  Trademark protection is a tricky but hot topic these days.  With the numerous licensing opportunities presented to successful bands and musicians the protection of a band or artist’s performance name is extremely important.

Bob Marley is a perfect example.  Marley has become more than just a musician’s name.  People who know Marley’s music immediately associate it with Reggae, Jamaica and a certain “laid back” lifestyle.  Over several decades, the Marley name has been exploited by thousands of people for millions of dollars.  A protectable name has gone unprotected.

Bob Marley’s estate recently reached a global licensing deal with Hilco Consumer Capital, a major private equity fund that licenses well known brand names to equally well known merchants.  The Marley family had grown tired of the millions of dollars it lost out on thanks to sales by unlicensed dealers across the globe.  Think of all the Marley paraphernalia that can be bought on the street or in your local head shop.  Not to mention the schwag manufactured in China and India that finds its way into the US and European markets.

After years of sitting by and allowing trademark infringers to profit off of the Marley brand, the Marley’s took appropriate action.  Hilco with hits large corporate infrastructure and influence will be able to secure specific approved relationships with merchants.  Any sales that are occurring outside a relationship developed by Hilco will be an obvious infringer and can be dealt with accordingly.  Bootleggers will be less likely to sell their unlicensed goods to retailers.  That is not to say that you will no longer be able to pick up a Jamaican Flag with Marley’s face on it at Panama City beach during Spring Break ’09.  However, you will not be able to walk into Spencer’s Gifts at your local mall and pick up a “Bob Marley, Legend” t-shirt or hemp necklace.    The family through its new corporate partnership have taken the necessary steps to register all things related to Bob Marley and his musical goods and services.  Those trademarks can now be policed and enforced if need be through the court system or the mere threat of a law suit.

Available Online! (from New Zealand & without ermission)

Available Online! (from New Zealand & without ermission)

Most likely, you and your band are not fielding offers from Hilco or other major license distribution companies.    Chances are you are not worried about having your band’s name emblazoned on backpacks or hoodies at the mall without your permission.  Yet, get a little bit of buzz going and unlicensed merch will start popping up online and even at your shows.  Bootleggers love to capitalize on new bands because most do not know how to protect their rights. That’s why you should be prepared.

Registering your band’s name as a trademark will give you statutory protection.  Statutory protection will allow you to enforce the rights you have through your unique band name or logo (assuming its unique).  By registering your band’s name as a trademark, you can take the steps necessary to stop infringers from using the name or logo, recover monetary damages from those who infringe those rights and even, in specific cases, get the attorney’s fees that you spent to enforce your rights back from the infringer.

Sounds great, right?  It is, but like most things with the government, the trademark process is not exactly easy.  You have to do your research first.  You can’t just pick a name that you think is rad without determining if someone else beat you to the punch.  You also cannot profit off of another band’s name and notoriety.  While Jon Bovi may think they are the “opposite of Bon Jovi”, chances are, Bon Jovi doesn’t think so.  If there is a likelihood that the public will be confused as to the source of where the music is coming from, the government is not going to approve your application.  Our friends from SNL may think that they have nothing to do with the actual band, but there is no way they could ever make it with a name that is so similar to the original.

Find out if there are any other bands using the name you want for your band; see if that band registered its name with the United States Patent and Trademark Office.  Do a MySpace and Google search.  Go to www.allmusic.comand look up your chosen name.  While there are a lot of variables to determine if a band name is trademarked or protectable, if you find a band name that is still being used by a band today or was registered in the past, its time to go back to the drawing board for your own band name.    Do not start a marketing campaign, release an album or start multi-state tour with a band name until you are sure you are the only ones out there using it.  As with most things involving the law, its always a good idea to talk to a lawyer to help you out with the process.

Does Tubbs Still Live in Miami?/Winter Music Conference

header2009a

I’m a bit spent after SXSW (read below).  Or maybe I’m just old.  Anyway, I’m going to suck it up and head down to the party that is the Winter Music Conference.

While I’m sure it will be fun, I’m there to work and spread my knowledge of copyrights and publishing (which is also fun).  In my on going quest of getting musicians to treat their music like a business, I’m fortunate to be speaking on a panel with other lawyers and industry execs who feel the same way.  In the ever changing industry which is seeing the rise of the do-it-yourself artist and the demise of the major label, it is even more important for the independent artist to protect her work and capitalize from all available avenues of income.  We will be focusing on the steps necessary to do just that.

I’ll be speaking at the Copyright and Publishing Panel on Friday, March 27, 2009 at 1:30 (EST).  Here’s a run down of the details:

1:30 PM Intellectual Property: Songwriting & Publishing Forum
Panel Room: Valencia Panel Ready Rm: Madrid

Learn how to protect your songs, programs, and ideas effectively. What are the pros and cons of publishing under a label or independently? Can you copyright your songs years after the release date? This panel takes an in-depth look at copyright laws and publishing contracts.

