Category: making money as a musician
What to do During a Pandemic (for musicians)
So much has been written already about the devastating effects that COVID-19 is having on our industry. Social distancing, whether suggested or mandated, means no live performances. No live performances means no money for venue owners, security and staff, ticketing companies, the artists and their teams. Without live performance revenue all of these individuals are without the revenue that normally pays their bills.
While some of the potential and actual legislation and ordinances put forward by government officials will look to help our industry, specifically bartenders, wait staff and other hourly workers, the musicians and their teams will likely not benefit from the same. As we have highlighted so often, the music industry has shifted in such a way where the majority of musicians who make a living via music depend almost entirely on live performances and the merchandise and sponsorship opportunities they afford them.
We, like the rest of the world, do not have an immediate solution to make up for the loss of income caused by COVID-19. However, our experience allows us to make a few suggestions specific to our musician friends and clients to help during this uncertain time.
1. Create more content. This should really be the primary focus of all artists right now. Take advantage of this odd period of time where the world is forced to stay at home to give your fans new content to consume. There is no doubt that people will be glued to their devices now more than ever. Fresh content can keep current fans engaged and introduce you to a new and bigger audience. Whether it is releasing new music, creating video content or streaming live on the ever growing digital platforms like Twitch, Mixer or Caffeine, keep active and keep in front of your fans. Maybe accelerate that release plan and delay that tour schedule.
2. Plan ahead. Hindsight is always 20-20 and it is far easier said than done to save money for a rainy day or a pandemic, but take this time to plan out the rest of your year. Plan financially as well as creatively. While very few people expected this type of event to occur on a global level, now that it is here, we can all plan for it to happen again. Get with your team, including your business management or financial planner, and figure out where you stand and how to maximize revenue for the future.
3. Review your current status. Remember those contracts you signed last year or the year before? This would be a good time to review them and see where you stand. Are you recouped? Have you delivered everything you were supposed to deliver to satisfy your obligations? Is it time to request an accounting or an audit to find the royalties that still haven’t arrived? Take this time to talk to your counsel and look at your contractual situation.
We are living in a crazy time right now. Focusing on what you can control rather than the unknown is solid advice for everyone at a time like this. For musicians and creatives, controlling their careers by following some of these suggested steps is a great way to start taking back some of the control that has been lost due to COVID-19.
PLEASE STAY SAFE AND CONTACT US WITH QUESTIONS, CONCERNS AND IDEAS.
You and Taylor Swift
Whether you follow the music industry or not, it has been hard to avoid the ongoing saga that is Taylor Swift. There are hundreds of articles out there about all of the particulars and specifics of Taylor’s ongoing fight with Big Machine, the Carlyle Group and, most publicly, Scooter Braun. (Here’s one.). While relating to a super star who has a catalog worth $300,000,000.00 may be difficult, ownership of your art is infinitely relatable to musicians.
Let’s start with the basics. For the purposes of this article, we will focus on a traditional label recording agreement. When you sign a recording agreement you are agreeing to sell your recordings (the “masters”) to a label. They label will require you to deliver a certain number of records or albums over a certain period of time. In exchange they may pay you an advance (a loan against the money that is earned from those records) and will agree to pay you a certain percentage of the revenue that is earned from the exploitation (sales, streams, licenses etc.) of those records. That percentage will only be paid after they recoup all of the money that they have previously paid to you as an advance as well as amounts paid to record that music and oftentimes, to promote or market the records.
So that is how the money part of a recording typically works (more or less). The term of a recording agreement is a whole other animal.
Let’s use Ms. Swift as an example. Her original deal with Big Machine was to deliver 6 albums. She completed that delivery at some point in 2018. She recouped shortly thereafter (obviously). So she was free to go explore the market as a free-agent. But here is where it gets interesting and where many of our clients get confused. Just because the term of the recording agreement expired does not mean that the label gives up ownership of the records that were already delivered. That ownership is perpetual (aka forever). On top of owning the masters forever, Taylor’s recording agreement (as with most of them) had a restriction on re-recording of the masters. That means that for an extended period of time, Taylor cannot re-record any of the songs from the albums that are owned by the label. This restriction has led to the current and very public dispute with Scooter over whether Taylor can actually perform any of the songs owned by Big Machine/Scooter/Carlyle at the American Music Awards where Taylor is being honored for her legacy as a recording artist. Why would she be prohibited from performing these songs? Scooter and his squad were making the argument that the AMA’s will be recorded so that the re-recording restriction contained in her contract prohibits the performance. This has since been resolved and Taylor will be able to sing her heart out on all of her past hits at the award show.
