A blog for musicians and music industry people. It is a free educational resource and it is also the way I advertise my music consulting services. I am an entertainment professional with deep roots in the music industry. Throughout my music career I have been a major label A&R representative, a music supervisor, an artist manager, a reality show producer, a bass player and the head of a digital record label.
You Are Viewing Music Business
The following is a re-post of an article from early 2010. John Mathiason has since opened his own management company, Candy Shop Management. You can check out the company and its clients on the Candy Shop Management website or on Facebook.
At the time of this interview, John Mathiason was an Artist Manager and an Artist Relations Executive at the Merchandising Company Cinder Block. Cinder Block handles Merch for artists like Kid Rock, the Dixie Chicks, the Pixies and countless other artists. Prior to working at Cinder Block John tour managed Sponge and managed several other successful artists.
John talked about some of the qualities bands should be looking for in a merchandising partner and some of the moving parts of successful merch design and sales.
One of the reasons I wanted to interview you, because you’re always an interesting conversation is because you once told me, “People think Merchandising is just printing t-shirts but it’s a lot more than that.” I’d love for you to explain what people should be looking for in a merchandise partner and what it is you do.
As an artist relations rep, you’re doing acquisitions – trying to find bands or comics or any company that need merchandising fulfillment. It’s interesting always how you come across in discussing stuff with potential clients because I think everyone has a different idea or attitude about merchandising. The irony of merch ultimately is that it’s probably the biggest earner right now for most artists. It’s the lifeblood for your touring abilities. Now as 360 deals start to become more prevalent, more and more people are sticking their hands into the revenue streams you can have, and merchandising becomes more and more significant.
My experience as a manager was that I didn’t put a lot of emphasis on the merchandise. I was the guy who two weeks before the tour would be yelling at the merchandise guy, “You have to get my merchandise turned around super fast” assuming it’s a simple process, and it’s really not. It is simple in a way in that all you’re doing is making t-shirts, but in the same way that management has a lot of moving parts and there are also all these aspects of merchandising that you have to pull together to make your artists successful with their merch. There are many different elements to it.
What are the specifics? What are those moving parts?
We start out with design, projections, what quantity you’re going to need for that particular tour, pricing, turn times, who you have selling on the road and what you’re going to be selling that merchandise at in terms of pricing. You have to make sure whatever cost we’re selling you the merch at provides a margin for the price that you’re selling it at on the road that will make you a profit. I think what ends up happening a lot of times because people don’t really understand that they have to factor in manufacturing, shipping, whatever it is you have to pay the house in terms of event fees and what you’re paying the guy you have selling. After all is said and done, you might only be making $3 off a $25 t-shirt. It’s crazy how tight the margins are. What can end up happening if you don’t prepare for it is that getting your merch becomes a last minute thing and you have overnight shipping and that reduces your margin. You’re losing goods because we over-nighted shipping and fed ex didn’t make it in time, and now your merchandise is chasing you around the country and you’re losing revenue there. You hired the bass player’s cousin to sell merch because you don’t want to actually pay somebody to do a good job, and that kid’s in the back smoking weed throughout the tour, and not keeping up with inventories or following the cash. And then you realize you’re out of your biggest-selling shirt because the kid wasn’t paying attention and you’re spending more money on rush fees to get the shirts out and more money on overnight fees.
That’s what I mean in terms of moving parts, and it’s the last thing that anybody thinks about when it comes to the things you need for your band to be successful, but it’s also one of the most important streams of revenue. There are some bands that really get it. I think for the most part where Cinder Block comes from is from that punk rock ethos, and those guys get it. Metal bands get it.
One of our biggest clients right now is Larry the Cable Guy, which is so far from what you would expect a punk rock company to be handling but at the same time we handle NOFX and work with developing artists too. We like to start with developing acts and create that relationship early. With merchandising it really is about relationships. It’s about customer service back and forth. When it comes to merch, you’re on the road and you want to trust the people that are the lifeline to your income streams outside of obviously what you’re going to earn from the venue paying you to be there. The only other income is going to be the merchandise. So if you don’t’ do it smart you’re going to come back from tour on a break even or worse. If you’re smart and do it right and spend the time to understand your fan base.
Take me through the process of doing it right. In other words, it sounds like a lot of this is lead time and you probably want to give yourself more lead time to get this merchandise.
The ideal scenario is you find out you have a tour two months prior, and you start talking to your merchandiser and coming up with designs and working hand-in-hand with them to figure out what you can project in terms of what your sales would potentially be based on you previous histories and actually be prepared so you’re not scrambling two weeks prior. That includes what your line is going to be – what are your best sellers? Do you do really well with black t-shirts? If you’re a heavy metal band you probably do. Is your demographic mostly male? Is it girls? If it’s girls then tailor the lines towards the younger and more female-oriented crowd. People don’t think about that usually, and they never give themselves enough time, so a lot of it is just saying, “Just get some merch for us and we’ll have cousin Albert sell it and then we don’t make any money but at least we have merch out there.” It’s such an afterthought that it’s difficult to sort of articulate to bands and managers how important it is. Basically the best process is, as soon as you find out you have a tour, you start that dialogue with whoever your partner is for your merch. Again, it’s all down to design, your product line and projections.
Talk to me about the product line. You do more than just t-shirts as well. Obviously there are people that have a very customized thing towards their niche, but are there items that are selling a lot that you think more people should look into?
I wish it was as simple as, “You know what’s really hot right now? Those LiveStrong wristbands.” Those were hot for a hot minute, but everybody would go out and get them, and then they’d stiff on some tours and do great on others. I think it’s funny because a lot of our clients will come to us and say, “What’s really hot?” And I’ll say, “What’s always hot? If you’re a metal band, it’s a black t-shirt.” Again, I think it’s a case-by-case thing, and that’s why it’s so important to be communicating with your merchandiser, because between you and your merchandiser, you’re going to get a pretty good idea of what your demographic is. For example, with Larry the Cable Guy, he’s a good example. His t-shirts do okay, and key chains and travel mugs and the things we sell. But what kills is the camouflage hat he wears. We can sell 50-100 of those per night. But if I were to give a camouflage hat to a band like Anti-Flag I don’t think it would work. It depends on who the client is and understanding your demographic. For a while now, the cut of the t-shirt has been really important. Everyone wants an American Apparel slim fit shirt. But if I sold American Apparel slim fit shirt to Kid Rock’s crowd, I don’t know if that would go over very well. We’d probably end up with a lot of angry people saying, “What the f**k?” It’s a bigger crowd. It really just depends. Again, that’s the thing. I discovered something early on in terms of how product development works, and it was really interesting. Bands would over-think designs and what they wanted to present to their fan base, and it would always be something cool and indie and something somebody in the band would wear. The problem was, nobody would ever buy it. It looked cool, and it would be something somebody in the band would wear, but the fans weren’t interested in it. They wanted something that had a big giant logo on it and is some sort of statement about, “I’m a member of this club.” If you’re walking in with some t-shirt that doesn’t say the band’s name on it and is hidden someplace, you’re not really expressing that. What always ends up selling is a band’s logo. I’m sure they can’t keep shirts with the Metallica logo in stock. We do the Misfits for retail. That Misfits logo will sell forever, but it says “Misfits” on it with a big giant skull. Don’t over-think it. It’s simple. What it comes down to is the thing you would actually wear probably won’t sell. The thing you think is ugly and stupid and is too simple is always going to be the thing that sells the best. It’s weird and a hard thing to learn, but you’ll learn it after you’re sitting on two palates of stock of slim fit shirts that have this awesome design where you can barely see the band’s logo. You’ll learn because you can’t get rid of that stuff.
Are there copyright things to keep in mind when you have a logo or when you go after and knock off very successful consumer product logos?
We try to make sure nothing we’re doing is going to infringe on anything. It’s not a perfect science but everyone overtly infringing is eventually going to get sued. In terms of other people biting off us, all our retailer products will always have copyright logo. It’s a lot harder to do with tour items, especially if you’re just doing supply for a band that’s going cross-country for a six-week tour, and they’re probably not going to have any of that copyright information on there, but it’s a cash business at that point, so you’re not really putting yourself at that great risk. When it comes to retail, you have to, because the last thing you want to have happen is somebody selling bootlegs, and you’re not getting your clients paid. Bootlegging has always been a really big problem for this part of the industry. It’s really a lot worse overseas. South America is very difficult because you just get hammered by the bootleggers. It’s almost like they end up having better designs and better quality shirts, and they’re selling them out in the street, and you’re not getting a dime.
Is having multiple items in your merch line important as well? In other words, every time you go out on tour should you have a new item in stock for places you’ve hit already?
Yes and no. I think a lot of bands make the mistake of saying, “We’re going through blah blah blah again, and we have to refresh our line.” The problem with that is that you’re assuming you’re playing to exactly the same people over and over again, which doesn’t tend to be the case. That’s why e-commerce is so important nowadays. At least you afford your base the opportunity if they missed it at the show, they can go back and get that specific item via your web store. It becomes expensive to constantly be refreshing your line. I’m of the mindset to add a couple things here and there but stick to your main sellers. Don’t assume that literally the same 400 people are going to be there the next time. You could be in a support situation or a headline situation or on a different kind of tour altogether. You could be on a festival. You want to keep it going and change up the items a little bit, but be aware that you can complicate your inventory if you do that. That’s the thing with merchandising, the thing you have to really be careful of your inventory. It is not a science. You’re always going to run out of one size and be scrambling to get reorders done, and you never know how something is going to sell one night vs. the next night. But it’s always better to err on the side of caution in terms of inventory. The last thing you want to do is come off a tour stuck with shit tons of merchandise you couldn’t sell, because that’s just money lost.
I’m glad your brought up e-Commerce. As a company that does both on and offline fulfillment- what percentage of the merchandise is sold at shows, and what percent is e-commerce?
The main amount is at shows. That’s where you do the most business. E-commerce is more of a slow grind. It also depends on how aggressive the client is in terms of driving traffic to their e-comm site. It depends. Some bands are just made for that. A band like The National is made for e-comm. There’s not as much of a demand for the National t-shirts at stores like Hot Topic. So the fan base has two places to get merchandise: either on the road or via the online store. You probably won’t have that same experience with My Chemical Romance, because they have that base that’s going to be going to Hot Topic all the time and will pick up items there. For certain types of bands the e-commerce aspect is crucial and can be really significant and be a strong revenue source.
Is your e-commerce fulfillment print as you go, or is that something you have to warehouse?
We have to warehouse it. The way I prefer doing it is to have the bands own as much of the goods they put into their online stores as possible. That way there is less risk to us as a merchandise company. This works for the artist as well in terms of inventory. It’s good to be communicating with your merch partner, because you can see what are the things that are going to sell the best in your e-comm store and what’s not and what you should put on sale one week because you want to sell out of a particular style. With e-commerce there is a lot more control because you’re dealing directly with your fan base. It’s a direct-to-consumer experience. With e-comm, it’s an interesting thing, because I think a lot of the time people just sort of look at it as a static thing: “We have some shirts. Let’s put them in the e-comm store and let them sit.” But you have to approach it the same way as anything else when it comes to the experience you have on the Internet.
