Category: Music and Business

Blurred Lines Decision

I’m happy to have been quoted in this article by Paul Schrodt and the Business Insider.

Please take a look here:  http://www.businessinsider.com/blurred-lines-case-music-copyright-2015-12

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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.

Internet Radio Fairness Act: Oxymoron?

Protesting Royalty Rates (or something similar)

The current hot topic debate in the music industry involves the Internet Radio Fairness Act (“IRFA”).  Recently, the debate is getting louder as the top artists in the music world and successful Internet radio companies clash over the bill.  Supporters of IRFA say it is vital to the survival and success of all digital music streaming companies to end a flawed royalty system, but opponents claim it represents a disproportional cut in pay that musicians have come to and may eventually rely upon.  It’s no surprise this debate revolves around money, but let’s not mute what’s more important: the long-term health of the digital music business itself.

How are the current Internet Radio and Streaming royalty rates set?  Music rights owners (publishers, labels and independent musicians) and the digital radio companies do not negotiate the price of a license for streaming digital music.  Instead, Congress’ Copyright Royalty Board (“CRB”), a three-judge panel, directly sets the price once every five years after SoundExchange (remember SE represents both master owners and performers which can include labels as well as independent musicians) and the digital radio services (online, satellite and cable radio companies) present evidence about the value of recorded music and the technology for delivering it to music listeners.  Then, the CRB determines the royalties each kind of music service will have to pay out for the next five years.   SoundExchange is then charged with distributing out those royalties to its members.  The Performing Rights Organizations have their own equally confusing method for collecting and distributing royalties from internet broadcasts.

The debate or heavy complaining which led to the introduction of IRFA is coming from streaming services like Pandora.  CRB has decided on dramatically different royalty rates: Internet radio companies like Pandora, the IRFA’s most vocal supporter, purportedly pay more than 50% of their revenue in performance royalties; satellite radio companies like Sirius XM pay about 7.5%; cable radio companies like Muzak pay about 15%, and AM/FM radio pays nothing.  The result of these high royalty rates have forced most online streaming services out of the music business; most notably some giants such as AOL, Yahoo, and Microsoft.

With the rise of services like Pandora and Spotify, the labels and publishers went to extraordinary lengths to ensure that they would be paid a “fair” amount and the artists lobbied hard as well.  Any change, however minimal, will be met with angry voices screaming (or singing) on the other side.

IRFA is designed to give Internet radio stations a fairer calculation process for setting the price of their music and lower this difference.  The goal is to put services like Pandora, Spotify, Muzak, SIriusXM, on the same or similar footing.  But 125 major label artists including Rhianna, Ne-Yo, Billy Joel, Maroon 5, and Missy Elliot penned a letter opposing IRFA.  Their unified voice argues that IRFA will cut deeply into current Internet radio royalty earnings by an estimated 85%.

Who is right?  Who is wrong?  Who knows? What we are sure about is that, without a doubt, Internet radio is good for consumers. It allows for more music choices with more control for the listener, pushes songs from both major record labels and the nation’s rising independent musicians, and enables greater exposure and potential compensation for thousands of artists who would otherwise never be heard.  Rights owners see this medium as a meaningful revenue stream that is only going to grow overtime.  And the more listeners and the more plays mean Internet radio companies must pay more in overall licensing and rights fees to stream the music.  Supporters of IRFA say that not only will these lower rates drive more innovation in legal music distribution, but also ensure more artists are fairly compensated for the performance of their recordings.

It is hard for us at L4M to pick sides in this fight.  We have been writing about the changing music industry for almost five years now.  We spotted Spotify as a potential solution and also a potential problem prior to its US launch.  It comes as no surprise to us or our readers that there is a fight over how much streaming radio plays should pay out to artists.  Obviously, we want to see a fair resolution, but that gets us into the existential debate over what is fair and how much is art worth.  We’re not getting into that debate in this entry (save that for a night filled with several glasses of scotch and smoking jackets).

What do you think?  Comment, email or discuss over Thanksgiving dinner (please don’t).

