Category: Music and Business

Misconception #1: Once I Get My Deal, I’m Good.

As we have explained we work with clients in every segment of the industry from musicians to managers to labels to distributors and more.  Because of our diverse client base and years of experience, we are able to recognize certain trends, hot topics, common misconceptions, and red flags while working within the music world.  Each month we are going to look to highlight one of these areas that, to us, have a deep impact on an artist’s career as a musician.

#1 Misconception:  Once I Get My Deal, I’m Good.
For some reason, there is this complete falsehood that runs rampant throughout the music world that once an artist signs a deal with a label or a publisher (or these days, with a distributor) they are good to go.  We could point out the countless song lyrics that allude to this gross overstatement, but we don’t have enough room here for that.
In actuality, here is what happens when you sign a deal (regardless of what type of deal it is, publishing, recording, management etc.):  a contract is signed (hopefully reviewed by a reputable attorney), royalty or revenue splits are agreed to, an advance may be paid, deliverable requirements in the form of music recordings or compositions are promised, dates and budgets are set once music is delivered and accounting cycles are determined wherein reports and money will be paid (or might, depending on if you recoup an advance).  While this is definitely a gross over-simplification of what actually transpires, it gives you the gist of what happens upon signing.
The advanced portion is obviously super important to all involved and it should be.  However, it is what happens after that money is delivered to the artist that is really important.
Depending on the deal that an artist signs, that advance may actually be a recording budget, it may be an all in lump sum for living expenses, recording, tour support and marketing; maybe it is a bit of all of the above with some percentage paid out at signing for living expenses an the rest to be utilized to record the next project.  Sometimes deals are backloaded with incentives.  If the first LP does well maybe you get a bigger advance for the second album and so forth.  The point is, if you don’t know what you are supposed to use that money for, you may have just completely screwed yourself.
Imagine getting a six-figure signing bonus.  Naturally, anyone would want to spend some of that money on “non-essential” and “non-music related” items.  But if that is all the money you get to record, mix and master and then promote (which includes, PR, tour support, radio promotion, videos and more) and you spend a large chunk on a house or a car or both, how is your music ever going to actually get produced?
There is no question that a solid deal can help an artist’s career in a major way (pun intended).  But it should never be viewed as the end of the work required by that artist or her team.  The responsibility does not get transferred.  Someone still needs to make sure registrations are being registered, statements and payments are delivered and are accurate and that promised support is actually made.  Options need to be exercised or termination notices need to be made.  The work continues…
Advertisements

The FIRST Industry Standard Podcast

Seems like everyone has a podcast these days.  Not wanting to be left out, we are pleased to announce the launching of our affiliated podcast:  The Industry Standard.  Perhaps a little late to the game, we are trying to bring L4M to the masses by any and all media available to us!

Eddie Sanders and Josh Kaplan will be bringing this site to life (and then to the cloud) a couple of times a month.  We will host the broadcast here but it will be available wherever you find podcasts.  Hope you tune in and enjoy!

SoundCloud Listened (to us)

Sometimes speaking out works. listened and modified its new artist contract.

Thanks to some solid journalism (take that #fakenews), and the power of artists and their representatives (like yours truly), SoundCloud revised its new artist monetization agreement.  The program introduced by SoundCloud four years ago allowed select artists to earn a share of ad revenue and subscription fees by monetizing the use of their music.  Finally ready to go to the masses (and keep up with competitors), SoundCloud announced the ability for all Premier Members to monetize.  With the announcement came a long form, click-through, agreement.  That agreement left quite a bit to be desired.

The biggest outcry from the artist community was over a “Covenant Not to Sue”.  Basically this means that if SoundCloud screwed you in some way, you would have no right to seek retribution in court.  We were less concerned with that clause as we were with the completely ambiguous payment schedule, the improper method for notifying artists of changes to  payment terms and the extremely short amount of time to review statements (if and when the statements were ever delivered).  While the Covenant Not to Sue is concerning, there was arbitration language included which offered artists the ability to challenge any issues with SoundCloud through the arbitration process rather than in court.  There is a definite difference between a law suit progressing in court versus a matter in arbitration, but it is not extremely unusual to have this type of clause in this type of agreement.

The ambiguity was far more concerning to us.  How can anyone agree to enter into a business relationship where the party who is owed money has no idea when or how they are going to get paid?  How could you agree to enter into an agreement when you aren’t sure if the agreement has been modified and you could actually be earning less than what you originally agreed to?  To us, these types of unclear and unfair terms were the main issues with the SoundCloud artist monetization program.

With the help of @verge and others, SoundCloud, took heed and modified its agreement.  Unlike our current government, when the people are outraged and nothing gets done, SoundCloud reexamined its agreement, agreed there were fundamental flaws and took the necessary steps to make the needed changes.  Kudos to a company who caters to musicians for actually listening to musicians.  I hope this trend continues.