If I went to a blog once, for example, this blog, and checked it out and said, “Oh, wow, this is really interesting.” And then three weeks later I went back and you hadn’t updated it, I’m probably not going to come back. And that’s my attitude about e-comm. I think there always has to be a flow going on. It’s not like you’re going to have random people say, “You know what? It’s Saturday! I’m going to go check out this band’s Store because I don’t know anything about them.” It’s going to be a direct-to-consumer thing. So it’s going to be your fans constantly returning to find out, “Is there something new for me to purchase? Because I’m a fan, and as a fan I’m going to want to buy as much stuff as I can from that band, whether it’s vinyl or limited edition posters, new shirts.” You want to have your base continuously coming back and wanting to get some new aspect of your merchandise.
Do you find there’s a benefit in the online stores of being able to bundle things at a higher price point?
Again, I think the way it works with e-commerce is that you always have to be creative and refreshing and do something different. We’ve implemented digital downloads as part of our e-commerce bundling now. You can look at the content and the music as something to drive more sales of hard goods. The bundles become important because you can say, “Hey, we have this new track,” or “We have this record, we’re going to give you a t-shirt, or the combination of all those things.” You get it at a higher price point, and I think it just makes it more interesting for the consumer because they feel like they’re getting something special or something limited or different or a deal. In a lot of ways, they are. I think there always has to be something to draw them in and make ask, “What’s going on here?” It helps from a marketing standpoint and from a band standpoint, because you’re communicating directly with their fan base when you say, “Hey, we have a new design,” whether it’s tweeted, on Facebook, sent in some e-mail blast or whatever drives traffic to the store. Hopefully when they come back to the store, they will see some new stuff and say, “I didn’t see that before” or “This is new, I’m going to buy that.”
Do you have any other parting words of advice as either a manager, or a merchandiser?
I would say give yourself some time and think about turn around time with your merchandiser. Really think through your merchandise. It’s a lot more important ultimately than people give it credit for. It’s not sexy, I know, but in the end we’re going to make you more money than almost anyone else. Your merchandiser is the last person you call, but the first person you call when something goes wrong. Just take merch into account before your tours start. It’s an important aspect to your growth and your branding.
If you are looking for a Merch company check out Cinderblock.
This is a re-post of an interview from early 2010.
Mike Shea is the president and founder of Alternative Press, a magazine that he started as a fanzine in his hometown of Cleveland Ohio in 1985. I thought Mike would be an ideal interview as he knows first hand what developing artists need to do to get press and was likely to have an interesting world view about what it takes to migrate a business from an old media model to a new media model.
Mike discussed the origins of Alternative Press and how music publications have changed in the Digital Age. He also offered up some tips for artists about finding the right press outlets to promote their music.
How did the Alternative Press start?
It started as a fanzine here in town [Cleveland]. We used to cover a lot of the stuff that was here locally, and then we found there were kids in Detroit, Pittsburgh, Columbus and so forth that wanted to read us. They wanted to write scene reports for us. They started contributing, and it just started growing from there, but we didn’t know what we were doing as business people, so we were draining a lot of money. We started producing punk rock shows at a local old theater here, and that made money for us for a little bit to keep things going, but eventually the promoters in town saw us taking away some of their money, so they started cross-promoting against us to wipe out our night. That fell apart after a while, and we stopped printing for about a year. Then one of my writers came up out of the blue and said, “Hey, we should do an anniversary issue,” and he asked me how much it would take to produce it. I figured it out and said, “about $800 or so,” and he said, “I’ll donate the money.” He just really missed the paper and the writing. I got a hold of some record companies and said that we might be coming back for one issue, and during that time period that we were gone, we had built a reputation and it had spread nationally. A lot of the people in the underground music scene really liked us.
This was about 1987-88. I called up some record companies, and they said, “Oh, we’ll buy full page ads.” They were throwing the money down, and prior to that we were begging most of the time. So we had gotten our success and our profile had grown considerably while we were gone. We came back with a vengeance. We used to be a large newspaper, and we did that for about a year, and then we swapped down to the Rolling Stone size at the time, which was 10×12. Then, that’s when alterative music and Alternation on MTV really picked up in the 90’s. We kind of got swept up with it, and our name was always about being an alternative to the papers and the media that was here in Cleveland. So it had nothing to do with alternative music. We were called Alternative Press before there was alternative music. We got tagged with that, and then we had a nice little FedEx thing going on, and kids were calling us “AP.” So, we decided to try and detach ourselves from getting stuck with a genre like alternative music, because we always knew that with the cycles of music, it comes and goes down, and comes and goes down. We started focusing on the letters “AP” and redesigned our logo, and it’s stuck ever since then, and we’ve just grown, and grown, and grown. We didn’t make any money until about 1996.
We finally got our act together by then, and we went through the new metal phase, and then in about 2001 we were all pretty miserable, and I was very miserable. The whole industry just turned into money and selling the most units, and especially even on the magazine end, it just got so silly with the way magazines are distributed. I really thought about just shutting it all down and going off and doing something else. I was in New York City at the Sony building, and I just had an epiphany. I said, “I can probably close this, and I’ll be fine.” Prior to that I was just very reluctant to. I didn’t know what to do because it was my identity as a person. So, I went down to Century 21 to get some underwear like I usually do when I’m in New York City, and I walked outside. It was about 5:30 or so, and I saw all the suits come out of the World Trade Center going home, and I said, “You know what? I can’t do that. I can’t go into Corporate World. I’m too damaged, in a way.”
So I came back to Cleveland, and I said, “Okay. We’re going to give this one more shot. But we’re going to do it our way, and if we’re going to go down, we’re going to go down doing it the way we wanted to.” A couple of my editors and my marketing director were talking about having been on a “Warped” tour, and they noticed there was a new sound that was coming up, and the kids were really fanatical about it. They started throwing some band names out there like Save the Day and AFI, and they said, “We should maybe think about this.” So I said, “Okay. Find me the two bands that have a very, very dedicated fan base behind them. They don’t have to sell a lot of records, but they have to have really crazy fans.” Part of that was, we were always looking at who was Platinum and who’s the biggest artist. We picked Save the Day and AFI and put them on the cover, and it went through the roof. It sold triple what the Red Hot Chili Peppers or anyone else had been selling for us. So the first year we kind of tip-toed our way back into our roots with alternating covers, and the response from our fans and from our readers was just fantastic. The bands were just so much more appreciative than a lot of the alt rock bands we had been working with who couldn’t have cared less if we were writing about them. We shed our skin and went from there. We’ve found our punk rock roots again, and it’s worked out really great. Now we’re just getting ready for the new technology.
I was going to ask you that. I definitely want to get to your perspective on helping get artists to develop. But how are you switching to the digital switchover, as magazine subscriptions probably across the board have been kind of hurt?
I think it’s early still. This morning Interview magazine just released their little promo of what Interview would look like with the iPad. It’s a very basic, stripped-down version. I think what we’re trying to see and do some research on is where websites are going to play into this, because we’re absolutely convinced that Pay Walls on websites won’t work. So then you start to get into, if you have a digital subscription, and you put it up on iTunes and Amazon, people, including kids, are used to going to those sites and paying for things. So we feel really confident that that will be the model. What we saw with Interview and those sorts of things were just the elementary school of digital magazines. The digital versions will be multi-media and will have video, interactive advertising, etc. They will be the future, and you’ll get paid for it. Will there be piracy with digital magazines just like some of the publishers are having to deal with, with their books? Yeah, there will be. But by and large, as the next generation starts to go from being eight-years old to 18-years old, they’ll start naturally buying magazines and subscribing to publications and that sort of thing via iTunes and so forth as these digital readers – whether it’s an iPad, or whatever the hell it is – become more affordable, and become standard things that are sitting on your coffee table at home. And you’re sick with the flu, and you’re just on there dorking around on the Internet. Because that will be the future. For us, that’s interesting, because you’re taking the paid model of somebody buying a $4.99 magazine, and now you’re going to surpass the websites and transfer that, but make it a lot cooler, and put it in as a digital magazine. And your magazine – your printed version – will have less copies, and will be better looking and better produced. So it will be thicker and better-quality paper, but it won’t be $4.99, it will be $7.99 – $9.99, depending, and going to be a keepsake thing. It’s going to be very Web proof. There will be a lot of photographs, a lot of long stories that don’t work very well, even on an e-Reader at this point. For us, that’s what we’re kind of seeing is going to happen. Of course, Steve Jobs could sneeze tomorrow, and a whole new system and something else could happen.
It’s so funny how that can happen so quickly. But I wish you luck with the transition. It doesn’t sound like you are off to a smooth start.
It’s a transition in our heads. I’m dealing with people here that are in their 40s and people in their early 20s. The older you get, the more resistant you get, so there are people here that say, “No way! Print’s not going to die! There’s no way!” And I’m telling them, “Look, anybody who was born in the year 2000 and forward don’t have a romantic attachment to print like we do.” To them, a book, a newspaper or a magazine doesn’t mean anything. Once they hit 18-years old, it’s over, at least as much as new product. Once Generation X drops dead, print will be pretty much dead. You’ll still have it being produced in a very small quantity, but by and large things will be in a digital format. You’re looking at the last generation of a mass-produced print. You’ll have boutique print, but in terms of mass publication, you won’t have that after the next 25-30 years, tops. It all depends on how the Generation X-ers want to get rid of print. If they want to just go straight to digital and make it convenient, it will accelerate even faster. We’re going to have lots of trees left on this planet.
I guess that’s something to look forward to. Transitioning awkwardly … You’re a guy who is and has been in the position to take a band from complete and total obscurity and really expose them to a nationwide if not worldwide platform. What would your advice be to somebody who just can’t get arrested in the blogosphere. What are the common mistakes you see with artists trying to get the attention of journalists?
Don’t send your demo CD to our home address. I just had that happen to me about a week ago. That was fun. The kid had balls. Unfortunately they were horrible. If they were good, it makes a great story, doesn’t it? Unfortunately there’s a fine line. We’re starting to see that there’s a difference between assertiveness and aggressiveness when you’re promoting. A lot of these bands that we’ve been writing about now for ten years are getting dropped, their labels are going under, they’re choosing not to renew. They want to start over and do it on their own and do the Band Camp or TuneCore etc. I think what they need to do for those bands is that they’ve made friends in the industry that work in publicity, marketing and A&R, and they need to have a conversation and learn publicity and marketing and A&R 101, 102 and 103. We’ve had some bands that approach us with their own stuff, and are very cool about it and know how to do it. And we’ve had other bands that every other day I’ll get an e-mail or a tweet or something on my Facebook saying, “Hey, did you check out our record? Can we get a feature now, can we get into ‘Most Anticipated?’ Can we stop by your office?” And it’s as if they haven’t learned how to balance that out, and when you start to pester too much. I think bands, on their own, have to learn that fine line between being assertive and making sure your product gets in front of somebody vs. being aggressive.
Is that a frequency thing, or is that just having something new to say or the way they’re asking?
I think it’s the way they’re approaching it. We have a few bands over the past couple months that have new records coming out. Sadly, one of them is on a label, who fired their publicist and never rehired. So the label has no publicist and the band is more or less doing it on their own. So, they’re approaching us. The record is okay, and we already gave it a review, and it got a decent review. But one of the members is just constantly hitting us up. It’s getting to the point now where we’re starting to not like it. I think it’s just a matter of learning curves. I think this was naturally about to happen, and it’s what you were talking about earlier with having to adjust. I think bands need to learn how to adjust to having to promote themselves in that way. It’s one thing to be assertive and somewhat aggressive sitting outside the House of Blues handing out fliers for one of your shows. But you have to learn how to approach different types of situations differently with that assertiveness. I think that’s one aspect of it.
