Welcome back to my multiple part series on how to make money as a musician: Volume 2, Licensing.
No point dwelling on the past, making money selling records has gone the way of the 8 track, the ferbie and the Hummer SUV. The antiquated system of big advances and platinum record sales has died (or is at least on life support) along with the major labels. So while it is harder to make money the old fashion way, there are new and, more importantly, more ways of making money as a musician.
Performing live at concerts is still the best way to make money. It used to be that bands would perform to sell albums, now the musicians give away their music to sell concert tickets. However, not everyone can sell out stadiums, concert halls, or even high school proms. So, what is another great way for musicians to make significant income or supplement their concert income? Licensing!
Think of how many commercials you heard or saw today? Consumer Reports estimates that the average American is exposed to 247 commercial messages a day. The vast majority of the radio and television ads, as well as a growing number of internet and new media ads, are accompanied by music. Whether its Budweiser, which spends approximately $90 million a year on advertisements, playing the newest Dodo’s or Santigold (See Above) song or Apple promoting the newest IPhone with Feist, music is an integral part of advertising all over the world. Musicians can lay their claim to the billions of dollars spent on advertisements each year.
Licensing does not end with advertisements. One of the most common terms of art used in license agreements drafted by folks like me is describing the use of a song in “any medium now know or hereafter discovered”. This industry phrase means that a song can be used or synched to movies, television shows, internet programming, video games, radio programs, or any other programming or format which hasn’t even been discovered yet. Think about, when is the last time you watched a movie that didn’t have a sound track, a television show that didn’t have a theme song, or a video game that didn’t have background music? Watching old silent movies does not count.
As satellite and cable television expands and internet programming continues to grow the opportunities for music licensing grow proportionally. Budgets may vary, but mechanical royalties (the statutory rate that must be paid every time a song is broadcasted) must be paid. Licensing music can be a quick substantial pay day or a long term and consistent money maker.
The dollar figures for global music licensing are staggering. According to a 2007 report by eMarketer, the projected budget for music licensing in 2010 will reach $4.4 billion! How many artists would be happy with just a teeny tiny percentage of that huge pot?
Just knowing that the licensing money is out there does not make it a reality for most independent artists (I’m anticipating your questions). For independent artists who are not signed to a publisher, it is still difficult to get your music in front of the licensing decision makers. There are several services out there via the web which offer solutions: Pump Audio, Taxi and my favorite (bias added) Music Dealers. These sites allow artists to upload their music to catalogs with the hope that a music supervisor seeking independent music visits the site and selects their song. Some sites are non-exclusive, meaning you can upload your music to more than one, while other require exclusivity. Always read the contract (even the click through contracts)!
Other options for getting your music licensed is to attend music seminars, panels, events, conventions. Research where the industry people are going to be. Buy a badge to CMJ, SXSW, Midem, etc. Music supervisors and a&r types are always at these types of events networking and trying to find the right sound for their project. If you don’t run into the right folks there you can start networking on your own to find managers, lawyers or other independent licensing reps of music. A lot of times these types have the inside track (which is usually a coveted list of contact info for music supervisors in all types of media like movies, tv, and video games) to the decision makers. For a split on the fee, independent reps will submit your music for your. While there is no guaranty, your chances of having a supervisor actually listen to your music is much higher when it is submitted by someone like this.
Just like everything else in your career as a musician, you will only go as far as you and your talent take you. Having great music alone is not enough. You have to treat it like a business. Licensing opportunities will not just come to you. Go out there and sell it. Network, meet the right people, create a buzz and capitalize on every opportunity (no matter how small) that is presented to you.
What happens when an artist decides to “help out a buddy” or lend a verse or bass line on the whim? Most of the time not much, but sometimes, the song ends up in places you never imagined; like in a movie, the internet or as a commercial jingle for a new adult diaper.
The more popular you or your band get. the likelier your friends or your acquaintances will start asking you for stuff. Everything from showing up to their concert, to posing for pictures, to recording a song. Think of it like a lottery winner finding out that he has third cousins, twice removed, that are in desperate need for money to fix their trailer. An endorsement or involvement from a popular musician is worth a dozen or so trailer repairs.
Here’s the problem, if you don’t set out the terms of the music that you nonchalantly give away, it may not be clear who owns it. Lending your voice to a song might qualify as a “featured” artist or it might be it is your creation which actually “features” your buddy who asked you help out. Without clearly stating whose song it is and what percentage split you will receive you are asking for trouble (usually in the form of a law suit).
