Tagged: License Deals

What is a One Stop Shop in the Music Business?

One stop shop for musicians? Better ask some questions.

Lately we’ve noticed a growing trend in the independent music scene.  Specifically in the businesses that work with independent musicians.  Many companies and individuals who used to have a job or a business that covered one specific element of the music scene are now presenting themselves as the “one stop shop” for musicians.  As you know, we like to dissect things around here, especially when catch phrases or “industry” speak is thrown around as if it has one universal meaning.

To me, a one stop shop conjures up images of a major highway gas station where you can get gas for your car, a slim jim, bait for your fishing trip, a slice of pie and possibly take a shower (I would not recommend the last one).  Basically a one stop shop should give a consumer an option to purchase all that he or she needs in one location.  Transfer the phrase to the music industry and it is not quite as clear what a one stop shop is or should be. 

We know that in the past a label was supposed to be a one stop shop, with a massive amount of employees handling everything from A&R to press to accounting for its signed musicians.  With the decline of the label system the number of employees at labels feel as dramatically as the number of records sold at Tower Records.  Thus, the services once offered by a label were no longer present.  The displaced label personnel did not simply bury their heads in the sand.  Rather, they started showing up as specialty boutiques offering the specific services they once provided to labels direct to the musicians or independent labels.  Because the music industry is still based on who you knew, these boutiques served a pretty powerful purpose for quite some time.  For example a boutique full of ex-Warner Brothers PR experts could utilize all of the same contacts it once had at a label directly to musicians for a discounted price (lower overhead).

Still, as the economy worsened, the boutiques had a difficult road ahead of them.  Boutique employees were cast off too.  So now you have a bunch of skilled and connected music industry folks milling about and looking for a new way of doing what they used to get paid to do by the labels and the speciality boutiques.  A PR executive befriends a merchandising expert who then befriends a music web designer and so on and so on.  The displaced experts then form a “one stop shop” for musicians.  Essentially becoming a lean-mean label which, ideally, avoids the red-tape and bureaucracy of the traditional label system. 

However, each one of these self-proclaimed one stop shops must be examined a bit more closely prior to agreeing to work with them.  Here are some questions you should ask:  Do you have distribution (usually digital is enough, but physical, think vinyl, is still important)?  Do you have press contacts and the ability to do an actual push to garner the attention you need (in the markets that make sense) for the release of your music?  Do they have connections with booking agents?  Do they have connections to a legal team that understands music and corporate law?  Have they managed a band before or do they have a management team in place?  What type of connections do they have to other musicians, producers and studios? 

All of these questions are important when choosing to work with any business out there purporting to be a one stop shop.  Oh yes, there is also that little issue of money.  All the connections in the world don’t matter if you don’t have the money to fund the project.  Typically, a one stop shop is not going to operate with the budgets of the labels or the indie boutiques.  The shop will be more of a facilitator, a connector of the dots, rather than a bank roll.  As a musician, you will want to make sure you have your music production ready to roll (whether it’s an EP or an album) before agreeing to work with a one stop shop.  Otherwise, you may be stuck at their shop without the cash to buy the goods. 

The model for these shops is similar to the license arrangements indie labels used to enter into (some still do) back in the day.  You bring your finished product to the shop, they market it and sell it to the masses.  But the shops go one step farther by attempting to manage your band, book you shows, protect you legally and sometimes keep your corporate books and records.  That is why it is so important to know what you are getting into before signing anything.

The one stop shop idea can work.  Due your diligence, ask the right questions, demand everything in writing (and have it reviewed in writing) and continue to do your own job as a musician: make great music.

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How to Make Money as a Musician (Volume 2: License It)

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.

Music Licensing Avenue

Music Licensing Avenue

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.

Mos Def(initely) a Great Idea

Buy and Wear Mos Def's new product

Buy and Wear Mos Def's new product

Some of us who work with businesses that are on the periphery of the music industry (clothing manufacturers, software and computer companies etc.) have been babbling about the trend of coupling music with another consumer product for some time now.  Finally the idea of bundling or packaging new music with other merchandise appears to be taking off.  Artists like Mars Volta, ACDC, Mos Def and, oh yeah, the Beatles, are getting into the game providing major steam to the indirect music sales category.

Most of the readers of this page are not signed to major labels (at least I don’t think so).  So the idea of getting your next single on Guitar Hero IV is not very realistic.  However, in the past we have discussed creative ways of getting your music out to the masses.  Mos Def, a true indie hip hop legend, has taken this approach with his latest release: The Ecstatic.  As Pitchfork, Digital Music News and NME have reported, Mos Def’s newest release will be presented to the public via a “Music T-Shirt”.  Each t-shirt will have a unique code that will allow the buyer to download the album (not to mention rock a new sweet t at the same time).

This cross marketing and cross selling idea is clearly the wave of the future for music sales.  With continuous drops in physical cd sales, limited and dwindling numbers of stores selling cd’s and the tight economy, musicians and their labels have to think of new and creative methods for getting the new music to the people.  The majors may be too slow and too entrenched to re-invent their sales method in time, but creative indies and mid-size labels can definitely get on board.

The t-shirt idea is brilliant, but how about including music with the purchase of a particular sneaker.  If Converse knows that their shoes sell particularly well to the hipster community, why not include download codes for music from Passion Pit, Santigold or MGMT?   If you are a band that has identified your target audience, approach a company whose products are popular amongst your fans.  For young bands, their fans probably only buy music digitally.  Why not get custom usb drives made with music embedded on it and sell those at your concert instead of cds?  The cost is about the same (check out CustomUSB and Molotalk ) and the chances of a fan buying a wicked cool usb drive far outweigh a crappy cd with a handwritten label.

