splash

Music Marketing

Posted By Rick Goetz on July 6th, 2013

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.

 

Posts Tagged ‘mechanical licensing’

Spotify, Mechanical Licensing and EDM News, April 14, 2012

Posted By Julia Rogers on April 14th, 2012

Online music services took the spotlight this past week as Spotify launched its new integrative “Play Button” and the music industry finally struck a deal with streaming services regarding mechanical licensing royalties. Also, industry analysis showed that electronic dance music has become one of the most lucrative niches for independent promoters and artists.

 

 

Spotify’s “Play Button” Revealed

 

Spotify launched its new streaming music widget on April 10, and according to Billboard, it will another step towards globalization for the already-popular music service. Using the Play Button, users can stream music through the Spotify desktop app using a widget on a web page. This is expected to help spread the word about Spotify to those not already using the service and even guides them through the process of registration.

 

The Play Button is also the introduction of new partnerships that will make the process of integrating the tool simpler for both artists and music fans: FanBridge; Tumblr; FanRX and ShareMyPlaylists.com. These companies intend to start using the Button in their different platforms. Other editorial partners, including Pitchfork, Rolling Stone, NME, Popdust, Spin, The Huffington Post, The Guardian, Time Out and Mashable. have signed on to write about Spotify’s new offering.

 

Charlie Hellman, Spotify’s director of product development shared with Billboard.biz that this new Button is a response to the frustration users have reported surrounding sharing music via the Intenret:  “Streaming on the Web was scattered, disparate and unreliable.” The two biggest examples of this disconnect are embedded YouTube videos that will not play because the content owner has asked it to be removed or the uncertainty of which tab on a Web browser is streaming music. Hellman added that the people at Spotify felt that having one music player to “manage playback,” promote consistency and mitigate conflict  would offer a more streamlined listening experience.

 

While the Play Button is new, streaming widgets are not. They were used often early on in digital music, as many in the music tech industry felt that widgets would help those with web pages play DJs or connect directly to retailers. However, newly-envisioned widgets have turned into incredibly powerful marketing tools. Popular digital music companies like Topspin and ReverbNation provide widgets for artists that help stream music, collect email addresses for their mailing lists and direct traffic to their personal or label websites. And many widget-based storefronts have turned into Facebook apps that help artists enhance the ecommerce component of their websites.

 

Billboard also speculated that Spotify’s partnership with Tumblr could be huge. Those using Tumblr copy the URL or Spotify URI into a Tumblr audio page, add text and then put the post out there for the world. And Play Buttons can be directly shared by other Tumblr users on their own feeds.

 

However, Gray Blue, Director of Music Industry Relations at FanBridge – a fan growth and marketing site for artists – stressed that streaming music is not just about marketing for artists:  “This is seriously an answer to the most continually-asked question I’ve had [from artists] for the last year and a half:  How do I monetize Facebook streams?” FanBridge will now be offering the option for clients to add the Play Button within the FanBridge Facebook app and essentially stream royalties from their Facebook fan pages.

 

The biggest impact of the Play Button could be that it helps create a real network that will give Spotify a competitive edge:  The more often Spotify’s Play Button appears online, the more new listeners will sign up for the service and the more other people and online companies will post Play Buttons.

 

Groundbreaking Digital Royalties Deal Finally Reached

 

The music industry finally struck a historic deal with the Copyright Royalty Board (CRB) about mechanical royalties rates on April 11, said an article in The Hollywood Reporter, and the RIAA chairman called it “historic.” The agreement will set rates going forward for digital music, settles an ongoing argument about statutory license fees and will set new rules for many “cutting-edge business models” such as cyberlockers, streaming services and other subscription-based music services.

 

This agreement was announced by the Recording Industry Association of America (RIAA), the National Music Publishers Association (NMPA) and the Digital Media Association. These three entities will soon submit a 25-page agreement to the CRB that allows existing rates and terms for CDs and downloads to be carried over. Five new categories are also being proposed to be added to Section 115 of the U.S. Copyright Act, the section dealing with mechanical royalties. Proposed amendments include adding the following items to the system as items that will bring revenue for artists, songwriters, etc.: “mixed service bundles,” which include locker services, ringtones, etc. that are joined with music-unrelated products such as mobile phones, consumer electronics devices or Internet services; paid locker services; purchased content lockers; limited offerings,” which includes subscription-based services that provide only one or several genres of music or limited playlists; music bundles,” including CDs, ringtones, digital downloads.

