The New Big

May 16 2010

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.

    It’s amazing how many of us songwriters and artists want to go right for the presumed glitz and glamour of this industry (or what’s left of it). In doing so, we overlook so many opportunities. I was speaking with my producer today about what the plans are to promote the new album I’m recording. I’m not going to hire a radio promotor, publicist, or try to get in the biggest magazines…I’m starting with dominating my local market, hitting the area colleges and universities, and the locals malls where I may be able to have a store give away free copies of the CD. Little becomes much, and even snowballs start out as one small snowflake. It’s time to turn every stone over, and then dig underneath it as well, not just look at the top of mountain. (I hope you’re liking these analogies…they are just flowing out of me).

    Hi Eric,

    Your new website looks great! I responded to this post over there but in case you missed it, here’s a link to that Noam Kaniel song that sparked Saban’s success if you haven’t seen it. Lots of cultural genre stuffed in this thing!!! http://www.youtube.com/watch?v=v9×9aPIbdOg

    I wrapped up my second read of Making Music Make Money last night and will be enrolled for the June 28th start in Music Publishing 101. If you’re willing and able I would love it if I landed in one of your sections…

    Oh wow– that video is crazy! An Israeli kid singing a French song in a Japanese cartoon. On this an empire is built. Thanks for sharing this.

    So happy to hear you’re going to take the Music Pub 101 course. I’m just now finishing an update of the course, which will debut this semester– so you’ll be the first to take the new, better than before, course. I hope you like it. I’m actually not teaching this semester– all my focus is trying to finish the updates on the course. But the instructors are great, and you’ll definitely hear plenty from me during the course of the 12 weeks, as there are several video interviews and other elements where I show up every now and then. Good luck with the class– and as always, thanks for all your support of the blog, the book, etc.

Leave a Comment