Moderator: Brandon Bakshi – BMI
Panelists: Corey Boddie, Esq.- Boddie & Associates, PC
DJ Rap
Steven Greenberg- Carey, Rodriguez, Greenberg & Paul, LLP
Josh Kaplan- Lawyer4Musicians.com/Stahl Cowen
Frank Liwall- The Royalty Network
Mark Quail- Q&A Music Rights Admin. Inc.

Guest Panelist?

Guest Panelist?

2009: Who is the Next Soulja Boy? (yikes)

One and done?  Hopefully

One and done? Hopefully

 

What can we expect in the world of music in 2009?  As I am a lawyer for musicians and not a music critic for musician, I cannot predict which band is going to make it big nor can I even wager a guess as to who is 2009’s Soulja Boy (please don’t let there be another one).  What I can do, however, is perhaps offer a sneak peek as to what the hot button legal and business issues will be this year. 

This year we are bound to see more lost jobs, closed doors and consolidations in the music business than what we saw last year.  Depressing as it may sound, its better to be honest then to live in denial.  The industry is in shambles and was headed that way even before the global economic meltdown.  However, all is not lost my friends.  The advantage that music and entertainment have over banking and auto makers, is that there are truly talented and creative people in the entertainment world.  You cannot teach talent.  In addition to talented individuals, the entertainment industry has another key advantage:  a hungry public.  When you combine talented and innovative people with a public who craves new, creative and unique ways of being entertained, you have a great market for sales and growth.

Here is some hard evidence for you:  According to Soundsacn, 2008 saw a drop of 14% from 2007 for album sales with the real anchor being physical cd sales plummeting by 18.2%.  The upside: digital downloads.  Digital albums skyrocketed to a gain 32% over sales in 2007.   As if we didn’t already know, these stats offer further proof that even though the CD is a dinosaur, the industry is not extinct. 

Creative artists and management offering unique digital downloads can still make quite a bit of money.  The best thing about the death of the CD is that it also means the death of sneaky “manufacturing expenses” and “hold back” clauses in recording agreements.  Labels cannot (although they may still try to) charge an artist huge manufacturing costs and hold back’s or reserves for returned or damaged CDs when the artist is releasing a strictly digital album.  Lowered expenses and increased downloads at fair prices equals more revenue.  Artists who follow the digital revolution will continue to make money in the rocky economy.

Along the same line of thought, without the need for CD manufacturing and distribution, the need for a label further diminishes.  An artist and a capable management team can hire the appropriate digital distribution company, marketing company and PR company and achieve the same gains as a label without the cost of losing ownership of the artist’s music and a lousy royalty split. 

Energy plus New Beyonce Single...Sweet.

Energy and New Beyonce Single...Sweet

  

So my predictions for 2009 are that we will see even more innovative and creative ways to get music to the public.  CD sales will decline even more and digital downloads (singles, albums, ringtones, videos) will continue to increase.  Music will come in packaged deals for other products people are still buying:  dvd movies, beverage sales (think energy drinks), computer and video games, sneakers, bikes, and more will include exclusive tracks of musicians who are truly on top of their game.  Labels will continue to die or at least slip further into a darkening coma.  The independent do-it-yourself artist will continue to make great strides getting her music to more people.  Bottom line, more music will be available to more people via new and exciting mechanisms.  Should be fun.

Another One Bites the Dust: Down Goes Pinnacle Distribution

Is the music business closing shop for good?

Is the music business closing shop for good?

Last week the world economic situation claimed another victim in the music world.  Pinnacle Distribution, one of the biggest British independent music distributors, declared bankruptcy (known as administration in the UK).  The ramifications of another large physical (CD’s and vinyl) distributor going out of business will have a wide reaching effect.

Distributors work with independent labels to distribute hard copies of a label’s catalog out to the stores and the public.  The labels wait for delivery of payment from the distributors based on the number of units sold.  If a distributor goes under, the labels, and the musicians who are signed to labels, stand in line with every other client/creditor of the distributor waiting to get paid.  Usually the result is not enough money to go around.  A label may end up taking pennies on the dollar for what is owed rather than taking nothing at all. 

It’s a true domino effect.  Simplified example:  Jimmy usually buys $100 bucks per year in cd’s for holiday gifts.  This year Jimmy got laid off and is no longer buying cd’s for his buddies.  The store (Best Buy/Target or the last remaining record shop) where Jimmy used to buy cd’s notices that a lot of its customers are like Jimmy and does not order as many cd’s as it did in the past.  The distributor who distributes Jimmy’s favorite bands’ music orders the same number of cd’s as it did last year from the manufacturer, but cannot sell as many units.  The distributor cannot pay the manufacturer nor can it pay the labels who provide the distributor with its product.  The label cannot sell as many of its artists’ cd’s nor can it distribute its cd’s worldwide.  The label who is chiefly dependent on record sales to make cash, cannot continue to market or advertise its artists.  And finally, you, the artist who survives on royalties from record sales does not get paid. 

