Category: Music and Business

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.

How Do You Split Up Publishing?

Publishing is an often discussed and rarely understood element of music.  For those working as musicians or within the industry, understanding publishing and how it is divided is essential.  However, even for those of us that have a grasp on publishing, answering the question of how publishing is or should be split is not easy.

There is no bright line rule or formula that must be followed when divvying up the publishing of a composition.  In a common (and usually fair) scenario the publishing is split equally between all writers who contributed to a song.  In an even clearer scenario, one writer (typically a producer for pop/dance music) comes up with a melody and a writer comes up with the lyrics.  Then those two split the publishing 50% each.

As we all know, life and the music industry is just not that simple.  Think about a band that has 4 members.  One member writes the lyrics, one comes up with the hook, one contributes to the melody and one just plays the drums (sorry drummers).  Should each band member get 25% of the publishing?  Again, it depends!

If a band is truly collaborative then the drummer in the above example may have written the entire melody to another song while the lead singer fixed his hair in the mirror.  Or maybe the guitarist wrote the entirety of a song while the rest of the band was at the bar.  The scenarios of how a song are created are limitless.  That is why we often recommend that a band enter into a band member agreement that states that all songs, regardless of who did what, are split equally.  A band, like a family, is a delicate and complex thing full of personalities, egos, opinions and emotions.  Setting up an equal split at the outset and putting that into writing can diffuse fights before they occur.

On the other hand, having a  pre-determined and documented split could also build resentment and disdain.  If your bassist never contributes to the creation of a song and the other members work tirelessly at song writing, chances are that the s$%t is going to hit the fan eventually and the agreement will be revisited to eliminate or lessen the bassist’s participation.

Bands are actually easier when it comes to splitting up publishing as compared to pop and hip hop music.  It has been widely written about that many of today’s top 40 artists co-write with may top-line (lyrics) writers and producers.  That’s if those pop and hip hop artists write at all.

It is not uncommon for a pop song to have 3 to 7 writers on it.  Look at this year’s Grammy nominees to see just how many people it takes to create one song.  A commonplace is to have a team of top liners work with one or two producers to create demo songs.  Those demo songs are pitched to various artists by A&R reps from labels and publishing companies as well as managers and other industry insiders.  A demo song could make the rounds looking for a home for years.  Once it is finally selected by a recording artist the publishing splits are sometimes the last thing to be determined.

Playing out the above example, let’s say Kelly Clarkson selects a demo song that was written by the writing team of Julia Michaels and Justin Tranter (top liners) and produced by Mark Ronson.  Kelly then puts her spin on the song and brings in her own producer, Jesse Shatkin, to tweak the production a bit.  So now you are looking at 5 people that get a share of the composition.  Now the question becomes, how are those 5 people splitting it up?

Again, the method is not always the same.  However, the typical way a pop song’s composition is split is 50% to the producers who create the melody and music and 50% to the lyricists.  In our above example, Mark and Jesse may split the 50% tagged for the producers and Julia, Justin and Kelly split up the remaining 50%.  Are the splits going to be equal amongst them?  We will leave that up to their respective lawyers and managers!

The bottom line when it comes to publishing splits is that it is always better to have a conversation with your co-creators sooner rather than later.  The last thing anyone wants is to release a song, watch it do well and then fight over the splits.  Trust us.  That is no fun for anyone involved.

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!

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…

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!