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.
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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.
Bill Wilson is Vice President of Digital Strategy and Business Development for the National Association of Recording Merchandisers (NARM), the #1 trade association for professionals in the music industry. For almost 20 years, Bill ran Blackout Records in New York City, which originated as a label for hardcore bands and was responsible for putting out albums by bands including Guided by Voices and H2O. He has also worked at a variety of other independent labels and distributors, such as Relativity Records, Caroline Distribution and Earache Records and was an A&R consultant for MCA Records in the 1990s. In 2001, Bill started working with internet start-ups and throughout the 2000s has acted as Director of Business Development for several music marketing and research companies. He currently runs NARM’s Digital Think Tank, designed to address issues surrounding enterprise-level digital music commerce. He is an active member of many music industry organizations, such as the American Association of Independent Music (A2IM)’s New Media Committee and speaks regularly about the digital space at CMJ, South by Southwest, Bandwidth, New Music Seminar and many other industry events.
Recently, Bill shared 10 valuable insights about what it takes to launch a music-based business in the climate of the modern music industry:
- Know the Animal You’re Dealing With.As a mature business, the music industry can be terribly confusing, but it’s necessary to understand the players if you want to do business as an artist or a startup. Educate yourself on the industry food chain, and understand where your product or service fits in.
- “Two for One” = Two Clearances for Every Song.If you plan on using a pre-recorded song from a signed artist, make sure you have clearance from the two main rights-owners – usually the label and publisher, but sometimes the artist themselves.
- Yes, You Need to Track Them Down. In the age of the internet, there’s no excuse for not doing due diligence on who owns what, and there’s no indemnification for ignorance of copyright law.
- But There’s Help. Resources to find out publishing info/to see who owns the recordings include Rightsflow and the Harry Fox Agency and any retailer like Amazon or iTunes.
- “Fair Use” is Not Fail Safe. “Fair Use” is a list of potential defenses for copyright infringement, not a clearly-defined right. It’s a term that gets misused a lot and a grey area that must be adjudicated in the courts … and that is expensive. So if you want to go that route, be prepared for a long war of attrition with deep, deep pockets and a strong possibility of losing … or get the licenses.
- “It’s Cool” is Not A Business Model.When approaching a large content aggregator like a major label, understand they don’t care how cool you are. They need to take care of their needs and won’t disintermediate or undercut customers that drive their revenue.
- It Still Comes Down to “Sex, Drugs & Money.”These three things are key to obtaining a license. Well, not literally. It means: your app or product needs to have real sizzle and marketing oomph behind it (sex), it must be a “sticky” or addictive, repeat experience for the customer (drugs) and of course, it must provide a real, scalable revenue opportunity ($$$).
- Mind Your Ps and Qs … Literally.Metadata – the data around a particular track – is more important now than it ever has been. Names need to be spelled correctly and consistently, songs need to be titled properly, correct release dates and label information must be applied. Collecting and matching collateral contextual information such as liner notes, lyrics, photos and more are also becoming increasingly important to the products of the future, as well as information about how it was recorded: producer, studio, etc. It’s not just the music, it’s all the information that surrounds it – which you can curate yourself – that creates value.
- Context is King. Artist? Album name? Song title? Music isn’t just about those three things. There’s a story in who produced the album, side musicians, additional songwriters and other information. Artists in the studio need to keep track of these details because the products will be based on deeper and deeper levels of information. A picture isn’t just pretty; it’s a wealth of information that can be used to drive people to an artist. Who’s in that picture? What are they playing? What are they wearing? Amazing discovery experiences such as the 955 Dreams History Of Jazz App on the iPad use artist context to build immersive apps that lead to content purchase.
- Rome Was Not Built in A Day … But a Modular Home Can Be. If you’re looking for speed to market, you may want to look to see what APIs are in the marketplace that could apply to your business to get up and running quickly without additional licensing hassles. You need to weigh this against the benefits of having control of your own relationships with the providers of the music and related information.
To learn more about Bill Wilson and the work he does, visit the NARM website.