One easy way to fix the problem is to simply register the song with the copyright office either before (as a pre-registration) or immediately after recording and release. Both the lyrics and the sound recording itself can and should be registered with the US copyright office (www.copyright.gov). The fee is only $35 and it can all be done on-line. The form is a bit tricky but with a little experience and guidance, it’s a no-brainer.
Registering the song as a copyright not only provides statutory protection in case the song is ripped off, it also clearly identifies the author of the song, the performer of the song and if there are any other entitled people involved (samples/publishers). The approach for any musician who is asked to participate in someone else’s song is that she will not lend her voice until the copyright registration is filled out.
The next step is to register the recording with your publishing rights organization. This will also allow you to identify who owns what for an individual track. Whether it is BMI, ASCAP or SEASAC, registering a title with a PRO not only allows you to collect every time the song is publicly performed (not in a concert but over the radio, tv, internet, etc.) but will end any debate as to who actually owns the song.
Creating music is clearly a creative process. Collaborations bring about some of the best music. Think of the hip hop and R&B world. How many songs are currently featuring Lil Wayne or have Ciara singing a verse? The formula for featuring another artist is a time tested winner. But just as with everything else in the music industry, set out your creative collaboration in writing before you enter the studio. It will allow everyone, especially your lawyers and managers, to sleep better at night.
I had a lengthy internal debate over whether to join the endless number of blogs, articles, tributes and montages in honor of Michael Jackson. Even though I was big fan of MJ and I did rock the moon-walk on numerous occassions during bar and bat mitzvahs and family weddings during the 80’s, I decided that for purposes of my posts, we should learn from Michael rather than add to the endless fluff pieces circulating our globe at the moment.
So, what can we in the independent music industry learn from the King of Pop? One glove is better than two, Emmanuel Lewis (aka Webster) is cool, living on a ranch with children, monkeys, and an amusement park will definitely get you noticed. All joking aside, Michael Jackson was one of the biggest grossing artists of all time. He single-handedly changed the way music was marketed to the masses. He was one of the first truly international (Asia to Africa to Australia) superstars. Along the way, he purchased the Beatles catalog.
That purchase, along with some of his other buisness decisions is what I can’t help but focus on when thinking about MJ’s legacy. Michael and/or his management team had the foresight to purchase a large chunk of the greatest rock and roll band’s publishing catalog of all time. In 1985 he puchased ATV Music Publishing for $47.5 Million. ATV controlled around 200 Beatles songs. This investment, at a time where the value of music publishing was still unknown, was one of the best investments anyone could make.
Every time one of the Beatles’ songs was played on the radio, which is virtually every minute of every day, Michael was earning money as the publisher. For every song that was licensed in advertisements, tv shows, movies, greeting cards, etc. Michael got a check. At the time of his death, the Beatles catalog would have been one of his most valuable assets. Think about that; Michael Jackson albums sold in the 100’s of millions but he had more earning potential from another artist’s songs.
Obviously when we discuss the Beatles and Michael Jackson we are looking at musicians who are in a different stratosphere when compared to most indie musicians or even most major label acts. However, the lesson that any musician can learn from both the Beatles and MJ is that control of publishing, control over who owns your music and how it is maintained, can be the life-blood for your retirement, and even for future generations.
When you sign to a label you need to think about what you are signing away. If you choose not to sign with a label but pursue a publishing deal, the same rule applies. Most major label deals will come with a publishing deal wherein the label or a division of the label will get the right to publish your music. While this is not always a bad thing, just remember what you are giving up and what the financial repercussions may be. A good warning flag that indicates that a musician may be giving away her music forever is an offer of an advance. Typically, publishing deals, like label deals, come with an advance. BE WEARY OF ADVANCES. If you are getting money up front, it usually means that you are leaving something behind. The length of publishing deals can be for the life of the copyright (95+ years in some cases) or can even be perpetual (never ending). Is a $50,000 advance worth the value that publisher is going to bring to your music for the next 100 years? Maybe…
Publishers are ideally supposed to act as your world-wide agent. They are supposed to help advertise your music to the world and seek money making opportunities for that music. Also, publishers are there to collect the money that is earned for music which is actually “published”. The typical split with most publishers is 50/50. The even split looks better than it is (of course). Many artists need sub-publishers to reach different markets around the world. A sub-publisher will take its percentage which in turn reduces your percentage.
