Music Publishing & Songwriting

Here’s a moderately happy ending to a story that we first started following in the blog “Welcome To the Hotel California”, back in May. That posting recounted the story of Don Henley’s decision to pursue legal action against Chuck Devore, former GOP candidate for California’s US Senate seat. This would-be champion of the American people (a group which would presumably include songwriters and music publishers, at least in California) had opted for the questionable campaign strategy of using Henley’s songs, “Boys of Summer” and “All She Wants To Do Is Dance” (Henley’s co-writers, Danny Kortchmar and Mike Campbell joined him in the lawsuit) as a means to ridicule DeVore’s political opponents, Senator Barbara Boxer (Dem-California) and President Barak Obama.

As you might remember, DeVore and his co-defendant Justin Hart, the campaign’s Internet director, had re-written the lyrics to both songs, re-recorded the vocals with the new lyrics, and then posted their new creations on YouTube. Truly, it seems everyone in California, even a conservative Republican state Assemblyman, wants to be in show business.

Interestingly, the whole case hinged on the difference between “parody”, which is allowed under the principle of “fair use”, and “satire”, which requires the permission of the copyright owner. The court rejected DeVore’s argument that the new lyrics parodied the original song, and concluded that the new lyrics were indeed “satire”, directed at the candidate’s political opposition. Here’s the distinction:

Parodies are re-written versions of a song which poke fun primarily at the original song. Most of Weird Al’s work falls in this category, as do the things you hear on morning radio shows. The principle of fair use provides that once you put your work into the public realm, people can re-record it, re-arrange it, or make fun of it without your direct permission. It’s called free speech.

On the other hand, satire is a different animal. A satirical use takes the song and employs it in order to make fun of someone or something else, outside of the song or the songwriter. That function requires the permission of the copyright holder, as one is now altering and using the song to say something the songwriter never intended. Despite DeVore’s legal arguments, it’s pretty clear that the uses of Henley’s songs were satirical, because they didn’t so much ridicule the songs themselves or Henley as an artist, but rather political figures never mentioned in the original lyrics.

Incredibly, DeVore and Hart would seem to have made another miscalculation when they chose to put their creations on YouTube, presumably in synchronization with a visual image. As Music Publishing 101 students will recognize, this requires a synchronization license, which must be negotiated with all of the parties who control the copyright. And DeVore calls himself a “law-maker”? Maybe he should try reading some of them.

He probably will now, as he’s seen firsthand the consequences of copyright infringement. Not only was the case settled for payment of an undisclosed sum, DeVore had to issue an apology to the songwriters, which must have really rankled.

“We apologize for using the musical works of Don Henley, Mike Campbell, and Danny Kortchmar without respect for their rights under copyright law. The court’s ruling in this case confirms that political candidates, regardless of affiliation, should seek appropriate license authority before they use copyrighted works”, they admitted. Oh and by the way, despite his display of songwriting genius, DeVore lost the primary election to Carly Fiorina. Talk about so much wasted time.

On the heels of his legal victory, Henley gave an exclusive interview with the website, Copyrights and Campaigns (www.copyrights and campaigns.blogspot.com), a great website, full of information about current developments in copyright law. The most interesting thing about the interview was not Henley’s acknowledgement of his big win, which he called “a moral victory, and a victory for every copyright holder in the United States”. What struck me about Henley’s interview was the almost valedictory tone of resistance in the face of overwhelming odds, as he tried to make a case that songs were works of art that deserved at least some fundamental respect, just as one doesn’t generally paint mustaches on the Mona Lisa or sing along at the opera. As Don confessed, he’s running against the winds of change on this issue:

Henley blasted all unauthorized uses of his music, whether by politicians or just amateurs making remixes, mash-ups, and similar unlicensed uses on sites like YouTube. “I don’t condone it,” he said of such practices. “I’m vehemently opposed to it. People in my age group generally don’t like it. Songs are difficult to write; some of them take years to write. To have them used as toys and playthings is frustrating”. Henley noted that he does not license his songs for commercials and only rarely does so for uses in films and television. (Copyrightsandcampaigns.com)

In fact, the concerns that Henley raises allude to a much bigger, deeper and more relevant issue than any dispute on the distinction between parodies and satire. The truth is that the few growth opportunities that exist in music publishing are exactly in the areas that Henley is complaining about. Lyrics on t-shirts? Mash-ups on the internet? Music as background for games, toys or greeting cards? Music to sell products, music with funny homemade videos, music as ringtones, music for karaoke games or music as fashion accessory? These are the things fueling what little growth exists in the music industry. But Henley is right—they don’t sit very comfortably with a generation that once thought music held the potential for political or social change, or that at least popular music could aim for an artistic value beyond Top 40 charts and novelties.

This larger issue holds a number of important implications for music publishers. The most obvious concern is that music publishers need to understand their rights under their various writer-publisher contracts, as well as the rights of their songwriters. Who has the final approval on licensing opportunities like advertisements, synchronization placements or even satires? In most instances, the publisher, as the owner of the copyright, has the power to license, but many contracts will allow the songwriters to specify specific uses which require the writers’ permission. Some contracts may exclude particular exploitations entirely. And of course, administration deals will frequently give the publisher less control than a full or co-publishing agreement.

More importantly, publishers need to get a sense from their songwriters where each composer falls on the subject that Henley raises. Some will be more than happy to embrace any new opportunity you can dig up. Others will be appalled that you even considered putting their “baby” in a game or on a mobile phone. It’s in the long-term interests of all parties to understand each other’s point of view before requests come in, rather than after .

Especially for younger songwriters and publishers, it might be worth considering whether there’s some real insight in Henley’s comments. Back in March, my dispatch from SXSW in Austin noted that music seemed to increasingly exist solely as a marketing tool—not to sell the music itself, but to sell other products or shows. I’m not so sure that’s a good thing. Perhaps it explains why we have a society in which, as it’s so often noted, music is more present than ever, yet less and less valued.

There’s no question that the generation that made Don Henley a star continues to care more deeply about music, purchase more of it, attend more concerts, and support its artists longer and more unwaveringly than the generations that followed. Maybe that’s because the people who made the music took it seriously, believed it meant something, and refused to compromise on how it could be presented. It bothered them to see a Deadhead sticker on a Cadillac. Henley wrote the line as satire. The modern audience see it as just one more ironic ingredient in the pop cultural stew.

While I was walking home tonight, I passed by a museum and something in the window caught my attention. It was a display of a small antique pipe organ from the late 1700’s– it looked like a very early attempt to create a miniature Wurlitzer that could be played at home. A rather odd, “Chitty Chitty Bang Bang” type of contraption, it reminded me of the homemade time travel machine rigged up by Doc Brown in “Back to the Future”. In its day, it probably looked as cool as the iPad. Now, it’s not something that anyone uses to get the job done.

The sight of this awkward, ungainly invention brought me back to an analogy made by one of my colleagues earlier in the day, as we discussed the current challenges of copyright licensing. “I feel like we’re trying to drive some old unrestored 1950’s clunker” he said, “the kind that only the old guy that owns it can actually drive, because you have to know just how to wiggle the gear shift and how many times to pump the brakes to make it all work”. I heard almost the same sentiment at a lunch with one of the industry’s most respected copyright lawyers. Everyone in the music business knows it’s true, though few will say it publicly, since it directly undermines our demands to get paid for what we own. But the old copyright system just ain’t working anymore. The truth is:

The process of licensing copyrights has to change drastically and fundamentally, if the whole concept of copyright is going to survive at all.

Right now, we’re driving down the Information Superhighway in that old 1950’s jalopy– we’ve got it floored and we’re doing about 35 miles an hour. Copyright holders are not only being run over, we’re also being passed by, as young entrepreneurs from the Google, YouTube, Spotify generation create global empires built on providing immediate, free access to entertainment and information. Meanwhile, the copyright community is still back somewhere on the side of the road, trying to figure out who owns the rights in which territory and for how long, and who has the right to issue the license, and how many licenses will be necessary, and what should the license cost. At best, we’re an impediment. At worst, we’re irrelevant.

Consider:

At a family wedding, the bride and groom do a crazy dance to a medley of big pop hits– it’s all relatively harmless (at least from a copyright standpoint) and clearly covered by the principle of “fair use”. After all, this is kind of what music was made for. But not too surprisingly, the dance is captured on videotape by the people filming the wedding. It’s then posted on YouTube, probably as a simple, cheap way of sharing the moment with family and friends. Again, it’s all still covered by fair use, since it’s largely a private activity and there’s no attempt to sell anything.

But suddenly, the family wedding video becomes a viral phenomenon, and millions of viewers go to YouTube to watch the silly dance, generating plenty of tangible economic benefit to YouTube in the process. At this point, clearly the copyrighted material contained in the video (that is the medley of recorded music to which the dance is performed) should be licensed, and the labels, artists, publishers and songwriters should be compensated. But how? Just a guesstimate would indicate that there could be 15 different artists, all of the major labels (some of which might no longer own the master recordings in question), probably at least fifty songwriters, and twenty different music publishers, each of whom would have to grant permission, and then play a role in determining the appropriate sync fee for each song. It would take months for a two minute home video, and probably cost in the six figure range. Ridiculous.