For bands in general, I don’t think there’s really anything new as compared to the way it used to be back in the day because it isn’t going to mean anything unless you have some talent, or you can write good songs or anything. We get sent mp3’s and CD’s all the time, and you can tell that one of the band members just was doing his part of the job in the band, and just sending them out to everybody. There was no follow up whatsoever. So, half the time we stumble upon it buried amongst all these other things that we got as well, and we love it. We reach out to the band, and then we start covering them. Other times, you get people that haven’t really clicked yet. They don’t have good songwriting abilities or something like that, and they’re just constantly all over you. Unfortunately, I don’t really think anything’s changed in that respect. It just comes down to whether or not you have a good product. That’s what you need. If you have that, that’s more than half your battle, as far as I’m concerned.
As a major press outlet, is it a selling point for you if bands came to you with a bunch of lesser publications having covered their story? Is that relevant? Is that part of the story when they can point to a dozen blogs?
You’re definitely right. They’ll come to us with some music specific person’s blog or something that was off Absolute Punk or Punk News or Buzznet or something like that. It definitely does help. Sometimes an editor will have that kind of bias. You’re trying to hire somebody, and you say, “You better have some job experience first.” I try to keep my ears open regardless, because you just never know who you’re going to stumble across. But, does it help if a band comes with some material? Sure. I think it’s sad, but it does help, even if it was just some postings that were on a blog site and you have the comments from the other kids saying, “I love this band” or something like that. In this day and age, it’s not really what the press has said about something; it’s what the fans have said about it. My editors were recently just all about, “We should put Muse on the cover,” and I took a look at Spin magazine’s sales for when they had Muse on the cover last year, and I compared them to when we had some smaller bands on our cover, and we actually out sold them. Sometimes editors can be wrong.
They’re one of my favorite bands, and they were the critics’ darlings. Sometimes music critics tend to get into a school of fish and they all start going on something, but it doesn’t necessarily mean people want to read about it or watch it.
Do you have any final words of advice? You’ve had a really interesting career and have a really unique vantage point. Is there anything you would suggest artists focus on besides developing great product?
I had a young musician approach me on Facebook the other day, and he said, “I’m getting depressed.” And I said, “Why?” He said, “Because I don’t know how I’m going to make it. I can’t make any money. I want to try to do something revolutionary and do it on my own, because I know the labels aren’t going to sign me, but every time I start focusing on a particular business model, the business changes and I don’t know what to do. Should I just try to stick with one business model for a little bit, or should I just keep dropping everything every time everything changes?” I think the point is to just grab a fundamental business core method that is true all the way through. If people really like your product, they’ll buy it, especially if they feel an intimate connection to you. That’s the fundamental belief with music or anything artistic.
I said, “You start there, and then you allow yourself to be adaptable, because you’re right. Everything is going to change. You could go run off and have fans raise money for you and you can make a record, and you build a website where there’s a PayPal account and all this other stuff; but that all could be changed in a year. You’re definitely right about that.” I said, “You have to be flexible. Maybe you need to play it safe for a while. Maybe you need to go through Band Camp or TuneCore and sit back for a while and let the industry figure itself out. Focus on what you know is the core, fundamental truth, and that is, fans will buy from you if they feel an intimate connection to you, and if they think it’s going to benefit you personally. Maybe you need to play it that way. But to get depressed and throw your hands in the air because there isn’t one business model that’s working for everybody, that’s tried and true, you can’t let that happen.” It’s definitely a wild west out there right now. Everything is wild west. The movie studios are going through wild west, print, music, radio. The only thing that’s not wild west is concert promotion, because it is basically just one company. You just have to hold on tight and persevere. Stick to the basics on that, and let the business models figure themselves out. I said, “Somebody that has a lot more power than you or I will figure out some system and spend millions on it and blow it and work out all the kinks, and everybody will be able to benefit from that.” We’ll see. That’s what we’re doing right now. We’re sticking with the core beliefs and remain adaptable to it and play a little big safe. For us, we think websites are going to become network TV. They’re doing to be basics. The cable television will be the digital editions for pay. All the cool stuff will not be on websites anymore. It will be in the digital editions. The websites will just have breaking news and basic stuff, and how-to-get-through-your-morning stuff. To us, that’s exciting because it shows there is a way to transfer the money we were making from the print edition to the digital edition. Because there was no money in a website. You have to remain adaptable. The core belief that people want good-quality information is still there; and they will pay for it. You just have to find the way.
This is a re-post of an article I originally wrote in June, 2010. Even almost three years later, it still represents the mindset of a lot of musicians looking to succeed in the music business.
“How do I find a music manager?” “How do I find a booking agent?” “I just need to find someone to get my music to the next level.” I’ve heard these questions and statements before. And fifteen or so years ago, I sounded exactly like this. As it turns out, I wound up on the industry side of the fence and traded in the crowded smelly van for a record company desk job, but I do have some answers for you. If you showed up here via Google search chances are you won’t like what I am going to tell you, but I implore you to keep reading.
Let’s start at the very beginning: Do you have anything to manage?
I know – sounds like a stupid question … but is it? I’m not asking you if you have lots of work that you could use help with, nor am I making light of the pure volume of work that is the creation of both recorded and live music. What I am asking you is, do you have something ready to bring to market that needs managing … or are you still building out your product?
There is no shame (I’ll repeat it again, NO SHAME) in being in the developmental phases of your career. We live in an instant-gratification kind of world, which is why when I write articles like this I know statistically that a majority of people won’t have made it this far because they were looking for a “get famous now” button. Take your time and develop your product; this will help you rise above the MILLIONS of other people who went out to guitar center purchased their first instrument and recording gear and had the first song they ever wrote up on MySpace the next day, hoping for some kind of miracle that won’t ever come.
Back to management: Let’s talk about what you should have together before even considering approaching someone to invest in your career. *** Notice I said, “invest,” because, whether or not they spend a dime on you, management is an enormous expenditure of someone’s time.***
Before approaching anyone to manage you, you need to have most of these items together:
- No apology recordings of your music
- Professional looking photos of you or your group
- A basic, findable website (custom URL) you can update yourself
- A Mailing list and a place where people can sign up on said list
- A social network presence (Twitter, Facebook, MySpace, YouTube)
- Live performance footage (preferably in front of a crowd)
- A well-written bio highlighting your accomplishments
These are the building blocks and the marketing materials you will use over and over and over again. There are no words, no email sales pitch and probably not even naked photos of an executive in compromising positions that will get you taken more seriously than having the items above in place. Many of these items can get pricey, so do your homework and shop around if you feel that any of these items are best done by work for hire. Having these materials will get your more gigs, get you taken more seriously by your peers and potential fans and ultimately (if you have a product people want) will help you build a business in music.
“Okay – wait – isn’t this super basic? Does he think we are idiots?”
No, absolutely not. But I can tell you that statistically aspiring musicians are looking at the wrong things to get ahead. Check out what people search for online for music related terms according to a Google AdWords query in April 2013.
Term: “Get My Music Heard Online”
Global Monthly Searches: 58
Term: “Get more people to my shows”
Global Monthly Searches: 28
Term: “Make a Living In Music”
Global Monthly Searches: 800
Term: “Marketing My Music”
Global Monthly Searches: 140
Term: “Get a Music Manager”
Global Monthly Searches: 1,900
Term: “How to Get A Record Deal”
Global Monthly Searches: 9,900
Draw your own conclusions, but I think too many people are looking for a shortcut to fame that — barring an act of God or Justin Bieber — just doesn’t exist.
I will be back with the subsequent portion(s) of this increasingly poorly-named article early next week and I will actually get up to the part where you approach someone, and what you should discuss.
In the meantime, do a search under “manager” in the search bar at the top right of the blog to find lots of fun interviews with very experienced music managers.
…Or continue to part 2 now.
Tom Silverman is the founder and the head of TommyBoy Entertainment. Throughout his amazing career Tom has worked with and broken artists like De La Soul, Digital Underground, House of Pain, Queen Latifah and Afrika Bambaataa. In addition Tom helped revive the New Music Seminar and is now one of its principal executives. He’s been kind enough to allow me to feature his candid thoughts about the changing music industry on the Musician Coaching site on several occasions. In January of this year, he shared some insights about what he termed “The Music Business Resurrection.”
After our conversation about “The Future of New Music Business Models,” Tom and I went onto talk about what artists are going to need to do from a business and artistic perspective to be successful in the evolving music climate. We also talked more about what is in store for artists attending the New Music Seminar – where we will both be speaking – in New York City, June 17-19.
Thanks for continuing this conversation, Tom. We obviously hear a lot about artists that have achieved legend status, like Lady Gaga. The attention on her made Polaroid decide to give her a title and a stipend. They wanted to bask in the glow of her celebrity. But on a smaller level, can you identify anyone that does monetize the attention their music career has bought them?
Not really. We’ve talked about Vevo before. Vevo was really the first attempt by labels to monetize attention. All of Universal’s, Sony’s and EMI’s music videos are monetized by Vevo across all the platforms. They have a team that does the sales, and that team controls the flow of all that. That’s a good example of the labels using the monetization of attention model.
What I don’t quite understand about Vevo is how their service involves synchronization licenses, but they haven’t paid a single independent publisher.
I don’t know about that. I’ve really just looking at the ideas surrounding labels getting into that business. All of these online technologies, for the most part, have value based on the amount of visitors they have; their monthly average users or weekly average users are how they value themselves. If you can get to “X” million, it’s worth “X” dollars. That’s why Huffington Post and Daily Candy sold for as much as they did. The value is in the eyeballs. That’s why they say we’re in an attention economy.
So, if you collect all the eyeballs that are affected by The Beatles’ songs, The Beach Boys catalog, all of Frank Sinatra and everyone else that still get played everywhere in audio and video formats and were controlled by Capitol and EMI, the value of Capitol and EMI could be monetized at a number much bigger than what Citibank sold them for – another zero, at least.
If you were a company like Instagram, you could say, “I had 30-million active users. And my 30-million active users monetized out to a billion dollars when I sold it to Facebook.” Obviously there were other factors involved, so there’s not necessarily a direct correlation there. But if EMI could monetize on a similar level, based on the amount of attention its collective, aggregate artist roster and catalog generated across all platforms – online, on the radio, in venues and any other place the music could be heard – those impressions would be in the tens and hundreds of billions. But they can’t monetize them right now, because they only think of themselves as creating a music product and selling that product. If they were able to sell the attention, they’d be worth way more.
I totally get it.
But the labels don’t see it. They still think they’re in the business of making and selling records. They need to say, “We make records and sell records to build brands and build attention … and then we sell the attention.” One of the ways they sell the attention is with records. But it’s not the only way. And based on the calculations that we currently have between 200- and 250-million people buying records, the business of selling records doesn’t have room to grow much more than that. Maybe it could double. And even if it doubled, it still wouldn’t be as big as it was in 1999, so it wouldn’t even be an interesting target. We have to come up with a paradigm shift that allows the business to monetize on a much bigger level.