The Music Modernization Act of 2017

Wait a second…What just happened?  Did the United States government actually try to address a problem that has effected millions of Americans for years by introducing a Bill before Congress?  Did those blowhards in Washington D.C. stop fighting and tweeting and actually do the job that they were sent there to do?

Sort of.

Here is a draft of H.R. 4706, The Music Modernization Act of 2017.

For years now the streaming revolution has completely disrupted the way consumers listen to music, the way musicians release music and the way rights holders (musicians, publishers, labels etc.) get paid.  With the recent onslaught of litigation against giants like Spotify and Apple Music, lobbyists in D.C. seem to have been effective in getting our legislative branch to try to address an over decade old issue.

With the goal of ensuring that streaming platforms (a) don’t get sued, (b) mechanical royalty rates are set as independently as possible and (c) theoretically, getting money to the right people in a faster way, the MMA sets up several new processes for the music industry.

In typical Washingtonian fashion, the Bill introduces yet another bureaucratic body to oversee and administer digital licenses and pay all copyright owners (so long as your works are registered correctly).  While, in theory, this sounds like an intelligent move, there are numerous questions about the efficiency of yet another “agency” involved in paying monies to the correct rights holders.  We think it is definitely a move in the right direction by centralizing all digital blanket licenses and the decision makers for mechanical royalty rates (without a commission or overhead cost put on the backs of rights holders), but the move begs the question of how effective other government led regulatory bodies have been in the past (Government Shutdown ring a bell?).  Lobbyists have touted this move as a departure from the tenured “judges” that rule over the PRO’s (ASCAP and BMI) and allows for a more impartial method in determining amounts paid for performance royalties to songwriters.

Since the inception of streaming services, platforms have avoided paying mechanicals because after filing the required Notice of Intent (or NOI) there is no further requirement to determine the actual right holder of a particular song.  So if your information isn’t found or hasn’t been registered, Spotify, Apple, Amazon etc. haven’t had to pay you for streaming your license.  The MMA attempts to do away with this giant loop hole.  The new oversight/governing body will attempt to collect all data (by working with Content ID/Google and other data aggregators) and theoretically make sure that every song is registered so that every right holder is paid (some minuscule amount) for every stream.

The Bill then sets up a more “free-market” system for determining what mechanical royalty is actually paid to the rights holders (now that they will all be contained within this database).  The rights holders and the platforms will have the ability to negotiate and set rates rather than relying strictly on government set rates.

The Bill was introduced to the House Judiciary Committee before the end of 2017 and there it sits.  We will be watching carefully, along with millions of musicians and industry folks, to see how it progresses, what changes are made and how much pork is added to it.

Stay tuned!

 

 

 

 

Need a Publisher? Are you Sure?

Maybe it is a millennial thing or maybe it is just a product of the industry but we consistently hear several things from new artists that are trying to make it to the next level:

“I need a manager”

“I need a label”

“I need a publisher”

Sometimes there is a need for one of these.  Sometimes there is a need for all of them.  But when does an artist really need a publisher?

We think there are only a couple of situations where a musician who writes music truly needs a publisher rather than self-publishing:

1.  You are a top-line (lyrics) writer or producer that needs a publisher to set up writing/recording sessions with other similar or more established writers or producers.

Or

2. You are in need of a substantial check as a loan/advance.

Going in reverse, the only way you are going to get to #2 is if you have a previously released catalog of music that is making substantial revenue on the publishing side of things (actual record sales, licenses, performance royalties etc.).  Obviously, easier said then done.

So in our opinion #1 is probably the best and primary reason that an artist should consider or seek out a publishing situation.  If you are a writer/producer that either writes for him/herself or has written for another artist and your goal is to try to continue to do so or write with writers who have credits on gold/platinum albums, a good publisher should be able to facilitate this.  They should be able to pair you with established and up-and-coming artists that have budgets behind them.  Getting in with those artists and getting music actually released with a budget for radio/pr etc. obviously builds your own value and the value in your publishing.

As many of you know, getting tracks to the top artists is incredibly difficult.  Even if you have a direct line to the artist you still have to get through the artists, management, publisher and label to even have a shot of getting a placement on that artist’s album.  Getting a writing session with the artist is even more of a challenge.

If you are at the point where you have the chops, you have a history of writing really solid music, your previous writing is actually earning you some money and you can write for other people, you want to make sure that you are doing everything you can to maximize your value and that of your publishing.  We have so many stories of writers/producers that were involved in big songs that weren’t credited the right way or were left off registrations for some reason or the other.  So making sure you are handling your publishing yourself is the first step in preparing yourself to even be considered by a major publisher.

