Holiday music sales were down this year in comparison to 2011. And music startup investment hit $600 million in 2012, bringing to light several music startups to watch in the coming year. Also, Billboard.biz reported that reversion rights might significantly change the music landscape in 2013.

 

 

2012 Holiday Music Struggling to Sell

 

Holiday music sales are down this year, according to Billboard.biz. Without a best-selling album like Adele’s 21 or a definitive Christmas hit like Michael Buble’s Christmas, the usually-busy music sales season has been slow. Compared to the period between November 12 and December 23 with weeks 46-51 of last year’s SoundScan calendar year, unit sales dropped 10 percent to 54.9 million from 61 million copies scanned last year. However, digital album sales were up 5.3 percent, while CD sales went down 15.4 percent.   

 

Even though year’s 51^st week on the SoundScan calendar included December 24 – a huge shopping day – analysts say the 52^nd week of 2012 will not likely add much extra to the year’s sales. Last year’s holiday season boasted Drake’s Take Care, Buble’s Christmas, Nickelback’s Here and Now, the Black Keys’ El Camino, Adele’s 21, Young Jeezy’s TM 103:  Hustler Ambition and Justin Bieber’s Under the Mistletoe, which combined offered weekly sales of more than 200,000 units on 12 different occasions during the holidays. This year, sales only hit the 200,000-unit mark four times with One Direction’s Take Me Home, Taylor Swift’s Red (which hit the 200,000-unit mark twice) and Rihanna’s Unapologetic (which sold 238,000 in the period around Black Friday).  

 

While many music merchandisers complained of lackluster music sales, others said that business was not down for those not relying on music. For example, Newbury Comics, which has branched out into fashion merchandise, experienced a sales boost this year because of its shift in focus. And Super D’s CD online sales and online fulfillment company’s VP of retail sales Tim Hinsley said he believes there was significant sales growth this year, even though VP of wholesale sales Bobby Miranda took a slightly different view:  “Some were up a little, and some were down a little … Retail saw a last minute rush … There weren’t a lot of releases that made an impact. There wasn’t a blockbuster release that sold throughout.”

 

Newbury Comics’ chain director of purchasing Carl Mello said that Red sold well, but there was a lot to make up for with the lack of “200k deltas” in 2012. But there were “a lot of albums that did what you hoped.” There was Bruno Mars’ Unorthodox Jukebox, Alicia Keys’ Girl On Fire and several other new heritage artist titles like Led Zeppelin’s Celebration Day DVD and the vinyl versions of Beatles’ catalog albums:  “At the end of the day, there was a lot of decent records, but with less demand.”

 

Music Startup Investment Hitting Big Numbers

 

Music startups raised record dollar amounts in 2012, according to a recent post in Digital Music News. This year, investors shelled out $619 million to music startups. And much less money was invested in companies attached to music, with even less being given to businesses that license music.  

 

Despite the over $600 million raised by startups in recent months – which represented a 34-percent increase in funding among startups compared to funding in 2011 – Billboard asserted that the dollar amounts are a bit skewed, as not all are strictly music companies. For example, Gumroad, which got $7 million, has an online direct-to-fan solution for musicians and labels, but is not only a music service. And Backplane, which got $4,500,000 is an online social network that has been pushed by Troy Carter and Lady Gaga but is not any more music related than Twitter or Foursquare. And there are many others that do deal in music, but only because they help build brands, offer software, hardware and media or provide ticketing solutions for people in all industries.

 

With all the companies that are not exclusively music related removed, $398 million was raised by companies rooted solely in music. And of that amount, $230 million went to on-demand, licensed services like Spotify and Deezer, thus proving what many have said is impossible:  Some companies that require negotiated licenses can actually raise millions of dollars.

 

And Spotify and Deezer are major points of focus for those who are hoping for evolution away from the current digital market that is heavily focused on Amazon, Apple and Google. This $230 million is invested in changing the way people listen to music and will probably bring about the most revenue and the biggest mergers, acquisitions and IPOs.

 

Investors also spread out $168 million among music startups not concerned with licensing issues. Radio services like Senzari, TuneIn and the social radio service attached to Spotify Soundrop collectively took in $20 million.

 

Analysts do not expect digital music services other than Spotify and Deezer to raise huge amounts of money in 2013. However, more money could come into the industry as a result of those services. Other companies like Soundrop will likely establish themselves as streaming companies grow.

 

And who among the startups funded in 2012 will make it big? Billboard reported there are several to watch in 2013, including audio hosting site SoundCloud, e-commerce and Twitter hybrid Chirpify, e-commerce tool Tictail, crowdfunding site PledgeMusic and music recommendation platform The Echo Nest.

 

Will Reversion Rights Change the Music Landscape?

 

2013 is officially the year that the copyright licenses or many master sound recordings will expire for many albums. And this will put many albums released in 1978 in line for potential reversion of ownership from labels back to the artists. Still, the only artists to file notice of termination with the U.S. Copyright Office have been artists including Pat Benetar, Journey, Devo and Billy Joel. And even experts and analysts are unsure of exactly how reversion rights will impact the industry, said an article on Billboard.biz.  

 

Some artist supporters have said that reversion rights will be “cataclysmic” for the industry and could be the beginning of a major and fast evolution. Still, label executives maintain that their companies will not see any significant change, and that it could just be an “overhyped potential disaster” in line with the Y2K non-event of 1999/2000.  

 

There was no federal copyright law for master recordings before 1972, so discussions of what will happen have been surrounding albums released after that year. After 1978, there is a 35-year copyright period, which will expire for artists that file a termination notice. Master recordings that were made between January 2, 1972 and December 31, 1977 are protected for 56 years. Artists have five years to file their notices. Those with 1978 recordings needed to file their notices between 2003 and 2011 to get back recordings in 2013, but can still file until 2016 to get them back in 2018.

 

Although artists like Pat Benetar, Journey, Billy Joel, Kool & the Gang, Lipps Inc., Roberta Flack and Peabo Bryson have filed their notices, major labels and artists alike have been ignoring these filings. And which albums the notices of termination cover has been confusing.  

 

To make matters even more confusing, artists and the RIAA have been fighting over the provision in a 1,740-page bill from 1999 that stated that sound recordings are considered “work-for-hire” and thus potentially can never belong to artists who were technically employees of a label.

 

Elliott Resnick, an associate with the firm of Shukat Arrow Hafer Weber & Herbsman said, “The issue is a complex one, and ultimately, this is an area where case law and business practices are still developing.”

 

An unnamed artist manager reinforced this uncertainty:  “It’s kind of a jump ball at this moment … [While artists have sent termination notices to their labels], there is a complete wall of silence from the labels.”

 

Some artist lawyers are confident that all lawsuits related to reversion rights will be sure victories for them and are choosing high-profile locations for the proceedings in hopes of setting legal precedent. But these legal proceedings will likely be expensive and take a long time.

 

Eric German, an entertainment lawyer from the firm of Mitchell Silverberg & Knupp said, “If you look at these past artist-label negotiations from a neutral perspective, the parties to these agreements always intended sound recordings to be considered a work-for-hire … that’s why the agreements use that language.”  