Rich Bengloff has been the President of the American Association of Independent Music (A2IM) since January of 2007. Rich has been in the music and entertainment industry for past 20 years and has worked at both music labels and music distributors and at both independent (RED, Combat/Relativity/In Effect) and major music companies (Sony Music and Warner Music) as well as WNYC Radio, where he was a senior level operations and financial executive. Rich’s perspective on the music – particularly the indie music – industry has been frequently published in both trade journals, magazines and websites including Billboard, FMQB, etc. and consumer print and digital publications the New York Times, Hypebot, Huffington Post, Daily Tech, etc.). Rich also is often called on to be a panel moderator/speaker at events such as CMJ, Digital Music Forum East, Midem, SXSW and the inaugural International Creative Industries Summit in Shanghai, China in 2009. Rich has an MBA from Columbia University and, is an adjunct professor of Communications and Media Management at the Fordham University Graduate School Of Business teaching the introduction to the music industry course and also teaches the annual NARM/A2IM music business crash course. He also serves as a board member representing the Independent music label community on the boards of the SoundExchange and the Alliance of Artists and Recording Companies (“AARC”).
Recently, I got to sit down with Rich and talk about the mission of A2IM and some advice he has for artists who are trying to build successful careers in the DIY space.
Thanks so much for taking some time to talk to me, Rich. From your vantage point as the president of your organization, can you tell me a little bit about A2IM and its mission?
A2IM just celebrated its sixth anniversary. And there was a pre-formation period, so it’s probably been around for six-and-a-half, to seven years. There were prior organizations called NAIRD, which was a combination of independent labels and independent distributors. But most of the independent distributors are gone now. So that’s almost a moot point. NAIRD was followed by an organization called AFIM, which went out of business in 2002 or 2003. It was not as policy oriented. A2IM was formed in 2005 and got started in 2006 to do three things: advocacy; commerce; member services. But the fundamental was that we had all these barriers to access in the past, and the organization was formed to make sure we didn’t have these barriers to access in the future. That was the main reason. We can call up Apple if we find out we’re getting 67 cents instead of 70 cents, like everyone else is getting on a 99-cent download, and say, “Hey, that’s not fair. Why are our copyrights worth any less than anyone else’s copyrights? Do the right thing.” And Apple has been unbelievably kind to the independent community in terms of parity.
I did a computation the other day and figured out missing out on those three cents is worth 100 million dollars. That’s the difference of us getting a 70-percent share of the download as opposed to a 67-percent share of the download. If you take iTunes volume and multiply it by three cents, both the artist community as well as the label community (the recording side of the industry) – that money getting split between the labels and the artists at 70 percent, and not even including the money that needs to go to the publisher – is over 100 million dollars. It’s a pretty big number. It’s split up among a lot of people, but it’s still 100 million dollars.
That’s how A2IM got started, to make sure that everyone has access – whether it be access to promote, access to monetize or any other access. It’s a non-profit organization – a 501(c)6. No one here makes big salaries. It’s run on behalf of members by members. You can go up on our website and see who is on our Board of Directors. It’s elected on three-year staggered terms. Three or four new board members come up each year. There are term limits to make sure we’re fresh ideas and are a good forum for discussion. That’s important to us. A2IM does a lot of advocacy, and if you go to our website, you can see some of the work we do. Sometimes we’re with the artist groups, sometimes we’re with the major labels, sometimes we’re with ourselves. And sometimes we’re all together, like with the FM royalty we’re trying to get related to the Performance Right Act. It’s been stalled a little bit. But everyone else in the world gets paid when their artists get played on the radio except for the United States. And when I say the rest of the world, there’s the Organization for Cooperative Economic Development with 40 countries. 39 of them have a royalty for the sound recording owner and artist when it’s played on the radio. We’re the only country that doesn’t.
If that went through, would that fall under SoundExchange, or would that be a new organization that would administer those?