That should be the lesson we learn from Larry Page and Sergey Brin, and from Mark Zuckerberg and all these other guys who figured out how to do that. It’s not just the technology, it’s the aggregation of attention. And now they’re selling the aggregation of attention. The fact that I can communicate with you on Facebook isn’t what they’re selling; they’re selling the ads to the eyeballs. And it’s the same thing with YouTube, with SEO and AdSense and all those other companies who are selling attention.
That’s why I applaud Vevo. I’m not saying it’s perfect. But it’s the first time the music business has said, “Let’s get into the business of monetizing attention.” I don’t even think they knew what they were doing when they did it. But if you look back at it historically, you can say, “Vevo was the first.” Let’s hope it’s not the last.
It looks like Makers Studios is giving Vevo a run for its money.
Yes. Exactly. You get it. I read the description of your NMS talk – “Everything You Need to Forget about the Music Business” – at the seminar and I got very excited. It’s very similar to what my keynote is going to be. We’re almost exactly on the same page with what we’re talking about, and I can’t wait to hear it. Of the descriptions I’ve seen, it looks like you’ve picked the most interesting, new and provocative subject. And I haven’t shared what I’ll be talking about yet. But what I’m thinking about and you’re talking about are so close, it’s almost scary.
Well, and I’m going to be talking about some positive things people can do, the things they can take into their own hands. But I’m also going to be talking to them about how there’s a really big disconnect. Mass media has sold us a lie. One of the things I’ve done to prepare is, I’ve watched VH-1 Behind the Music, and I’ve measured out exactly how much attention was paid to the different phases of artists’ career, particularly the developmental phase – when the artist is actually in the van or in the studio. That’s only about three percent.
The way we perceive things on television is interesting. If you’re watching Friends, you realize you’re watching Jennifer Aniston play a role. But what you might not understand is that a waitress can’t afford a three-bedroom apartment on Central Park West. So, there’s this peripheral information and lack thereof that trickles through to people. And so many people are so dismayed by the journey.
You mean people are dismayed because they have expectations that aren’t being met?
They’ve come to believe that there is somebody out there to save them. There is so much data around passive music search terms, like “how to find a music manager,” “how do I find a booking agent,” “how to get a record deal.” And I knew this when I went to build my website several years ago, because I went and targeted all these people. And before I did research, I thought I knew all the right terms: “music marketing and promotion;” “book your own tour;” “take charge of your career.” Nobody searches for that. 10- or 15-times over, people just want to be saved. And I think a lot of the reason is because we’re exposed to this false idea. The story, “They worked hard for 15 years, and then eventually, people started to care” is not interesting.
When you and I did that notorious interview a couple years ago that was so hotly contested on the Web, that was my point: There were so many hobbyists out there that really were not interested in doing what it takes to take the Malcolm Gladwell road to fame, where you persist, work very hard, practice and hone your craft and redirect yourself until you get it right. They just wanted to send a demo to a label, and have the label roll up in a limo with a bag of money and have their career begin.
I don’t know if you were at the last seminar, but I said, “Anybody who has a CD, give me your CD now.” Then, I talked about what the odds would be of having their CD ever heard by anybody. And if it was heard, I discussed the odds that they would get a call. And if they got a call, I discussed the odds they would get signed . And if they did get signed, I talked about the odds of the record ever coming out. And then I talked about the odds of the first song being a hit if the record did come out. And if the second song came out, I talked about the odds of it being a hit and actually leading to a career. All the different things that could happen after they gave their CD to someone pointed to the fact that the odds of that CD turning into a career were only about five times greater than the odds of winning the lottery. And the lottery ticket only costs a buck.
So, I said, “Rather than waste any more time or money on your career, you should just buy lottery tickets, if you think you’re going to give someone a CD, and that’s going to help you get where you’re trying to go.” And I gave them lottery tickets. I bought about 36 lottery tickets and gave everyone who gave me CDs a ticket.
That’s the mentality you’re talking about. Nobody’s searching for “how to book your own tour” or all that great Hypebot stuff that’s out there about how to do it yourself and build your audience. I hear all these stories of Hoodie Allen, Mac Miller and all these guys who are building it up for themselves, and I think, “These guys are the new heroes.” And we’re really going to be putting them up as the new heroes at the New Music Seminar. Hoodie Allen is going to be on the artist panel this year and maybe perform. Mac Miller’s team is coming in. We’re going to tell that story of the people who have persevered. And none of these people had a limo full of money show up at their doors. In fact, they still are controlling their own destiny. And as I mentioned before, we’re also doing a YouTube Innovators panel of people who broke off YouTube and are selling out venues and selling songs and doing it on their own. Because, these are the examples. I think people respond better to examples. When everybody reacted to that interview a couple years back, the big thing was “1,000 True Fans,” and it was all theoretical. But now it’s becoming real, because YouTube and all the other tools are really starting to work.
The point is, there are a lot of things that are going to help more people do this. Things like YouTube and Makers Studio are becoming important. The Collective has a whole department just signing people like this. And Sony/ATV has Larry Mills trying to sign everyone up for publishing who is on YouTube, because they’re seeing a new section of the business where they can really dig in. And nobody is doing it yet. In a minute, everyone will be doing it. It makes you wonder if YouTube will be dead in a few years because there are so many people filling it with crap. The model for YouTube now is still, “Cover, cover, cover, original.” You do a million covers, and if you’re good at doing covers, like someone like Karmin, you get picked up. But it begs the question: Is Karmin going to be a star on Epic, or does Karmin work best on YouTube doing covers?
I did an interview with a guy named David Choi, who had 90-million views. And it was mostly covers. But something took off. He was a guy with a Warner/Chapel publishing deal who has co-written a bunch of songs for people. He’s making a living at it. Does he have a chance to become an icon outside his niche? I have no idea. I’m very comfortable saying, “I don’t know” these days.
And it’s the same question you ask when you ask, “Is this American Idol finalist going to have a career just because they just because they were seen?”
I think you can count on one hand the people who have been on American Idol or any of the other shows in America that have built lasting careers. I think there are probably only two or three.
This goes back to my days at Atlantic Records. I’ve told this story many times before, and it always has me scratching my head. Atlantic was mining the Southeast looking for the next Hootie & the Blowfish. They would sign a band, and the band stop everything, quit their jobs, wait, spend the advance money a little bit. And the publicist would come in and say, “You, cut your hair. You, wear leather pants. And everyone get shiny shirts.” And they’d re-master the same album, maybe put it out and stop all the momentum.
I’ve heard that’s what has happened to Karmin since she went to Epic. She stopped her regular communication with her fans on YouTube, because now she’s in the major label system. I think people think that once you “arrive” you can stop doing all the things you did before. But you can’t stop.
The point I was making is that I rarely see it work for people when they get thrust into these situations where they are overnight sensations and suddenly get tons of exposure. A switch doesn’t just go on and allow you to stay.
I was lucky enough to work peripherally with Kid Rock. The guy had been building his career for twelve years, fan by fan. A label can’t replace that.
And he still thinks of his career that way. When he makes his records, he still thinks about the screaming guy in the balcony – the guy half-a-mile away from the stage who came to the show. He makes his music for him and tries to serve the fans. Because, he knows that’s why he is where he is. He’s not trying to serve radio or labels. He’s trying to serve his fans. That’s what you’re supposed to do. If you always follow that policy, I think you’ll always be successful. He’s very smart.
Not all artists are that smart. Many of them think their fans should serve them.
I’ve watched a big, fat wallet try to replace development time. You can’t force or speed up artist development. It happens on its own terms. Patience has never been the major labels’ forte, particularly since they’ve had to report to their parent companies on a quarterly basis.
That’s true. And that’s not getting any better. Unfortunately, because the seeds they have to plant right now in order to make their business be ten times bigger in ten years, they can’t afford to plant, because they can’t fund it. They need to say, “We have to change our business model. And while it’s being changed to the new model, we have to support the old model.” And that’s going to be a cost center for five years, just like Spotify or Pandora will lose money for a couple years before they start really making money. But that’s the way it is when you’re transitioning into a business that didn’t exist before. You have to be willing to invest and wait.
I’m sure the process of inventing the iPod and iTunes probably cost Apple hundreds of millions of dollars if not more over time before it bore fruit. We only saw it coming out and being a really big thing. But they didn’t know it was going to be a big thing when they came out with the idea. There were a million things that could’ve gone wrong between labels, publishers and everything else. And it paid off. It’s the same thing with the iPhone and iPad. The cost of creating all those products, physically and from a licensing and programming perspective, before any revenue comes is hundreds of millions of dollars. And it takes years.
If the music business wants to become a business that is a $100-billion business, they will have to invest hundreds of millions of dollars over the next few years, and I’m not sure they’re willing to do that.
Let’s hope somebody does.
I’m optimistic, though. And at the New Music Business Seminar this year, we plan to be optimistic – no whining and complaining. If you don’t have a way you think the business can be better or that artists can do better, get more exposure or make more money or do something better than has been done before – if you don’t have a way to improve things – stay home. This is not a whining session.
At a lot of the other conferences, people talk about what a mess everything is, but, that’s not the way we want to look at it. It’s the way it is. So, let’s get beyond that and say, “How do we get to Point B?” If “Point B” is a $100-billion business, how do we get from where we are, to that $100-billion point? What do we have to do in the U.S. and around the world? And what are some of the various ways we can get from where we are to where we need to be?
I have a bunch of ideas. But I want to hear what everyone else’s ideas are. That’s why we’re bringing people like you in, because you’ll have ideas, too. And in your talk, you’ll likely talk about these artists who are waiting for success to happen to them. Whether it was the new era or the old era, there were always people like that, and they never achieved success. The people who have always been successful go out and get it; they don’t wait for it to come to them.
I totally understand that frustration though. That’s why I changed the seminar this year. For the last five, we tried to cater to artists and give them the tools to do it themselves and lift themselves up out of obscurity and into success. But what we continue to find that some artists don’t necessarily care about that. All they want to do is give an A&R guy their CD.
It is amazing. But I decided that rather than complain about it, we should just shift the model and make a bigger music business. Because, people need to stop their fear of cannibalization of the record business. They need to stop complaining about illegal downloading. The people who are stealing music probably never paid for it in the first place, and probably will never pay for it. Does illegal downloading have an impact? Sure. We might be able to get another 10 percent out of it. But who cares about another 10 percent? We need to figure out how we get 30-times more than what we have now.
That’s what I want to talk about at the seminar and beyond. While people are arguing about how to get rid of piracy, the music business has gotten 75-percent smaller in inflation-adjusted dollars. Obviously, the protectionist model is not working. It’s like winning the war on drugs: It doesn’t look like we’re winning.
I hope we’re at a place sooner rather than later where those that have the power to change the system aren’t incentivized to keep it broken because they stand to make more money that way.
Well, but maybe they’ll just be dis-intermediated by companies like Makers Studio and The Collective. These companies are probably the biggest threats to labels that are out there. Anybody who thinks about managing and monetizing the artist-fan relationship as the thing you need to do is a threat. If the labels don’t get into that business, somebody else will, from a different angle. The labels will wake up one day and realize their industry has been disrupted, if they haven’t realized this already.