 

One area where copyright terminations might not be relevant is in films. Because a movie is a collaborative project with many “creators,” it is seen as a collective work, ineligible for termination. Some have claimed that albums also fall into this category, because there is a band, a producer and often songwriters and musicians involved in its creation.

 

But lawyer Bob Donnelly, who was a part of the initial 1999-2000 work-for-hire battle said, “It’s a stretch if they will be able to squeeze a typical recording into a collective work. Collective works were created to cover things like an encyclopedia. It strains credulity to try and say sound recordings are collective works.”    

 

When it comes to publishers, there is no work-for-hire provision, so the songwriter frequently gets ownership restored once paperwork is done. And most publishers are keeping their works, even if they see lower profits. One publisher agreed, “It’s hard to get pole position over the publisher in place.” And even though individual songs are up for termination and reversions, these songs will likely not be reclaimed unless part of entire albums, because the revenue from single songs will not support this type of lawsuit.

 

And will record labels continue their “ostrich strategy,” or will they eventually fight termination notices? Chris Castle of Christan L. Castle Attorneys said, “The whole issue is definitely not settled, and I don’t think anybody wants to have a lawsuit about this … I don’t think either side wants to take a chance and lose. The labels and artists will settle this on a case-by-case basis.”   

 

Many major label executives argue that artists are better off keeping their recordings in house. One unnamed executive said, “There are a lot of levers at our disposal that the record labels can employ in a negotiated settlement in order to retain those rights … We can offer a higher royalty rate for the expiring copyright, and we can sweeten the pot by offering to pay a higher royalty rate for albums that have not yet hit the 35-year point, and we can offer a higher royalty rate on records outside the U.S. Sure profit margins will be less, but record companies will likely end up keeping those rights because of the leverage they can bring to negotiations.”  

 

The executive added that he believes only the top 5% of artists will pursue the reversion process, in great part because of the expense involved.

 

Another major-label executive said, “Ultimately, this issue will wind up making for a really interesting couple of years.”

This past week, Pandora sued the American Society of Composers, Authors and Publishers in order to lower the royalty rate it pays to music publishers and songwriters. And in the days after the election, analysts discussed how the exit of pro-music representatives in the House could affect the industry. Also, Rolling Stone laid out the challenges former major label artists face when they go the DIY route.

 

 

Pandora Will Continue to Fight a Royalty War

 

Pandora Media is continuing to fight royalty rates for streaming music online and Internet radio. Last week, the company added another target to its attacks on performance rights by suing the American Society of Composers, Authors and Publishers (ASCAP).

 

The music service has joined a battle that has been fought for more than a decade, recently rejuvenated by a bill presented to Congress – the Internet Radio Fairness Act – that could change the way royalty rates are set. Ever since Pandora went public and streaming music sites like Spotify have started to cut into its revenue, which is largely based on the size of the royalties it pays out, it has been lashing out at all those who make money off music and accuse the radio service of trying to get a break at their expense.

 

The Internet Radio Fairness Act was introduced in September and, if passed, would potentially lower the royalties Internet radio services pay to record companies. Pandora, Clear Channel Communications and many other technology groups are in support of it, because they feel the change it offers would finally align its royalty payments with other digital services like satellite radio that pay less. However, the music industry was disagreed.

 

Pandora sued the American Society of Composers, Authors and Publishers – one of the U.S.’s major performing rights organizations – on November 5 in an effort to decrease rates for itself yet again, this time the rates it pays to publishers and songwriters. Pandora’s license with the PRO ASCAP expired nearly two years ago. And in this most recent suit filed in the U.S. District Court in Manhattan, Pandora asked the court to grant it a new licensing deal that had “reasonable rates and terms.”
Once again, Pandora is asking for fair treatment, comparing itself to regular broadcast radio. Radio stations pay 1.7 percent of their revenue in publishing royalties, less the amount they pay for advertising commissions. But Pandora pays 4 percent without deductions.    

 

A Pandora spokeswoman said, “ASCAP continues to seek rates higher than the current rates and above the agreement that they reached earlier this year with all of the major radio groups, which covers both broadcast and Internet radio usage for the majority of our competitors … As a results, we are initiating the process that has been in place for decades to resolve royalty disputes with ASCAP.”

 

While ASCAP did not weigh in, David Israelite, president of the National Music Publishers Association, was critical:  “It’s outrageous Pandora would try to reduce the already nominal amount they pay songwriters and music publishers, when Pandora’s business model is based entirely on the creative contributions of those songwriters.”

 

The recently-filed suit is also tied up with the controversial issue of direct licensing. ASCAP provides blanket licenses that cover the material it represents. But because some publishers, like EMI, have decided to work with PROs to manage their digital catalog, Pandora wants to be able to “carve out” the cost of licenses it has to negotiate directly from that fee.

 

These “carve-out” deals have been proven to be sound by two recent court decisions in favor of DMX, a company that provides music in retail stores and restaurants. Those who support the deals feel that publishers can make more money if they are able to negotiate for themselves. But those against them feel this undercuts the strength of collective bargaining through organizations and diminishes the worth of music licenses, which hurts artists.  

 

Did the Election Hurt the Music Industry?

 

The big news on November 6 was the re-election of President Obama, but the day also brought about the loss of one of two major music-business supporters, according to an article on Billboard.biz. Howard Berman lost his seat in the House after 30 years in office, and Mary Bono Mack, widow of Sonny Bono, was ousted after serving 14 years.

 

However, there were other friends of the music industry and those working on laws impacting webcasting royalties who were reelected and those that were already going to be in Washington in 2013. And the music industry could have pro-music-industry politicians acting as the chairs of judiciary committees in the House and the Senate, which will be important to continuing the conversation about copyright issues.  

 

Berman’s loss was the result of redistricting and a top-two primary system when he was pitted against another popular Democrat, Rep. Brad Sherman and lost, only earning 39.5 percent of the vote. Berman has been a longtime advocate for content owners, supporting anti-piracy legislation and co-sponsoring the Copyright Royalty and Distribution Reform Act. He also co-sponsored the Stop Online Piracy Act (SOPA) and was in favor of the Anti-Counterfeiting Trade Agreement (ACTA). He is also on the Subcommittee on Intellectual Property, Competition and the Internet.

 

RIAA chairman and EO Cary Sherman said, “In his 30 years in Congress, Congressman Berman has been a shining example of leadership and public service … His ability to legislate and his keen intellect have left an important legacy that will benefit creators and the country at large for many, many years.”

 

Many in the music industry feel that the loss of Bono Mack will be felt by artists and the larger music business, especially since she is co-chair of the Recording Arts and Sciences Congressional Caucus and, being a copyright holder herself through her late husband’s works, understands many of the issues faced by artists, publishers and songwriters.    

 

However, the music industry will still have friends chairing Judiciary committees in the House and the Senate. Sen. Leahy will be heading up the Senate Judiciary Committee because Democrats kept their hold. Although Republicans kept control of the House, the current chairman of the House Judiciary Committee Lamar Smith will run into term limits. And Rep. Bob Goodlatte, chairman of the Subcommittee on Intellectual Property, Competition, and the Internet is expected to take over chairmanship of the House Judiciary Committee in 2013.   