Probably. I’m a SoundExchange Board member, and I think the answer would be yes, but it would depend on the government. They would decide if they would use the existing organization or set up a new organization to administer it. But it would be a statutory amount, so it would most likely be administered by a government-directed organization. And given that SoundExchange exists, I would presume it would be SoundExchange.
How have you seen the concept of “access” in the music industry change during your 20-year career?
It’s been a dozen years now in terms of what is known as the “Digital Era,” because I guess most people use Napster as the kickoff, and that launched in 1999. I don’t necessarily agree with that. If you did say it’s been a dozen years now, I’d say the great thing that’s happened – and it’s become more and more prevalent – is that access is great. You used to have all these barriers to entry for indie labels as well as indie artists. You couldn’t get shelf space on the floor; you couldn’t get your music played on the radio. There were issues with old media and old commerce. The great thing today is that there is access for all. You can put your music up on CDBaby and sell it both digitally and physically. You can get your music up on certain websites, whether they be on demand services or streaming services. That’s a wonderful thing. You have all this access, and that’s the good news.
The bad news is that everyone has access. So, everybody is up selling their music and trying to monetize it. Everyone is up trying to promote their music, so it’s really difficult to stand out in a crowd.
That segues to what I considered the biggest event of the past 12 years, which was the closing of Tower Records five years ago. Before that happened, every city had a location where you could find your music. They carried a wide selection and back catalogue, whether you were world music, jazz or reggae. Virgin was still around, and there was Borders and also Barnes and Noble. And now even those have shifted quite a bit. In terms of retail, there as a dramatic change.
The second thing that happened was, we did this thing with the FCC about radio access. There was a consent decree against four major radio groups. There were also these rules of engagement that these four radio groups were supposed to follow in terms of giving everyone access. All A2IM did on that one was shoot ourselves on the foot. Their reaction to that was just to shrink the playlists even more, because they were afraid of regulatory ramifications if they didn’t give certain access to whoever it is that the government decided should have access. A2IM was one of the organizations that spearheaded that radio initiative.
I got a call from a member probably March of 2007 – that’s when the radio court case happened. And of course, Tower had closed in 2006. He said, “Listen, I have nowhere to sell my music anymore, and I can’t get any radio play. I just don’t know what to do.” And that was when I started to focus on the idea that there was a new economy now. This artist that called me was not really old, but he was someone that had been in the business for a while. And I realized we really needed to reeducate our people.
And how have you responded to this need for a re-education of artists to help them navigate the new climate of the music industry?
What happened after that member called to ask is that we started to put out a series of white papers. We have the Independent Music Label Roadmap, and we’ve done it in New York City and Los Angeles and Nashville and at events like NARM. While NARM happened to be in L.A., members from across the country attended that event. And that’s the conference where say, “These are the best practices.”
So, to help educate that member and other members like him, we also have white papers that are created for members by our larger members – people like Windup Records or Razor & Tie. What they do is teach our members how to do email marketing, direct to fan or how to use all the other social networks. And then after you’re using all the social networks they teach you how to use Google Analytics for free, or something better like Next Big Sound if you’re a bigger label and can afford that kind of thing. In the old days, you used to look at your marketing, and if you broke the band Jet, you would sit there and say, “Half our marketing worked. I really wish I knew which half worked.” Now there’s no gatekeeper between us and the audience in many cases. You know what your cost-per-click is if you’re doing something on the internet. You have a much better idea – and it’s not 100 percent, but it’s certainly better than in the old days – about what worked and what didn’t work. You know what resulted in good promotion and what did not, what resulted in good monetization and what didn’t. That’s very important.
You must be in a unique position to observe the independent label environment overall. Is that business expanding, shrinking or changing? Are the perils of staying in business the same as they used to be for the independent labels?
Our numbers are way up. Even with Roadrunner being acquired by Warner and Univision being acquired by Universal over the last three or four years, which is three percent of the business, we’re still over 30 percent of the business and over 38% of digital, which you’ll be able to read online on Billboard.biz in the coming weeks.