The New Music Seminar is really about how we can stop being disrupted and start being disruptors.
Be sure to also read the first part of this conversation with Tom Silverman, “The Future of New Music Business Models.”
Barry Heyman is an entertainment attorney with a focus in the areas of entertainment, intellectual property (copyrights and trademarks), and new media law. He has helped me out in the past by answering some important questions regarding Copyright Law (and even answered a question that had me stumped about how to license a cover song here on Musician Coaching last fall). He has worked in the Copyright Administration department at PolyGram and Universal Records and was in-house counsel for Eagle Rock Entertainment (producer, publisher, and distributor of music programming for television and DVD, comprising live concerts and documentaries). He has also consulted clients such as MTV and Razorfish. Barry currently runs his own practice out of New York and was an adjunct professor at NYU where he taught a graduate course entitled Law and the Music Industry.
Copyright law and artists’ rights are topics that come up quite a bit around here. And Barry was kind enough to share an article he published recently entitled “Termination Rights in Sound Recordings” about some big changes that are in store for copyright law in the next year that will directly affect the music industry.
Starting in 2013, for the first time in history, authors of sound recordings might be able to regain ownership of their sound recordings based on rights they originally granted to the record companies during and after 1978. Works by legendary artists such as Bob Dylan, Billy Joel, Bruce Springsteen, Tom Petty and many, many others will be some of the first to be eligible for this termination process. And chances are good this will cause recording artists and record companies to clash, as many artists will start the process of taking over ownership of their own recordings so they can start commercially exploiting them, while record companies fight to keep their ownership interest so they can continue to freely exploit and profit from these recordings.
So, how exactly will this shift look, and how might it affect musicians and other industry professionals? As Barry states, “The Copyright Act grants an author termination rights in all types of copyrighted works including books, photographs, and musical compositions (as may be embodied in the sound recordings). Since Federal copyright law protection was more recently extended to sound recordings in 1972, 2013 marks the first time a grant of rights in sound recordings under copyright law may be terminated.” This termination right was originally created so the “author” (which, in the music industry would be the recording artist) and the “entity to which the copyrighted works (sound recordings) were transferred” (aka, a record label/company) would be on more equal footing.
As Barry outlines, usually artists – especially emerging artists and those at the beginning of their careers – tend to not be in the best bargaining positions and then end up not necessarily getting the best deals from labels at this point. And of course, it’s never easy to predict how valuable a sound recording is going to be before it’s officially out in the marketplace. So, in simple terms, the new “termination right” lets either reclaim ownership interests in the sound recordings in order to try their hand at marketing and selling them, or re-negotiate their original contract. And, this could inevitably lead to quite a bit of litigation, as those on all sides of the industry work to interpret the law and protect their own best interests.
You can read Barry’s full article here. In it, he clearly explains the many different moving pieces of this aspect of copyright law as it relates to the music and entertainment industries, the impending potential complications, and what can be done to ensure that Congress’ original intention with this law – to “create balance and fairness for artists and record companies” – is upheld.
You can also read more about the work he does as well as find a variety of other useful articles and resources about various aspects of the music and entertainment businesses on the Heyman Law website.
Kevin Weaver is the Executive Vice President of the Atlantic Records Group. He is responsible for overseeing the creation and placement of music and artists in film, television and video games. Kevin is also in charge of developing and overseeing soundtrack projects, strategic alliances, licensing opportunities, and marketing initiatives. He has been working with sync licensing at Atlantic since the early-mid 1990s and has managed a variety of projects over the years that have significantly shaped the label’s and other labels’ music licensing business models.
Recently I talked to Kevin about how he got into music licensing, changes he has witnessed in the sync licensing market in the past 15 years and how modern music placement works.
Thanks for taking some time to talk to me, Kevin. How did you come to be Executive VP at Atlantic, and what does that position entail?
I started as an assistant at Atlantic in 1994 working for the Vice President of soundtracks an A&R. I subsequently became an A&R guy at Jason Flom’s label Lava Records in the middle of 1995. I signed some records and was doing A&R. But those records weren’t really happening. Because I was an assistant to this soundtrack executive, I had a ton of relationships in the film, television, advertising and sync communities. And I thought, “What do I need to do to turn these records around and make some value out of them?” I knew I had these relationships, and that no one was pushing content into the sync world; it was a very laid-back business at that time, where you had people at the special markets divisions of record companies fielding incoming requests via fax. There was no sexiness to it, and nobody that had direct relationships with the artists playing the middle. There was no one aggressively pitching and pushing the content for licensing.
I took out the records that I was A&R’ing as well as some of the other records that Jason Flom, who was my mentor for many years, was working with. Jason was very supportive and encouraged me to do this. With his support, I was able to go out and get in front of the relevant folks at the time who were using music in media and basically give them quality content while at the same time help with the process to make sure it was seamless and that things were getting approved quickly. Over the first couple years of doing that we were able to significantly increase the licensing income at Lava.
That subsequently led to me becoming the first shared Lava/Atlantic employee and executive. I started doing the same thing for the Atlantic content in addition to the Lava content. And I was also able to increase Atlantic’s numbers really significantly over a short period of time. And when Lava folded into Atlantic in 2002, at that point I became the head of the department at Atlantic and all the Atlantic affiliate and division labels.
Very few people have as much time in as you do. I remember when I was working on placement for a commercial a few years ago. And everyone was coming out of the woodwork claiming, “Sync and licensing? I do that!”And I knew you’d actually been doing it since the very beginning. How has that sync marketplace changed over the last 15 years that you’ve been working within it?
Obviously it’s become much more competitive. People have realized the value of these opportunities to break artists. The media around these opportunities can be critical if timed right – around the launch of the single or the record. We’ve found that we’ve been breaking records over the last handful of years by way of these opportunities while also putting money back in the till to support subsequent marketing and promotional efforts. And everyone has realized to a certain extent that with the decline in income in other areas of the music business, sync is still a major revenue supplier. The importance of sync has become even that much more significant now. And because of all those factors, everybody is out there aggressively chasing sync opportunities, and it’s become more competitive.
I’m fortunate because I’ve been doing this for so long and somewhat built the model of how this works at a record company. I have tons of relationships that go back 15-plus years. And it’s very important to me that the people I do business with feel good about that business at the end of the day and feel it was an easy process and positive experience. I’ve had people continue to want to come back and drink from this well because they know we have great records, are easy to deal with and get stuff done. Because of this, even though sync is a competitive market, we still do great business.
Do you find that the huge number of independent and unsigned artists and the many aggregators of DIY content have brought the overall price down for you?
It can, and it has a little bit. I think the quality of music that we’re creating with our artists speaks for itself. People who are willing to give their music away for free can hurt us a little bit, but I believe that we’re making really strong records over here, and that people are willing to pay for quality.
We do price super competitively around developing artists. I never want to lose a great opportunity because of money. The visibility is important, so we look at everything on a case-by-case basis. And if there’s a look we can deliver for an artist, but it means I need to waive a fee or help get something approved below fair market value; I’m always willing to entertain those requests and make those deals, if the marketing opportunity mitigates the loss of income on the fee. I’m competitive as it relates to pricing. Wherever there’s a smart marketing play, I’m willing to make the same kind of deal that an indie artist would make, as long as I feel like the visibility is worthwhile.
There have been so many placements since placements really exploded with that first iTunes commercial six or seven years ago. Do you feel the impact of getting music placed in a commercial has diminished because now we have seen it so many times before?
Not really. It really depends on the scope of the placement, how great the song is, and how well it’s used. At the end of the day, great music is going to react, and it just needs a platform. What I’ve found is that you don’t want to just give away music and not look at the place it’s being used and how it’s being used. If it’s a meaningful placement, it’s going to translate.
Going back to your earlier question about competition with independent music, what we have at Atlantic is the whole company going after a record at the same time. I’m not just out there in a vacuum getting placements. I’ve found that it’s very hard for a singular placement to move the needle in a significant way, even if it’s a huge placement where the song is used really well and has great visibility, without other drivers in place. Not many labels – especially smaller labels – are able to use placement opportunities as effectively as we are and work with the other departments within the label. This really makes a difference when it comes to the power of these placements.
What is standard practice once the Atlantic Group gets the placement? How are you supporting the placement with marketing, sales and promotion?
We connect the pieces. We use the artist’s social media platform to create awareness around it and connect the fact that the placement you’re hearing or seeing is the artist’s song. We bring back all of the info and a clip of every placement to every department in the company, so they have the actual use and can take that out to show folks. A lot of it is talking points that help build momentum. But, everyone can use these drivers to show radio, video, digital/new media and sales and show these different accounts and partners the visibility we have going on around an artist. Generally, that in and of itself is an incredibly useful tool, because people see a song is out there and getting plays in a significant capacity. And that helps them feel better about getting behind it as it relates to their specific area of the industry.
You have A&R roots. Do you feel that artists getting placements before they’re on a label contributes to their ability to get signed?
It can. Recently, we signed Christina Perri. She had a single “Jar of Hearts” out before she was signed to a major label. She had her song featured on Dancing with the Stars in a really significant way. She immediately released the song on iTunes on her own, and it sold a lot of digital singles over a short period of time, which immediately put her on the radar of a lot of major labels. She then went on the show and did a live performance of the song, which made an even more significant impact. She went on to sell a few hundred thousand singles around those two uses alone. Every label really jumped in and went after her based on the fact that not only was she getting visibility by way of sync placements, but also, it was reacting.
I think that’s the key to most of these placement situations: If somebody’s getting sync placements but it’s not doing anything – helping with their sales or online searches and hits – then there’s a disconnect, and there’s a reason there’s a disconnect. It’s not often that these placements are going to move the needle significantly without the other drivers I’ve mentioned earlier – having the company and all the resources at the company behind it connecting the dots. I think the Christina Perri example is the real anomaly there; without the real drivers, the use of the song on television a couple times still managed to really make an impact, which ended up getting her a significant record deal. That being said she’s needed the power and the machine of our company behind her to build on this initial success and visibility.
You know a lot about how music is placed in film, and sure you often get asked, “How do I get my music placed in film and TV?” What would your best advice for somebody who is trying to make it happen in their own?
To be honest with you, I think it’s incredibly hard. It’s a very relationship-driven industry. And one of the reasons I’m able to get so many placements is because of the relationships we have with the folks who control this various media. They trust us. And they know when we’re serving something up, it’s going to be at a certain quality level and easy to clear and use. So, that is something that really helps us get placements and visibility that other smaller independent folks don’t have the benefit of.
But the one thing that these people can do is try to be super targeted and really chase opportunities where their music has real relevance. And they should get to people via real relationships – getting to know people who know the right people. And then they need to be really easy to deal with. Anyone who is a pain in the ass, especially in the developing stages, is not going to get much support. And there aren’t going to be many fruits that come out of that. If they are easy to deal with, and the quality of their music is good, they have a much better chance.
To learn more about Kevin Weaver and the work he does, visit the Atlantic Records Group website.