Here’s another:

A video collector owns outright some archival footage of a big star performing on a TV variety show from years ago, which a new mobile entertainment provider now wants to license and sell as a download to mobile phones in Asia. But within this short segment, the big star performs a song, which would have been licensed under a sync agreement that covered only that particular performance, in that territory, during a specific window of time. In order to use the footage in a different medium, territory and era, a new sync license will need to be negotiated with all of the publishers (many of whom have sold their catalogs or allowed the copyrights to revert to the songwriters). And then there’s the matter of union fees. Several of the performers on the show may have been members of the American Federation of Television and Radio Artists (AFTRA), Screen Actors Guild (SAG) or the American Federation of Musicians (AF of M), which means there might be residual payments due for any reuse of the show. Good luck figuring that one out.

A last example:

A music fan in Japan wants to purchase the new CD by an American act signed to Columbia/Sony Records in the US. The CD has never been released by Sony in Japan. The fan logs on to Amazon, locates the CD, and purchases it. But Amazon can’t fulfill the transaction, due to a copyright infringement lawsuit initiated by Sony Japan. As the local distributor of Sony product in that territory, Sony Japan owns the rights to sell that product in their region. By allowing the consumer to purchase directly from Sony in the US, Amazon is infringing on the copyright. And it’s true, even though Sony Japan has no intention of making the record available in Asia. As the copyright holder, the local company has the right to distribute the product or not, at their discretion.

In part, this explains why a consumer in the US who wants an album by a French artist released only in France can’t simply go on iTunes and purchase it. He or she can go to iTunes France and see the album or hear samples of the music. Certainly, the consumer can steal the record on any number of illegal sites. But purchase it? Nah. That would be copyright infringement. Go figure.

Anyone who reads this blog regularly knows that I’m a staunch defender of copyright. I’m not a believer that information wants to be free. I am however realistic enough to know that information wants at least to be available, at some generally reasonable price. Right now, our copyright laws are a hodgepodge of political compromises and outdated principles, all changing from country to country. In a global world, they are structured territory by territory. In a society based on instant access and immediate gratification, they are restrictive and reliant on step by step negotiations with half a dozen different parties for a single use. They can’t survive like this.

Unfortunately, there are no attractive solutions. Clearly, any reform needs to be done on a global level. The web is worldwide after all. That should be easy. We can take it up right after we solve the problem of world hunger and get everyone to agree on global warming.

Even worse, the only viable answer to the internet-related problems seems to lie in some kind of system of blanket licensing, similar to that used by the performing rights organizations to collect on music being used in public venues. In some form or another, a tax or surcharge would need to be assessed on electronic equipment or computer technology, or directly on internet service providers, mobile phone networks and other “distributors”. The money collected would then be shared among the entire creative community, from publishers and labels to artists, writers and union members.

If that seems like a simple and clean resolution, it’s not. The problem is that all of the money would go into a fund, and then be distributed to the copyright holders without any clear way of attributing it to a specific use. Worse, the ability of each individual copyright holder to negotiate fees on his or her own behalf and to collect them would be lost– thus eliminating two of the major functions of a music publisher in one fell swoop. In essence, such a move would make much of the music publishing role obsolete. If only for reasons of self-interest, it’s not a proposal I relish.

The only thing worse is the alternative, which is what’s happening now. We are already becoming obsolete, simply because people are ignoring us. Sure, we can still make things grind to a halt with a major lawsuit here or there, or exact our revenge with a jumbo copyright-infringement settlement–after about ten years in court, fighting appeal after appeal. But the judges are getting less sympathetic, the law is seeming less and less just to society at large, and the internet generation is moving ahead without us. Most importantly, we’re leaving stacks of money on the table every day, by not being able to take advantage of licensing opportunities for our music. There’s no value in owning copyrights if no one has the time, patience or money to license them. Already, more and more creators are simply making new product which they own in its entirety, and licensing it directly to individual services.

There was an article in the New York Times today, about an inmate who after having been wrongfully imprisoned on death row for twenty years had just been set free. His one request to a benefactor had been a Walkman, only to be informed that no one used them any more, and handed an iPod. As the surprised ex-con acknowledged, it’s painful sometimes, but things change. You have to move on.

Otherwise, you’re an artifact in a museum window.

I know it’s summer and everything, but let’s face it– I’m a New Yorker. I’m not much for gardening or working in the yard. Nevertheless, I recently found myself battling the forces of nature in preparation for an upcoming outdoor barbecue, trying to singlehandedly turn an overgrown, out of control patch of jungle into own of those tame, manicured, Hampton-like lawns. With all the sweating and cursing, the endless labor and the distinct lack of progress, it felt about like a day in the music business, during what has to be the deadest, most uninspired period I’ve ever seen during 25 years in this industry.

In a summer that has seen continued dismal record sales, falling publishing incomes, the crash of the touring business, and worst of all, the tragedy at Love Parade in Germany, the whole music biz seems stuck in the kind of dreary, gray blanket of stale air that has hung over NYC for most of the summer. It’s hot, uncomfortable and nothing’s moving.

Even Billboard seems to be struggling to come up with anything to fill the pages. Last week they ran an article about a consortium of European banks who are partnering with Universal Music, to offer a discount subscription for music downloads with the opening of every new bank account or charge card. Out of 200 participating banks in Germany, 6,000 people have signed up. That’s 30 people per bank. Jeez. 30 people? And they wrote an article about it? Must’ve been a slow news day.

Staring out at a wild, unruly, tangled mess of a field, it’s not easy to leave the lawn chair and get out the weed-whacker, but we’re quickly nearing the point of no return. It’s August, and the fourth quarter is about to kick in. Somehow, the industry has to find a way to start at least laying the groundwork for better times ahead. Undeniably, it’s been a bad year in the fields. Still, we have to start doing the obvious work to get something growing again:

Step One: Take Control

Nature abhors a void. Even when it looks like nothing is happening, something is going on. Right now, even as the music industry stands still, other more dynamic businesses, from social networking companies to Apple to mobile networks to investment companies are expanding their influence, grabbing our audience, choking off some of our own opportunities and redefining the entertainment landscape on their terms, not ours.

It’s incredible that even after losing control of the music industry to MTV way back in the 1980s, then losing it again to illegal file-sharing in the first part of this decade, and yet again to Apple and iTunes in the second half of the decade, the record companies and music publishing companies have still not offered up anything to even attempt to control the playing field in their own industry. Streaming didn’t originate with record labels or publishers. Neither did the iPad or YouTube. Given the extent to which they’ve benefited from it, why did a music publisher not come up with a TV-show like “Glee” years ago?

If we don’t want to think beyond making music, then we can rest assured that someone else will. Then they, not us, will decide how our product is marketed, distributed, and sold, as well as what price it will sell for.
Don’t believe it? Notice how 80 years later we’re still going hat in hand to the radio industry, begging them to play our records (and in the case of the record industry, wishing they would actually pay us something to do it). Why does every new initiative in the music business seem to revolve around piggy-backing on someone else’s innovation, like making a channel on YouTube or taking an ownership share in Spotify? If you don’t control your turf, someone controls it for you.

Step Two: Clear out the dead.

You can’t hope for much new growth until you get out the wheelbarrow and start cleaning up the mess. This is actually one huge advantage for new, small companies entering the business. At least they’re starting fresh. The great burden being carried by all of the major music corporations is the fact that they have little choice but to manage the slow death of the CD, and the whole traditional business model that surrounds it. Everyone knows that it’s on it’s way out. If they could, they’d kill it off entirely. But the truth is that it’s still the primary source of income. No one can afford to abandon it. Consequently, too many resources go into keeping the dead man walking, while the infant survives on whatever is left.

For those who are still forming their overall business strategy, this is an opportunity to embrace a new model, free of the ties to the past that are strangling the industry’s major players. Take advantage of it. You don’t have to build your business around manufacturing CDs, or getting radio airplay, or trying to place songs on million-selling albums, or focusing on your own home territory simply because that’s what everyone has always done. Those old branches of the tree quit growing years ago. Anyone trying to hang onto them is going to be hearing a distinct cracking sound in the next five years.

Of course, abandoning the old ways of doing business means you’ll have to come up with new ones. That’s never easy. But it’s easier to create something new and alive if you’re not spending 80 percent of your time trying to resuscitate something dead.

Step Three: Look at what grows naturally.

None of us are completely in control of our own fate. Sometimes you decide what will grow in your garden, and other times, no matter how hard you try, the garden decides what will grow. We all have to adapt to our environment, and the faster we do it, the easier our life will be.