There was an op-ed piece I wrote back in February called Being Counted. What happened was, independent labels did really well at the Grammys this year.
I should take this opportunity to ask, because it’s really so confusing when it comes to who has a distribution deal, etc. As a label, at which point are you still considered independent?
That Being Counted piece speaks to that a little bit. “Independent” means you own your record label. So, Mike Curb owns our member Curb Records, even though it’s distributed by Warner Music. Normal Lear owns Concord Records, even though it’s distributed by Universal. Cliff and Craig of Razor & Tie own Razor & Tie, even though it’s distributed by Sony.
From the outside looking in, who is really “independent” can be difficult to determine.
Yeah, and think about it – why should a distribution agreement of limited duration determine whether something is independent or not? If you want to do a distribution chart, I have no problem with that. But, because I happen to use this distributor, do we have a chart by publicist or a chart by an independent promoter? No. These are all outside services which people contract. The people I just mentioned all believe they own their own label. What makes it even more bizarre is a lot of those people have direct digital deals; they have direct deals with iTunes, Amazon, Rhapsody, etc. They are still included in the majors even though that is not covered by the majors. That concept seems bizarre, because they actually don’t even service that part of the business, and they’re not in it. An “independent” as far as we’re concerned is one where a person owns a majority of the label. How they choose to distribute or publish it are just services that can be bought from anybody.
Well, the division between what is a label owner and an artist and an entrepreneur and an artist has virtually gone away.
To a degree, I agree with you. We have probably 30-40 label members who are artist-owned labels. Some like Burning Spear in Queens. Spear and his wife Sonia run their label out of their house in Queens, and it’s just the artist. Others have evolved over time, whether it be Righteous Babe or Joan Jett, or the Hanson Brothers. They’re the center piece of their label, but they also house other artists.
I assume a majority of the people you coach is artists and not labels.
The people who read this blog are usually people who recognize they’ve been thrown overboard into the Atlantic and there is no help coming, so rather than getting good at screaming, they’re getting good at swimming. Knowing which perils an independent label faces and what that climate looks like is extraordinarily important to them.
And what advice would you give to DIY artists trying to manage their careers now that everyone has such easy access? How can artists get their music out there?
I would say to remember that there are different phases to your career. When I run into artists, they see our little tan cards at events, and they say, “Gee, who’s this from?” And then they’ll come over. And some think that A2IM is a record label, and I dissuade them. And then they ask me to introduce them to members, which I don’t do.
But the artists I run into do ask, “What should I do?” And I say, “What have you done so far?” And the answer is usually that they went somewhere and pressed up 500 CDs. And then they get excited and say, “And I’ve sold 125 of them already.” And I say, “That’s great. How many of those weren’t to your aunt, uncle, best friend, etc., and what are you going to do with the other 375?”
And to other younger artists I run into who say they’ve pressed some CDs and sold a few, I usually also then say, “Do you have an email list?” And they usually say they do, and they use it only to tell fans about their shows. And then I ask them if they ever sell their fans any music or give any away for free. And then I say, “Why don’t you send each person on your list a free download?” And the artist will say, “Yeah. I have some B-sides from the album we put out.” And I say, “No. You only have one chance to make a good impression.”
If you are young artist and looking to send a free download to fans, you want to send them your best cut. Send them the very best track from your new album and say, “Listen, I’d really appreciate it if you’d send this track to 10 of your friends.” You think you have an email list of 500 people, but you probably only have 100. And maybe of those 100, you can get 50 of them to send it to ten of their friends. And you can tell them that if three of their friends email you back and ask for a second track, you’ll send them plus those three friends a second track for free. And now you have a list of 500-700. And that’s a good list.
At what point in his/her career would being on a label be advantageous for a DIY artist?