Again, Taylor’s struggle is not exactly one that most musicians face. Most musicians do not experience a major venture capital firm (Carlyle) headed by one of the most public and powerful music industry moguls (Scooter, who also happens to be sworn enemy of Taylor’s), purchasing their legacy of master recordings for hundreds of millions of dollars. However, anyone entering into a recording agreement should know that they are selling, assigning and transferring the copyright and ownership of her recorded music to a third party. Accordingly, they will not own and certainly will not be in control of their past art.
For some, selling their art is not an issue. It is a centuries old practice that extends beyond music (think paintings, sculptures, movies etc.). However, for others it can be a tough pill to swallow. For those musicians who are aware and informed of the current financial model for the music industry, they know that owning their masters is not just artistically important but financially significant as well. So what is an artist to do?
First off and most importantly, know what you are signing. Find someone who has experience dealing with this fact pattern. Whether that is a lawyer or manager or just a musician friend, consult with them and ask questions. Further to that point, ask the people that you are considering signing with what their intention is. If the language of the agreement doesn’t match that intention, you should probably run away; quickly. Second, know that there is no longer just one type of recording agreement. The days of standard completely one-sided recording agreements are dead. While labels will always try to get the most out of any signing, musicians have options. There are license deals where you essentially license your masters to a label for a set amount of time. Once that time is over, the master revert back to you. There are deals to be struck with distributors. Distributors of music will fund artist projects without taking any ownership and simply recoup off of the streaming revenue that they are earning by distributing your music. There are a lot of carve outs and exceptions that can be drafted into a recording agreement that can solve for the situation that Ms. Swift has found herself.
If you are Taylor Swift today versus Taylor Swift at 15 you not only are ridiculously successful and rich but you are operating without a tremendous amount of leverage. Her new deal with Universal/Republic undoubtedly contains language that allows her to share in the ownership of her new masters or at the very least allots her the ability to buy them back at the end of her term. So while you may not have her catalog and leverage, you can at least arm yourself with knowledge, understanding and a team to help you navigate your way to Swift-like stardom!
I’m sorry (again) for the lack of posts over the last several months (make that years). The truth is that we have been too busy working and have let our attention to this important outlet lapse. Instead of promising to write more, we want to make sure we are posting quality info that can actually help musicians.
In line with that thinking, here is the most important thing that we have come to understand a bit better over the last 12 months or so: a musician’s team (#squad) is more important now then it has ever been. The team is still in second place behind the music (position 1a) and the work ethic of the musician (1b), but in today’s music industry, the people that you have working for you, representing you and seeking opportunities for you is more crucial now then ever before.
There has been plenty written about the demise of the major label system. What seems to be going largely unnoticed or undocumented is the growing roll of those left behind: Managers. Management (effective management) has now become the true one-stop-shop for a musician. Management is the new label. As management, we are faced with the same set of facts and challenges as a label. An artist creates music and now wants to bring it to the masses. Yes, you can get that music out yourself as an artist but how do you make a dent in the din of new releases on Spotify, SoundCloud or Apple?
To make a living as an artist you need to do more then just post your music on the internet. You still need to get a significant number of eyeballs and eardrums to consume your product. So the management team is faced with this challenge without (typically) the luxury of having the deep pockets, employees and relationships that labels have (or had).
An artist’s manager is now in charge of planning a release schedule, getting artwork created, lining up press (more than your mom reposting on facebook), booking shows, figuring splits, clearing samples, registering publishing, monetizing all outlets including YouTube and SoundCloud, paying out band members, featured artists, promoting the release and live shows, finding potential brand sponsors and licensing opportunities etc. etc. All of this without a budget. I’m tired just writing all of these duties and responsibilities.
I’m not implying that a manager is going to literally be able to do all of these things himself, but he will have to figure out who to line up to help with this process. Managers must either strategically team up with the right professionals or outsource these services without breaking the bank. Yes, getting your music on all outlets is pretty easy (TuneCore etc.) but getting on a top Spotify Playlist is not. Yes, booking a show in your home town is very doable but playing in another city is not. Yes, finding someone to remix your track is not hard but figuring out the rights of that new recording is not.
Our opinion is that artists should do what they are best at: making music. To permit this, managers need to keep everything else moving forward. Managers must leverage all relationships and forge ahead with qualified distributors, booking agents, pr agents, and lawyers to realize real success in today’s industry.