 

On the state level, music industry proponents in Tennessee – Bob Corker, Jim Cooper and Marsha Blacburn – were re-elected. And Utah Sen. Orrin Hatch, a songwriter and member of the Senate Judiciary Committee was re-elected for a seventh Senate term.  

 

Politicians at the heart of the raging war over digital performance royalties will also be in office next year. Jason Chaffetz and Jared Polis, who sponsored the Internet Radio Fairness Act, were re-elected to the House. And the author of a competing bill, the Nadler Bill, Jerrold Nadler also won his reelection to the 8^th District of New York. His bill is backed by SoundExchange and the RIAA.  

 

President Obama’s reelection also means that the two biggest people working on intellectual property law enforcement, Victoria Espinel (IP Enforcement Coordinator for the White House) and Director of I.C.E. John Morton will remain.  

 

Major Label, to DIY:  What Are the Real Challenges?

 

What happens when major label artists decide to go DIY? According to Rolling Stone, they face the same challenges as anyone else, and sometimes find the landscape of the music business more challenging than they expected.

 

Garbage is an example of a major label band that got a “crash course” in the new realities of the music business as they were recording their latest album Not Your Kind of People. After the members left Geffen, they started to investigate their options. Front woman Shirley Manson revealed, “We’re used to the old system … so we thought, ‘Let’s see what’s out there’ …” She and her band mates had been out of the game for so long that she admits they had little familiarity with the possibilities.

 

Because none of them wanted to sign with another major label, Garbage members decided to take a cue from Radiohead and Nine Inch Nails and release an album on their own. However, they quickly discovered how expensive the process of recording and making videos can be. Manson said, “The freedom it affords you is so amazing … but it’s nerve-wracking. We’ve put our own money into it. Bringing the record out on our own label poses some problems for us.”

 

Bands like Garbage that came to life in the music business’ profitable ‘90s as well as new bands that do not realize it has changed are learning the hard way that the industry is not even what it was five years ago, let alone 20. In the past, bands enjoyed sizable cash advances from labels to help them record albums and videos. And after their records were released, they would tour for anywhere up to a year. Mass outlets like MTV would promote them, and then the band would be able to take a break before starting the same cycle again.   

 

But in the Digital Age, recordings and touring just are not making money for labels or for artists. CD revenue has declined, and to compensate, musicians have to go on exhaustingly-long tours, then find multiple ways – from licensing songs to TV shows or video games, to asking fans directly to contribute to their recording costs – to put together a modest living.  

 

Dan Reed, music director of NPR’s World Café sees a lot of artists come through his studio. He stated, “I used to hear the word ‘overexposure’ more than I do now … In this crowded media market, I don’t think there’s such a thing anymore. Bands are vying for any spot they can where they can reach a sizable number of people. We’re all working harder. The music business is no different.”    

 

And musicians have to keep pushing out new material at breakneck speed in order to keep apace of the rabid music fans that are used to the bounty the Internet provides. The band Tennis decided to release its second album Young & Old just 13 months after its first in 2011. Singer and keyboardist Alaina Moore shared, “The demand for music and output is so high … If you stop altogether, which bands used to be able to do, people will assume the worst and move on and forget about you.” She added that the band’s management will even call asking for new tracks when they are out working on the road.    

 

The band’s manager, Rob Stevenson said that while Twitter and Facebook certainly brings about closer relationships between bands and their supporters, they provide an unfortunate distraction for artists that can take time away from honing their craft:  “Fans expect things to come directly from the artist … You have to get yourself to the next gig and do a good gig and do all your social media stuff. And there are still only 24 hours in a day.”

 

Amanda Palmer echoed the ridiculousness she feels sometimes trying to connect to her fans via social media. She tweeted with fans while sitting at her piano and writing a new song for her latest solo album. She said, “I felt kind of silly, and my superego was saying, ‘Really, Amanda?’ But hundreds of people were writing, ‘I can’t wait to hear the song.’”

 

Of course, to get around shrinking recording budgets and the need for record labels, some artists have started using crowdfunding platforms like Kickstarter. Fans contribute, on average, $25 apiece to music projects. And some bands often raise around $20,000, giving contributors autographed records, concert tickets and other items in return for their support.  

 

So, how do musicians really make money? Amanda Palmer made news when she raised over $1 million via Kickstarter to pay for and promote Theater Is Evil. While this seemed like a lot to many critics, she said she actually ended up with less than $100,000 after expenses:  “People say, ‘Don’t you feel awful begging your fans for money?’ And I say, ‘You don’t get it – I’m doing my job.’ Musicians used to think if they worked hard, they’d be a star like Madonna. Hopefully we’re seeing a new understanding of what it means to be a working-class musician. It’s a job.”

 

The truth is record sales have never brought in major income for artists. The cost of creating and promoting albums was simply charged against their accounts. Today, artists can count on album sales even less than ever before. And digital streaming has not yet settled in as a lucrative channel for artists. 

 

Touring is how a lot of bands are making ends meet, but making a living at it means spending huge stretches of time on the road. Party band Fitz and the Tantrums and the band Dawes each left home to promote their albums in the wake of dismal sales, and stayed out for almost three years, playing multiple shows per day at clubs and for online outlets. Lead singer of Fitz Michael Fitzpatrick said, “It’s really exhausting. You’re doing a performance for a website and you know they have almost no readership, but you do it anyway. You’re in somebody’s garage doing a taping and you know no one will see it, but you think, ‘OK, five more fans here or 10 more there.’” The band has to earn $3,000 per night just to earn its overhead. And it only consistently hit this amount after touring for two years.

 

Despite all the heartache, musicians say that the music business is giving them huge opportunities they never had before such as incredible creative freedom. Manson said that after enduring huge creative debates with Geffen, “We were immensely relieved not to have any major label influence whatsoever … I turned in some songs and they were met with unbelievable contempt. They were telling me that because they weren’t pop songs they were worthless, and I should make a record like Duffy.”

 

And selling music and tickets has become easier thanks to social media. The band Dispatch cut a deal with Facebook recently to sell tickets to shows at Madison Square Garden. The band spent no money and sold 58,000 tickets. Fitz and the Tantrums gave away free MP3s of their music in an effort to sell more tickets to their live shows and ended up increasing their album sales by 120,000 copies.

This past week, the evolution of the music industry was highlighted as Village People singer/songwriter Victor Willis won a copyright battle and NARM discussed its intentions to implement better systems for tracking and analyzing sales and consumer behaviors within the music industry. Also,  top music attorney Ken Hertz spoke about why artists need to shift their focus away from the traditional record deal.

 

 

Victor Willis and Termination Rights

 

Former lead singer of the Village People Victor Willis became one of the first songwriters to take the rights to his music back from music publishers who had held it for 35 years this past week, when California judge Barry T. Moskowitz dismissed a suit filed by two song publishing companies, according to Billboard and The New York Times. The publishers – Can’t Stop Productions and Scorpio Music – had disputed him when he exercised the “termination rights” copyright law provision to regain control over “YMCA,” stating that he had “no right, title or interest” in their copyright. The termination rights provision allows recording artists and songwriters to take back and administer their work themselves 35 years after the song was written.