Part of the reason the music business continues to struggle is that it’s been determined to force results out of a market that simply doesn’t want what it’s offering. People don’t buy albums. Fine. Sell them something else. The audience is constantly shifting and losing interest. It’s frustrating, but it’s nature. Give them a constant stream of new songs, rather than ten new ones every two years.

In most cases, the marketing strategies that have worked recently, from mixtapes to YouTube videos to mashups to blogs, have grown up naturally out of their environment. Meanwhile, the field is littered with millions of marketing gimmicks, from “enhanced” CDs to special “fan club” subscriptions, that emanated from corporate planning sessions, only to dry up and wither when they ran into a skeptical and disinterested fanbase. If it’s not happening at a grass-roots level, then the grass won’t grow. Work with the forces of nature, not against them.

Step Four: Plant a seed.

A few years ago, I decided to plant some trees. Being the impatient city boy that I am, I decided the bigger the better. I bought trees that were already at least half grown, planted them, then looked around and admired my efforts. Within a few days, I had a garden that looked as if it had been growing for years. Within three months, I had a garden full of big, dead trees.

Later, an Englishman (and hence, a genetically gifted gardener) suggested that instead I should buy some tiny little saplings. The theory was that if they died, I’d hardly notice. At the same time, being very young, they were more likely to adapt to the soil and eventually start to grow. So far anyway, it seems to be working.

Much of the reason that the music industry has failed to discover new technologies on its own, or clear out the old failing business models, or even jump on trends that have taken root at street-level, is that the large corporations that dominate the field want things to be too big, too fast. Faced with the pressure of producing quarterly results, they can’t wait for a new idea to grow. Just as they can’t afford to nurture artists through a three or four album development, neither can they nurture new business strategies or marketing initiatives that could take years to pay off.

Again, those just now staking their claim to a tiny spot on the music business landscape have a real edge here. If you keep your overheads low and your expectations reasonable, you can afford to let nature take its course. Try your new idea in an inexpensive, low-risk way. Take a deep breath or two. If it doesn’t take, it’s no great loss. But if you see it growing, you can patiently nurture it along, until it suddenly has a life of its own.

Last weekend at the barbecue, I spoke with a friend in the garment business, who has a clothing company in New York. He explained to me that even fifteen years ago, there were dozens of manufacturers, tailoring shops, pattern-makers and fabric factories throughout the country who created garments for a wide variety of clothing lines. Today, there are virtually none. Trade policies, wage pressures from developing countries, outdated union rules, organized crime, and short-sighted management policies combined to essentially eliminate the industry. We’re not talking about a tough business cycle. The dress-makers, weavers, tailors and other specialists have left the country or found other work. The machines have been sold off. It’s not coming back.

Industries do die. It’s not enough to reassure ourselves that “music will always exist”. Sure. But will the music industry? It didn’t exist much before the 1900s. It doesn’t have any guarantees for the future. Another six months has come and gone, and nothing is happening. Sooner, rather than later, we better get out the shovel and start digging our way out of this mess.

I think the advertising tagline of the New Music Seminar, held last week in NYC, should have been changed from “The Revolution Starts Here” to “Welcome to the War Zone”. That seems to better capture the mood at the parts of the conference I attended— battered, beleaguered, angry and afraid. Very afraid.

And for good reason. During one presentation, NMS’s organizers Tom Silverman and Eric Garland from BigChampagne laid out the real numbers that music makers and marketers are up against, and as most of us in the industry already knew, it wasn’t pretty. These numbers have since been flying around the internet, as a rather fitting post-script to an event that was supposed to celebrate new music. If this is the revolution, I think we’re losing:

Albums that sold at least one copy in 2009: 98,000
Albums selling less than 1,000 units in their first year of release: 92,601
Albums selling more than 10,000 units in 2009: 1,319
Albums selling more than 5,000 units in 2009: 2.058
Albums selling more than 250,000 units in 2009: 85

As these numbers have circulated, I’ve seen several comments questioning their accuracy– wondering for instance if they include worldwide sales. It doesn’t matter. Anyone who is hoping that international numbers will significantly change the picture is dreaming– the record business in Europe is in a free fall and Latin America just posted similarly dismal results. We can’t kid ourselves. The fact is that no one working in the industry on a daily basis would dispute these numbers. There is simply far too much music chasing an ever-dwindling audience.

Rather than making excuses or trying to find a silver lining in the storm clouds, our best response to the crisis is a crash course in survival skills. Of course, there are obvious external forces that are causing much of the industry’s pain– most notably the fact that every kid around the world over 10 years old has figured out how to take our product for free. Certainly, there’s a need for a concerted effort across the industry to combat piracy of all kinds. But you and I, working on our own, aren’t going to solve that one. Given the daunting situation staring us in the face, let’s focus on what really matters: saving ourselves.
How do we rise above the masses of people spending money, putting out music, and seeing little or no results? Here are three fundamental tips:

1. Be Strategic.

Most people making albums have put more thought into the artwork and the credits than they’ve put into what they’re actually going to do with the music. Incredibly, that is as true at a major label level as it is with self-funded indie efforts. Projects are green-lit, recording studios booked, producers engaged without anyone having given serious consideration to basic marketing questions like:
Who is this act’s audience?
How does that audience listen to music?
What kinds of records are they willing to purchase?
How do you reach that audience in order to market to them?
Which of those marketing methods are feasible, given your budget?
If it needs the support of radio, does the record have a clear radio single?
If you need to sell the CDs at shows, does the act have opportunities to tour?
Given the results of similar acts, how many records can you reasonably expect to sell?
How much then can you afford to spend on making and marketing the record?

If you are a hip-hop or a dance-pop act, your audience is entirely single-driven, even at a superstar level. Consequently, until you have a hit single there is no reason to make an album. If you make jazz records, all indications are that the audience responds only to artists who have established a level of credibility through touring and playing with well-known musicians. If you haven’t done that yet, then don’t make a record. For a country artist, there are very few ways to reach a sizeable audience without radio airplay. If your budget is tight, then better to record one single and use the rest of the money to promote it than to record ten songs that no one will ever hear. For a singer-songwriter with only a small local following, selling 500 CDs might seem like victory, rather than defeat. And indeed it can be, providing you can make the whole product for under a few thousand dollars. The key here is to have a plan.

2. Be Realistic.

The reason that most artists, record label executives, and producers approach their recording projects without the requisite strategy is that the process of planning requires a reality-check. As Simon Cowell would happily point out, most artists could benefit more from a look in the mirror, an honest self-appraisal and perhaps some frank feedback from family and friends than years of lessons and words of encouragement.

In pop music, artists have to look like stars, have endless stamina, possess a drive and work-ethic that go well beyond obsessive, and rely on a charm that wins over anyone who meets them. If that’s not you, then don’t waste what could be a successful career as a producer or songwriter churning out ill-fated solo albums. If you’re a rock band that can’t play live, then making records is an exercise in futility. Hip-hop acts need some kind of street-level following. If you’re not generating a response on that basic level, then it’s time to go back to the drawing board. A DJ/producer who makes records that differ drastically from what he or she plays at a club is bound to disappoint the audience.

Don’t fool yourself. Don’t rationalize and don’t look for miracles. If you can’t hear your music objectively or see yourself clearly, then you’re not ready to make a record.

3. Be Frugal.

Most major record companies spend both too much and too little–blowing money on travel expenses, dozens of misguided mixes, over-cutting and endless experimenting with changes in direction, only to suddenly pull back when the marketing, promotion, and tour support bills come in.

While the scale of spending differs drastically on an indie level, the same kinds of mistakes show up again and again. Artists operating on a shoestring cut an album where a single would have sufficed, or an album when an EP would have been more effective, or put 15 songs on a record rather than 9 or 10, as if the sheer number of songs would be a selling point. They spend money on vague, abstract artwork for their album cover that presents no visual image to communicate their identity to an audience. They hire an independent radio promoter to work a song to radio without a budget sufficient to break the song in any meaningful way.

While it’s not going to make anyone a fortune, to sell less than 5,000 records, or even less than 1,000 is not necessarily a bad thing. One thousand CDs at $15 a piece still makes $15,000. If it cost $5000 to make and promote the record, then it was a profitable venture– putting you ahead of 90% of the major label releases each year. The problem occurs when you’ve spent $17,000 to make the record, and you haven’t even begun to market it. When you’re operating in a sales environment as difficult as the one we face at the moment, you must be able to record at minimal expense, get the most value for your dollar, and put your money where it can generate results. This is a market the leaves no room for error, and even less for extravagance.

I’m continually amazed at the number of beginning artists, with no following at even a local level, no obvious radio single, and not even a clear artistic direction, proudly announce to me that they’re “working on their record”. Former multi-million selling acts like Matchbox 20 struggle to sell records in the current market, and yet here is a new act with less than a hundred people in their fanbase making an album. Why?

The answer is: because it’s too easy. The ease of home-recording, the universal availability of digital distribution, and the rise of the DIY ethos have removed many of the barriers to music-making, and that’s a good thing. But by doing so, it’s caused many artists to feel that recording their own record is some kind of rite of passage that must be fulfilled at the earliest possible date.

Athletes often talk about having “a respect for the game”. That just means that no matter how talented or gifted a sports star might be, he or she still has to appreciate the difficulty of what’s being undertaken, whether it’s hitting a 90 mile an hour fastball or pedaling a bicycle up a mountain, and must be prepared to do the hard work necessary to be victorious.

The scary numbers that many of us have been looking at for nearly five years now indicate that artists, producers and record labels need a little more “respect for the game”. It’s not difficult to make an album. But to make even one song that a significant number of people genuinely care about enough to purchase is a monumental undertaking. Before you go marching into a war zone, have a plan, be realistic, and consider the costs. Let the revolution start there.

I don’t usually get too personal in this blogspace– but I thought this week I’d offer up a quick excerpt from Chapter One of the Eric Beall biography for which absolutely no one is waiting (and which happily, no one is actually writing).

The story begins just before I graduated from Berklee College of Music, when, like most graduates everywhere, I was searching out possible job opportunities with a mixture of anticipation, excitement, ignorance and desperation. While I didn’t know much about what I was doing, at least I knew enough to be reading Billboard regularly, and that was where I happened on an article about a young whiz-kid named Tom Silverman, who was the founder of Tommy Boy Records, one of the seminal record labels in the history of hip-hop.

Riding high off the success of “Planet Rock” at Tommy Boy, Tom was quickly emerging as an industry leader, having also co-founded the New Music Seminar. Based in NYC, this conference was at the epicenter of a wave of new music taking shape in the early 1980s, it was where new wave and punk rock, hip-hop and electronic dance music all met and mingled, with hundreds of new artists, indie label owners, A&R people, press and other entrepreneurs plotting out their path into the industry.

The article I read about Tom Silverman concerned his plans to launch an industry group called “The Independent Label Coalition”, which was intended to be a trade group controlled by independent labels from across genres. The hope was that by working together to improve the business environment in the independent music world, the ILC could increase the ability of these smaller companies to compete with the major labels that dominated the industry. At the end of the Billboard interview, Tom pointedly mentioned that he was looking for volunteers– and I quickly reached out to be in contact.

Tom Silverman, from Tommy Boy Records and the New Music Seminar

To me, The Independent Label Coalition seemed like an ideal opportunity to meet people in the music business, learn about the industry, and hopefully build relationships that would result in gainful employment. To Tom, my willingness to volunteer undoubtedly confirmed yet again one of his pet theories, that in the music business, there was always a young kid who would work for free just for the chance to be involved. Happily, I did manage to meet Tom shortly thereafter, and was given a small role in the Independent Label Coalition.

I moved to New York from Boston in the middle of July, 1984, dropped my still-packed boxes in my tiny apartment, and immediately reported for duty at the New Music Seminar, where the Independent Label Coalition was officially being launched. I helped to check people in for the conference; I stood for endless hours at the ILC booth in the exhibit hall; I worked the door at Studio 54, where the Independent Label Coalition had a kick-off party. I was yelled at by Bob Krasnow (the head of Elektra Records); I screwed up most of what I touched; I tried to network in rooms of hundreds of people where I didn’t know a soul. But I also met dozens of new entrants in the music business sweepstakes, saw early performances from artists that ranged from the Beastie Boys to Run DMC to RuPaul to Madonna (check out the video below), and sat in dozens of panels where I learned the realities of how our industry is structured. Thanks to Tom Silverman and the New Music Seminar, I suddenly entered the music business, and I’ve been fortunate enough to remain there ever since.

The Independent Label Coalition didn’t actually work out very well– the idea of coordinating activities among indie record labels, made up of some of the most defiantly “independent” personalities in the world, proved to be a little Utopian for the real world. To me, it didn’t much matter. The ILC did exactly what I needed it to do, which was to give me my first network of friends, supporters and mentors in the music industry. In fact, many of those people I still maintain relationships with today, more than twenty years later. One of the leaders of the ILC was David Renzer, who at the time was a successful songwriter and producer. David went on to become the head of Zomba Music Publishing, where he wound up signing me to my first publishing deal. Now, David is the worldwide president of Universal Music Publishing. Another early compatriot from the ILC days was Duncan Hutchison, who became the president of Caroline Records, and is now the Chief Content Officer of RightsFlow, the licensing organization.

The ILC also introduced me to to a wide group of record industry entrepreneurs, including Eddie O’Loughlin at Next Plateau Records, who continues to be a colleague and mentor to me, Sergio Cossa, for whom Shapiro Bernstein, the company where I work now, administers the Emergency Music catalog, and of course, the illustrious Tom Silverman.

To bring this story to a well-crafted and slightly ironic conclusion, it turns out that Tom Silverman, along with my friend David Lory, one of the industry’s most creative and forward-looking executives, has now relaunched the New Music Seminar. After concluding in 1995, the New Music Seminar was brought back to life in 2009.

Dave Lory, New Music Seminar

As it turns out, I’ll be participating in NMS 2010, being held July 19-21st in New York. I’ll be promoting my books, “Making Music Make Money” and “The Billboard Guide To Writing and Producing Songs That Sell”, as well as my new consulting service, “Ask The Music Business Weasel”. If you can be in or around New York during this time, I strongly urge you to be a part of this conference, which is all about uncovering new paradigms and business models for success in today’s music business. And if you’re there, please find me and say hello. I’m looking forward to signing some books, chatting a bit, and being part of an event that played a key role in my own development as a songwriter, producer and executive.

http://www.newmusicseminar.com

Contrary to what many believe, the music business is not really such a tough thing to break into. There are no entrance exams, no licenses to obtain, and far less financial commitment than in almost any other business (have you ever thought what it would cost you to get into the restaurant business, or steel-manufacturing?).

Even better, there are hundreds of organizations, societies, conferences, and trade groups to help you start your network. The New Music Seminar is one of many such points of entry. All you have to do is show up, start learning how the industry works, and make some friends. It worked for me. I’ll hope to see you there…

It seems almost cruel to kick a company when they’re down and gasping for a final breath, but the news from EMI Music just keeps getting more and more bizarre. Only 10 weeks after naming Charles Allen the executive chairman of EMI Music (he replaced Elio Leoni-Scelti, who himself lasted only 18 months), Terra Firma announced that the head of EMI Music Publishing, Roger Faxon, would be replacing Allen, taking over the helm at EMI Music (the record division) as well. Even by music industry standards, that’s an amazing bit of turnover– Allen has gone from executive chairman to a vaguely defined “adviser” role in less than one financial quarter. It’s like watching a bit of time-lapse photography, where a process of destruction that usually takes a year and a half has been condensed into 10 weeks.

And all of this is meant to reassure the investors.

Roger Faxon, Chief Executive EMI Group

The real irony is that after three years of completely inept decision-making, Terra Firma is actually making a pretty good call on this one. At least Faxon has a genuine understanding of the business. While he didn’t build EMI into an industry-leading publisher (that was the work of Marty Bandier, who is now at Sony ATV), he has maintained the company’s status despite the ever-present rumors of the corporate parent’s financial demise. EMI Music Publishing still has one of the strongest executive teams in the business, a catalog full of classic songs, and a current writer roster that made it the Publisher of the Year once again at this year’s ASCAP Pop Awards. The obvious strategy here is to try to use the strength of the publishing company to shore up the weakness of the recorded music division. It makes pretty good sense… on paper.

For reasons that are fathomable only to the executives that run major media companies like Universal, Warner, Sony and EMI, none of the major music companies have ever managed to create any relationship between their record companies and their associated publishing companies. There are remarkably few acts that are signed both to Warner Bros. Records and Warner Chappell, or to Sony ATV and Columbia Records. In fact, the relationship between many of these publishing companies and their affiliated labels is downright hostile. At Sony ATV, I was well-aware that many top-level A&R people at Columbia and Epic were steering their new acts to EMI Music Publishing, convinced that the artist would get more money and promotional support at that company than at Sony ATV. Likewise, EMI Music Publishing has made no secret over the years of their disdain for the hapless label that shares their name.

Some of the hostility can be attributed to executive envy, political gamesmanship, and the general corporate tendency to put one’s personal bonus ahead of the interest of the company itself. Some of it comes from the fact that many of the publishing companies and their associated labels have very different histories, areas of specialization, and financial means. To call the relationships “dysfunctional” would be something of an understatement.

Not too surprisingly, in the world of independent music companies, the idea of having a label and publishing company cooperate for the greater good has been far less elusive. In fact, many of the great success stories among independent labels have been built around the idea of record company and publishing company working together– from Motown Records and Jobete Music, to A&M Records and Almo-Irving Music, to Jive Records and Zomba Music, to Disney Records and publishing. It’s not terribly tricky. It simply means that the record label either strongly encourages or demands that their artists make a publishing deal with the related company, and likewise, the publishing company tries to keep any new talent they discover or hit songs generated by their writers “in house”, by bringing them to the associated record company.

So the idea now being put forward by Roger Faxon and the string-pullers at Terra Firma, to use EMI Music Publishing to bolster the fortunes of EMI Records, is not a crazy one, even if it’s relatively untried at a major music company level. I can almost understand how the non-music business weasels within Terra Firma could see this as the last best hope– and could have great expectations for the power of the two companies when finally brought together. It certainly won’t be the first time during their grand experiment in the music industry that Terra Firma has had their hopes dashed, though it may be the last time.

As obvious as the idea to unite the two companies sounds, it’s about ten or fifteen years too late. At this point, with EMI in such precarious condition, it’s almost impossible to see how this plays out. Most top artists with any other options would be understandably hesitant to sign to EMI Records right now, and quite frankly, it is probably not the first place that anyone from EMI Music Publishing would recommend for their artists. The publishing company needs its top writers, artists and producers to focus on creating the biggest hits possible, regardless of which label they happen to be released on.

Even if EMI Music Publishing were to encourage their top new artists to consider going to EMI Records, many are under contract with other labels for years to come, or are signed to production companies with ties to other companies, or have managers with relationships at other organizations. To create any real synergy between the two divisions is probably a five-year program, even in a best-case scenario.

Best-case scenarios have not served Terra Firma well. Indeed, the real problem with its buyout of EMI and the subsequent meltdown that followed has been a simple case of unrealistic expectations, which when unrealized, only increased the need for greater miracles in the next financial quarter. The ultimate result of this is the kind of ridiculous game of CEO musical chairs that we see now, where each new person is brought in with high hopes and a touted “turn-around” plan, only to find themselves doing a disappearing act as soon as the “turn-around” doesn’t turn out as planned. Every business should challenge its leaders to do the very best they can do. But if you challenge people to do the impossible, you will inevitably be disappointed. If you bet on them doing the impossible, you will not only be disappointed– you’ll be broke.

Terra Firma CEO Guy Hands

From the moment that Terra Firma purchased EMI in 2007 for the wildly inflated price of $4.7 billion dollars, they put themselves in a corner from which they can never escape. The loans that made that purchase possible were made on earnings expectations that were unrealistic for any music company in the present business climate, especially a company that was hardly a market leader even three years ago. In order to make the interest payments on those loans, Terra Firma now needs EMI to generate income at a level that is simply not possible for a music company in this environment.

If you try to drive a Volkswagen in the Indy 500, it won’t win the race– even if you press the gas pedal to the floor and keep it there. It’s not that it’s a bad car. It was never built to run that way. Further, if you insist on trying to do it, you’ll eventually ruin the engine– all because your expectations were not remotely in keeping with what the automobile was designed to do. EMI has plenty of talented, dedicated people in its offices around the world. It’s not inherently a bad organization. But music companies are not investment banks or oil companies. They don’t generate that level of cash. If you try to force them to do it, you’ll wind up cutting the creative experimentation you need, taking dangerous chances on high-priced “sure things”, demoralizing your staff, and draining your most productive assets to pay for your least-productive ones.

As remote as the problems of EMI might seem, the lesson of unrealistic expectations is one worth keeping in mind, even for individual songwriters and entrepreneurs entering the publishing game. As Andre de Raaff, the CEO of Imagem Music once sagely pointed out to me in a discussion about the disappointment of many investment firms who recently acquired publishing catalogs– music publishing is indeed a relatively steady business, but only over the course of about ten years.

When looked at over a decade, most established music publishing catalogs tend to hold their value and provide a relatively predictable rate of return. But within that ten year period, there can be wild swings in income from one year to the next. Currency fluctuations, copyright lawsuits, split disputes, hit songs or big flops can cause unexpected spikes or dips in the financial picture. Should you happen to buy into a catalog during the wrong three or four year period, you could easily panic when you don’t see the results you expected. If you can’t afford to wait it out for ten years, at which point the good and bad times will probably even each other out, you risk taking a sizable loss on your investment.

For those starting up a company, that means that you need to have a clear, level-headed understanding of the risks involved, the potential profits, and the time-frame in which you expect to see some action. Here are three rules to keep in mind that should help you avoid the dangers of great expectations:

1. Don’t buy anything based on what it could be.

The music business is built on dreams of endless potential. Every catalog you will ever be offered for purchase will be “full of undiscovered hits that have never been recorded!”. Every songwriter you consider signing will be on the verge of becoming the next big thing. Every cut you get will be under consideration to be the next single. None of it means anything.

Of course, all of it is possible–and hopefully one of the acts or songs you sign will turn out to be wildly successful. But you don’t do the deal based on that expectation. You negotiate the price based on what something is earning now (if it’s an established artist or catalog) or on a very conservative estimate of what it could do (for new artists or songs). You don’t plan for success. Plan for slow and steady growth, and make your financial decisions based on those plans. Then be surprised by success.

2. Don’t look for a quick money.

There isn’t any. All money in music publishing comes through the proverbial pipeline– a CD is sold at a retailer, who pays the distribution company which then pays the label which then pays Harry Fox or the equivalent which then pays the music publisher. Most of the time, that process takes somewhere between a year and a year and a half– longer than that for international royalties. Performance money is somewhat quicker, but still at least 9 months from when a song is on the radio. This is why songwriters want advances from publishers– because it’s very easy to find yourself starving, even while you’re hearing your song on the Top Forty countdown.

If you sign a new writer with an advance, no matter how minimal, it’s very unlikely that you will recoup that advance within the first year. Even if the songwriter is able to write a song in the first week of the deal, and you’re able to get the song picked up by an A&R person in the first month, it will still take three to six months for the artist to record it and release it, and another month and a half before it starts to impact at radio. It’s almost impossible that the money for that airplay or sales will show up in your coffers before the end of the first contract period. When it comes to signing and developing songwriters, you have to be willing to stay in the deal for at least a couple of years in order to get your money back.

3. Desperation is dangerous.

Decisions only get harder when you’re desperate. If you need to show results quickly, you will take foolish chances, be too aggressive, overpay for deals, or put too much pressure on the songwriters signed to you.
If you’re trying to stave off financial disaster, you’ll make budget cuts that will impair your ability to find new acts, drop unrecouped songwriters too soon, and sell off songs or catalogs at a fraction of their real value.

The music biz is a risk-taking business– but in order to take risks intelligently, you need a solid, supportive environment in which to work. That means enough capital in the business to survive while you’re waiting for your pipeline to come in, low overheads that can be covered by slow and steady growth, and enough patience and belief from your partners or investors that you are able to follow your instincts, and even make a few mistakes along the way.

A little more than a month ago, when Terra Firma was desperately trying to raise funds from its investors to stave off a Citibank takeover of EMI, they trotted out the new CEO at the time, Charles Allen, and announced that Allen would be unveiling “the new plan” to turn EMI from investment bust to boom. It was hard not to feel badly for the new leader, who was essentially being asked to create a fantasy picture in which everyone’s expectations would eventually be met, even as everyone knew that this was a completely unlikely scenario. As it turns out, he didn’t stick around long enough to even initiate the plan. And now there’s a new dream on the table.

As my father in law likes to say, you can’t teach a pig to fly. Trying will only frustrate you, and annoy the pig. Keep your expectations in line with reality, and you’ll have a far greater chance at not only meeting them, but maybe even exceeding them.

I hope everyone had a great Memorial Day holiday! I joined much of the country in taking a quick vacation– a couple of days of international business, then off to a week-long respite from weaseling. So maybe that explains why my mind is on things global. Or maybe its a conversation I had last week with someone in the insurance industry who had just been offered a position in Singapore– he was telling me that in many of the world’s fastest growing economies there is a real shortage of people with expertise in many of the major industries. Or maybe it’s the video I just watched, forwarded to me by one of our faithful blog-watchers Quincy Wofford, of the first hit that built the career of Haim Saban, the subject of one of my most recent blogs. That video featured an Israeli teenager singing a French song in one of the earliest Japanese television cartoons. It doesn’t get much more international than that.

What all this worldly thinking does is to bring home to me the fact that most of us are missing opportunities all the time, simply because our sphere of awareness is not sufficiently global. In fact, much of the time, it’s barely even local. When I was a writer-producer, the world was frequently contained entirely within the four walls of the recording studio, for weeks or months at a time. We are all worrying so much about what we’re doing, that we forget that where we’re doing it could make all the difference. If you’re searching for gold (or platinum records), it’s usually easier if you go where the gold is found.

This does not mean that you should immediately join every other songwriter from New York, Nashville, and London in moving to Los Angeles. Quite the opposite in fact. The herd mentality is exactly what you want to avoid if you’re looking for opportunity. You can’t dominate a market that’s over-saturated. You become the big fish by going where all the other big fish are not.

Of course, those little placid pools of opportunity seldom feel terribly exciting when you first arrive at them. In fact, most of the time, when a songwriter is in a small town, or a mid-size city, or a relatively small country, or in an economy that is still developing and has little infrastructure for media or music businesses, all he or she wants to do it get out. I recall having a writer/producer from Denmark make a writing trip to New York, and within days of arriving, he was already talking about moving here. Now Denmark is actually a very vibrant country with a thriving music community. Nevertheless, it’s not a large market, and as such, certainly doesn’t offer the financial pay-off that making it in America does. I can easily understand the appeal of relocating to a city full of other artists, writers, and music business people.

What I had to explain to the Danish writer was that much of his appeal to A&R people, American co-writers, and others in the industry was that he was something exotic. Simply by coming from a different place, and bringing different influences and ideas, he had a story that opened doors. It’s a lot easier to suggest to an A&R person that they take a meeting with the hot new writer in town for a week from Denmark, or Berlin, or Peru, than to interest them in another songwriter from Brooklyn or Hoboken. People in the music industry are constantly searching for something new and surprising, and more often than not, those things do not emerge from the same community of songwriters that is creating the current hits. The hot new thing comes from outsiders– whether it’s from a regional scene (think of the music coming out of places like Atlanta, Austin, Chicago, St. Louis, New Orleans, Memphis, Portland and Vancouver), or from another country. Today’s Hot 100 is full of international success stories, from RedOne to Stargate to David Guetta to The Phoenix to The Script to Greg Kurstin to Akon to Rihanna. Being from a place outside of the music centers can seem like a disadvantage, especially if there’s no local music community with whom to work. Yet, it’s also an advantage of sorts, as it gives a story and a new, fresh perspective. It also makes it relatively easy to become a dominant player in the local scene.

RedOne

That reality has a flip side for songwriters, producers, publishers and others who are located in a music center, like New York, London, Nashville or LA. While you might be fighting for every breath in a big but very crowded pond, perhaps you would be a big fish in a smaller, less competitive environment. I often find this to be especially true for melody and lyric writers working in the urban/r&b market. What if instead of struggling to break out of the pack of the hundreds or thousands of topline writers in a market like LA or Atlanta, you were to go to a European country, where people who could write believable, authentic lyrics with an American urban sensibility and slang were in relatively short supply? Countries like Denmark, Sweden, Norway, Germany, or Amsterdam are full of fantastic programmers and producers who can compete with many of the top urban producers in the US. But they lack the topline writers who can provide lyrics that work for American audiences. It doesn’t always make sense to go where the action is. If you’re trying to get to first base, the best thing to do is “hit ‘em where they ain’t”.

That goes for the business side as well. Just as many developing countries are in need of experts in insurance, banking and medicine, they may also be in need of people to build their creative industries, like music, film, radio, and entertainment management. It’s hardly news to anyone that the music industry in America and much of Western Europe is contracting, or maybe even collapsing. But in places like Eastern Europe, China, and the Middle East, the music industry is just getting started. It’s often not very pretty, frequently lacking in infrastructure or even basic copyright law, and sometimes actually at odds with government authorities or local customs. That’s about what the industry looked like in America in the Forties and Fifties, when people like Leonard Chess, Ahmet Ertegun, Don Kirshner, and Col. Tom Parker first made their fortunes. If you want to strike it rich, the place with the least rules, the fewest entrenched power brokers, and the lowest number of competitors is an ideal place to do it.

Since it’s that time of year, I would then offer this up as advice to all of the graduates of music schools and music business programs this month:

Get outta here.

Don’t go where everyone else is going, wherever that might be. Find a place where there is an interesting local scene that’s just taking shape, or an economy that’s growing rapidly, or a place where whole segments of the music industry have never existed. Then bring your knowledge, talent and ambition to somewhere that really needs it. It will be very difficult, especially in places where there is relatively little legal or economic infrastructure on which to build. But trust me, trying to break through by gigging at the Mercury Lounge or the Whiskey is pretty difficult too– as is working your way up through the executive ranks of a major label teetering on extinction. At least this way, you have the chance to truly hit the jackpot, rather than just hoping for a decent advance or a good severance package.

Sooner or later, you will in all likelihood return to London, LA, New York, Stockholm, Munich or Tokyo– that’s why they call them music centers. These places are the ones with the lawyers, agents, major publishers and labels, and collection companies that make the business run. But when you return, you’ll come back with a story (hopefully a successful one), some momentum and credibility, and with any luck, the kind of power that comes from having created a thriving business model in unlikely circumstances. That’s very different than showing up in town with a degree and a suitcase full of resumes.

Realistically, in order to pull this off, you’ll need more than just a basic background in the music biz. You’ll want some foreign language skills, an understanding of the culture and economic system of wherever you’re headed, a musical knowledge that extends beyond the current US Top 40, and an understanding of how different aspects of the music business can change based on local custom, copyright laws (or lack thereof), and different collection systems. Needless to say, that will take some extensive studying and research.

At the moment, I’m knee-deep in updating my Berklee Music online class, Music Publishing 101. One of the key changes I’m hoping to make in the new course is a greater emphasis on the international differences in music publishing. It’s a very tough subject to address, simply because there are so many of those differences, some rooted in variances in the copyright laws between territories, others related to the size of the market, and still others based on custom and history. The US system is neither the oldest nor the most representative– it’s just one way among many of publishing music. You need to know the variations in each market, not just so that you can speak intelligently with sub-publishers and colleagues in other regions, but also so that you can take advantage of opportunities that lie outside of your own national borders. If you want to check out the new version of Music Publishing 101, visit Berkleemusic.com

When I first told my parents that I wanted to be in the music industry, they reminded me frequently that success in that field seemed to hinge entirely on being “in the right place at the right time”. Those words always drove me crazy, as they seemed to imply that anything that happened in music was all a matter of sheer luck—never a great basis upon which to build a business strategy. While I’m still not a big believer in the “lucky break” theory of career development, I now have to admit that Mom and Dad had a point. By doing a little research, keeping your eyes open, and being willing to go wherever it takes to grab an opportunity, you can put yourself in the “right place” at the “right time”, and make your own luck. Don’t be afraid to pack your bags and go west, east, north, or south to find a place where the pasture is greener.

A good friend of mine, one of the best “songpluggers” left in the music industry, has his own company through which he consults for a number of publishing companies and songwriters, pitching songs throughout the world. His company slogan, emblazoned on every email is:

Small is the new big.

He’s right– in more ways than one. Clearly, small companies with low overheads and fluid business plans are better suited to manage the challenges of the “new” music industry than the massive conglomerates that have been the dominating forces over the past several decades. In fact, even many large, well-established companies have realized that small profit ventures like low-percentage administration deals, music library businesses, gratis sync licenses that yield only performance income, and no-advance sub-publishing arrangements have replaced the big-money pay-offs on co-publishing, life of copyright deals and six-figure sync fees. Small money is not only the new big money. It seems to be the only money there is.

But “small is the new big” in another sense as well–perhaps it would be more accurate to say, “small is tomorrow’s big”, and it always has been. The music industry is full of niche markets, many of which are deemed too small or specialized to interest the major record labels, or their colleagues at the major publishers. These little pockets of activity probably don’t show up on the Billboard charts. The music may not even be sold through conventional music outlets (whatever those are anymore). The markets are too obscure to interest the big industry players, not nearly sexy or cutting-edge enough to bring up at an A&R meeting, and too limited in their earnings to attract the attention of the investment community or the financial guys at the major music corporations. And yet, if you look at some of these markets twenty years later, you’ll usually find that at some point, a smart, wily, unconventional entrepreneur came in and quietly made a killing, while all the rest of the industry slept. Out of nowhere, the small business person becomes the new big one.

Happened to read an article today about one such example– a very dramatic one at that. Check out an article called “The Influencer”, by Connie Bruck, in the New Yorker magazine.

http://www.newyorker.com/reporting/2010/05/10/100510fa_fact_bruck

New Yorker articles being what they are, this is a long and fascinating story of entertainment mogul and political powerbroker Haim Saban, full of complex political and ethical implications. But for music business weasels like myself, the primary point of interest was this one:

Saban made his initial fortune as a music publisher. He’s now estimated to be worth more than $3 billion dollars. Do I have your attention now?

In 1986, Saban sold his first music publishing catalog to Warner Communications for about $6 million dollars, which he then used to expand his empire, buying additional catalogs, and then expanding his media holdings to eventually include Fox’s Family Channel and now, Univision. Still, I feel fairly confident that most in the music business would hardly recognize his name, except for having seen it on the outside of office buildings or theaters in LA. For all his years in the music industry, Saban doesn’t seem to have any big hits or legendary acts to his credit. He probably didn’t often hang around the schmooze circuit of awards shows and music conferences. I can’t see him checking out bands at Stubbs at SXSW.

So how did he manage to make a fortune in the music business, anyway? The answer:

Cartoons.

Not exactly the mainstream of the industry. Indeed, it was even less so when Saban got into it, in the late 1970’s. At the time, Saban was managing a young French singer from Israel named Noam Kaniel. The manager brought Kaniel to Paris, taught him French, secured a recording contract and had a minor hit with the artist when he sang the theme to “Goldarak”, a Japanese cartoon series broadcast in France. You can’t get much further from the mainstream music business than that. Yet for Saban, it became the opportunity of a lifetime.

The exposure to the cartoon business allowed Saban to see that a huge amount of music publishing income could be generated by TV cartoons, which are licensed to television stations around the world and played countless times. If you’re wondering what the word “perennial” means, think about Bugs Bunny or the Road Runner, and how many times you’ve seen certain classic episodes– and how many times your kids have seen, or will see them as well. Now, imagine what those generate in performance income from ASCAP, BMI, SESAC, and the other societies around the world.

Quickly, Saban seized the moment and began signing writers to create music as “works for hire”, which he then provided to the cartoon production companies for free– Saban registered the works and took the publisher share (and often the writer share as well). In less than ten years, he was selling the company for seven figures. Small got big and was getting bigger.

It’s a remarkable story, but not an entirely unique one. There are similar tales throughout the music and entertainment industry of people who found a spot in the shadows where they could quietly mint money, while others grabbed the headlines. Actually, the story of Saban reminded me of Clive Calder, the founder of Jive Records and Zomba Music, who I had the good fortune to work for in the late 90’s, before he sold his company for more than 3 billion dollars. Like Saban, Calder found his initial opportunity in niche markets like heavy metal and hip-hop, snapping up the publishing on early hip-hop artists and producers when the general consensus was that hip-hop was unlikely to yield any enduring copyrights. Rap was too small a business to matter much, and even many of the other entrepreneurs that were pivotal in the expansion of the genre failed to see the value of the publishing rights, and focused only on starting record labels.

All of this came to mind when I met this week with Chrisie Santoni, a talented songwriter, performer and publisher. In our discussion about her band and the success she’s had in creating a self-sustaining business around her music, she happened to mention that there was another element to her company which focused on children’s music. As it turns out, she has constructed an exciting new business, Dancing Bears Music, built around her work as a performer and music educator for children– playing shows and selling CDs. Still, I could tell that she was a little hesitant to mention it, knowing that music for children was something that rarely registered on the radar of most music business weasels.

http://www.dancingbearsmusic.com

That’s their loss. The fact that most of the major labels have entirely abandoned the children’s market is incredible, especially since it’s one of the few genres that can still move physical product. People who balk at paying a dollar to download a song for themselves will happily buy a fifteen dollar CD for their kids (especially if it keeps the kids quiet in the car!). Why label A&R’s and music publishers would rather wager money on a buzz band from Brooklyn, instead of a children’s project that could be sold to all the people wheeling strollers around Park Slope is utterly beyond me. But I know that it spells opportunity.

It’s not the only such opportunity out there. Niche markets like world music, foreign language releases, theater music, modern classical, jam bands, soca, dancehall and many others all have the potential to generate big money, and yet fall outside the purview of most major label and publishing A&R people, who are segregated into pop, rock, country, urban, and (maybe) Latin departments.

Of course, there are no guarantees. Many small niche markets never grow much, and others quickly become over-saturated to the point where no one can make any money. Niche markets probably won’t get you a profile in Billboard, or generate a major label bidding war. At worst, a niche market provides a small but steady income with a minimum of risk. At best, it could be tomorrow’s hot new thing, and you’ll be there before anyone else. So never be embarrassed or hesitant to focus your company in areas that the mainstream industry dismisses as marginal. There’s a lot of money to be made on the margins. For small publishers who want to get big– this is where you start.

A quick note in closing:

I want to be sure to let all of you who follow this blog know about my new business: Ask The Music Business Weasel! This is an hourly consulting service aimed at songwriters, artists, and publishers looking for information, feedback, or advice on confronting challenges in their business. The consultation can happen in person, over the phone, through skype, or whatever suits you– but it’s a chance to chat and try to brainstorm about opportunities and strategies for your music career. If you’re interested check out my brand new website:

www.ericbeall.com

If you go to the section marked: consulting, you’ll find more information about the service. Just drop me an email at ericbeall@ericbeall.com, and I’ll be in touch to set something up.

Just recently returned from a trip to California– the usual business schmooze in LA, a couple of days in Santa Monica, a venture up to Malibu and Topenga Canyon– and as always, I had to wonder why I battle the New York winters when the sun is always shining in the other music capital, and you get cultural advantages like better Mexican food and surfing. It’s a beautiful state, and seems like a pretty chill place to live.

However, political junkies will tell you that it is a state in total political meltdown (not that New York is much better), and not surprisingly, even the laid-back Californians are now starting to work up a little rage. So it’s only appropriate that the king of California rock, Don Henley, should find himself embroiled in a political battle, which actually has some interesting publishing issues at the heart of the matter.

http://www.variety.com/article/VR1118018548.html?categoryid=16&cs=1

It seems that a right-wing candidate for the California Senate seat, Republican Chuck DeVore, borrowed two classic Don Henley songs, “Boys of Summer” and “All She Wants To Do Is Dance”, altered some of the lyrics himself and had his campaign strategist re-record some of the vocals to make attack spots on his opposing candidates– he then put the ads up on the internet. I’m not sure which part of this is actually the most egregious: the fact that a politician is now thinking he can write song lyrics, that he thinks he is a comedian, or that he considers his campaign strategist qualified to replace vocals by Don Henley. First there’s an action hero that wants to be governor, now there’s a politician who thinks he’s a co-writer with the guy who wrote “Hotel California”.

Of course, none of those concerns are the primary ones for Don Henley, who has a reputation for a healthy temper, an unwillingness to suffer fools, and a staunchly liberal political point of view. Henley and his co-writers, Mike Campbell (“Boys of Summer”) and Danny Kortchmar (“All She Wants To Do Is Dance”) reacted quickly and have already sued DeVore for copyright infringement in the US District Court, on the basis that the new versions implied that they were supporting DeVore’s candidacy, a prospect that Henley probably found more upsetting than a Deadhead sticker on a Cadillac.

Those that follow this blog (I KNOW YOU’RE OUT THERE) will recall a similar situation around the McCain-Obama campaign, which I discussed in “Weapon of Choice” back in the politically-charged days of November 2008. The blog mentioned a number of song uses, including “Barracuda” (for Sarah Palin) and “Running On Empty”, which the McCain campaign (in one of the wackier campaign strategies ever devised) tried to use to ridicule Obama. Both of those uses were immediately attacked by the songwriters, who made clear that they had no interest in their songs being used for a candidate whom they did not support. While campaigns usually escape from such situations with little more than a pledge to cease and desist, the rumor is that Jackson Browne, a very politically active Democratic supporter, actually pursued the case and walked away with a six-figure settlement from the Republican Party.

So the Don Henley-DeVore case would seem to be something of a no-brainer, based on the precedent set by such a similar battle with Browne and McCain. But interestingly, in part because of the lyric re-writes, this fight actually could be considerably more substantial, as it raises the question of “fair use” for parodies, one of the trickier areas of copyright protection. In fact, much of the case comes down to whether the DeVore’s re-writes are “parodies” or “satire”, which under the law, are two different things.

Since the one thing that both liberals and conservatives seem to be able to agree on is the value of “free speech”, the copyright laws do provide for the “fair use” (that is, without the author’s permission) of well-known songs in parodies, which is defined as something that “at least in part, comments on the original author’s works”. On the other hand, the rights to “fair use” are diminished when the song is used as “satire”, which is when the use “has no critical bearing on the substance or style of the original composition”.

In other words, if the DeVore version of “Boys of Summer” pokes fun at Don Henley, the song itself, or the style of the songwriters involved, then it’s a “parody”. And if it’s “parody”, then it falls into the category of those things that you hear on the morning radio shows. However, if “All She Wants To Do Is Tax” is solely an effort to discredit a political opponent, and doesn’t actually comment on the original song or artist at all, then it’s “satire”. In that case, DeVore likely would need the permission of Henley, the co-writers, and their publishers in order to use the song.

Obviously, this is a pretty tough distinction to make, and in fact, even many of the “morning show” spoofs would probably fall more in the territory of satire than parody. But most songwriters and artists don’t care much about those uses, as they don’t imply the “endorsement” of someone antithetical to their own values. In the cases where the “parodies” are in truly bad taste (in the judgment of the original writers and publishers), there is some ability for publishers to argue that “fair use” does not apply in an instance where the parody is doing serious damage to the long-term value of the original copyright.

As you would expect, DeVore is arguing that he is indeed making fun of Henley, and his left-wing political leanings, by deciding to use his well-known hits for the political ad. He points out that there are millions of other songs and artists that he could have chosen for the “parody”, but that part of the humor is based on the use of songs by such a well-known supporter of Democratic candidates. Henley apparently doesn’t get the joke. As far as he’s concerned, DeVore has used the music to solicit campaign donations online, a use for which Henley assesses an approximate value of $1.2 million dollars (in endorsement and licensing fees).

Indeed, the first thing that occurred to me was that there is more than just the issue of “parody” versus “satire” here. There is also an unlicensed synchronization use. When he created a visual advertisement and put music to it, any music, DeVore was required to obtain a synchronization license, just as any advertiser would need. The “fair use” principle does not exempt the need for a proper license when it comes to putting music with a moving picture. Nor does the fact that the ad appeared only on the Web make it any less necessary to obtain the permission of the publishers involved. In fact, that kind of unauthorized use in venues like YouTube is one of the fundamental copyright violations that all of the major publishers and labels, not to mention film studios and everyone else involved in the entertainment world, have been fighting against. Given the importance of show business to the California economy, it’s not a great look for the aspiring senator to be using unlicensed material in his web-based advertising efforts.

Perhaps that’s the most important point. The scariest part of this seemingly endless effort by politicians to use music for their own political ends is that it points out, again and again, that the political community has very little understanding of the principles of music licensing and copyright protection, and not much good taste either. It’s no wonder we can’t make any headway on legislative issues related to file-sharing or performance royalties for artists, when a candidate for president can’t figure out that using “Running On Empty” without permission is a bad idea. Or when an aspiring senator, from the capital of the entertainment business, doesn’t recognize that re-writing Don Henley lyrics, even if you were a real songwriter, is somewhere on the level of painting a mustache on the Mona Lisa.

The case goes to court for hearing on June 1st, but the judge may or may not make a decision at that time. Needless to say, the challenge of distinguishing between “parody” and “satire” makes this a more complex issue than one might think. Neither Henley nor DeVore may get the quick decision for which they’re hoping. If the case winds up dragging on beyond next month, it’s worth noting that DeVore will already be costing California taxpayers money, and he hasn’t even been elected to office yet. Meanwhile, as Don himself said, “the lawyers dwell on small details”… Not sure if that’s parody, satire, or just plain old irony.

When it comes to rites of spring, the big ones for me are Easter, the arrival of royalty statements, Opening Day, and the ASCAP Pop Awards and “I Create Music” Expo. It looks like it’s that time again. The “I Create Music” Expo, probably the best and biggest songwriter conference of the year, took place last weekend in Los Angeles at the Renaissance Hollywood Hotel, from Thursday, April 22 through Saturday, April 24.

If you’re an aspiring songwriter, or even a well-established one, this is a decade’s worth of education crammed into three days, with dozens of panels on everything from film & television licensing to the international market, interviews with superstars like John Mayer, master sessions with writers from Dr. Luke to jazz legend Kenny Burrell, and listening and critique sessions to allow everyone’s music to be heard.

The Expo is useful not only for the amazing networking opportunity it presents, or all of the information and resources it provides. One of the most important things that the ASCAP Expo does is remind all of us, whatever our level of experience in the business, how many different elements and factors go into making a professional songwriter, and how many skills one needs to really be at the top of his or her game. Success is not merely a matter of songwriting skill, or who you know, or finding the right career path, or marketing savvy, or simple, sheer ambition. It’s a matter of having all of those things at once.

I thought of this as I prepared for my own ASCAP Expo event– a workshop called “The Nuts and Bolts of the Music Business”, which I led on Friday, April 23, from 11:15 to 12:30 in the Grand Ballroom. To all of those who turned out– and there was a big group– thanks so much for all of your support!

The title of the panel was not my own, but rather one that ASCAP has used in the past, and I started thinking about what it really meant. Of course, it refers to the “basics” of the music business– the fundamentals of publishing and licensing, and the various legal and negotiation principles that go along with those things. But it also struck me that “Nuts and Bolts” are essentially tools. They’re things that you use to build something. And the truth is, the things that are necessary to build a career as a songwriter go far beyond a reading of “This Business of Music” and a few sample sync agreements.

So what are the tools that it takes to be effective as a songwriter in today’s music industry? Here are a couple of ideas that you might want to consider. In fact, if you’re going to other events like the ASCAP Expo, you might even want to take a good look at yourself in relation to these tools, figure out where you’re weak and where you’re strong, then try to focus your efforts on strengthening those areas where you feel a little weak. The tendency of most songwriters is to focus all their energies on the spots where they feel most confident. But the point is to be well-rounded, to have all it takes to get to the top. Here’s what you need:

1. An understanding of your audience.

The first thing a professional songwriter needs is an audience. Songwriting without an audience is a hobby. Who is your market? Is it a hip-hop market, made up of young, urban or suburban teenagers, or a country audience of rural and suburban women in their twenties and thirties in the mid-South and Southern states?

And just as importantly as “who is your audience”, it’s important to know “what does this audience want or need from the music they purchase?” Successful songwriters have a very clear understanding of who their target audience is. Sometimes it’s because they themselves are representative of that audience. Other times, it’s because the songwriters have studied it carefully. Star songwriters know exactly what kind of people make up their market and what those people want in the music to which they listen. Beyond that, smart writers know what magazines their audience purchase, what clothes they wear, what TV shows they watch and what kind of cars they drive. If you’re going out hunting bear, it’s a good thing to know what a bear looks like.

2. A network of people.

I’ve yet to see any songwriter actually become successful in isolation– breaking into the big time without any music community to support and nurture him or her. An essential survival skill is to learn how to choose the right people with whom to surround yourself, Your team should include a music lawyer, a representative from ASCAP, BMI or SESAC, possibly a manager, or perhaps an outside publisher. It can go further. If you’re breaking into the urban world, you might want to join forces with a well-known production team. If you’re a rock artist, you need a booking agent. The ability to build an effective team is crucial to the success of any music creator.

3. A strategic approach.

This is where the first two skills meet. Strategy is just the ability to discern what direction to go, and what the ultimate goal is is, then to figure out a way to use your network to get you there. Most songwriters fail because they don’t know where they’re going or what they’re aiming at. Many who may have that knowledge are too shut off from the industry or even their own musical community to be able to find a way to reach their goals. You have to be able to see the destination, find a path, then call upon the people you need to help guide you down the path.

To go to the ASCAP Expo is a positive career move and an aggressive approach to your career. Still, it’s not by itself strategic. If you were to look at the names on the list of panelists in advance and identify the ten key players who you need to meet… then you were to research them enough so that you could ask one knowledgeable, interesting question at their panel… all with the intention of creating a reason to be able to approach them after their panel– now that’s strategic!

4. A demo reel with hits on it!

There’s no better weapon in the war of the music weasels than a hit song. A band with one sure-fire radio single and nine mediocre songs will get signed to a record label long before a band with ten pretty good songs and no single. A songwriter with one song hitting the charts will get a publishing deal faster than a songwriter with dozens of big album cuts. Hit songs are the currency of the industry and if you have them, doors will open and things will happen. Having hits is a sure-fire strategy.

5. An entrepreneurial spirit.

If you went to hear the top songwriters speak while you were at Expo, I can assure you that you will not have heard any of them, including those signed to big publishing deals, speaking like an employee at a company. You will never hear an A-level songwriter imply that they just write the songs and leave the business to someone else. Successful songwriters view themselves as the driving force of their own career– as the CEOs of their publishing companies, their own best song-plugger, and their own toughest critic.

Life being what it is, not every top songwriter has all of these tools in equal measure. Some make up in hit-songwriting ability what they lack in team-building skills. Others let networking, strategic thinking and overwhelming ambition carry them beyond where their talent alone could have placed them. Most importantly, the great songwriters recognize what they’re missing, compensate for it, and then try to improve their weakness by any means necessary.

Opening Day at Yankee Stadium always brings to mind the legendary Mickey Mantle, who along with his rival Willie Mays, was described as one of the quintessential “five-tool ballplayers”– that is, a baseball player who can run, hit for power, hit for average, field his position, and throw accurately. There’s not many of those around at any time. The same could be said for songwriters. The five-tool songwriters are the ones who know their audience, have a network of people on whom to call, take a strategic approach, bring the hit songs, and keep an entrepreneurial spirit toward their business. They were the ones on stage, accepting the ASCAP Pop Awards at the Wednesday night event prior to the Expo.

Tools are a way of making things easier. If you have the right ones and you know how to use them, you can do the job faster and better than you could without them. The ASCAP Expo is an unparalleled opportunity to pick up those tools that you’ve been missing, or that you haven’t yet learned to use. Don’t miss the chance to get your game up to a big league level. If you didn’t make it there last weekend, try to put it on your calendar for next year. There is no better event than this one to learn from the top songwriters and publishers, and to hone your skills in every aspect of the music business.

For those of you who were there– thanks so much for dropping by to say hello. It’s always great to connect with all of you in person…