 

Internet music streaming royalties have been a notoriously-debated topic since digital music took off, and if these items are added, those in the music industry believe rate negotiations will be much simpler than they have been in the past. Lee Knife, executive director of the Digital Media Association stated that the new landscape that could be created by changing copyright law could provide huge growth and earning opportunities for everyone:  “Today’s agreement paves the way for our members to continue developing exciting new business models that satisfy consumers, create greater revenue opportunities for music creators and effectively fight piracy, the music industry’s greatest threat.”

 

RIAA chairman Cary Sherman added, “This is a historic agreement that reflects our mission to make it easier for digital music services to launch cutting-edge business models and streamline the licensing process.”

 

Live Music Industry Reveling in Electronic Dance Music

 

Electronic dance music has become one of the most lucrative genres in the live music industry and is bringing huge opportunities (and big money) for independent promoters and DJs, according to Ben Sisario of The New York Times.

 

Electronic dance music (also called “EDM”) has been around for decades, but has only attracted large-scale-tour-worthy audiences in the past few years. In December, 2011, Swedish House Mafia was the first electronic DJ act ever to headline at Madison Square Garden. And this coming summer, DJs like Avicii and Kaskade will appear at some of the same arenas as artists like Coldplay and James Taylor.

 

Why has it exploded in popularity recently? Sisario cites that pop radio darlings like Lady Gaga, Rihana and Katy Perry’s incorporation of the sound into their songs have brought it to the masses … en masse. And while record sales have stayed low for dance music – David Guetta’s big album “Nothing But the Beat” was a top seller in the genre, but still only sold 300,000 copies – DJs were recognized at the Grammys this year, with Skrillex winning three awards and Guetta and Deadmau5 performing alongside the Foo Fighters and Chris Brown.

 

EDM festivals have brought the spirit of the rave, once questionably-legal and relegated to underground clubs and warehouses, to the mainstream. Their profit margins have even attracted the attention of Wall Street investors. In an industry that has started to put all its live music money on “aging headliners” like Bruce Springsteen, Madonna and the Rolling Stones, EDM has become appealing because it is full of fresh faces and attracts hordes of young fans. CEO of the world’s largest concert promoter, Live Nation Entertainment Michael Rapino said, “If you’re 15 to25 years old now, this is your rock ‘n’ roll.”

 

As an example, in late March, the Ultra Music Festival in Miami attracted 165,000 fans. And events featuring EDM artists like Deadmau5, Tiesto and Afrojack in Los Angeles, Las Vegas and Dallas have been reporting comparable attendance. The opportunities for these DJs to earn money has also been great as a result of the explosion of live event attendance, according to talent agents, with many of the bigger acts earning $1 million for a festival appearance and $10 million for a Las Vegas club residency.

 

Independent concert promoters are also winning, as many – such as Insomniac, Hard Events and Ultra – have found a niche for themselves in the EDM live music industry. Analysts feel that part of this opportunity has arisen because of the nature of EDM, which is designed to create a feeling of community, as it is essentially “high-energy waves of mechanized sound that, at its best, creates a communal experience for a sea of strangers.”

 

The success of artists and independent promoters is also attracting investors from within the music industry as well as those on the outside. Huge corporate promoters Live Nation and AEG Live have started to invest. And outsiders like media entrepreneur Robert R.X. Sillerman have started to notice the power of EDM. He was responsible for bringing together regional rock promoters in the 1990s to build Live Nation.

 

However, while there is great opportunity in the EDM arena, getting into the dance music festival business represents a risk, as figuring out the real value of promoting companies is challenging and there are risks inherent in putting together events for tens of thousands of people. For example, at the Electric Daisy Carnival in L.A. two years ago, a 15-year-old girl died of a drug overdose. And there have been other deaths at other festivals, as well as an incident where at the same event in Dallas, more than two dozen people were hospitalized for drug-, alcohol- and heat-related issues.

 

However, the latest resurgence of EDM is still huge for the genre. Since it has previously been “mostly associated with secret locations and drugs,” the amount of money suddenly flowing in (the biggest investors have been offering deals ranging from $20 million to $60 million to buy out bigger promoters) has been surprising. Joel Zimmerman, a William Morris agent who books a lot of top EDM acts said, “It feels like the dot-com era … There’s a little bit of a gold rush going on, with outsiders looking in.”

 

And many of the dance festivals have created strong brands, selling huge numbers of tickets just based on their names and the audio-visual excitement they offer. Still, a partnership between DJs and large-scale investors could prove challenging. Live music has turned into a risky and low-margin business for promoters, and ticket pricing is a balancing act. Pricing tickets too high or too low can drive a successful festival out of business. And many also wonder whether or not dance music will stay popular, or if it will fizzle out eventually as it did like electronica did in the 1990s.

 

Of course, there are also two clashing cultures involved. Dance music promoters and managers tend to be distrusting of huge amounts of money and not familiar with the corporate way the mainstream live music industry is run. And many worry the festivals they have worked hard to make unique will lose their interactive spirit. Independent promoter Gary Richards of Hard Events said that the big investors he spoke with clearly did not understand the market. He added, “You just can’t franchise this like McDonald’s.”

How To Cover a Song – LimeLight

Posted By Rick Goetz on July 8th, 2010

Scott Sellwood is the Sr. VP and General Council of RightsFlow, Inc.  Prior to being at RightsFlow Scott was practicing law part time and playing in a band called “Saturday Looks Good to Me” who released albums on both Polyvinyl and K Records.  I wanted to speak to Scott because of his unique career and because of RightsFlow’s new product Limelight that allows you to clear cover songs legally.  If you want to check that service out immediately click HERE or click the icon below.

 

Music Consultant:

Scott, thanks for your time today.  Tell me how you went from part time musician / part time attorney to being at Rightsflow?

 

SS:

I started playing music as a kid and ended up in a number of indie rock bands over the years, including a couple bands out of the Ann Arbor, MI area that did pretty well and actually had some record deals and were fortunate enough to tour all over the world, although if we made enough money to pay rent and our cell phone bills, we were happy. After 10-15 years of doing that and learning the ropes of the music business to the extent you can as an artist, I decided to end the days of sleeping on couches and move to the business side of the industry. It was actually at the CMJ in 2008 where I was performing and came across Rightsflow and started to work with the company in January of 2009.

 

Music Consultant:

How did you pull off touring and being a lawyer?

 

SS:

I went to law school in the mid 90s while being a musician and led a very unique existence over the past 10 years where I was practicing law part time and touring part time and it was one of those situations where the band would have to turn off the stereo in the van so I could do a conference call.

 

 

Music Consultant:

It’s always great to speak to someone who has lived on both sides of the industry fence.  Before we get into Limelight, tell me about RightsFlow in general. I know this company is expanding rapidly and making lots of noise. Tell me about what you guys do.

 

SS:

RightsFlow at its core is a licensing and royalties services provider. The mantra is “created by musicians for musicians”. The idea is that clearing mechanical licenses and other types of licenses in the United States can be very difficult. So, we’ve developed some technology and leveraged some of our relationships within the industry to provide a product and a service that allows, artists, record labels, distributors or online music services to obtain mechanical licenses and pay the publishing royalties as quickly and painlessly as possible.

 

Music Consultant:

And those cover all different kinds of licenses, or specific ones?

 

SS:

Our core business right now is mechanical licenses, whether it’s an artist that needs one mechanical license for a cover song for their record or whether it’s an online music service that needs millions of mechanical licenses in order to stream content. We followed our customers’ needs. We’ve also launched products where we will report to International Rights societies for performance and mechanical usages. We also do a number of customizable licensing services, for example background music services and some sync licensing. We’ve started working with a number of karaoke online services to approach publishers to clear karaoke licenses. While our core is mechanical licensing, we try to be as nimble as possible.

 

Music Consultant:

Before we get into Limelight, because that’s going to be the most interesting thing, tell me about the problem, before you get into the Limelight Solution.  Anybody that covers a song needs a mechanical license from the publisher of the song. Traditionally, pre Internet, what was that process of obtaining that kind of license like?

 

SS:

There are a number of ways to obtain a mechanical license. You can contact the publisher directly, you can license through the Harry Fox Agency, who represents a number of the publishers, or you can research the copyright registry to determine who the rights holder is. If you can’t find the rights holder, there are a number of ways to send a notice to the government – to obtain the mechanical license. To distill the problem in the United States, the U.S. functions differently than almost any other territory in the world. Most territories have a mechanical rights society – one entity – to which you can go to obtain a mechanical license and to whom you would pay the royalties after you sold your product. In the U.S., that doesn’t exist. The closest thing we have is the Harry Fox Agency that represents a good percentage of the market. But for those publishers that aren’t represented by Harry Fox, artists and other entities are forced to find out who they are and go directly to them and convince them to put your license request to the top of their pile and give you a license. What Rightsflow does is aggregate all the license requests from our 10,000 clients and streamline the process.

 

Music Consultant:

And this is now a digital process? Do you get issued a license directly from Limelight or notice that a license request has gone through and then release something?

 

SS:

Our clients will come to us hopefully prior to distribution and tell us the catalogue that they intend to release, and we will contact either the Harry Fox Agency and license through them on a bulk basis, or we will contact the thousands of publishers all around the world that aren’t represented by the Harry Fox Agency and do a direct license. Over the last couple years we’ve put a lot of blanket licenses in place with publishers. We can automatically pass a license onto our clients for the publishers with whom we’ve negotiated direct licenses. And it makes sense for the publishers.

 

Music Consultant:

Legally when an artist releases a song, there’s a compulsory license that anyone can cover it as long as the person has put the request in, right?

 

SS:

Yes. And we do use the compulsory process. We’ve noticed that publishers prefer that you contact them directly, and we try to do that, but we certainly do take advantage of the compulsory process.

 

Music Consultant:

Why did RightsFlow decide there was a need for Limelight? What was broken that Limelight fixes?

 

SS:

Limelight is our consumer-facing licensing portal. Rightsflow’s core service, prior to launching Limelight was arranging millions of mechanical licenses for users like The Orchard or InGrooves – companies that need bulk mechanical licenses. There really wasn’t an effective product for artists or small indie labels that needed just a handful or even one mechanical license. That’s why we launched Limelight, in order to offer our bulk licensing services on a one-off basis.

 

Music Consultant:

Correct me if I’m wrong, and again I’m not asking for mudslinging, but I’m looking for a comparison. Are you not able to do one-off with HFA’s Songfile?

 

SS:

Yes. HFA also offers a one-off mechanical license product called Songfile. The difference between our product and HFA’s is that we feel like our product is more comprehensive. You can do up to 5,000 units through Limelight. Songfile’s limit is 2,500. We will also license the entire publishing universe. Through Songfile, understandably you can only license the songs that HFA represents. Through Limelight, we’re able to license 100% of the publishing world, both HFA publishers and non-HFA publishers. We also offer slightly more aggressive pricing breaks for bulk licensing, for those artists and independent labels that need more than just one license. One thing I think people appreciate is that through Limelight you can license multiple configurations through one order. We offer licenses through physical, digital and ringtone, and you can license all three of those configurations all at once.

 

Music Consultant:

What happens if you can’t locate a publisher for that request, or does that just not populate your database and is un-doable through Limelight?

SS:

So far we’ve been able to obtain licenses for all the requests. There’s a procedure for if you can’t locate the rights holder based on a diligent search, you can send the notice of intent licensing request to the Copyright Registry.

 

Music Consultant:

Any money generated by the other would wind up in escrow somewhere. Speaking of money – track the flow of cash for me.  Say for example you go and cover an Eric Clapton song, you go to Limelight, you start getting royalties. Do most digital distributors recognize this license and pay out accordingly to the publishers that you have these relationships with? How does that money travel?

 

SS:

That’s one of the fundamental differences between the U.S. and other territories. The bulk of digital sales go through iTunes though Amazon and eMusic is also fantastic. In most territories, iTunes would pay the mechanical royalties directly to the rights society. In the U.S. iTunes chose not to do that and instead passed the money back to whoever distributed it – the label or the digital distributor. Those parties are then responsible for paying the mechanical royalties to the publishers. The way we handle that process in Limelight is that my band would come to Limelight, license the Eric Clapton song, and we would estimate, “I think we’re going to sell 100 digital downloads.” And Limelight would calculate the mechanical royalties due on 100 digital downloads and we would prepay to Limelight the publishing royalties, so we’re covered prospectively. And then if the song is a hit, and we notice that we’re going to sell more than 100, we come back to Limelight and again pre-pay the next batch of publishing royalties that we expect. What ends up happening is that it’s very flexible. People don’t have to pay thousands of dollars of prepaid publishing royalties. Instead, they will pay in bursts and then come back to Limelight each time.

 

Music Consultant:

There is no tracking system? It’s all on the honors’ system?

 

SS:

It is all on the honors’ system, because we just don’t have any way of tracking. But the way we can enforce that is that the license we obtain from the publisher is limited to the quantity and the format that the artist requests through Limelight. So, the artist is not legally allowed to go beyond.