Once you have 500-700 people on your mailing list, you have people who really care; you’ve created a viral street team. At that point in your career, you probably don’t want to be signed to a label or be that focused on monetizing your music. And you also want to keep your day job and not overexpose yourself with too many shows. Get yourself and your unique selling proposition going to a certain level. And once you get to the next level up from that, you’re going to need an agent and a publicity group behind you to make sure that when you have a show and you’re traveling, you’re doing it reasonably. So, if you live in the New York City area, you would just start out by doing the Northeast quarter and staying at friends’ houses. You can do a show in New England, New York, Philly and maybe as far south as D.C.
But at a certain point, you might need a label to make sure people come out to those shows and to deal with the promoters. And the label can say to promoters, “I’m behind the artist. Maybe you want to do something with this artist. And I’m also going to do an in-store at the record store in that particular city, and I’m going to bring them around and get some online and print press about their shows to let people know. I have an email list of X amount.” And if the label happens to be a brand as well, you can email people on that list as well and potentially sign some new people up.
For example, what Daniel Glass has done is brilliant. He took his Phoenix relationship and applied it to The Temper Trap. I don’t know if you’ve heard them, but they’re fabulous. Phoenix begat The Temper Trap, The Temper Trap begat Mumford and Sons. It almost becomes like bands helping bands within a label, which if you’re by yourself, you don’t get. You get help with touring, your music, etc. That’s the beauty of a label: You have stable mates, so to speak. You have people with relationships and expertise to bring you to the next level. And you don’t have to be with a major label to get to that level anymore, as witnessed by Vampire Weekend last year. You look at the charts, and there are as many indie artists there as there are major label artists. It’s really deep.
And even in the DIY community, you hear a lot of names over and over again. For example, Corey Smith is making a living touring, and he is one of the non-mega stars. It’s not like Trent Reznor or Amanda Palmer, who have made DIY careers for themselves but used to have major label support with other very popular bands. Corey Smith is a real DIY artist, though I find it interesting that he just signed with a label.
But there are different stages to your career, so I’m not dissing anybody. Our member Big Machine was able to break Taylor Swift, and whether Universal or Jeff McClusky did the independent promotion is irrelevant. Again, the label just bought a service; they did the work within their own mechanism. It was just to get the crossover to Top 40 at a certain point. Everything else was done by Big Machine. And I’m not saying there’s anything wrong with going to CDBaby. I think it’s a wonderful way to start to get your music out there.
eMusic Editor-in-Chief J. Edward Keyes has been writing about music since 1997 for publications including RollingStone.com, Newsday, the Village Voice and Entertainment Weekly. His piece “Where’s The Party? 13 Hours with the Next Franz Ferdinand” was selected for inclusion in Da Capo’s Best Music Writing 2006.
Recently Joe took some time to talk to me about how he got his start writing about music, how eMusic is helping new and emerging artists and what bands can do to get noticed by journalists, editors and other music industry decision makers.
How did you get your start in the music industry?
I started writing about music on the print side of things about 15 years ago. I wrote for some publications in Philadelphia, including Philadelphia Weekly and the Philadelphia Inquirer and steadily pushed my way along. Then I moved to New York and started working for places like Entertainment Weekly, the Village Voice and then Rolling Stone after that. I was fortunate enough to end up here at eMusic. I started as a production manager, and then slowly over the course of six years I worked my way up to Editor in Chief.
It’s been really exciting to be with a publication for that amount of time, and to see it really carve out its identity and figure out who we’re supposed to be and who we are supposed to be serving. Getting to be a part of that editorially and being able to lead that charge has really been one of the more exciting moments of my career as a writer and an editor. I feel like working at eMusic dovetails really well with my personal taste and the kinds of bands I’ve covered over the last 15 years. We’re coming up with really exciting consumer research to help us figure out who our ideal member is. As we’ve long suspected, it’s the customers who are really independent minded and have independent tastes and want to set themselves apart from the Top 40. They really want to dig deep and learn more about independent artists and artists with a singular voice and idiosyncratic point of view. For me as a writer, that’s perfect. Those are the bands that have always excited me over the past 15 years. To be able to focus on them and have a platform to expose independent and just starting artists out to an audience that is eager to learn about just those kinds of artists is a really exciting place to be.