 

Willis wrote the lyrics to “YMCA.” and co-wrote and recorded 32 other songs with the Village People. The publishing companies laid forth one of the arguments that has been predicted by experts who have been speculating about how publishing companies will react now that many legendary 1970s artists, like Bruce Springsteen and Billy Joel will be soon able to take back the rights to some of their most popular and profitable songs, arguing that Willis had just created “works for hire” while an employee of the company that managed the group. The other part of their argument was that since he was a co-writer, he could not reclaim his share of the song until the other copyright holders weighed in and agreed on the issue.

 

Judge Moskowitz disagreed and wrote, “The purpose of the act was to ‘safeguard authors against unremunerative transfers’ and address ‘the unequal bargaining position of authors, resulting in pat from the impossibility of determining a work’s value until it has been exploited.” He asserted that if the publishing companies’ interpretation of the law were correct, “it would be more difficult to terminate an individual grant than it would be to make it in the first place.”

 

“Termination rights” was added to copyright law in 1978.Therefore, many 1970s recording artists and songwriters can start to regain ownership of work they signed over early on in their careers in 2013. Recordings that have, over the years, sold millions of copies and have made millions of dollars for publishers and the four major record companies will soon be eligible to be taken back.

 

Despite Willis’ big win, the attorney for the plaintiff expressed confidence that while Willis regained the rights to one of his songs, it does not mean a “big victory,” as it does not dictate he will gain control of the many others he wrote. He added, “We predict that when such a determination is made there will be little change from the current status that exists today … The case, in short, is far from over.”

 

Willis is an interesting first example of a songwriter successfully using the termination rights provision, because the Village People did not come together naturally, rather were put together by producers and managers, with each member being given a very specific role. Willis’ lawyer said, “This is the first case that’s interpreting the statute that deals with termination rights … The significance of the ruling is that one author who gives a grant to a publishing company has the right to recapture the copyright interest he created 35 years ago regardless of what other co-authors do or don’t do, and that author gets back that which he created regardless of the income stream he agreed to over 35 years ago.”

 

In a written statement, Willis commented, “I’m extremely pleased with the court’s determination … And I look forward to controlling my copyright interests in 2013, as the law provides.”

 

How NARM Will Finally Integrate Big Data

 

At this year’s NARM conference earlier this week, attendees noted the increased use of “big data” terms, such as “key performance indicators” (KPI)and “regression analysis.” As Billboard reported, after years of relying on SoundScan sales numbers, the music industry now seems ready to embrace the huge amount of data that is available to them thanks to the Digital Age in order to work more efficiently and create products that will make consumers happy and satisfy the creative and monetary needs of artists and music companies.

 

Data in the past decade has moved beyond just CD sales and radio listening behavior. NPD Group can now track consumer purchases of concert tickets, artist merchandise, sponsored products, “listens” attached to music collections and Internet radio and users’ activity on social media sites. On May 8, Russ Crupnick of NPD gave a demonstration that even showed how Neil Young fans most like to experience their music – by listening to music they purchased and not getting the music through streaming sites – as well as which non-music products they most frequently buy. And while Nielsen tracks consumer purchases and media consumption, cutting-edge companies like Radian6 and Wiredset can track data being exchanged over social media.

 

However, while there is a lot of data available, experts like Ethan Kaplan, founder of Live Nation Labs and VP of product development at LiveNation.com stated that those tracking data have to be wary of data informed by “narrow experiences.” Facebook likes or music purchases wrapped up in digital rights management can produce biased data. For example, a terrible user experience might not be reflected in the data it produces. Kaplan stated that to counteract this phenomenon and others like it, ratio-based metrics like daily average users vs. monthly average users, average revenue per user and groups of users over time provide solid insight.  

 

The music industry has long been reluctant to adopt new methods of data tracking and analysis, an overwhelming task in the face of completely rebuilding systems that have been around for decades. Therefore experts predict there will be “growing pains” as new systems take hold. Working with the data will require training within organizations and the development of new skill sets. Those at record labels, music publishers, promoters, agents and artist management companies will have to brush up on math and be comfortable with simple statistical analysis, or else they will come up with faulty conclusions which could ultimately negatively affect sales and profitability.   

 

Also, getting solid partners who can actually put the data to use will be critical. Colin Willis of Next Big Sound, a company that teamed up with Sony Music to create data tools that improved reporting processes said the music business is in the early stages of adopting new strategies and have not yet started to turn big data into actual practical intelligence:  “It’s about really having the right tools around data.”

 

Attorney Ken Hertz, on the Artist Reality

 

Top music lawyer Ken Hertz (will.i.am, Will Smith and Britney Spears) was also making waves at the NARM conference on May 9 when he spoke frankly on an artist branding panel about the fallacy of traditional models of  success within the industry. He talked about the harsh near impossibility of getting a profitable record deal and why musicians need to get realistic about their career goals.

 

He said, “I think the reality is the following:  99.9-some odd percent of every kid in the world that wants to have a recording career won’t have one, won’t even meet someone like the people on this panel. And of the people that do meet someone and really get a shot, some fraction of a percent will have any chance of having a career.”

 

Hertz went onto describe the process of having a successful career as an artist as “like winning the lottery,” stating that only 95% of the people that put out records do not make a living from that.

 

However, his harsh tone changed – though only for a moment – when some audience members expressed discouragement and frustration:  “We all know the truth. You don’t have a chance of succeeding unless you believe in yourself. So, you have to have unbridled confidence even to have a chance to succeed. And nevertheless, when you do the math, the reality is you won’t … The fact is that the people on this panel don’t play the lottery for a living. We work for the lottery. And the reason that people play the lottery is because it’s easier to understand the prize than to understand the odds.”  

 

Despite his negativity, Hertz did deliver some practical advice for artists trying to brand themselves in a way that will get them noticed by important gatekeepers:  “The pitch has to include the story. You have got to gift wrap this pitch for the people you are doing this for because they have a choice. She only has so many hours to listen to this stuff, I only have so many hours in a day to listen to stuff.  In order for me to listen to something that you have, vs. what you have, I have to decide that it’s worth the time …So, my suggestion is if you’ve got a good social media story to tell, then that’s the story you should be telling. If you’ve got an artist with a voice that’s unlike any other, then play the music. Or, go out and find the money to produce a video that can have a viral success so that people will stumble onto it.”

 

He added that as the Internet grows and bands and artists get savvier about leveraging it, the game is getting harder to play. Artists need to do more to distinguish themselves and build their brand:  “Half-a-million hits is not a big number anymore. It’s an impressive number because it means half-a-million times, somebody clicked on it. But it is not a big number, and the tide is rising, and it’s much harder to rise above the din. And the din is getting larger all the time.”

 

Initiatives to bring more money to artists took the spotlight this past week as Viacom announced its upcoming Artists.MTV ecommerce solution and a court ruling against music piracy in India forced the shutdown of 104 sites offering unauthorized music. Also, blogger Aaron Colter analyzed how the “pay-what-you-want” business model could reform the music industry.