Melinda Lee is the co-founder of Uncensored Interview and Deputy General Manager (GM) of Getty Images Music. A lifelong music fan, she was first attracted to the music industry while attending law school in Philadelphia, where she befriended local artists and developed an admiration for musicians writing their own music, playing constantly and collaborating with other artists. Melinda’s focus in law school was on intellectual property, and she eventually found her way to New York City in the late ‘90s, where she went to work for MTV Networks. During her career, she has worked with networks and companies including MTV Networks, Lifetime and Joost, a peer-to-peer streaming media company started by the founders of Kazaa and Skype. She has over a decade of experience handling content licensing in the digital space. Melinda started the “Web 1.0” version of Uncensored Interview – a video interview site that captures rare moments with a variety of indie artists and other personalities – in the late ‘90s. She revived the concept almost a decade later with a new partner, Marisa Bangash and a new team. The current version of the site launched in 2008 as a source for musician interviews and in 2010, expanded to interview key influencers in other areas of the entertainment industry, including film, food and film/TV.
I recently spoke to Melinda about her career path in music and entertainment, why all artists need to closely monitor their own licensing in the complex, ever-changing climate of today’s industry and how she sees Uncensored Interview and Getty Images Music contributing to the hopefully more artist-friendly music business of the future.
How did you get started in the entertainment and music industry?
I was a really big music fan. In the late ‘90s, I was living in Philadelphia while I was in law school, and I ended up becoming friends with a lot of the local musicians and artists. I really started to develop a love for musicians who actually wrote their own music and were out playing day and night, whenever they could, and collaborating with as many other artists as possible.
From there, I finished up law school. I concentrated on intellectual property and found my way to New York City. I ended up getting into content licensing at MTV Networks. I continued to primarily work in TV, but as it goes in the entertainment business, you’re constantly in flux and you go from company to company. I came back to MTV Networks eventually and ended up taking up a role heading music and content licensing for the international group and digital media groups. What was great about that was that it was across all of MTV Networks. So, I got to work with MTV, VH1, Spike, Comedy Central and Nickelodeon. By then, that was the early to mid 2000s, where everything that was on TV was trying to make its entrance into the digital space.
At that point, rights were messy. No one knew what to clear for. But there were a lot of deals going on. People were making deals in the mobile space internationally. And every channel wanted to have an online broadband channel. So, I started to take on less of a clearance and rights type of role and more of a strategic role. I worked with most of the business development and business strategy groups as well as the head producers on how to put content into shows or into other formats and make sure the rights were in place from the get go, so we could actually embrace all the business models that were developing in the digital space, even internationally; because at that point, MTV was growing by leaps and bounds internationally. For example, you’d come across a channel that was launching in Africa, and you would need a different type of strategy for implementing the content on that channel.
What I really learned there was just how to think about content from an overall perspective. I would ask, “As we’re making more content, how can we get the rights in place so that this is scalable and will actually fit into whatever business models that might emerge?” I’ve worked with a lot of music companies doing that type of thing.
I find it wonderful and a bit of a sad statement that you love music and helped found a company that works with musicians, but you probably put together Uncensored Interview because you were looking for non-music content from artists, in part because music licensing is such a nightmare.
You hit the nail on the head. While I worked at MTV, the easier content to work with was images and footage. Of course, there are rights within that too. But music is where it got really complicated. With music, the models were set. And when you’re dealing with labels and publishers, they have this dance – and it was especially strong then – that they did together. It was really difficult to get those rights and to get someone to quote experimentally. You would say, “This is primarily for TV, but you know it’s probably going to be on the internet and on radio. Can you give me one quote instead of options that will address all those spaces?”
What I find really funny about that is that you were calling from Viacom. It’s not like you were Joe from Armpit, Ohio.
Exactly. And I do have to say, I did a bunch of work for other companies. And what was great about MTV is that the publishers and the labels did call us back quickly. They may not have given us what we wanted, because the whole idea was, “If it’s going to be a different kind of use from the one we agreed to, we’re going to need an additional fee.” That gets really difficult, especially when everything is going digital.
Back in the day, you had television with an option to renew and then maybe a DVD quote. But all of a sudden, nobody could really predict whether it was going to go beyond TV to the internet or mobile. The way it was structured was that you had to get a quote on each of those uses just in case. When I was at MTV, one of the few companies willing to go into the new media space as far as giving us those broad rights up front was Getty Images. Pump Audio was the other. And I think that’s what made Pump Audio separate from the rest of the music libraries out there; they put that “all you can eat” blanket option out there that allowed our producers to really create and be able to embrace the new models that were popping out without worrying about uncleared rights.
So, after MTV, you put together Uncensored Interview. And as a result of that, you put together a partnership with Getty Images?
Right. But actually, I did Uncensored Interview prior to joining MTV. My first iteration – a Web 1.0 version – was me interviewing bands and giving them a platform to be able to talk about their music. When I started it back in 1999, if you liked an indie band, you really couldn’t get access to them unless the local paper wrote about them or maybe if they were on NPR. But there weren’t that many outlets. It was right when digital video cameras came out. That was when I got the domain name.
A lot of the things I learned through working with content, rights issues and licensing really helped me develop a fuller strategy with the content we were creating over at Uncensored Interview.
I have a few questions I want to ask you that you’re more than suited to answer given your licensing expertise. First, what should musicians doing things for themselves have prepared in order to increase their chances of their music getting licensed?
There are so many different types of musicians. It’s a different strategy for each category, whether you’re a singer/songwriter, composer, indie band, etc. There are so many other trends that are popping up right now too. But one thing would be to really decide if you want to be a member of a Performing Rights Organization (PRO) – ASCAP, BMI or SESAC. Deciding which one you want to become a member of is an individual choice.
There is also a growing trend for direct-licensed music. What’s really great in the U.S. is you can be a member of these PROs and still retain the option of doing direct licenses.. I think that’s great and overall, in the spirit of what these PROs aim to do, which is protect their artists. Internationally, this not necessarily the case. The second you get into the EU, performing rights organizations and royalties get really complicated. Simplification is really something they should consider; because the back end of royalties today still remains a really lucrative way to generate revenue for artists. You don’t just make money on the upfront sync placements.
What does a direct license look like? Is that just someone saying, “I’m going to pay you a flat fee for this song?”
In practice, yes. Everything’s just bundled in at the beginning. It’s just saying, “All rights to this song, including what you would’ve gotten on the royalties side are included in this price.” At least this is how many licensees see it.
Is it re-titled then, with the royalties going to the person that paid for the rights?
Re-titling is something different. The way re-titling first came about was as a mechanism against being able to figure out how to administer payments based on who placed the music. It emerged because there were a lot of nonexclusive deals with several parties trying to place music. When people started to re-title, it was a way to identify who did a placement. So it’s basically an administrative tool that is far from perfect.
When you look on the production side of things, you note that people aren’t always very buttoned up about cue sheets. When no one is clear about what’s really going on, it can get really confusing on the back end when the producers have to report the song. Let’s say you have a song that is being represented by several different production libraries. Sometimes it’s hard to tell where it was grabbed from. Re-titling was really developed to assist PROs in tracking which party did which placements and then determine who gets the payment at the end.
I figured it was something like that. But I never realized the genesis of it.
It’s all because of non-exclusive deals. If there’s no sharing on the back end, there’s no reason for a production library to re-title. Most of the music production libraries out there that have non-exclusive deals and that also share a backend administrative fee will have a need to track it. A lot of artists have non-exclusives and are working with several libraries. It gets really confusing.
It is what it is. And most people know that it’s convoluted.
It really just comes down to the fact that it’s common among many of the music production libraries to re-title. And it’s really due to the fact that there are so many non-exclusive agreements.
As you’ve built up Uncensored Interview, have you discovered that non-musical content – interviews, stories, etc. – is valuable for artists? How have you seen this kind of content serve musicians?
The idea behind Uncensored Interview is to sit down with an artist or a band – and we’ve sat down with artists and bands on all different levels. For example, we sat down with Henry Rollins. But then we sat down with Margaret Cho, who is not necessarily known for her musical projects. And we also sat down with the up-and-coming bands you’d find in places like Pitchfork.
The questions we ask vary depending on who you’re talking to; because you always want to make whoever it is you’re talking to feel comfortable so they can actually be themselves. It’s video, so you can tell if it’s something that is media trained or rehearsed. We’re after catching those raw moments. What starts to happen after a while is that people start to talk about their experiences. And with any recap of an experience, there’s advice that comes out of that. What we find the most is that people who watch the videos that are also musicians themselves say, “Wow, that was a really great tip for touring. We should try to avoid those things,” or, “Sure, this band that I really feel influenced by get distracted too when they’re writing music. And here are what their issues are.” And what’s great too is to see the differences between different bands that you might classify in the same genre.
What we’ve noticed is the bands that really start to get that buzz and get those placements where they’re generating revenue may not be “famous.” But they’re constantly playing and constantly touring and really buttoned up on the back end. The rights are all sorted out. And the agreements are amongst members of the band if there are multiple writers. They understand that sync licensing is a business, and digital downloads and deals with streaming companies are a different business. Their expectations are set. And then, they’re present for those phone calls to use their music.
You’re somebody who knows exactly where this non-musical content goes, because you take footage of bands – some that are well known and some that are not very well known – and see where it has value. Is there any advice you could give to artists that want to put together, promote and use non-musical content?
There’s no shortage of videos of bands online. There are a lot of slice-of-life-type videos out there. I think that’s cool, especially if you’re a fan, because you end up feeling closer to your favorite artists. However, I think that content is somewhat disposable. I do think it’s helpful to do sit-down interviews. A lot of times you can garner fans just by virtue of who you are as a personality. They may love your music. But they could also love what you stand for, that’s just another in road into a fan base that might really like who you are.
There are ways to monetize that for sure. I think with band videos though, the value has to do with the question, “What do these video say?” What’s the message within a particular sound bite or clip? Is the artist commenting on politics, on his/her music or on the economy? Then, based on the content and context within that clip itself, it can actually be monetizable. What that is, is the building block towards another video piece that can show yet another vantage point. That one clip can tell a larger story.
That’s really the whole core concept of licensing and revenue based off a piece of compelling content. When you’re looking at how valuable it is, you have to first ask, “Who’s in it?” It could be someone that is not particularly famous. But if the person is talking about something that is relevant or something that is compelling in some way, it can make itself into a larger piece and there is value in the context or message. It can be something that’s newsworthy. It can be told in retrospect talking about a certain time from a certain vantage point. All of these elements add value to the clip.
Are there specific artists you’ve seen do this particularly well?
Amanda Palmer is pretty good at it. She gives a lot of really great sound bites about things that are newsworthy at the time of the interview. But she delivers them in a way that’s timeless. For example, if she was talking about Twitter, it matters now because Twitter is important now. But the overall message she’s giving is timeless because she’s saying she likes Twitter because it allows her to connect with her fans. So, whether Twitter is gone next year or not, she’s still talking about music trends and how through technology, artists have direct access to their fans now. And I think that concept and message is never going to change.
And with her, you’ll really see examples of different types of video. She does really high quality interviews as well as stuff that is more fan shot or handy-cam-type videos. She uses video really well. And that’s not that surprising given her roots are in visual performance art.
I know you’re also now working with Getty Images Music. What’s coming next with that?
Getty Images Music is doing a lot of great stuff.. We’re really just looking at music licensing as a whole and saying, “We’re not just one thing.” We’re lucky to have Pump Audio as a collection, which has really done a great job. It was the original crowd-sourced music model, if you think about it. They said, “Let’s get all the rights in one place and make it easy for content creators to license out music for different uses.” It’s a fantastic model. And I think that so many music production libraries are copying that. But Getty Images Music has done some great deals in addition to that with collections like Sony/ATV and Elias Arts.