The easy argument to make in favor of publishers is that without them: are you going to get your music out to the public en masse and more importantly are you going to collect once that music has been published? While the new music industry has seemingly endless opportunities to get your music out to the public, the publisher still plays an important role. Several new bands and even labels have either formed their own publishing company or partnered with a publisher. The partnership or the self-publisher model will reduce the endless percentages that go out to people and companies who are not in the band. But, just like everything else in the D-I-Y music model, it takes a lot of work and a strong team to accomplish what established publishers can already provide.
God willing your catalog of music will be worth as much as Michael’s or the Beatles. Realistically, you might not get to that level. That does not mean that you should not think about the value of your music before you hastily sign it over to a publisher. A quick advance from a publishing company may look great now, but as I have ranted on several occassions, advances are simply loans which must be paid back. Look at all your options first and go with the one that is best for you and your band. Think before you ink.
SHAMELESS SELF PROMOTION OF THE WEEK: NALEDGE’S (AKA MR. BRAIN) CHICAGO PICASSO
One day a John J. Emo was walking through a mall in Suburbia, USA. As he followed his girlfriend into a Forever 21 he heard a familiar song over the cheap sound system. Why was it familiar? Because Emo wrote the music!
The next day Paula P. Techno was watching an independent horror film. During the first slasher scene a somewhat terrifying and recognizable techno beat could be heard. Techno, who had released her music for free all over the internet, had no idea how her music ended up in the movie.
Finally, somewhere in NYC, Hank H. Hiphop rode an elevator up to see his dad at his office. Typical Musac was entertaining the passengers of the elevator all the way up to the 83rd floor. Hank was dumbfounded to realize that his recording of Catch it Like it’s Cold had been made into an instrumental only masterpiece without his knowledge.
Are John, Paula and Hank a bit slow on the uptake? Probably, but that does not mean that they are dumb. The world of music publishing is also massively confusing. For the independent artist, there are steps to take to make sure that you do not end up like these poor fools; potentially losing out on uncounted royalty payments.
Once you have made the decision to write music and introduce that music to the world (your bedroom mirror or your Aunt Grace do not count) there are several steps you need to take. One of the first steps is to register you lyrics and music as copyrights. This can be done for a sound recording and/or the lyrics of your song. There is a relatively easy online application that is available on www.copyright.gov to fill out.
The next important step is to register with either ASCAP, BMI or SESAC (in the USA). These organizations will help you collect and manage (to a certain degree) performance royalties that are owed to you as the performer of a piece of music. So if your song was performed on Dancing with the Stars or on your local Morning Zoo radio show or even in the airport smoking area, one of these Performance Rights Organizations (PRO) is resonsible for collecting the statutory royalty owed to the writer, performer or composer of the song for the public performance of the song.
PRO’s are not fail-safe. There are a lot of artists that feel that their PRO is not collecting everything that is owed. However, think about how tough of a job that is these days. How many media and consumer outlets are there out there that utilize music? While every person, entity or business that publicly performs music (over the airwaves) is supposed to report the playlist to a database, it is nearly impossible to keep track of everything. Trust me, the PRO’s do 110% better than an individual on his own.
The next step in capturing your publishing and maximizing the value of your publishing income is to form an entity. I’ve written about the need to form an LLC in the past. Publishing is yet another reason to do so. Your LLC will become your first publishing company and will collect royalties for your music. If you are in your band, you can register the LLC with the PRO. That way, the payments go to your LLC and will be split amongst the band members that own a piece of the LLC.
Another advantage of forming an LLC to act as your publishing company is negotiation power with other large publishers (EMI/Sony/Warner). You may get a better split with a publisher if you have already formed and registered your music under your LLC. Instead of signing up with a major publisher and giving up 100% of your publishing for an advance (not that anyone has money for an advance these days), you can negotiate a better split.
Last week I was on a panel with other lawyers, a musician and publishers. We all seemed to agree that the music world is changing and the major label system is beyond repair. The do-it-yourself artist is a reality that is here to stay. But many musicians who are used to having a label handle their registration and publishing do not know what steps to take. This has allowed for an enormous amount of royalties to go unpaid as well as copyright infringement to go unchecked. Throughout this whole process of making music, an artist will need help and guidance. Instead of a label coming to the rescue, now the artist is charged with creating his or her own team of experts. Just like any other business, services have to be outsourced. No one would expect a doctor to be able to play the bass. Similarly, a drummer probably does not know corporate level taxation.
Consult with experts. Find your PRO. Hire a lawyer. Hire an accountant. Treat the music like a business. Whether it is losing opportunities or not collecting what it is owed, without the right team, the D-I-Y artist will see her career D-I-E.