 

 

Artists.MTV Poised to Create New Revenue Streams for Musicians

 

MTV is in the process of building new artist-focused ecommerce sites where they can sell MP3s, concert tickets and merchandise, according to an article published by BloombergBusinessweek. The new Artists.MTV websites will be ready for musicians to build in May, and Viacom, Inc. hopes they will help MTV build a stronger business relationship with performers than has previously been possible. Many analysts note that this move could also could serve to re-connect the network – which has in many ways moved away from music towards reality programming and other forms of entertainment in recent years – to its musical roots.

 

Artists will be able to control their own sites and upload music, videos and photos as well as link them to Facebook and other social media sites. Vice president of digital music strategy at MTV Music Group Shannon Connolly said that Viacom’s hope is to streamline musicians’ online presence and also create a viable revenue stream for artists to help them overcome the challenges they have had in recent years making a real living off touring and traditional recording:  “We felt like the world needed a place that’s comprehensive and thorough and that allows artists to connect with fans at scale … The goal is to help artists get paid.”

 

Artists.MTV will also be linked to the VH1 and CMT music channels and will share advertising revenue earned through the pages with the musicians themselves. Artists will also get most of the revenue from MP3, tickets and merchandise sales thanks to a partnership with Topspin Media. Those signed to labels will also be able to send traffic to their other sales outlets. There will also be a “Tip Jar” feature on all pages, 100% of which will go to the artists.

 

Unsigned acts as well as mega-artists will both be able to create pages. MTV currently hosts approximately 10,000 artists pages. But the Artists.MTV project will increase this number to over one million pages at the time of public launch in the fall.

 

Connolly said the long-term goal is to make every artist searchable through the new network:  “Music fans should be able to search for any artist and never strike out … You should always get a result.” And MTV’s hope is that by creating a streamlined, artist-friendly web page setup process, more musicians will be drawn to participate:  “The pages will also allow artists to post once and publish everywhere.” Users will be able to choose whether they centralize their posts and updates through Facebook, Twitter or a variety of other online sharing services.

 

Viacom will also not demand that artists use specific retailers. They can connect pages directly to any digital music store to sell their tracks, connect to their preferred tour promotion website or send visitors to music videos on Vevo,com, YouTube or any other video services. Connolly said, “The goal here is to give artists the opportunity to monetize what they do.”

 

There will also be an opportunity for artists to be featured on Viacom’s TV channels. Starting in May, MTV, VH1 and CMT will each select an artist each month to showcase on the air through music videos, other TV shows and in promos. This announcement was made at the South by Southwest festival this past week.

 

MTV has already signed up high-profile artists to pioneer Artist.MTV. The pages will officially launch to the public in September, around the time of MTV’s Video Music Awards.

 

Over 100 Music Pirates Punished by Major Court Ruling in India

 

All 387 ISPs in India were forced by court ruling to block 104 sites that provided illegal music last week, providing a big win for proponents of SOPA-style legislation worldwide. However, an article on TorrentFreak stated that while many organizations within the music industry abroad celebrated, the Indian music business would like to see rulings like this as an opportunity to teach pirates and others with a passion for music about copyright law and how to properly adhere to music licenses.

 

MPAA Chairman and CEO Chris Dodd praised the ruling, saying, “Content theft is a global problem and we must have a global commitment to solving it. This is an important opportunity for the Indian government to move forward with strong protections against online theft.” He also added that he hoped the film industry would continue to show similar proof that it is possible to be both “pro-technology and pro-copyright at the same time.”

 

While the recent ruling in India may seem like a victory for SOPA and other legislation, it is not necessarily groundbreaking. India has had site-blocking legislation in place for quite some time. In fact, Indian film companies have won cases in the past – though not on as large a scale as the most recent ruling.

 

At the Calcutta High Court, 142 music companies affiliated with the IMI – India’s answer to the RIAA trade group – got licenses to bring about the shutdown and cooperation of every last ISP. And implementation will be just as thorough:  ISPs will have to implement both DNS and IP address blockades to prevent pirates from accessing a DNS outside India. Deep Packet Inspection will also be monitoring the process to make sure the domains stay blacked out.

 

IFPI CEO Frances Moore commented, “This decision is a victory for the rule of law online and a blow to those illegal businesses that want to build revenues by violating the rights of others.” However, she added that she hoped the Indian government would use cases of website blocking as an opportunity to examine even further anti-piracy legislation, especially since one of the main sites – Songs.pk – has already managed to get around the blockade by re-launching as Songspk.pk.

 

Even though Indian record labels have been forceful about blocking sites, Apurv Nagpal, CEO of India’s major label Saregama stated that the goal was not to annihilate offenders, rather to acknowledge sites’ passion for music and help teach them how to obtain proper licenses:  “We don’t want these sites to be shut down. We want them to pay a license fee and flourish asa business … There are legitimate businesses in operation too. The scope is there, and we want these sites to be legal.”

 

Will “Pay What You Want” Save the Industry?

 

Trusting fans to pay what they want for music has been a radical and somewhat controversial topic since Radiohead released their first post-EMI album In Rainbows using this business model in 2007. And while many fans did download the songs without paying for them (playing out the music industry’s greatest fear), the album still brought in more revenue for Radiohead before its regular release than their previous traditionally-released album Hail to the Thief. And according to a post on Digital Trends by blogger Aaron Colter, this and many other examples signals that the “pay-what-you-want” idea could actually be helping to rebuild the future of the music industry.

 

Colter noted that the fact that digital sales surpassed physical album purchases for the first time ever in 2011 could provide the perfect opportunity for innovative musicians and industry leaders to get out of the rut of some of the long-standing, outdated business models that have been dragging profits down since the beginning of the Digital Age.

 

The pay-what-you want model has been big in recent years with Radiohead and other artists experimenting with the strategy and crowdfunding sites like Kickstarter, Pledge Music and others helping enlist the help of their fans to raise money for their dream projects. While some artists have been successful at adopting the model, Colter points out that others have not and that even Radiohead has now abandoned the idea, signifying that perhaps relying solely on consumers to pay when they don’t have to “may not be a sustainable practice for artists or record labels.”

 

And a lot of indie artists and entrepreneurial music startups have crashed and burned. The site Patronism launched in 2011 and offered a subscription-based service where fans could connect with their favorite bands by paying no more than $10. However, the company has been unable to expand beyond a roster of small, unknown acts. And the website Daytrotter changed from free downloads supported by ads, to private and ad-free subscriptions that start at $2 per month. The site claimed that the cost of recording and distributing free music via ad revenue was unsustainable. Those who have taken the pay-what-you-want approach agreed that the success of the model greatly depends on musicians making an extra effort to reach out meaningfully to fans who contribute, especially those that contribute the most.

 

Colter also pointed to Jared Mees, musician and manager of the Portland, Oregon-based label Tender Loving Empire. He started an online system called The Priceless Music Project in 2012, reaching out to IndieGoGo fans in an attempt to raise $48,000 to fund a pay-what-you-want site. He wanted to add the “guilt factor” of disclosing details the related costs bands have for producing a record, ongoing touring expenses and how much money the most supportive fan donated.