I would imagine running a digital service provider like eMusic really does come down to magazine real estate in terms of people getting written about and placed. I’m guessing you have a lot of people vying for your time trying to get a featured spot. You’ve all of a sudden combined journalism with what was once a record company sales role, where people would be trying to get your attention to get prime positioning at retail. Is that a somewhat accurate description of what your position as an Editor in Chief entails?
In a way. But one of the things I’ve been proudest of is that we’ve been able to keep a wall around the editorial department and stay true to our indie music roots. I can honestly say that in the time I’ve been here, while we’ve been constantly getting pitches from labels about their priorities and what they think we should be covering, if it doesn’t feel right to us and we don’t believe in it, we don’t cover it. We really do have the latitude to do that and continue to cater to the independent-minded consumer. One of the things for me is that it’s not just about dictating the written editorial on the site, but also guiding the whole direction of the voice of the site in general: What kind of partnerships should be doing, and which artists should we be featuring across the site?
A good example of something we did recently that I was pretty proud of is what happened was surrounding the latest Lady Gaga record. It came out, and it was going to be a huge record and obviously something that people were going to be talking about. As an editor, I thought there was a value in talking about it, but we didn’t want to talk about it the way everyone else talked about it. So we had had Michaelangelo Matos – a long-time music critic for places like Rolling Stone and someone that wrote a book on Prince – write a feature on the site called “Six Degrees,” which basically connected Lady Gaga to people like Grace Jones and Lower East Side New Wave artist Christina. It’s really about thinking differently about even the really poppy stuff and trying to present it in a way that will be interesting to even the consumer that is interested in off-the-beaten-path music.
I’m glad you circled back that way. I definitely want to know more about the process of searching for your ideal customer, the person who is independent minded. In your research, have you discovered that there still a thriving, vibrant community of people who are shunning the Top 40?
Absolutely. We believe it’s a really strong market. I think in general you can see it anecdotally if you look at the kinds of bands that are in the news. Look at this week’s pop charts in general and who is at the top. It’s bands like Death Cab for Cutie, Adele and My Morning Jacket. Those are artists that you could broadly call “indie bands.” We’re coming off the back of some really interesting research in general that shows that the independently-minded consumer does exist in the market, and that it’s hungry for something different from the “big box digital stores.”
Is there anything about those demographics you can share?
Nothing beyond the fact that we know some of the characteristics of their personalities. They tend to be the types of people that like to turn their friends onto bands. They take a certain level of pride in their individuality and in stepping outside the mainstream. They have a really close, personal relationship with their music; what they listen to defines them. So, there is an even greater incentive for them to step outside the mainstream. It’s really more about personality than hard demographic. It can span a bunch of things, but it’s really more about their personalities and their tastes.
Malcolm Gladwell would probably refer to them as “mavens.”
It’s interesting to know that scene is still vibrant. Personally, I know when I saw Zeppelin end up in a Cadillac commercial, I don’t know what happened to me, but something shifted.
One of the reasons I wanted to interview you is because I want to know how artists can use your site to their benefit. Clearly there’s a benefit to being on a site that’s catered towards the long tail. Are there ways artists can get in and customize the profiles when their music gets picked up by your site through TuneCore or some similar service? Are there things artists should be doing to make the most of their music being on eMusic?
We have a couple things that are designed to work with artists just like the ones you described. First and foremost – and something I’m really proud of on the site – is a program called eMusic Selects. We’ve been doing this since 2008. The simplest way to describe it is that we scour the internet and go to tons of shows to find unsigned bands we like. And then we exclusively put out their records digitally for two months to our members. We give them the full eMusic platform. So they get full homepage coverage, a newsletter that goes out to all our members telling them about the record and some other tools. We have really designed it to be a stepping stone for artists who are just starting out and really need a leg up, but don’t have a label and just need broader exposure. I’m proud to say that there are artists who have been Select artists in the past who have then gone onto sign with proper labels: Best Coast; The Rural Alberta Advantage; Crystal Stilts. Next week we have a band coming out we’re really excited about called Army Navy, which is the next artist in the eMusic Selects program. Once every two months we try to find a band that we love and a band we think more people should be hearing and use all our resources to break them in the consciousness of our members.