Major downer.  Sorry.  At first glance it appears that the sole reason for the chain reaction which is not-so-eloquently described above is the crumbling world economy.  However, if you have been paying attention to the music industry and reading this blog, you already know that is not the only reason.  The underlying reason for the crumbling music industry is rise of digital music as a true industry standard for music  sales.  The cd doesn’t make sense any more.  It is a “loss leader” for most bands and distributors alike.  The overhead involved in manufacturing, shipping, returns and fees make it almost impossible for an independent label or the artists on that label to make any real money from physical cd sales. 

Yes the economy is scary.  Yes music sales as a whole are not great.  But, today there is no reason for a creative independent label or artist to be shackled to the dying distribution system.  Using digital distribution companies, releasing digital only albums, striking exclusive deals with non-music websites or stores are just some of the out-of-the-box methods for musicians to make money.   New and unique methods for delivery are popping up everyday.  Bands can provide fans with exclusive content on its website or through a fan portal or by selling thumb drives with its music preloaded on it. 

As the old industry infrastructure continues to crumble, independent labels and artist must move quickly to avoid being swept under by the collapsing giant.  It is truly time to think independently, meet with other creative people and think of methods on your own to get your music to the masses.  Most musicians are creative.  Successful musicians realize that their non-musical-team which they choose to work with must be creative as well.

SHAMELESS SELF PROMOTION OF THE WEEK:  The State of Illinois (?)

My adopted state government of Illinois finally got something right.  Recently it passed Senate Bill 1981 which increased the state film tax incentive in Illinois from 20% to 30% and also includes a tax credit of 15% for the using labor on a film production from poverty stricken areas.   The prvious bill was set to disappear on January 1, 2009 is now extended for an undetermined amount of time.  Independent film makers in the music, movie and television industry should all be happy.  Now the trick is trying to explain the tax incentives to a potential investor.  

Way to Go Rod!

Way to Go Rod!

 DISCLAIMER: THIS BLOG WAS ORIGINALLY POSTED ON DECEMBER 8, 2008.  HOT ROD DID NOT GET ARRESTED UNTIL DECEMBER 9, 2008.  THE AUTHOR HEREBY RECANTS ANY AND ALL APPLAUSE OR PRAISE DIRECTED AT THE SOON TO BE “FORMER” GOVERNOR OF ILLINOIS. 

Are you Exclusive (like a Chinese Democracy)?

Welcome to the New Hotel California

Welcome to the New Hotel California

The big rock bands today are more often than not bands that made it big yesterday.  By yesterday I mean in the 70’s, 80’s and 90’s.  Think of the biggest bands that appear on Billboard’s Soundscan:  the Eagles, ABBA, Journey, Metallica.  How do these bands stay relevant?  How are they able to top the charts with music that is  not entirely new but instead carries selling points such as “digitally remasterd” or “featuring 2 all new tracks”?  The answer:  EXCLUSIVITY.

The days of the neighborhood record shop are long gone.   If you are still buying cd’s you are buying them at the huge box-retailers like Target, Wal-Mart and Best-Buy.  On-line music is no longer the future, its the present.  The result is a dizzying number of potential outlets to purchase mp3’s or download music for free.  Great for the public and some websites, not great for record labels and big named bands or musicians.

Creative stores and music execs have learned from other industries which have had to combat diluted sales streams.   The “YOU CAN ONLY GET IT HERE” strategy has worked for retailers of all types of goods.  So why wouldn’t it work for music? 

A band with a previously established reputation as a big seller (10’s of millions of records sold) will enter into an agreement with a huge store and agree to only release its music through that store. Enter the exclusive sales agreement.  The Eagles and Journey, both represented by Front Line Management, rather than a record label, have etched deals with Wal-Mart that provided that their new releases (Eagles “Long Road Out of Eden” or Journey’s greatest hits compilation “Revelation”) would only be available for purchase at Wal-Mart.  Similarly, Christina Aguilera’s “Greatest” (I did not give it that adjective) Hits is only available at Target.

You may ask why any band would ever want to be exclusive with a monster chain like Wal-Mart or Best-Buy.  Think of the marketing reach that these mega stores have.  With newspaper, radio, television, internet and direct mail marketing materials from these stores consistently entering our homes the advertising and marketing reach is enormous.  Even in the record labels’ hey-day they were never able to match the marketing reach of today’s mega stores.  The proof is in the sales numbers, not the pudding.  The Eagles physical cd sales hit 711,000 in the first week with all sales going through the registers at Wal-Mart.