 

While his project only raised $4,000, Mees said that he still plans to add the model to his label’s website next year. He also added that he doesn’t think record labels will ever become extinct, even if they don’t get on board with new strategies, because they will always be strong “curators and consultants.” However, the breakdown of income for most indie artists is typically split between a few different sources. In Mees’ case it is 30 percent digital downloads, 20-25 percent physical albums, 20 percent show ticket sales, 15 percent licensing and 10 percent merchandise.

 

In his post, Colter also agreed that while big-name, intensely popular artists need a large team of professionals to stay afloat, the idea of the record label still could be changing from focusing on a large roster of musicians into revolving around a single artist. And he pointed to the example of DIY dynamo Amanda Palmer, who has managed to run her career the help of a small team by staying on top of online tools and connecting with fans worldwide through a rigorous touring schedule. She releases all her music by the pay-what-you-want creed through Bandcamp, sometimes donating proceeds to charity. And many agree that this model helps fans feel connected to artists in a meaningful way and encourages them to pay more.

 

And Palmer said that the key to any successful model is making it easy for the consumer:  “… I have a fundamental belief that people love to support artists. [W]e just need to work towards a system where the act is as simple as tossing a dollar in the basket of a musician whose street music you’ve been enjoying. Musicians need so drop any shame they’ve had in the past about asking. The asking has to just be second nature and feel as shameless and natural as the act of playing music itself.”

 

(For more on the concept of taking the shame out of making money playing music, take a look at the interview with Brian Meece of the crowdfunding site RocketHub published last October. As Brian said, “You want to push the ‘trade,’ not the ‘aid’ angle.”)

 

Lastly, Colter discussed the importance of using technology as a means of empowerment. Being a musician has not been a money-making scheme or even a very stable source of income for most that choose that path. However, he said, “… with the democratization of platforms that help bands reach fans and distribute their music, there’s never been more potential for a musician to cultivate a dedicated number of supporters. Combined with the right tools and the tenacity to engage listeners, musicians should feel more empowered today than ever before.”

 

And while the pay-what-you-want method might not be proving to bring great wealth to those who implement it, Colter concluded that the basic concept of “a direct exchange between creator and consumer” will likely be the way the music industry will continue to save itself in the future.

This past week, copyright laws reformed abroad as the British High Court sided with the music industry regarding Internet piracy. Also, upcoming initiatives by top digital music providers could continue to promote music industry growth. And Russell Simmons talked about why music executives, artists and fans are setting an example for other segments of the entertainment industry.

 

 

The Digital Economy Act Supported by Britain’s Government

 

The High Court upheld Britain’s newly-implemented anti-piracy laws by ruling against Internet service providers (ISPs) in a court case last week, according to a report in The Washington Post. The Digital Economy Act mirrors laws that have been implemented in France and Ireland and requires that ISPs send a series of warnings to users under suspicion of illegal movie and music swapping. And after several warnings, ISPs are authorized to deny repeat offenders access to the Internet.

 

ISPs, music industry executives, artists and music fans have been debating online copyright law enforcement worldwide, with record labels, film studios and others stating that new anti-piracy laws are the only way to prevent the deluge of illegal content. However, ISPs and civil rights groups have said they are concerned new laws will infringe on freedom of speech and expression.

 

BT Group and the TalkTalk Telecom Group PLC – two top ISPs in Britain – filed a court case stating that the Digital Economy Act was too expensive to uphold and would also be an invasion of privacy. A lower court had already ruled against these groups, and on March 6 at London’s Court of Appeal, three judges upheld this ruling.

 

Will Apple, Google, Amazon and Sony Perpetuate Music Industry Growth?

 

New initiatives by top digital music providers could help perpetuate even more growth in the music industry. An analysis by Anthony John Agnello on the Investor Place website outlined some new digital music initiatives and how they could bring music sales further out of their past slump.

 

Nielsen Soundscan reported in January that overall music sales had risen for the first time in eight years. And digital music sales grew a total of 14% in 2011, with more people buying music than ever before – a total of 78 million in the U.S. alone. This sales renaissance has been good news for labels, musicians and online digital music providers such as Amazon, Google, Sony and Apple.

 

But how will these companies continue to push music sales in a positive direction? All four have initiatives planned for 2012.

 

Sony will continue to improve the scope of Music Unlimited, its subscription-based service. The company has plans to bring it to Apple’s portable devices – iPod Touch, iPhone and iPad. They will charge $4-$10 per month and allow users to access a set number of songs – more songs for more money paid.

 

iTunes – the service that represents 70% of all music sales – intends to release a completely redesigned version of the iTunes player and the iTunes store. Insiders have claimed the new iTunes will provide better access to new songs and apps, which will make buying music easier and could lead to better sales. The new iTunes will also be reshaped to make interaction between it and new products like iPad HD, iPhone 5 and Apple iTV more seamless.

 

Google is the newest player in the digital music store arena and launched Google Music – its answer to iTunes – in November, 2011. The service, which has yet to impress critics, offers a fluctuating price structure for song downloads, from 69 cents – $1.29. It has also been unable to gain support from all music labels. This year, Google plans to release hardware attached to the Google Music service, including a home wireless radio system with a streaming radio service that will mimic Sirius XM. Listeners will be able to buy songs they hear through the service and keep their purchased tracks in the cloud to be played through PCs, Google TV systems and Android phones and tablets.

 

Amazon – the leader in digital download sales – will initiate changes similar to iTunes. Amazon has plans to improve accessibility to downloadable songs and make the purchase of products easier for users. The service also released a new version of its Amazon MP3 app for Android devices in February.

 

According to Agnello, even though there may not be an explosion in sales like the one that occurred when CDs came onto the scene, plans for new product offerings and methods of delivery for the five big digital players in 2012 is an indication that a “realignment of the music ecosystem” is “settling into place.”

 

He adds, “… even though labels worried about the impact of free Internet radio, music social networks and other streaming services like Pandora and Spotify, it looks as if those services are having the same effect radio did back during the height of its viability. Free Internet music broadcasts appear to be encouraging digital music sales.”

 

Russell Simmons, on Audience Connection in “Post-Racial” America

 

In the wake of what he and many others felt was a disappointing Oscars broadcast, entrepreneur and hip-hop mogul Russell Simmons commented on why all sectors of the entertainment industry need to trust their audience and stop fixating on racial lines in order to truly connect with fans and profit from their art. In an op-ed piece for the Hollywood Reporter, he explained why Hollywood is failing in areas where the music industry has found creative success.

 

As Simmons explained, Hollywood’s financial struggle in recent years can be attributed to its inability to truly embrace and trust its audience:  “I have deep respect for Hollywood and all its players. I know that they are, for the most part, well-intentioned, sweet, progressive, liberally minded storytellers who have grand aspirations for the world. The problem is that while they believe in the concept of an all-inclusive, post-racial America, they don’t trust in it enough to bank on it. And now, they’re paying for it.”