We’re also partnered with a music production company called Ah2, which was founded by the two composers that compose for almost all of Mark Burnett’s shows – like The Biggest Loser, The Apprentice, etc. These guys pretty much created the “reality TV” sound. Their tracks are so special because not only do we have the original track but we also have stems, which come in handy for editors. Often times the original track may be too powerful for a scene, so with Ah2’s collection we offer different stem options so you can get the tracks with just drums or just the piano – no problem. Our deal with Ah2 is an exclusive deal and we get to be their sync licensing arm.
The world of music licensing is interesting, because there are all these little tools that help you get where you need to go. We’re finding now, with the economy the way it is, fewer and fewer companies out there are doing straight composition, where everything is composed end to end. A lot of hybrids are popping up. And this is a comfortable place for us to be, because not only do we have almost every kind of track and genre that fits the “production music library” label, but we also have cinematic score music, indie artists and bands, and we have music composition services.
And we have imagery and footage as well. For the indie band and artist that also contributes their music to our platform, that is a powerful trifecta. We’re trying to open up different distribution and marketing opportunities for indie artists just by incorporating these opportunities into our licensing model. This is additional promotion that is difficult for them to do themselves. In a way, we are crowd sourcing cleared compelling content in music, footage and photos to content producers and leaving it to these creators to do the tastemaking. What’s cool is these are not just producers or content creators at major media companies that could pick up your stuff; there’s a whole slew of semi-professional producers out there that are creating content and they know about licensing!
I think combining all these different elements together will push where media is going to go as a whole. There are a lot of stories to be told, and this is a fantastic new distribution model for a lot of artists that are looking for new ways to market themselves and their music.
Chris Castle is an attorney with Christian L. Castle Attorneys specializing in issues surrounding the traditional music industry, content-based technology and public policy. With offices in L.A. and San Francisco, he represents artists, producers, songwriters, record labels, music publishers, film studios and technology companies. He got his start in the music industry as a professional musician, working and playing with artists including Long John Baldry, Yvonne Elliman and Jesse Winchester and many others. Chris is an MBA/JD of the Anderson Graduate School of Management and the UCLA School of Law and is a magna cum laude graduate of UCLA with a B.A. in Political Science. Prior to founding his own firm in 2004, he was of counsel to Mitchell, Silberberg & Knupp in L.A. and to Wilson, Sonsini, Goodrich & Rosati in Palo Alto. He has also held several senior business affairs positions in the music industry.
I recently had the opportunity to sit down with Chris and talk about some important, current music-related legislation and how it will affect the music industry as well as some advice he has for DIY artists that want to get involved in managing their own rights.
Thanks so much for taking some time to talk to me, Chris. From the perspective of someone that knows digital distribution, music supervision and record deals as they relate to legal policy, which items are currently pending that you think will have the greatest impact on musicians going forward?
In the last year or so, the penny has kind of dropped in the U.S., the UK and France, though what is happening in U.S. Congress is most relevant for this conversation. There are certain things they need to do about regulating some of the bad actions that are going on online. And I don’t mean going after individual users, because all the laws you need to go after individual users are already in place. I’m talking about going after the people who make the big money from piracy online and have very involved structures by which to do that, also known as “rogue sites.” That includes search engines that don’t filter obvious piracy sources and sell advertising that supports pirate sites.
In the last Congress, Senators Leahy and Hatch introduced the first rogue sites bill (the Combating Online Infringements and Counterfeits Act) that passed the Senate Judiciary Committee on a unanimous vote with all members present late in the session. Chairman Leahy introduced a successor to that bill called the Protect IP Act, which has been passed out of the Senate Judiciary Committee and is about to be introduced in the House.
The legislation is bitterly opposed by Google and Google is bringing its full lobbying weight to bear on stopping it, no doubt due to the financial losses staring them in the face. Because it’s hard to come right out and say they want to support theft and that they don’t care about musicians, film makers, songwriters, actors, grips and directors, Google attacks the solution that Congress is endorsing—of course, there is no effective solution that Google does like.
You can argue about unintended consequences when it comes to these rogue sites bills. But what these bills do is recognize that there are some real structural problems with the Internet that encourages piracy and inhibits a true market from developing. You have a lot of incentives for people to do really bad things. I think that realization on the part of the Congress has been a big step forward toward establishing market rules online that will help artists be successful.
The other realization that goes along with the recognizing the structural problems online is that we’re not seeing pirates in the historical sense of what we’re used to.
I’ve been in the business for a long time, and so have you. Online piracy is not some guy with a duplication plant in Santa Ana who deals a little coke on the side. Now it’s companies like Google. Google is very much involved with selling advertising on these rogue sites and splitting the profits with the pirates (made evident in the April House IP subcommittee hearing). And it’s like that great line in The Untouchables: “Everybody knows where the booze is, Mr. Ness.” It’s not a question of whether people at Google know what they’re doing, because they clearly do know. There are at least five cyberlockers with Google advertising that consistently are in the top 100 websites in the world. It’s just that they’re making so much money at it that they don’t want to give it up.
On a more positive note, I think we are finally seeing a real upswing in companies like Topspin, etc. There’s a site called Patronism.com, which is a cross between Facebook and Kickstarter for artists. And of course then there’s Kickstarter, where artists are able to go out and raise money – crowd funding that actually does work. You’re starting to see resources appear online where artists can get a pretty long way down the path without having to get into 360 deals, etc. early on in their careers. I think that’s encouraging.
And then the next problem after that, which nobody has really cracked yet is the lock on radio that major labels have. I don’t if anybody is ever going to solve that. But there are a lot of ways to get to the fan now that don’t involve telecommunications-related mass media.
What is your assessment of the class action lawsuit that has been brought against the major labels for digital payment issues?
The class action is a follow on to what’s referred to as the “Eminem Case” even though Eminem isn’t really a part of it himself. It’s the case where people are saying that the royalties for digital have been miscalculated under specific contracts and industry practice, and that it should’ve been a 50-50 split vs. a royalty rate.
First of all, I don’t think the class actions are necessarily going to be the best vehicle for addressing this issue because mostly because of what class action lawsuits require in order to go forward; you have to have common facts, common interests and a bona fide class representative, etc.
It’s also important for artists to understand that if a class is certified in one of these cases (like the one against Universal) then unless artists expressly opt out of the class, they are bound by the decision. Which is nice if the class wins, but not so nice if the class loses and you never not your day in court.
I think it is going to be very hard to certify a meaningful class because, not because of anything nefarious, but because the artist deals are not the same. For example, with Eminem, it was really a production deal, not an direct artist deal. So, if they had tried to bring that as a class action – and I wouldn’t be surprised if they had thought about that – I don’t know how it would’ve worked out, because there are relatively few production deals compared to direct artist deals.
I would also point out that there’s a bit of tree-ring aging that goes along with analyzing the relevant contracts for the class. I used to work at A&M, and I can tell you from having gone through many years of looking through old contracts in the file room that there were distinct points in time when the way things were addressed changed on many of the forms. And I think that’s not just true at A&M; it applies to all labels that have been around for a while.
If you’re talking about contracts that were entered into after about 2000 or so – when the labels started clearing large quantities of their catalogues for digital – most of the time business affairs people went through an amendment process that was very similar to what they went through with CDs. In fact, some people may have used the CD amendments as something of a model for digital.
If you were an artist they wanted to put on iTunes or through Pressplay or MusicNet/MediaNet and your contract was messy on the digital exploitation rights, they would go to you as an artist and offer you a more or less favored nations deal. Artists would have to sign those amendments or they didn’t get on iTunes. Most of those deals were fairly generous from a label point of view, usually something like paying the album rate for digital single tracks with no packaging and no new media deductions as the standard. Over time, the demand for back catalog on digital services was so intense that people may have gotten sloppy with getting these amendments, and that’s who the class action lawyers will be looking for.
The artists who are going to have the most play in this kind of litigation are probably going to be the people who signed before about 1990. That’s a pretty deep catalog. Those guys might be able to piece together a class that can get certified. But I really think it’s going to be tough.
This is not to say that a significant catalog artist shouldn’t pick up the phone and call their old label to see about renegotiating their old deals for digital. This is the kind of thing that works well when combined with an audit claim or a 35-year termination.
While I’m going over current topics, what do you think will be the ultimate impact of the publishers settling with YouTube?
That’s a very interesting piece. I will tell you that there are a lot of stakeholders in that situation that read about it for the first time in the newspaper. They were somewhat surprised and are unclear as to what the basis of that decision is.
If you read the press release from the Harry Fox Agency (HFA) – and that’s the only thing written I’ve seen so far – it looks as if the National Music Publishers Association (NMPA) and a handful of publishers were party to the class action lawsuit brought by the Premier League and others against Google that is a companion case to the Viacom litigation. It appears that these publishers released their claims. Viacom is still litigating their case and the class action is going forward, apparently without the NMPA and these publishers.
The short answer is, I can’t really tell what was dismissed and the settlement agreement has not been posted. But it looks to me is that the NMPA, which doesn’t own any copyrights, dismissed their claim against Google, whatever it was, as did the specific publishers mentioned in the HFA press release. But that’s only four or five publishers. So, I’m not really sure what it all means. And then the HFA is also offering a license on undisclosed terms that looks like a standard HFA opt-in structure. So, it says, “If you want to grant a license to YouTube prospectively, let us know.” HFA haven’t posted the terms but would have to tell any HFA publisher principal who wanted to participate.
I have heard that YouTube has what I would call a close to pathological level of secrecy about the terms of their deals. Like anyone in the music business can keep a secret. That’s kind of funny.
I guess it just doesn’t surprise me that the specifics of the deal have not been made public. But in this country, I don’t see how that’s going to stay quiet for very long, because that will have to go out with all the opt-ins. They will likely not say, “Opt into this deal, but we’re not going to tell you what the terms are” however much Google would like that.
Plus, HFA acts as an agent for their publisher principals, so they’ll have to disclose the terms.
What appears to have happened is that the publishers just walked away from the lawsuit, let the past go uncompensated and agreed to a deal prospectively for the future. I don’t really think that’s so great, personally. I don’t think it’s a good idea to sue somebody and then drop your case for no compensation. If you’re going to go to the trouble of suing someone, you should stay in.
Google seems to like its class actions as anyone who has followed Google Books or Google Buzz will know. Google likes to get rid of liability through what appears to be a “prepackaged class action” that limits the amount Google has to pay and gives Google a prospective license. That angle failed miserably in the Google Books case because they tried to make a prospective license part of the class action settlement. (Class actions are designed to deal with retrospective harm, not prospective licenses.) But what they failed to do by settlement they maybe can accomplish by prospective contract.
Does this mean that a large number of publishers have walked away from potential performance royalties? I don’t know whether or not ASCAP or BMI had deals in place, but it seems there would be performance royalties out there somewhere that haven’t yet been claimed.
This situation is really about sync licenses, not performances.
It’s interesting, because I interviewed an artist named David Choi, who has 95 million upload views on YouTube. And he said he never got a single check as a result from his PRO.