This article was penned in part by aspiring L4Mer Jessica Rzotkiewicz

SXSW 2012: A Solid Recap from a Solid Company

*Disclaimer: L4M is fully biased as it works directly with Music Dealers.

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

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

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

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

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

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

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

Which leads to our next point: Profound Gratitude.

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

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

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

Thank you,

Your friends at Music Dealers

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?

This Dancing Turkey is Definitely Thankful to Be Alive.

Perusing the local trade magazines or attending a music based conference can lead a musician (or someone who works with musicians) to believe that Armageddon is truly here.  If we hear one more speech or read one more article about the end of the music industry as we know it, we will certainly collectively go nutso. 

The truth is the entire economy is in the crapper.  We don’t know one industry that hasn’t been touched (well, maybe crime, if that is an industry).  Music has certainly not been immune.  However, we here at L4M are here to say that Debbie Downer needs to turn her frown upside down.  While the days of multi-multi platinum records and huge advances are certainly on death’s doorstep, the savvy musician can do more than just eek out a living.  Here are some things we think musicians should be happy about:

1.  The Internet.  Long hailed as the assassin of the music industry, the world-wide web offers more opportunities than it does problems if you know how to ride the waves.  Not only has the internet introduced the fan to new (and mostly legitimate) ways of finding new music, collaborative websites now allow musicians a means to create, promote and distribute their music.  Sites like TopSpin, BeatPort, BandCentral, SoundCloud and Facebook have become essential and typically inexpensive methods for sharing talent, ideas and product.  If utilized properly, the internet’s social media platforms can completely replace a label based pr system.  Access, affordability and a global reach are definitely something that the Internet provides to the musician willing to navigate it.

2.  Music Festivals.  Music festivals breath new life and huge opportunities to major label talent as well as emerging bands.  Bringing great music to enormous crowds coupled with innovative festival organizers oftentimes bring great results.  Not only are festivals bringing tremendous revenues to musicians and the organizers, they offer great opportunities to buzz bands to play in front of huge crowds and important taste makers.  On top of that, every festival brings with it industry parties, opening slots for after shows, and tons of press.  Emerging bands who strategically plan ahead for a visiting festival can really cash in (maybe not as much as Perry Farrell, but still…).

3.  Music Licensing.  It used to be that in order to get your music licensed your label or publisher would have to cozy up to a music supervisor.  With the amount of media content around the world growing at a record pace (think tv, radio, satellite radio, internet programming, commercials, film etc.) there is a matching need for quality music.  Jingles are a thing of the past.  Ad agencies with unlimited budgets for music is also rare at best.  Quality music that may originate from lesser known musicians but do not carry with it the rigors of publisher and label demands has become imperative.  Musicians who work to get their music to savvy music libraries can make money on both up front music licensing sync fees as well as the oftentimes lucrative performance royalties. 

4. The Remix.  Want to resurrect an old single?  Want to make some money as a producer by resurrecting that old singer?  Never before has the remix been more important.  DJ’s like Skrillex and Guetta have become über rich by making a name for themselves as talented remixers as well as great djs.  For popular musicians, remixes by producers or other bands can lead to revitalized sales of a falling single.  The remix is a handy promotional tool as well (Lady Gaga will be ever-present again for a while as she announces the release of an entire remix album).  Another means of collaboration, oftentimes between artists who would not otherwise work together is definitely a trend that we can all be thankful for in 2011. 

5.  Vinyl.  The LP appears to be back for good.  Collectors as well as a  new generation of music purchasers appear to be favoring holding something cool in their hands and not just in an electronic file living in an Ipod.  While still expensive to manufacture, vinyl sales in 2011 continue to defy the rest of the industry.  A positive trend that began several years ago, there does not seem to be a slow down to the sale of the old school vinyl record. 

What about you?  What are you thankful for as a musician or a music fan in 2011?  Please comment below.  Let’s stay positive and bring in the joy during this holiday season.  Having trouble doing so, slap on the collector’s edition of Justin Bieber’s Christmas album.  We have no doubt that you will soon be smiling!