 

And just as the music industry has notoriously struggled against the shifts in the landscape that the Digital Age and other technological changes have spurred, Hollywood stays rooted in the “old guard” instead of acknowledging the films people actually are paying to see:  “No surprises. No scandals. No upsets. No party. No flavor. Everyone was up in arms at Billy Crystal’s [blackface] joke, which, in my opinion, wasn’t racist in and of itself and could have played well everywhere else. But didn’t go over well in a place that excludes people of color. That joke made a statement that the Academy’s voting practices and insight into American mainstream culture remains deeply flawed.”

 

According to Simmons, the audience seems to be left out in Hollywood, but this does not have to continue:  “Hollywood is just misinformed because those who run it are isolated from their consumers … If I had a nickel for every time I’ve been in a meeting and heard Hollywood execs say, ‘I love that, but the audience will never go for it,’ I would be able to greenlight all the movies I believed in. There is a definite disconnect …They don’t believe that a great number of people in Middle America live in, or aspire to live in, a post-racial America.”

 

What is Simmons’ advice for Hollywood? Film executives need to follow the example of the music industry and the advertising world, who pay attention to what fans want and use this to shape their marketing and even some of their creative projects:  “It’s a telling statistic that this year’s Grammy Awards drew in almost 40 million viewers, eclipsing the Oscar ratings for the first time in history. Why? Because music executives couldn’t segregate artists if they tried! The music industry gets it because they have no choice. My nephew Diggy and Justin Bieber may look different, but they are cut from the same cultural fabric and sell their records to the same fans. Katy Perry and Rihanna may appear dissimilar but have much more similarities than differences in the eyes of pop culture. Between the artists’ friendships/collaborations and basic consumer demand, the music industry has all the research it needs to know that segregating artists is not the way to sell records. Post-racial America has a face in the music of today, and thank God for that.”

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.

This past week, lawsuits loomed as Megaupload sued Universal, and Sony and Warner both lashed out against free streaming service Grooveshark. Also, the head of digital at Universal Music shared his thoughts on the likely future of the music business.

 

 

Tables Turned on Universal Music Group (UMG)

 

In recent years, whenever there has been news of a lawsuit in the music industry, the story is usually about a major record label suing a digital music provider over copyright issues.  However, last week the story was the opposite: Megaupload – a Hong Kong-based popular file-sharing site – filed suit in California on December 11 against UMG after the label blocked an original promotional music video created by Megaupload from YouTube, according to an article published last week in The New York Times.

 

The “Mega Song” video was posted on December 9 and featured pop stars such as Will.i.am, Kanye West, Mary J. Blige, Diddy, Alicia Keys and many others. They sang and spoke in support of the Megaupload site. Footage of their performances was interspersed with stats about the file-sharing service. Hours later, the clip was taken down by YouTube when UMG claimed copyright infringement.

 

The video seemed to be an original composition created by the file-sharing site, with the total consent of the artists. However, a spokesperson from the major label stated the reason for the take down as “unauthorized use of a performance from one of our artists,” though the artist has not been identified specifically. The Hollywood Reporter speculated it was Will.i.am’s lawyer Ken Hertz who filed a takedown notice and claimed the artist had not agreed to appear.

 

In the lawsuit, Megaupload states that all artists appearing in the video signed release forms that permitted the footage to be used for promotional purposes. In a statement, Megaupload’s lawyer, Ira P. Rothken said that every artist shown in the clip had signed an all-encompassing release form.  He added that the case was not even necessarily about copyright issues:  “Each star was completely aware of what they were doing and the things they said.”

 

The Digital Millennium Copyright Act protects YouTube and other similar sites if they unknowingly host illegal content, as long as they respond immediately to takedown notices. Rothken declared that the takedown incident is also a case of a major record label attempting to fight against free speech when it doesn’t agree with the actions of its artists.

 

Grooveshark Under Fire … Again

 

Sony Music Entertainment and Warner Music Group are set to sue free streaming service Grooveshark last week over copyright infringement, joining a lawsuit filed in Manhattan by Universal, who claimed the service had violated copyright laws with the help of its executives.

 

Even though three of the four major labels are gearing up to go head-to-head with Grooveshark, not everyone in the music industry is against the company, which allows its users to upload songs in their own collection and share them through streaming with other listeners.  The New York Times revealed the service has garnered the attention of several major advertisers , including Mercedez-Benz. And the company holds licensing agreements with a number of indie labels and with Merlin, an overarching organization that represents thousands of micro labels.

 

Once again, the Digital Millennium Copyright Act came into play, as Grooveshark claimed its music service is protected, as a company that provides third-party content and continues to comply with takedown notices filed by original copyright holders:  “We respect the intellectual property of all artists, and our strict policies are designed to ensure that our users only upload content to which they are entitled.”

 

The recent suit from Universal stated that Grooveshark’s executives had uploaded thousands of songs themselves, claiming to have proof in the form of e-mails from the company’s executives that bragged the company had been able to grow significantly without paying any record labels. The label also claimed that they had filed thousands of takedown notices, but continued to see the same music appear. Sony and Warner are expected to have similar evidence.

 

If Grooveshark is found guilty of breaking copyright laws, federal statutes could command penalties of as much as $150,000 per song.

 

UMG’s President of Global Digital and the Future of Music

 

Rob Wells, who has overseen digital at Universal – home of superstars like Lady Gaga and U2 – for just over a year recently spoke to CNET about where he feels the music industry is headed. A self-professed lover of Spotify, he has regularly stated that he plans to take a very “progressive” approach to digital music.

 

When asked about whether he thought the music industry might finally be emerging from its slump and ditching some of its old attitudes about technology, he discussed the shifting attitudes of the music fan:  “I have a very macro view of the industry …  Consumers [globally] are invigorated again about music. They’re invigorated about new services. They’re invigorated about new devices, which are driving adoption of new services. In five, to 10 years, when we compare back a bit and look at this massive transition and upheaval of the business, I’m hoping 2012 will be an important year … not just from a digital perspective, but [from a] repertoire perspective.”

 

Wells was also asked whether he saw any one music service as having the “momentum” to change the playing field, and whether any of the current services would be capable of taking down the dominant iTunes. He believes the rejuvenation of the music industry will not necessarily be about knocking down existing services to make way for new ones:  “The phenomenal thing we’re seeing is that all of these services are happily coexisting. We haven’t seen a decline in any existing service’s revenue alongside the launch of a new service or new model in any existing markets … These new platforms and services are all complementary.”

 

He added, “This stuff about digital revenues and how freemium will have fun at the expense of other services is kind of irrelevant because it’s incremental money. What we try to ensure is that there is plenty of clear air for every service to exist. “

 

And what are Wells’ thoughts on piracy, which obviously continues to be a hot topic with the potential looming changes in copyright laws as they relate to digital and online content? He thinks the business needs to go back to its heart:  consumers/music fans. “… Since piracy continues to be a challenge, we work to ensure that all of these services can happily coexist because ultimately this is about consumer choice. And the consumers are kind of favoring some services above others and of course you’re getting some churn, but what we’re not seeing is consumers churning away from richer revenue streams onto lesser or cheaper revenue streams.”