And that doesn’t surprise me. The YouTube people are interesting, because they are sending checks. When I talk to label people, I hear that the YouTube checks have gotten a lot bigger if you’re a major. But paying off people who can sue them is the way Google has approached many aspects of their business, including the recent payment to the U.S. Government over Google’s sale of advertising for illegal drugs.
Frankly, until iTunes had been around for a couple years, iTunes approached it similarly; if you were an independent, you got a reduced rate on your wholesale price. That didn’t last very long and iTunes has been great with independents ever since. But YouTube and Google have approached their business model the same way.
I was at a NARM panel a few months ago in L.A. where Sami Valkonen, who is now the international music licensing person for Google Music (whatever that is, because no one knows what that program is yet) confirmed that Google approaches it that way in front of a room full of indies. He said, “All I have to do is go out there and get a few of the big guys. If I get two or three of those, the rest will fall in line.” The indies in the room had a good laugh about that later.
But that’s the way Google thinks of it. So, as far as Google is concerned, if you’re an independent artist that doesn’t have a big label supporting you or someone to whom they’ve paid a lot of money for a license, they’re not that interested in negotiating with you and want you to take what is often called the “hillbilly deal.”
There is also a kind of unholy alliance that goes on in this kind of situation that could explain why an artist wouldn’t get a check: When YouTube makes a deal with a major, there’s an assumption that they will account. So, they’ll pay the major label. And I think the early checks were relatively pretty large – in the $30-$50 million range. Part of that was a settlement, and part was an advance on the catalog. If you are a major, it won’t take you that long – even at the absurdly low rate that YouTube seems to be paying – to recoup that advance at the label level.
So when the advance is recouped Google have to actually start paying checks again. Also, along the way, they have to render statements to the label that show the activity, because the label then is supposed to credit that portion of the advance attributable to the artist’s share of those performances to the artist.
And I’m sure that hazy accounting gets very interesting there, because you wonder if they are really cutting checks for seven cents.
And that’s the thing. YouTube has an incentive to send just enough not to get in trouble. And the labels don’t really want to deal with accounting that is too good, because the worse the accounting, the less money they actually have to pay out to third parties, like artists. And those third parties include producers too. I guess there might be some video directors that would get a percentage too, though not many.
Hazy accounting is nothing new in the record business. Because this YouTube lawsuit is not about performance royalties, rather about synchronization fees, does this mean that people walked away from all the synchronization fees they were owed prior to this settlement and then struck a deal going forward?
It looks that way. But if you read that HFA press release, it’s not clear whether or not there is any money being paid. And if I’m Google, I don’t think I’d want to pay those guys a penny, because as far as I’m concerned, I won the case and this appeal business is just periphery. Google even tells governments throughout the world, “Oh no, we won the YouTube case.” Even though it’s on appeal.
So, for them to pay money to anyone who is still in on the appeal to knock them out is probably not something they want to do, because they don’t want to set the precedent. So, I would doubt whether any money actually changed hands at all. And the license is prospective.
That’s amazing. As much as all this policy interesting, it doesn’t trickle down to the DIY artists, because they’re not necessarily getting paid now, and it doesn’t look like they’ll be paid then either.
That’s right (unless you get your little share of advertising that Google sells on your You Tube “partner” page). And here’s the dynamic that’s also at work out there that’s the counter balance to the good news: they try to turn artists against their record companies, music publishers, and unions. The reason? Google would much prefer dealing with artists who were not able to strike back and as much as artists may have a bone to pick with labels, publishers and unions, that’s a bone better picked in private. Does anyone really believe that Google has their best interests at heart, or is it more likely that Google would prefer their artists served up alone, powerless and broke?
What do all these artist organizations have in common? They are places where artists come together to bargain collectively, because it gives them greater leverage. And of course, these companies don’t like that. Lawrence Lessig, the academic who has had a huge influence on Google and its executive team, has a real problem with the societies.
When largely non-union companies like Google who have no experience with collective bargaining at all try to undermine the artists and go around their representatives and natural allies, they undermine the one last bastion artists and creators have to stand up to people.
So, Google would like to avoid anything that doesn’t scale, and they would love to avoid the labels, the publishers and the societies. And it should not be overlooked that Google no doubt sees itself as occupying the space of these “intermediaries” because Google wants to organize the world’s information whether the world likes it or not.
Which organizations does that include, specifically?
ASCAP, BMI, AFM, AFTRA, etc. To further illustrate my previous point, something came up the other day. Sirius is going around trying to make deals with indie labels to pay them their artists’ share and union share of money that would otherwise go to SoundExchange, which is another organization that is viewed as a middle man. Well, that completely screws the artist and completely screws the unions. And these unions have a side deal with the majors that even if the majors did do a direct license for works that would otherwise be licensed through SoundExchange, the majors will not take that money and apply it against un-recouped balances.
The reason these companies are going to the indies is because they can’t get any traction with the major labels, because the major labels already have agreements in place not to enter into these types of deals. So, how is SiriusXM your friend at that point above your union or your label? They aren’t. That’s not to say you don’t ever have problems with your unions or your label, but that’s your business. What Sirius, etc. is trying to do is turn the labels against the artists and the artists against the labels. And it’s a constant push and pull that really just ends up with huge companies like Sirius and Google making more money by reducing what the creators get.
My problem with YouTube is that when the day comes when they only have content that they’re authorized to have and when they’ve paid for everything that’s already on there, then we can talk about how great it is for artists. There’s a reason why there are no music deals for the Google Music service: No one trusts them. That’s the bottom line, and they’re really trying to come back from that.
Once this Protect IP Act starts in the House, I think it’s going to be a real eye opener in terms of just how deep this goes.
And what’s at the crux of the Protect IP Act?
Are you familiar with cyber locker sites like RapidShare?
Yes. You can basically Google anything.rar and you get it. Megaupload is another one.
Correct. The way those guys make money is they charge for faster access but also publish advertising served by third parties like Google. So, if you have an account with Megaupload and set up a mirror site as an individual, Megaupload will reward you for the number of uploads and downloads with points that actually become money at some point that come through your account: Web 2.0 for pirates.
I never understood why people were so willing to upload on there when there wasn’t any take. I didn’t realize there was an incentive.
Megaupload actually writes a check. And this is all on the Megaupload site. If you look at the memberships, it’s all laid out there. It’s pretty sanitized, so they never tell you what you’re being paid to do, except download from your account or upload to them. They have a direct commercial relationship with their user.
But then, in addition to that – and this is where the real money is – if you have a mirror site, they give you a link back to the locker that has the content in it. What you’re hosting on the mirror site is just the link; you don’t host the file itself. The file is on Megaupload. When a user goes to the mirror site and clicks on that link that takes you to the Megaupload site, a popup will come up. It usually comes up twice, and a user can dismiss it to get directly to the site. If you look at that popup, it has ads on it. And those ads are very often served by Google AdSense. If you want to learn more about this, go to popuppirates.com, which is a site that’s written by a friend of mine named Ellen Seidler, who is an independent filmmaker. Ellen has researched this system into the ground, and she even has videos about it. I didn’t fully understand the concept myself until I saw Ellen’s site.
But, Google then splits the money with the pirate. And Google will tell you, “Oh no. We verify all these accounts.” They do, but they allow you to change the URL once it’s approved. This same kind of functionality is what got the attention of the U.S. Attorney in the ongoing Google drugs case and resulted in a $500 million fine and now a shareholder derivative lawsuit for a very narrow category of their Adsense business.
So when the cyberlocker asks for an account, Google Adsense has a human check out the URL where Google is told the advertising will be served (which is not the ultimate URL that the cyberlocker intends to use), make sure that the fake site complies with their supposed rules, all a bit nod nod wink wink if you read the Google drugs plea agreement. They give the cyberlocker a code, so Google knows who to pay the ad revenue on this site, they know who he is and know who to pay based on what happens, whether it’s a click-through or an impression. Up to this point, they are just like all the other ad serving companies.
The difference is that once the cyberlocker gets the account set up, with most of the other companies, the cyberlocker change the URL without going through the same process over again. That would catch any shenanigans.
With AdSense, you can change the URL after you have been approved, and they typically don’t check the new URL. So, if I’m Megaupload and set up a website “Dimitri’s Kittens and Sunshine,” I get my AdSense account and then the next day, I can change it to Megaupload. And nobody at Google will say, “My goodness. There sure are a lot of kittens and sunshine on Dimitri’s account.” They just serve the ads and make the money.
And it’s a lot of money. They’re in pretty deep trouble right now for selling ads. They were selling ads for illegal drugs that were being sold online – like Canadian drugs, etc. – and the DOJ just announced that Google paid the biggest forfeiture in US history–$500 million. So, if just that little narrow slice of the advertising pie is $500 million, imagine what they make from copyright infringement. It’s really a lot of money. And everyone gets paid except the creator. And that’s what Protect IP is really about.
Is there anything the little guy can do?
The thing the little guy can do with all this legislation going on, that’s really more important than anyone might think, is call their congressman, particularly if their congressman has a leadership opposition (like Ohio, which is where Boehner is from) or you live someplace that people don’t associate with the music business, i.e., outside the centers.
Congressmen need to hear about it from everybody because it’s a jobs issue. The fundamental question is why should we treat bad behavior differently online than offline? No one would question an artist’s right to call 911 if their car was being stolen, but some people would like to keep the artist from being able to call 911 if their life’s work is being stolen. That distinction will not stand.
There’s an impression in the Congress, which is validly obtained but not actually valid. People think that if they don’t have a big entertainment center in their district, they don’t have to listen. But that’s not true. Members like Lamar Smith (Austin congressman who is chair of House Judiciary) understands this very well and has been a great champion of artist rights even though he’s not from New York.
We had some artists from Austin who did a video about what has happened to them, and the voices could literally have been from any part of our country. Members need to hear from their constituents about why this legislation is important to them. That’s not going to make you any money in the short run, but it definitely does help the cause.
On a certain level, we’re all in the same boat, from the big studios, to the little filmmakers, to the major record company, to the independent label, artist or songwriter. There is one copyright law for everyone and it is not being respected.
It’s not like the big guys are suddenly going to get rich if this bill passes. It’s going to start the process of establishing market rules online. The Brits have done it, the French have done it; more and more countries are doing this kind of thing.
The other thing people can do is do things like what Ellen Seidler did and keep track of their experiences with the DMCA. Eventually there will come a time when people are going to say that the DMCA just doesn’t work. There are two pieces to Ellen’s site. One is her analysis of how this advertising thing works. The other is a discussion about her experiences with sending out DMCA notices, particularly to Google, and the singular non-responsiveness of these people.
Also, go to SoundExchange and make sure you’re registered. If you’re a songwriter, make sure you’re with ASCAP and BMI and keeping track yourself of where your music is used. And be respectful of other people’s rights, so when the time comes for you to step up, you can say you tried to do it the right way.
Finally, only let people post your music on licensed sites. The individual artist has to take some responsibility for this too. If the purpose of DIY is to start controlling more and more of your world, what goes along with that is enforcing your rights. And when people start enforcing rights on their own, lawmakers need to understand that going up against the power of the Internet mob is really, really hard to do alone.
People of good will can never let the mob win.
To learn more about Chris Castle and the services he provides to the music community, check out the Christian L. Castle Attorneys website.