I’ve been told to write about what you know best so I can share the story of how we have created our team over here at The Propelr (www.thepropler.com). Obviously we have legal taken care of (www.tkhlaw.com) but we brought on staff to handle all admin from calendar/schedule to financial bookkeeping to merchandise fulfillment. We partnered with a PR company that shares in our percentage income from artists or gives us preferred rates when we need to use their services (ttps://subvertagency.tumblr.com/). We have a licensing company working out of our space that is constantly pitching our music (http://brewhousemusic.com/). We share space with a branding and marketing agency (www.workwithdomino.com) that helps with artwork, social media campaigns and overall branding for our clients. There is a concert promoter working out of our office too (www.silverwrapper.com). So short of having a booking agency in house, we have created a co-op of sorts that allows us to really serve our clients much in the same manner that labels used to do. Obviously I am biased, but I don’t see how else you can really provide value to an artist without building this type of squad.
Want to learn more? Just hit us up.
Breaking Into the Music Scene: What the $%&%#** Should I Do?
Great question. With so many ways to get your music out to the public it should be easier to break into the music scene, right? Definitely Wrong!
We could write an entire book on the importance of your team as an artist. For the sake of brevity and sanity, let’s focus on networking and management for this post.
The number of individuals who post music to Soundcloud, YouTube, Facebook, ReverbNation, HypeMachine, Spotify, Pandora, MySpace (I think that site is still live), etc. is staggering. So while it is definitely easier to get your music on-line where it may eventually (randomly) be heard by the public, it remains just as difficult, if not more so, to actually get traction and make a career out of being a musician.
There is no one or best answer to this question. Unfortunately a lot of what permits an individual to “make it” in music depends on connections. So much of what happens in music is still based on who you know. While there are many stories of individuals grinding it out in coffee shops, selling cds out of their trunk, submitting demo after demo until, finally, someone with some clout (aka money) opens the magic gates to true exposure, the majority of musicians that have made it take a different route. Networking, schmoozing, pestering etc. are as important as great lyrics, production and stage presence. Going to panel discussions, meeting the right people or people that can lead you to the right people is hugely important. Please don’t mistake the necessity of having great music. You can be the best networker in the world and get your music in front of the exact right people, but if that music is not up to par, the door will quickly be closed.
Let’s assume your music is great and you just need the right people to hear it. What should you do? We at L4M consistently advise our clients to pick the best team members when embarking on a musical career. Try to find the right fit and figure out exactly who/what you need. A lot of artists assume they need a manager immediately. If the right manager is selected and he/she is utilized correctly by the artist, a manager can be an essential key for success.
Managers can quickly become a crutch or an excuse for an artist. Why am I not getting any gigs? Why am I not getting a publishing deal? My manager must not be doing something. While a good manager can secure some opportunities, a manager at the beginning of a musician’s career should be there to offer advice, tough love and help set up a plan for future success. Connections are a huge plus but having a level head and understanding the artist and his/her goals is equally if not more important.
Other key team members include a booking agent, lawyer and publicist. We could write long articles about the importance of each person, but in the very beginning of a music career, these people will most likely come with a certain modicum of success. L4M is obviously partial to lawyers being part of the team, but you will know when you need one (first deal, or band agreement or manager agreement). A good manager should be able to make introductions to all of the other team members you need. In fact, a good way to judge the skill set of your manager is to find out who he/she knows that can help build this team.
How do you find a good manager? Ask around. Don’t rely on websites (many of the best management teams don’t even have a website). Find an artist you admire and see who is on their team. Chances are that Scooter Braun isn’t going to take you on, but find out who he is taking on for clients. Those artists did not start with him as their manager. Reach out to people that know. Lawyers, publicists, other musicians should be your target when trying to find the best management fit.
Remember that there are two sides of a career in music: first and foremost the music followed closely by the business of music. If your music is great, your business skills and team need to be up to snuff. If your team is below par, your music will not get to the masses and you will sadly be lost in the (sound)cloud.
Pandora: More Users. Less Cash?
Pandora recently announced that it has passed 200 Million Users on its streaming music platform. This reportedly includes over 100,000 artists that compile the Pandora catalog of music.
Pandora which went public back in June 2011. Its stock has fluctuated after an inflated IPO. However, the recent news made public by the SEC, shows that its founders are cashing out as if they were dependent on streaming revenue to pay their bills (sarcasm intended). The SEC Form 4 report show that Pandora’s top brass has cashed out approximately $87.6 million dollars of their own stock all within less than 2 years of going public.
So what does this mean? Well, it means several things: 1. the executives are now rich (assuming they weren’t before they sold their own Pandora stock), 2. the stock will likely slide in value as the market watches the top executives’ behavior as an indication of the health of a company, 3. the streaming music model is not working well.