Musicians are creative by nature so the possibility for this secondary revenue stream for the sale of new music is seemingly endless.  As with all licensing and merchandise deals, the same “lawyerly” warnings apply.  As this trend grows and more non-music companies approach musicians to ask for music, more shady deals will be presented.  As always, be careful before you agree to sell, license or give your music to anyone.  That sweet t-shirt compilation idea may wind up as a not so awesome singing laxative container.

SHAMELESS SELF PROMOTION OF THE WEEK

I already plugged (no pun intended) them in this article, but check out Custom USB.  They have already worked with many big named musicians on really  cool USB drives that can come in any shape, size or quality.  They can embed software that not only includes music, but also creates a fan based intranet site that pops up once the device is plugged into your computer.  Awesome stuff.

another custom usb, picture courtesy of Molotalk.com

another custom usb, picture courtesy of Molotalk.comged into your fan's computer. Awesome stuff.

USB/Bracelets for Wathzisface's SXSW performance, pic courtesy of Molotalk.com

USB/Bracelets for Wathzisface's SXSW performance, pic courtesy of Molotalk.com

Movies and Music, Still Possible Money Makers

From indie to major (bucks)

From indie to major (bucks)

How depressing is the economy?  For musicians and industry professionals who make a living off of musicians, times are as sad as a Cure ballad.  Not a day goes by without a record label, distribution company, or music marketing company shutting its doors.  Up front advances are a thing of the past.  Traditional record deals are dead (which is not a bad thing) and it is getting harder and harder to find corporate sponsors to shell out five to six figure licensing fees.

What is a rocker to do?  Go see a movie (naturally).  Two industries tend to be recession proof in the US:  Movies and Booze.  People like to escape and what better way to do that then going to a movie or a bar and forgetting about the bonus that is not on its way or the third job you just took on to afford gas money for the band’s van.  If you can find a brew n’ view in your town, no doubt it is packed with soused movie goers on a nightly basis.

Unless you have a distillery in your basement, the likely alternative may be to invest in movies.  Granted the majority of my audience may not be at the stage in his/her life where they are even thinking of making an investment.  However, for those lucky few readers out there, this is the time to invest in movies.  State and federal tax incentives limit the potential risk by up to 70% in some cases.

Think I’m nutso?  Think movies are riskier then investing in a hedge fund run by some dude named Ernie Nadoff?  If so, then read this:  SCENE STEALER:  SUDDENLY, HOLLYWOOD SEEMS A CONSERVATIVE INVESTMENT.  See, the New York Times agrees with me too.

Movies that cost between 1 and 7 million are constantly making money.  Think of the different revenue streams:  box office, product-tie-in/placement, dvd sales, merchandise sales, on-demand sales, on-line (itunes/amazon/netflix) sales, etc.  So even those low-budget craptastic voyages about a third rate dance squad can turn a profit.

What about the musicians?  Think licensing!   While the low budget movies that are made today do not have huge budgets for music, they still need music.  Enter the independent artist looking to get his band’s music out to a wider population.  Most indi flix will give little to no money up front but will give a back end participation to the artist, meaning that the band will earn money based on the sale of the soundtrack.  An added bonus is the distribution that the movie’s soundtrack gives to a musician without any distribution rights.  Think of Juno or Garden State; staples of most hipster kids’ ipods.  Several of the artists on those soundtracks did not have distribution but were able to rake in money when the movie and the soundtrack took off (via physical and digital sales).

41_various-artists_garden-state-soundtrack

Get a License to Drive (your music)

not this kind of license

not this kind of license

Word on the street is that the labels have no money.  Shouldn’t be exactly shocking to anyone.  No one has any money right now, just ask Washington Mutual or Lehman Brothers (R.I.P.)  The majors are not immue to the troubling economy.  While the government is discussing bailing out Wall Street, chances are that Sony, Universal, and EMI are not going to qualify for any of the $700 Billion in economic aid.

Sorry to be a Debby Downer, but it isn’t looking great out there for anyone trying to get signed by a “major”.  BUT, do not fear, all is not lost!  There are still ways to get your music out there and even make some scratch at the same time.  A crappy economy and a dying industry is the perfect time for the do-it-yourself/self-sufficient musician.

Artists who have crafted their music into a ready to release format are perfect candidates for license deals.  Whether it is a one song license deal to a corporate giant like Budweiser (e.g. Santogold) or a complete album license deal with an independent record label with a distribution chain set up, licensing cuts down on the costs for everyone involved and allows your music to get to the public in a more time and cost efficient manner.

Typical label recording deals tend to tie the artist down with heavy recording costs, mixing and mastering fees as well as graphic and design costs.  Trust me, it is going to be cheaper for your band to go to a friend or a colleague who has a studio and is capable of mixing and mastering than to wait for the label to pick one out and charge industry prices.  Yes you may have some up front production costs, but they will pale in comparison to the fees that show up on your accounting statement from the label. 

Same goes for your artwork.  Maybe you have a graphic artist band member or groupie or something.  Tap all your resources to get your music in a ready to release format. 

Advances are typically lower on license deals, but, again, this is not a bad thing.  Advances are just loans.  The less you have to pay back the sooner you will see a profit.  Use the advance to finalize your project.  Hire that one percussionist you really wanted, clear a sample, trademark your logo, etc.  Just don’t rely on a license deal advance to buy that new Ferrari you have been eyeing. 

Finding a license deal is not always the easiest thing to do (not that anything is easy in this business).  Yet, you may be surprised by the number of opportunities that are presented to bands that have followed this type of model.  Record your music, tour and grow your network.  Create the buzz and the opportunities will follow.

Time for another shameless plug.  Check out this wicked cool video.  Hey Champ will rock you.  Mark my blog!