I would say that one thing independent artists can do is let us know about their music and come up with a compelling pitch to get us to notice them or listen to them. It could be a viral video they make or a press release they send out – something that gets us excited about them. As I said, in addition, we’re constantly going out to shows and constantly scouring Myspace pages to find new bands that are good fits for our Select program. That’s one of the big ways we have to really boost independent artists and artists that are looking to get broader exposure on eMusic.
Another thing in general that goes hand in hand with that is, there are literally millions of artists – and especially unsigned artists – who are competing for a finite amount of space. I’m happy to say that eMusic has a more unique editorial department than a lot of the other editorial departments I’ve ever worked in. Everyone in the department really does listen to most of the things that are sent; they all go out of their way to find new bands. But the more compelling the pitch, the more interesting the thing surrounding the pitch – whether it’s a viral video or some kind of clever campaign – the more we’re going to pay attention to it. Sometimes it’s really helpful to put your music in a framework that will catch an editor’s eye and make them want to listen to it.
I know a lot of young bands shy away from comparing their music to other things that are out there. But it’s helpful for me when I get a press release if one of the first things I see in the first couple sentences is giving me an idea of what this is going to sound like and making it compelling to me and like something I want to click through. That’s something I respond to very well. And I do read those press releases and listen to them. A lot of it is about the presentation and how you present yourself, so any interesting things you can come up with to accompany that are helpful. You can make a video, a Twitter campaign or a creative Tumblr that is a spin on something you’re doing on your site. Interesting approaches tend to get the greatest amount of attention and make me want to listen even more.
Wonderful. And you’ve sat behind the desk where dreams go to die – and I mean that in the best way possible – for a number of years.
The one message I do want to get out is probably hard to believe for most artists: We do listen to the greater percentage of the stuff hat cross our desk, because so much of what we do is focused on indie bands and young bands. We know what the big bands sound like. We’re looking for the next big band.
You just mentioned a “to-do” for artists. Based on your experience as an editor, a journalist and someone that has been a bottleneck, can you tell me anything that artists should not do?
I have a lot of funny, anecdotal stories. For example, I remember a couple years ago I got an unsolicited package from a band, which was great; I always open those packages. But I think the band thought to catch our attention they should load it with hundreds of tiny pieces of foil confetti, which proceeded to spill all over my desk and all over the carpet. That was a bad decision. Lately bands also have been filling up their promo envelopes with candy, which is also a bad decision. If I open that, and in addition to your CD, I’m getting candy or something like that, it doesn’t really tell me about your music. And if anything, it feels like some sort of weird kind of confectionary payola. I would rather have an interesting spin on your record than goodies.
Also, bands should be really careful about how they select their band name. You would be really surprised at how many bands get dismissed from just having a corny or too obviously-jokey band name.
So band name is important . Along similar lines, is there a value in a good elevator pitch or mission statement? My favorite story related to that is about a band out of Boston that I asked, “What do you sound like?” And the kid confidently replied, “We’re the music you would want to listen to if you were robbing a bank.” I didn’t know exactly what that meant, but I knew I wanted to listen to it.
That’s a perfect example; I would definitely listen to that. Here’s another example of that. We recently had a writer write about the band Tunes. And he described their music as “the sound of stopping a subway train with your face.” It was funny, witty and made me want to listen to the music. Anything like that is effective – something quick, and pithy and snappy. And it’s going to get my attention. If you come up with something funny or striking that makes me laugh, you will have earned my respect at that point. Its’ good to put a creative spin on it.
Here’s the question I’m scratching my head about: Has the advent of digital distribution, which has made the digital distribution model so accessible to everyone now made the eMusic offering any less unique? Do you feel like your catalogue is still deeper than other catalogues?