Please don’t get it twisted (as the young folks say), if you self-publish you better be able to administer your works or have a lawyer/manager who knows how.  Without registering your music with the PROs or securing correct split sheets or hounding labels for statements or hitting up independent artists who have used your music, you are essentially lighting money on fire.  You have to know what rights you have in and to your publishing and how to go about collecting it.  Registering works is not complicated.  Understanding how and when you get paid from those works is.

There are several companies popping up that are offering admin services.  Some are directly tied to the big publishers but then you have companies like CD Baby and Tunecore rolled out an admin service and functions a couple of years back.  Songtrust is another one that offers a ton of services including administration of publishing.  We have clients that have positive things to say about each one and those that have negative things to say about each one.  So we will leave it up to you to decide if one of these outlets is right for you.

Remember, if you write a song and do nothing to register it or attempt to collect on it, it’s not really “published”.

Just like everything else in music (or most industries for that matter) you have to work your way up.  You won’t get a publishing deal that makes sense unless you have already proven yourself as a writer.  It is tough to prove yourself as a writer without getting a break in a very competitive industry.  But you won’t get a break at all if you don’t treat your writing like an actual business and get the people you need to be in your corner to help you do so.

Sharing is Caring, but please paper your collaboration

 

As seen from our last L4M post, success in the music industry is often dependent upon the people around you; managers, lawyers, and booking agents make up your “team”. But what about those other musicians that help you create the sound? The artist’s you work with to make a song. Collaborations are so common these days even bands with numerous members are bringing in teams of producers, a second percussionist or guitarist, and additional vocalists. So why does it matter? You work with your friends to create great music, right? Its true, but defining roles and ownership is essential in protecting your music. Some of the biggest disputes in the industry today involve payments to collaborators, the rightful ownership to a song involving guest musicians and artists.

Take for example the dispute between Jack Urbont and Sony Music Entertainment over the theme song for Iron Man. (Urbont v. Sony Music Ent., 100 F.Supp.3d 342 (2015)). Sony released a song by hip-hop artist, Ghost Face Killah, which used a portion of the Iron Man theme song and only received permission from Marvel Television but not Urbont. The main issue being when Urbont worked on the original theme song with Marvel was whether his contribution was considered a work for hire or should he own part of the composition with Marvel. The parties ended up settling out of court after Sony was granted the right to use a work for hire defense against Urbont. So what’s the takeaway? You need to decide prior to releasing any music whether your bestie is taking a fee, getting any rights to the composition or both.

“Work for hire” is a legal term in the copyright act that in a nutshell means you are being paid for your services as a musician but will not own any of the intellectual property to the song. Think of it as any service you pay for, if a carpenter makes you an original table, you pay him or her for the workmanship and the table, but the carpenter doesn’t receive ownership in the table and doesn’t receive a portion of the funds when you resell it. Same for a work for hire musician or vocalist. Work for hires are the most common when the musician doesn’t create anything original, they are just playing or singing what you put in front of them. However, work for hires are becoming more and more common with writers, musicians and producers who contribute original material to the song. Why would they do that? First because you give them a big paycheck and second because they don’t think the song will make more money then the paycheck, it’s a win-win for them.

On the other hand, if you are a songwriter and you ask your friend the guitar player to come in and write the melody, it makes more sense to split the ownership of the composition. This is when you want a guest artist agreement in place so that you won’t have to track down the guitar player every time you receive a license request or want to make a remix. What if you want to use part of that melody in another part of a song? You will need to ask the guitar player for permission and he or she can argue that they want their ownership percentage to stay the same even though your using only a portion of the melody. A guest artist agreement will prevent this headache as you can outline each individual’s rights and permissions involved with the song.

Sometimes artists will collaborate and give both a fee and ownership over the composition. In this case, the fee is treated as an advance that needs to be recouped against profits. Think of it as paying the artist upfront for what you think they will make off of the sale of the song in the future. Until the song recoups the advance amount they won’t receive payment from a label or you, even though they own rights to the composition.

So how do you ensure that all of this is done correctly? Unfortunately, a handshake will not suffice. A legal document signed by both of you will be necessary. Lots of writers and producers use session sheets to delegate publishing splits, but this doesn’t clarify who can do what with the copyright and definitely doesn’t help you in a work for hire situation. Having a lawyer draft this for you is the safest bet, but the good news is that often you can reuse work for hire agreements by changing the name and the fee instead of paying for a new document every time (don’t tell your lawyer I said that). The most important thing is to read the agreement and make sure you understand it!! Ask questions, do your research, and know what rights you have or are giving up. Just make sure that on the day you hit number one you’re not scrambling to get your former bestie to sign a work for hire agreement.

by Lauren Schulz (lschulz@tkhlaw.com)

 

#Squad

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.