Guns N Roses Exclusively at Best Buy

Guns N Roses Exclusively at Best Buy

This weekend will see the release of the first Guns N Roses release in 14 years.  This highly anticipated release, just in time for the holiday shopping season, will only be available at Best Buy.  Best Buy has paid an “undisclosed” amount for the exclusive right to sell Chinese Democracy.  Best Buy’s upper management is banking on the millions of anxious GNR fans, the holiday season (albeit during a recession) and the collateral sales (customers buying a cd and an ipod or tv) it will make by bringing the fans into the store.  Will the deal make money for Best Buy?  Only the Best Buy brass will know, but chances are Chinese Democracy will have a long life on top of the charts.

What about the thousands of bands who do not have the clout of Guns N Roses or the Eagles?  Well up and coming buzz bands or even bands who have hit the 100,000 sales mark will not be able to grab a deal with Target any time soon, but options are out their for creative bands and management.  Write an exclusive song for a new music project like Green Label Sound or a website like Imeem.  The cross promotion will have the same, obviously on a smaller level, as the big guy’s exclusive deal.  Partner with an innovative company.  Rapper Xzibit is rumored to have reached a deal with Dodge to include his last release in new Dodge cars.  His sales numbers were automatically increased based on the number of cars produced.   Think outside the box and you will see increased sales and new opportunities.

SHAMELESS SELF PROMOTION OF THE WEEK

the whiteshadow at work

the whiteshadow at work

DJ WHITESHADOW is on the road again.  For those of you who don’t know check him out when he roles into your town.  For those of you who do know the whiteshadow, you already know his skill(z).  Download his music and check out his new projects:  DJWHITESHADOW.COM.

CMJ, Record Deals & A Label’s Checking Account (aka $0.00)

I am heading east next week to take part in the madness that is the CMJ Music Marathon.  New York’s music scene is always great, but during this five day stretch there is no better place in the world to see and hear some of today’s best independent music.  For us on the business side of the music scene it also a great opportunity to network, schmooze and drop names without trying to hurt one’s toes.

Last year at this time the word was that the major labels were in serious trouble.  That obviously played out to be accurate.  While the labels are definitely hurting, I have noticed that they are no longer the slow moving mass that they once were.  Sure there is still the old guard pulling the stings of the A&R and creative departments at the majors, but I think it has finally registered that making money off of physical record sales is just not going to buy the CEO his 2nd jet anytime soon. 

360 deals are being pushed hard by some labels and industry giants (eg. Madonna and Jay-z with Live Nation).  Companies are taking a piece of everything an artist touches from album sales to touring to merchandise.  In return the artist is promised national and international marketing and promotion by a label who still has the connections and manpower to launch such a campaign.   I am still not sure if this model can be mutually beneficial.  Judging by the insistence of some labels to only use 360 deals, I have a feeling they tend to skew in favor of the labels a bit more than the artist.  Just a hunch though.

If a band is looking for a more traditional deal, they are still available.  A one and five deal (one album with the option for five more) is still commonplace with many of the lables who are still around.  These are typically too long of a time period and too onerous on the artist (transfer of ownership your music is the norm), but have been around for so long that they have become the “industry standard”.  In the past a label would convince an artist that a long term recording agreement was the way to go and would sweeten the deal with a phat or fat advance.  Not so much these days. 

Bottom line, an indpendent band that kills it at CMJ next week will probably get an offer from one of the  many lurking label execs present at its showcase.  Whichever type of deal is offered, rest assured there will be a teeny tiny advance attached.  Labels do not have any money.  Its gone.  The days of six figure advances and seven figure recording budgets are history.  The labels’ belt has gotten tighter just like every industry in America.  On top of that, we are in the final quarter of the year so any coin that the labels had has most likely been committed to an earlier project. 

So what’s my point?  Don’t wait for a killer deal.  It just isn’t going to happen.  Musicians should definitely listen to any offer and be courteous while doing so.  Then they should think about this:  can they do the same thing the label is offering on their own?  If the answer is yes, and a band can forge strong relationships with strategic management companies, booking agents, merchandise companies and lawyers, they may not need a label.  If a band can do all of that, they definitely do not want to give up ownership of their music or have someones hands in their pocket during a performance, at the merchandise tent and at the record store.

Lots to think about.  Perhaps we should wait to think about it all until after next week when we have completed the music marathon.

SHAMELESS PLUG(S) OF THE WEEK:

Toki is getting well deserved press.  Click her wicked cool necklace above for more info. 

You may have already seen this, but I think its awesome: