music business

OK, as little as I want to do this, and as much as the focus of my work (and this blog) has sort of shifted to talking about business generally (as opposed to the so-called “music business”), I want to write this out (…again… I have written a couple books on it), so that I can just direct people to it when I’m asked.

I get asked this question (or a variant on it) more than just about any other music business related topic. I get it; it ain’t easy to understand, but it’s not that hard, and, understand it you must.

Also, as much as I believe that the “music business” is dead, and it’s all just business; the one thing that is unique to the music business is how (c) is handled. That’s not to say that you have different IP interests in music than in other businesses; you don’t. Rather, there are just various “terms of art” that are unique to the music business.

So…here we go: an attempt to explain the rules and licenses around songs being used in films, tv, and ads. Let me know if you have any questions; I’ll try to answer them in the comments, and maybe this can be an evolving document that we can reference.

Any time a song is used in a film, tv show, ad there are two licenses required:

1. A synchronization (synch) license: This is a license the producer of the above must obtain from the writer of the song (if the writer has assigned her (c) to a publisher, the producer must go through the publisher).

This gives the producer of the above the right to synchronize the (c)’d song (not the recording of the song, but the underlying composition - lyrics and melody) with the moving images in the tv show, ad, movie.

2. A master usage license: the producer of the above must negotiate a license with the person who holds the (c) to the recording of the above underlying composition (i.e. the version of the song found on the CD).

Typically, the master usage holder is the label. If there is no label (i.e., it’s self-released by the artist), then the producer of the above negotiates directly with the artist who self-released.

Thus, in the case of an artist who has not assigned their publishing rights to anyone and self-releases their own record, the producer of the above negotiates “both sides” (i.e. the synch and the master usage) with the artist herself.

If the artist has done a publishing deal and a record deal, the producer negotiates with the publisher for the synch rights and the label for the master usage rights.

Unlike with mechanicals (i.e. the payment labels make to songwriters for the rights to mechanically reproduce a (c)’d song on the album the label releases), there is no compulsory license for either synch or master licenses. That means that the producer must negotiate both of these licenses, and either the master holder or the publisher can deny the request.

In reality, the producer will approach one of the parties (the label or publisher - typically, publisher first - see below for why), and see if they can get the writer interested in the synch (most writers, of course, are falling all over themselves to have their music used for whatever piece of shit is being sold on any given day). They (the producer) gives them an offer, and then tries to shift the burden of the master clearance to the writer/publisher. At that point, they (both producer (or his music supervisor lackey) and the publisher/writer) push on the labels to clear the master side (most labels, of course, are falling all over themselves to have their music used for whatever piece of shit is being sold on any given day), and a deal is struck.

The fee is divided (typically evenly) between the publisher for the synch rights and the master holder for the, er, master rights.

Sometimes, the publisher will want to do the deal, but the label doesn’t. In this case - as you saw, for instance in the Sean Penn exploitation vehicle I am Sam - the publisher for the Beatles cleared the synch rights for the song, but the label wouldn’t make a deal for the master usage; therefore, the producers used different masters (i.e. they had artists cover the songs).

It doesn’t work the other way; if the publisher won’t grant the synch license, the party is over - this is why producers go to publishers first; they’re the dispositive party.

Importantly, in the US, when the Ad or TV show or Movie is publicly performed on TV (i.e. it’s broadcast), a performance royalty is generated for the writer and publisher of the song (often the same person). The performer (i.e. the person on the master) sees none of this performance royalty. Do note, that no performance royalty is generated from public performance in movie theaters, as they are (wink, wink, nod, nod) exempt from paying public performance royalties..

Hope this helps. Leave me questions in the comments.

xo

Finally, finally, FINALLY!

I’m just so excited about this that I literally can’t contain myself. I’m certain that the implications of this will take a while to ripple out there, but, rest assured, the implications are large.

Anyone who’s been in the game at all is about as tired of using the phrase “email for content widget” as they are of using the word “tweeted.”

That said, to many, this idea that the currency of the day is email, and that you best give someone something if you’re going to ask them for an email, is still novel.

Importantly, beyond being novel, it’s far from easy to just poop out an email for content widget on your site. If you’re fortunate enough to have access to, for instance, the Topspin tools it’s as simple as grabbing some embed code, and you have a snazzy widget ready to rock. But, if you don’t have access to these great tools, or if you don’t want to forgo a percentage of your sales for access to these tools (obviously, because there’s no revenue generated for an email for content widget, you’re not giving up revenue, but, justifiably, Topspin does take a piece in order for you to use their tools where commerce is involved), you’re pretty well shit out of luck unless you’re a coder.

Well, today, CASH added something to the landscape (disclosure: I am a proud CASH board member).

I first saw this functionality via a link from a tweet from one of the original CASH founders, Billy O’Connell. As I’ve learned, it’s a good idea to go where Billy leads, and so I clicked on through to Zoë Keating’s twitter page where you could get a free dl for a tweet. (Just in case she changes this, I’m including a screen grab, below):

Well, this just delighted me to no end. Finally, someone was moving the ball a little, and finding a different value proposition/exchange.

I happily went on my way off to date night with Marci, where we discussed all of this not at all; in the most delightful fashion. (Btw, antibiotics be damned, I drank some wine, and it was good).

Upon our return, and after getting the kids to sleep with an inspired reading, if I do say so myself of The Hobbit, and thinking the night couldn’t get any better, I logged on figuring I’d just check my email real quick and try to go to sleep early before my flight to SXSW tomorrow to see my brotha’/partner, Sean, and blather on at my panel.

Instead, I see this tweet from CASH.

Clicking through, I get to this page. Again, worth a screen grab:

What makes me so giddy about this is the following:

1. Good, inventive iteration on the tired “email-for-song” trope; now, tweet-for-code. So, so RAD! Should get people thinking about other transactional elements.
2. Free
3. Some of the burden is placed on the user/artist/whomever - not a passive thing; you gotta work a bit for it (this is, by the way, good). Another good step in the direction away from artists waiting for “Hand of God” help, and forcing them to figure some shit out.
4. Not obligated to Tweet to get it, but, again, some work required: you gotta go to Github to get the code (of course, this means you gotta know what Github is).
5. Moves the discourse out of the “music business,” and into just good, current markets-as-conversations/sharing of information business model I’ve been prattling on about; business, not “music business,” business.

Anyway, big ups to you, Jesse. You moved the ball.

Something I’ve been thinking about for a while, but was really catalyzed by Fred Wilson’s excellent blog post today: With the advent of check ins (and the related possibility that emerges from this) at physical locations facilitated by Foursquare, et al., why have we not seen this applied to Web Sites?

Certainly, it’s a good sign to see email-for-content widgets being the transactional element of choice for gaining the all-important currency of email sign ups (as I discussed in my post, “The New Report Card“). However, I think people are still missing an opportunity.

If (as I do) you believe in the customer journey approach, you know that you fail if - after all the energy and expense related to getting a customer to your site - the customer visits your site once, and never again.

You must compel people to visit more than once.

The customer journey is: awareness, consideration, inquiry, purchase, repurchase. The all-important element is “repurchase.” Again, without repurchase, you fail.

So, we need to compel people to visit over and over. To do this, we have to create value propositions. As offline businesses are discovering, one of these value propositions is the frequency-related “currency” one acquires from being a regular (”Norm!!“); in the parlance of Foursquare, a “Mayor.”

It makes no sense, therefore, that I can’t become the “Mayor” of some site that I visit over and over. The logical progression is that once I build this frequency-related currency, I can potentially receive value adds beyond being dubbed “Mayor” of the Site. (Just to be clear: I’m not saying the Foursquare should do this. Rather, web sites should create their own frequency-related rewards and currency.)

This frequency-related value-add could be free songs, additional access, tickets, whatever.

I would encourage people to think in terms of celebrating the passionate user.

As we move towards more subscription-based revenue, it will become increasingly important to celebrate the people who sign up for these services. I would suggest profiling the users who sign up on the subscription page of the site; interview them, etc. PopCandy celebrates her readers brilliantly.

So…let’s remember The Straddle: look around for these offline things that are working, and find ways to bring it online, and vice versa.

By the way, I fully expect people to tell me that this is already happening. I hope so.

And now…XTC:

I still wake up on Wednesdays with a little shudder. You see, Wednesdays are (and, I guess, always will be) soundscan days. Back when there was still a record business, you got your report card every Wednesday morning. I remember so well hauling my pale ass out of bed and using the sweet dial up modem to log in to SS. 90% of the time, this was immediately followed by an “ugh.” The numbers were rarely what you wanted them to be (for more on SS’s continued irrelevance, read this).

Numbers indelibly etched in my brain, off to the office I’d go. I’d hit the fax (yes, fax) machine to look for the radio and press reports from the indies, and check my inbox (and by that I mean a little box in which paper reports were inserted) for internal press and radio reports. Ugh. Ugh.

Wednesdays sucked!

And, typically (almost always) with each subsequent week after the initial numbers, Wednesdays sucked exponentially more. You see, 99% of the time, the only week you might have any type of non-ugh reaction over SS numbers and other reports was that first week.

From there the numbers tended to drop precipitously. In fact, it was often considered a win if your SS numbers only halved from week 1 to week 2. Same with the other reports: radio and press (linked, and, in many respects, taking their cues from SS) tended to start with optimism (“So and so from such and such magazine/newspaper/radio station really likes the record, and promises to listen!!!”), and got increasingly depressing (”So and so says they’re on deadline/add week, but they’re going to try to listen;” “So and so doesn’t really dig it/feel the heat/will give it a review instead of a feature/will try it on the specialty show, but won’t add yet”).

Here’s roughly what the report card looked like:

What my scrawl is saying is that in week 1 if your SS number was 1000, by week 2 you’d often decrease that number by 75% (so, from 1k down to 250); the press and radio interest would decrease by half. Week 3 would continue apace with your SS numbers being a tenth (in this case, 100) of the first week, while radio and press interest was 25% of what it had been in week one. This is probably a little dramatic in order to make a point, but it’s not that dramatic, and this is, sadly, often exactly what it looked/looks like).

Can you imagine how hard it became to do this week after week? Don’t get me wrong, I (and many more others) had weeks where the SS numbers went up, press went crazy, radio added the song, etc. But, for every one of these, there were literally dozens where it went the way I described above.

Just from a psychological standpoint, it caused a ton of psychic torment; rather than being excited and finding ways to create energy and positivity about a project, you were left sugar coating: “The numbers weren’t that bad;” “Hey, we laid a foundation for the next record.”

This type of laying it on thick was particularly important in terms of artist relations. You had to present things in some sort of positive light to artists or they’d lose their minds; they’d just spent many moons and much blood, sweat, and tears creating a piece of art, and entrusted it to you, and to tell them that the general response to their work was, “meh” was simply cruel. (In hindsight, it was equally cruel to sugar coat, but I wasn’t as evolved as I am now (hah!)).

In any case, as the negativity began to become almost endemic, the process became surreal: what were we doing? What is real?

Happily, we have a new report card, and it’s sort of the inverse of the above.

Below is a quick (I know, given the looks of it, it’s hard to believe that I didn’t labor over it; I have a gift) list of some of what I feel are the more important elements that should be on your new report card.

[The legend to my map: email addresses; twitter followers; Facebook fans; Google Analytics (you should look at visitors, time on site, bounce rate, etc. Also, you should be looking at Google Alerts); downloads; subscriptions (i.e. people subscribing to some offering, ala Kristin Hersh's Strange Angels). The calculation is just an example. Here, I've got week 1 as "X," and the subsequent weeks' numbers increasing by 20, 30 and 40% of X. So, if week one, you have 100 email subscribers, by week 2 you want 120, and so forth. This is arbitrary. You should set whatever goals are difficult but attainable, and you should adjust as the weeks go by.]

Couple of things to note: 1. You can do this daily. 2. You should measure what I’ve suggested, but you should also have your own things you’re measuring; I’m sure I’ve left off some obvious things (one thing I’d love to be able to measure is how effectively your music is being shared, I know Topspin is making some great strides with this; another is gig attendees/number of gigs played - you need to measure this!).

The big distinction, however, between the old skool report card and the new skool report card is the shift from pessimism to optimism it represents.

Where the old skool report axiomatically led to depression due to the inexorable decline in numbers (SS, reviews, spins), the new skool report axiomatically leads to hope (and thus energy): if you haven’t increased - even by a teeny bit - your email subscribers, etc., something is wrong.

The good news now is that once you realize that something is wrong you can take strides to fix it.

Not getting enough email subscribers? Do you have an email-for-content widget rocking on your site; have you done what you need in terms of SEO to make sure people know you have a site; are you leveraging Twitter or FB to go to where people already are congregating and giving them a decent value proposition to go to your site; etc.

You know what your “remedy” was for bad ss numbers? Spend more co-op dollars. Fuck. Bad radio numbers? Payola. Double Fuck. Bad press? Cry. Sigh.

Again, the real beauty of this new type of report card is that it should be exciting and encouraging. You can see incremental progress, and, most importantly, you (band, manager) are in control.

This is vastly different than placing your hopes/destiny in the hands of a sales rep, publicist, promo person, label.

You note that nowhere on this new report card is a category for radio play or press reviews. You know why? They don’t matter. Yes, a teeny bit of an exaggeration, but even if they might matter a bit (and, really, only for artists who are already established) - you largely can’t control them. Please focus on what you can control. I did, by the way put Google Alerts as a measurement; think of this as your press report, and when you see that someone blogged about your work (via Google Alerts), respond/comment, etc. Remember, markets are conversations/relationships.

In a comment to my earlier post about The Leveling I was gently criticized for not supplying specific enough instruction in my writing. Well, as much as I agree with Mr. Godin’s statement about not drawing maps, I guess this is an attempt at something resembling a map.

Map:
What you have to do is figure out what you need to measure (I’ve tried to give you some ideas). This should lead to an overall strategy (i.e. big picture goals), and this should lead to action plans (i.e. small, daily steps that help you hit those goals).

Don’t try to go from 0 email subscribers to 1000 in a week, and then deem it a failure when/if you don’t hit that. Try to go from 0 to 25 in a week. Before you can get any, you have to do some work (as above, email-for-content widget, SEO, etc. - these are elements of an action plan that lead to success at a strategy of getting more email subscribers).

Measure your progress weekly. Use a google sheet that can be updated each week. Have a band meeting and look at the numbers. Assess what’s working, and what’s not. Where things are working, there is energy; do more. Where things aren’t (no addition of FB fans, etc.), figure out what actions you can take to change it.

Do this for three months, you’ll be shocked by the results.

I do believe (largely because of Moore’s law) that - in the music/creative world at least - we’re reaching a moment where the technological barriers that provided advantages to those with the most resources is nearly over.

There is a sort of leveling occurring now that — with only slight variance — we all have access to the same tools.

The first moment of leveling occurred with the advent of ProTools. No longer did one need to collateralize their creativity in exchange for funds from a record label to create a competitive recording.

The second moment of leveling arose via firms like TuneCore. No longer did one have to be signed to a label to have distribution.

The third moment of leveling revolved around the emergence of social media. While not completely obviating the need for traditional promotion, the rise of social media certainly shifted the power away from people like publicists and into the hands of the creator.

We now arrive at a place where musicians/artists are comparable to chefs. All chefs, within reason, have access to the same ingredients. Certainly, geography plays a role for access to ingredients, in a similar manner as geography plays a role for musicians/artists - if you don’t like your geography/feel it’s a competitive disadvantage, move.

What then separates the hack “chef” with a failing restaurant from the thriving restaurateur with lines out the door every night - who is next door to the failure?

We’ve all seen this. It’s sad. Some hapless Babu Bhatt stares forlornly out the window of his restaurant at customers lining up for the place next door. (Oh, and by the way, all you unqualified “gurus” out there: you’re Jerry Seinfeld in this episode; proffering destructive “advice” …. “Very bad, very, very, very bad man.”)

So what separates the success from the failure when each has access to the same ingredients, the same customer base, etc. I suppose it’s like Hugh MacLeod says, “The future belongs to the artists and the Chinese…I am not Chinese.”

Being an “artist” today means coming to terms with this leveling. How will you put your ingredients together in a manner that creates attraction and retention. These ingredients go beyond the musical notes, obviously, and relate to all facets of your work: your relationship with your market, your “brand,” etc.

What I think I’m most looking forward to, beyond the emergence of music/art that never would have emerged prior to this Leveling, is the lack of excuses that will exist. At whom will artists point their fingers when their art isn’t greeted with the commercial success they feel it deserves? Since forever the artists’ fingers have wagged at: the label, the distributor, the publicist, the radio person, the web designer, the booking agent, the management … pretty much everyone but themselves.

With the exception of the booking agent/management above, all of the others (labels, distributors, et al.) are pretty absent from a realistic survey of this Leveled landscape. You really think a publicist is the difference between the success and failure of your music? Really?

As for booking agents and management. Playing live is now, was then, and always will be the most important thing you can do. If you can’t do it with some frequency and excellence, keep your music as a hobby, share it with friends, etc. Whatever the case, don’t wait for a booking agent; look for non-trad gigs, etc. With respect to management, you’ll know it when you need it. For the vast majority of artists, you don’t need it yet.

The future belongs to those like Thomas Keller, David Chang, Ferran Adrià, Chris Bianco. Artists who use the ingredients that are available to everyone else, but combine them - in an alchemical manner - to create something truly remarkable and unique.

So…no excuses, right?