 

Music Consultant:

Particularly with digital, it’s really hard to say. If you’re an artist through TuneCore or something, it’s really hard to gauge. Most months you have no idea what you sold if you aren’t selling above a certain volume of units.

 

SS:

Yes. Exactly. It’s the closest thing we can get, and publishers understand this. Nobody’s going to be upset if you attempted to license through Limelight or Songfile, and you get you quarterly statement, and you’ve hit 101, and say, “oh no,” and put the next license in place.

 

Music Consultant:

I didn’t expect the RIAA or the federal Copyright task force to be kicking down your door.

 

SS:

(laughs) You never know. So far, the publisher response to Limelight has been really exciting. We’re collecting thousands of dollars in longtail publishing royalties, and we think without something like Limelight, may not have been paid through to publishers. The one thing we’re doing that I’m not sure that HFA is doing is that our mantra is to grow the market. We want to grow the pie. We didn’t just create Limelight and then let it sit there. We’re out there actively educating people and explaining to universities, church groups, jazz ensembles, anybody that releases cover tunes, “Hey, this is a product. This can help you. It’s the right thing to do to pay these publishing royalties even if you’re only pressing 100 CDs.”

 

Music Consultant:

It doesn’t sound like $15 per 100 is that big a deal.

 

SS:

We think it’s a steal. $15 to get a license, pre-pay publishing royalties and come back and repay the 15 bucks for the net batch of sales. That way you’re only out of pocket once you’re selling.

 

Music Consultant:

Switching gears just for a moment. You’re a guy that’s spent a lot of time on the road, and unlike most of the people I know who turned from musician to executive, you were active up until a few years ago – well into the Digital Age. Can you share any of the pearls of wisdom that you may have gained by falling on your face and call out some of the potholes that other people might be able to avoid?

 

SS:

Sure. It’s tough. I played in a lot of those bands that many would consider too cool for school – 60s influence. You have to have a bucket underneath every single potential revenue stream, whether it’s background music services, licensing, starting your own publishing company and collecting there. I’m not sure we did. That’s the single most important thing for indie rock bands is to make sure you have a bucket under every single revenue stream.

 

At Rightsflow we value copyrights and encourage everyone to license correctly and lawfully and pay the publishing royalties, so while we don’t bash on the P2P people, we support copyrights. My Band released a record in October of 2007. We gave a copy of the record to maybe two or three people during a tour of Spain in April or May of 2007, and the record was immediately leaked in horrible, horrible quality. Saturday Looks Good to Me was not a top selling act. We’d probably sold 25,000 copies of records in sum total at that point. When the record was leaked, it was very disappointing to us. We had an EP that was coming out at the end of the summer that we really wanted to be in the public’s hands before our record, so it was distressing. We engaged in a letter writing campaign and asked blogs to take down our record and take down notices to RapidShare and MediaFire, but there was one day where I was going to spend some time having our record removed. I found a MediaFire site that had gone up that morning where there had been 7,000 downloads. 7,000 downloads in one day from a band where most of the responses were “I don’t know who this band is yet, but I’d be happy to check it out” is more copies than we had sold – 6,000 – of our previous record. So in one day … That’s when I threw up my hands and said, “Guys, we can’t beat this.” So what we decided to do as a band was embrace it. We just said, “If people are going to get it, hopefully they like it, and if we see an upswell in concert attendance, we’ll at least know our leak wasn’t a problem. And on our Fall tour, we didn’t notice the upswell in concert attendance. Maybe that’s a comment on the business, but for us it was very financially damaging to have more downloads than we could possibly sell in our wildest dreams in one day.

 

Music Consultant:

That’s an uncommon story that this kind of volume happens, but it’s not that uncommon of a story in general.

 

SS:

This was a band that had a very dedicated, small fan base, and we could play shows in any city in the country with at least 100 people or in New York City or Chicago 300-500, sell outs. People would say, “This band is not famous enough for anything to be leaked, but I checked it out,” and most of them said, “It sounds like crap,” because the sound quality on the copy was so bad. It led to the demise of the band. All of us were over 30 and on our way out anyway, but if we had taken that next financial step and kept pushing it, we would’ve stayed around. I do believe that the leak of that record hurt our chances.

 

Music Consultant:

Thanks again Scott.

—-

You can Click HERE or the icon below to clear your cover songs.

 

 

 

 

 

Check out Rightsflow and Limelight