I think with us, the key is the curation. If you go to some of the other major retailers and hit the main page of their music store, you’re going to see the same 10-15 records. With us – and largely because we have such a vast army of writers who are digging through the stacks – when you hit the main page, you’re going to be see things you’re not seeing in these other stores. We’re surfacing more of the deep stuff. So, sure, maybe in the age of digital distribution, TuneCore, iTunes and services like that will have a lot of the same records we have. But you’re going to see them in a more prominent place in our store. It doesn’t do much good for both of us to have the same records if on the larger retailer you don’t know they’re there. What we try to do is make you more aware of them and bring them out a little bit more. And we’ve seen sales that correspond to that: albums that we’ve surfaced get bought.
I was going to ask about that. By the sounds of it, you guys may very well have more impulse buys because you are a destination that is based on editorial.
We do definitely see a correspondence between the things we put on the home page and the things that end up being on our charts. When we used to take an older record we liked or an older record from the catalogue and make it “Review of the Day” and check the charts the following day. Without fail, you would end up selling more.
I think people trust us. We’ve been around for a while now, and I’ve been here for 98% of that time. We’ve worked really hard to cultivate that trust and to curate a very idiosyncratic voice. I think especially with the eMusic Selects bands, people know that if we put our seal of approval on it, we’re not going to take that lightly. We relationships we value, and we’re not going to throw something out there that we don’t feel comfortable recommending.
For more information about J. Edward Keys and his company, you can visit the eMusic website.
I got asked this the other day and I didn’t know the answer.
I happened to be chatting with my friend Barry Heyman who was kind enough to answer the question for me. Barry is an entertainment attorney with a focus in the areas of entertainment, intellectual property (copyrights and trademarks), and new media law.
Barry 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.
Barry- thanks for taking the time to answer this. Tell me what the legal ramifications are for recording a cover song and then giving it away free for promotion to promote the artist who covered the song? Do artists need to license the song to do this legally?
Recording a cover song can be a great marketing tool—providing artistic interpretation on a song that your audience may already be familiar with. A cover can also bring notoriety to your art from people who were previously unfamiliar with your work. However there are legal implications to covering a song even if you are giving it away for free.
Let’s begin with the basics. A song has two copyrights: the sound recording (often called the master) and underlying musical composition. Recording a cover song implicates the latter of these copyrights—the underlying musical composition. The composer and/or songwriter is the copyright owner of song. The Copyright Act lays out certain exclusive rights that the copyright owner has with respect to their copyrighted material, such as the exclusive rights to manufacture and distribute the musical composition. In order for an artist to not violate the copyright law, the artist covering the musical composition with the intent of manufacturing and distributing it would need to obtain the proper license from the owner, usually the songwriter or the songwriter’s publisher (either directly or through an agent).
Even if an artist is giving away the song for promotional purposes, the song still needs to be licensed. The type of license required to record a cover version is called a mechanical license which allows an artist to use a copyrighted musical compositions on different formats, such as CD and as a digital download.
Typically, cover songs are licensed with the songwriter(s)’ publisher(s). Publisher contact information can be found at the following performance rights organization websites ASCAP, BMI, and SESAC or with The Harry Fox Agency, a licensing agent used by many music publishers. In addition to licensing directly with the songwriter(s), the publisher(s), or The Harry Fox Agency, another option is using the licensing service, Limelight.
There is a license fee (royalty) associated with licensing and using the composition. This is called a statutory mechanical royalty rate. This Federal rate is currently set at $.091 for songs 5 minutes or less in timing, and payable per song for each unit distributed. For recordings given away as promotional products, it is not uncommon to try and negotiate a reduced rate (e.g., 75% of the Statutory rate), or even gratis (free), however the copyright owner is not required to grant it.
Now, if the artist/band wants to create a promotional music video based on the cover song, this requires license(s) as well, except that the license required is called a synchronization license. The statutory rate does not apply, as the license fee would need to be negotiated with the copyright owner in all instances. A couple of factors affecting video synchronization rates include the nature of the use, for example, promotional versus commercial use, and the length of use.