Point 3 should be the most alarming and obvious to artists. We’ve reported numerous times of the apparent inadequacies of streaming revenues (e.g. 1,000,000 streams equal some insanely low amount of money). With this new information it is clear that the streaming financial model in place with Pandora, while inadequate for most artists seems to be inadequate for Pandora itself. It appears that the royalty rates that Pandora agreed to pay the labels set the bar at too high of a rate to be a sustainable or scalable model.
For the artists out there, how much have you seen in terms of streaming revenue to date? Are you sound exchange numbers increasing in a proportional manner? Curious minds want to know.
Please write in with your comments. Stay tuned for more.
Is EDM Music? Answer: Who Cares!?!
As you know, typically we write about protecting your rights. This post is about musicians, of all types, having the right to make music in any format he or she may want.
Every decade or so a new type of music becomes popular amongst the teen to twenty-somethings. With the onset of a “new” hot genre of music an inevitable reaction is harsh criticism. The thirty-plus-somethings who still are fond of the trend that was tops when they were of a “taste-making” age cannot help themselves and shred the quality, craftsmanship or artistry of the the music trend du jour.
I guess it is a right of passage; you get to a certain age and you automatically are permitted to present your opinons on why whatever is hot right now sucks compared to what you like. In my formative years, rap took shape and took over. When I started rolling around in my Chevy Citation with a sideways tape deck and front-only speakers blasting Poor Righteous Teachers, De la Soul and NWA (when I was feeling especially hard) I definitely got some nasty looks from inhabitants of my white-bread suburb of Minneapolis. I immediately dismissed my parents and other elders who disclaimed that Rap was nothing more than unoriginal shouting and noise. They (Parents) just didn’t understand (thank you Will Smith).
Every generation has a similar story. Elvis and Chuck Berry were nothing but trouble makers with all that electronic nonsense and rotating hips. The Grateful Dead, Jefferson Airplane and the Almond Brothers were pot smoking hippies who made noise that was only audible to people on acid trips. Ramones, Sex Pistols and the Misfits were screamers who couldn’t play more than one chord on a guitar. Hair bands came about, and well…I don’t know what to say about hair bands. The point is, every generation has its own thing, its own view point on music and society. That point begets the counter point that the preceding generations typically hate the succeeding generations music and viewpoints.
Enter Electronic Dance Music. EDM has taken the world by storm. DJs who seemingly have no traditional musical ability or knowledge are selling out tours and arenas with their version of music. Is it melodic or overly complicated in production and writing? No. Will it stand the test of time? Maybe. Is it actually music at all? Who cares?
Kids love it and are paying to see it. Yet, the music industry cannot help but get in the way of itself. Complaints by critics and label execs complain that it is destroying the professional musician and his/her chance at a career. Stories of musicians making less money because of the large number of computer programmers currently “acting” as imposter musicians are all over the industry blogs and postings. Complaints of so-called talentless button pushers are rampant amongst the “purists”.
What we can’t seem to understand is why are all of these critics complaining about anyone in the music industry making money? Jealousy is the obvious answer. Laziness or stubbornness are additional answers. The point is, in an industry that has completely changed in the past 15 plus years, another change in popular genres or fan patters should not be surprising. EDM is just another example of a new generation making a choice of what it wants to party and dance to; nothing more. No one is saying you should listen to it and no one is forcing you to buy a dub-step or die t-shirt. Just don’t hate on the kids that do.
EDM has had a huge impact on recent sales from pure DJ’s like Skrillex and Bassnectar to the EDM producers like Guetta and Afrojack. The Pop world has embraced it with acts like Bieber, Usher, Britney and Madonna jumping on the bandwagon and incorporating Dubstep and EDM styles into their major label releases. New festivals and concert series are popping up all over the place and bringing in huge revenue for the promoters, vendors and, oh yeah, the musicians.
So whether you can get down to “wub wub wub” or it makes you stroke out, try to accept it as the natural evolution of music. If you make EDM music, do what you can to learn the ins and outs of the music industry. If you are good, no doubt the late to the party label folks are coming around. Know what you are getting into before you get into it. Your music, whether created on a piano or a keyboard, carries the same rights as any other music. Make sure you protect it and make sure you cash in before the next craze takes shape.
The Spotify Conundrum
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.
What Can Musicians Be Thankful For In 2011?
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!
Back to Basics: Performance Rights Organizations
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.
Cloudy With a Chance of Music
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.