Last week, older artists and songwriters as well as analysts and legal experts discussed why induction into the Rock and Roll Hall of Fame and potential copyright amendments are keys to their continued success in the modern music industry. Also, RightsFlow was acquired by Google to help manage YouTube licensing.

 

Legendary Artists Look Towards Cleveland to Lengthen their Careers

 

How can older, established bands and solo artists compete with younger up-and-comers in today’s music business? The answer lies in being inducted into the Rock and Roll Hall of Fame, according to a recent article in The New York Times. Not only does recognition by the Hall of Fame bring immortality to many legendary artists, but it also could mean more sales and a bigger paycheck.

 

Many older bands and artists have been hit in today’s ever-shifting music industry, with sales dwindling and music fans gravitating towards younger acts. The net worth of the music industry is half of what it was ten years ago. To counteract this, every fall, managers and record labels fight to get their oldest artists nominated in hopes of them getting officially acknowledged as the “royalty of rock.”

 

Rewards for those that score a place can be huge. Weekly record sales for artists that are inducted typically jump between 40 and 60 percent in the few weeks after selection, says David Bakula, a senior VP at Nielsen SoundScan. A Grammy might help an artist sell more of a particular album, but Hall of Fame induction usually means more sales across an entire catalog.

 

However, the path to getting recognition in the Museum is not an easy and can take many years. And controversy has historically accompanied the process of selection. It starts with a nominating committee of 30 music critics, entertainment lawyers and recording executives who narrow the playing field down to 15 worthy artists. Then another committee consisting of 500 people that includes past winners chooses just five inductees. Artists cannot qualify for a spot until 25 years after their first recording, which means today, artists that started releasing music in the 1980s and earlier are eligible.

 

According to artists and others who have participated in and witnessed the induction procedure, there is a lot of backstage lobbying, and most of them are not even sure how acts get chosen during the first step. As an example, the Bee Gees were ignored 11 times before finally making it in 1997. And in spite of 27 studio albums and 45 years of non-stop touring, superstar Alice Cooper was rejected 16 times, finally being invited to join the ranks in 2011. As Cooper said, “I used to think when you got in, you’d understand how it worked, and how you get nominated – there would be a secret handshake, and there’d be a dossier about Area 51 and the president’s assassination.” However, nothing was revealed to him.

 

Rhino Records, in control of Cooper’s back catalog capitalized on his induction by running 30-second spots on TV during the induction ceremony and making Alice Cooper compilations, boxed sets and deluxe editions available both online and at physical retailers. As a result, in 2011, the number of young people attending his concerts increased significantly, and sales of his entire collection rose from 75,000 to 115,000 from 2010, to 2011.

 

And not only do record sales increase for inducted artists, but new, career-reviving opportunities appear. In 2009, now 74-year-old Wanda Jackson, “the queen of rockabilly” was inducted and got to collaborate on an album with Jack White as a result. Suddenly she was appearing everywhere, making television appearances and opening for Adele during her 2011 tour.

 

Labels benefit also, when awareness of some of their back catalogs is increased and people start buying older albums.

 

Those being inducted in 2012 are Guns N’ Roses, the Beastie Boys, Donovan, Red Hot Chili Peppers, Laura Nyro and the Faces. The official induction ceremony will take place in April, 2012.

 

“Funkytown” Songwriter is Leading the Copyright Fight

 

The emergence of a long-existing provision in U.S. Copyright Law could cause a battle between Minneapolis-based songwriter Steven Greenberg and the music industry. And this battle could cause other songwriters and artists to start a war. Greenberg was responsible for writing the 1980 hit “Funkytown,” which led to huge sales for Mouth to Mouth, the record by Lipps Inc.

 

Since the ‘80s, his song has been used in TV shows, films, commercials and stage productions. Greenberg also gets paid for the song being institutionalized in several museums around the world. While “Funkytown” has not been played as much as the most-played song in history – which is “Yesterday,” by the Beatles, at 7 million recorded performances – its performances are approaching two million.

 

While Greenberg has refused to discuss finances publicly, the royalties and licensing fees his song has generated throughout the years have provided a great source of income. However, Universal Music Group, who owns the song’s copyright, has made even more money on “Funkytown.” The label has taken most of the funds generated by the song.

 

A 1976 amendment to the Copyright Act could cause revenues to shift. The amendment allows song authors to take back ownership of the song’s copyright 35 years after its creation, and it applies to every recording released since January 1, 1978. And Greenberg is the first songwriter in the country to file a “termination of transfer” notice with the U.S. Copyright office. If he is granted the transfer, the copyright will revert from Universal to him in 2015.

 

Greenberg said, “I’ll then own my own copyright and I’ll be able to negotiate with anyone I want, therefore giving me a much, much better royalty rate, licensing, you name it … I just get a much better deal all the way around.”

 

If more artists take advantage of this provision, it could mean another massive blow for the music industry, which continues to reel from the digitalization of the marketplace. As Greenberg’s attorney, Ken Abdo said, “If you can imagine having the vault of the catalog of major hit songs from 1978 on – and there are many – start reverting to the authors, that’s going to eviscerate the economic core of many of these record companies.”

 

Experts believe that labels and publishers will fight, arguing songwriters are employees of their record companies, making everything they produce their employers’ intellectual property. Obviously, artists will maintain they are independent contractors who deserve to ultimately own everything they create.

 

If artists win this battle, in an increasingly DIY-favorable environment, many will take control of the sale and marketing of their music. However, others like Greenberg may allow their labels to continue to handle their song’s copyright with a renegotiated contract. Greenberg predicted an entirely new music business:  “I think companies are going to pop up all around the country if this thing happens, and there already are companies [that administer artists’ copyright] … [These new companies] will do it for a lot less, and who knows, maybe they’ll do it better.”

 

Abdo also stated that music fans could be impacted when songwriters pursue this copyright transfer:  “This potentially changes the entire economic environment for the purchase of music.” However, the full impact on every piece of the puzzle will remain unknown until Greenberg and other artists take their cases to court.

 

YouTube and RightsFlow Merge

 

The popular online video site YouTube acquired the New York-based royalties company RightsFlow on December 9 in order to help it identify the owners of music people use in posted videos. The deal was made to help YouTube better manage its relationship with content owners, who are not typically asked by video creators before their music is used for free.

 

RightsFlow is in control of a database of over 30 million songs and helps ensure artists get paid royalties when these songs are used. YouTube already has a Content ID system that identifies songs uploaded by its users, but until acquiring RightsFlow, it did not have a mechanism that could find the songs’ rights holders. Content owners will now be able to decide to take down videos that use their music, or leave them up and collect a share of ad revenue.

 

In a blog post, YouTube product manager David King said, “We’ve already invested tens of millions of dollars in content management technology … We want to keep pushing things forward.” He added that by acquiring RightsFlow, the company is enabling the chance for more music to be available on YouTube and for the platform to be a better way to launch new artists.

 

Official terms of the deal were not released.

 

(And if you are looking to get your cover songs licensed legally by Limelight/RightsFlow, you can link directly through the main page of the Musician Coaching site.)