Happy Together

Sep 28 2011

During the travails of the past decade, when record label turned against downloader and publisher turned against record label and streaming service turned against publisher, the sage music industry commentators have been crying in the wilderness:

“Hold up guys! Remember: we’re all in this together”.

Yea. Right.

I think I might have even said it once or twice myself. But now, it turns out to be true—truer than any of us imagined at the time. As the giant merger wheel gains speed and grinds over anything and everything in its path, it seems we truly are in it together, all destined to be owned by the same uber-corporation, tools of an anonymous international venture capital fund. In a world where everyone is “strategically linked” (i.e. owned), every deal is a 360. Welcome to the new model music industry.

It’s not even the end of September, and already we’ve seen BMG Rights, the giant German elephant in the room, purchase Bug Music—rumors are that EMI will be the next to fall to Hartwig and his gang. Within days, Billboard blared the news of the recently struck “strategic alliance” (it would take a UN sub-committee to define what that actually entails) between Universal Music Group (the world’s largest record label) and Live Nation (the world’s largest concert promoter, artist management firm and ticketing company, albeit with the world’s smallest chairman). Then we also had the unveiling of the most unfortunately named venture of the year, Primary Violator, a merger of Primary Wave Music’s management company and Chris Lighty’s powerhouse Violator Management. If Violator had merged with Universal, would it be a Universal Violator?  I thought the guys at Primary Wave were supposed to be marketers. Name-check, please.

While the relative merits of each deal can and will be chewed over for weeks at Brooklyn Diner, the motivations are relatively clear. BMG is on a buying spree, and they’re doing what any savvy new player with several billion dollars to burn would do—they’re buying up classic catalog as fast as someone will sell it. Contemporary hits come and go, but when you’re investing money, there’s nothing like classic, proven songs to provide a steady cash flow and the musical depth you need for the big ticket sync placements. In that respect, Cherry Lane (Elvis, John Denver) was good, Bug (Johnny Cash, Duane Allman) is better, and EMI (Motown, “Somewhere Over the Rainbow”) is the Holy Grail. It’s a hard strategy to argue with, at least until everyone gets their accounting statements and we see if these guys had any clue whatsoever as to how they’re going to integrate all these separate companies.

The Universal-Live Nation deal was in some ways the most impressive. Lucian Grainge seems to be alone among the major label chiefs in being serious about constructing a comprehensive music company.  The Universal labels are so far out in front of their competitors in this respect that they seem almost to be engaged in a different business altogether. On the other hand, it doesn’t appear that EMI (which will be sold by the time I blog again) ,Warner (which still can’t seem to figure out who bought it and why), and Sony (overburdened with the usual 550 corporate bloodletting and X-Factor auditions) are engaged in much at all. Interestingly, the alliance with Live Nation seemed to implicitly acknowledge that the 360 model had not yet become effective for Uni, and that a fierce, fire-breathing dragon might be necessary to bring Universal’s artist management companies, Trinifold, Twenty First Artists, 5B, and Sanctuary into some kind of orderly place within the larger organization.

With Live Nation heading up the management side, Universal has the leadership it needs. At the same time, it’s an impressive land-grab for Irving, without much firm commitment from him for any real cooperation. (As is his custom). Front Line invests nothing, gets a 50% stake in UMG’s management companies, and agrees to discuss bringing the Madonna album to Universal, but only if Guy and Madonna want to.  Next time, can we please send Irving Azoff in to negotiate the federal budget with the House Republicans ?

By comparison, the Primary Violator deal is a genuine merger, or maybe even a “buy-out”, depending on who you talk with. As such, it may reflect a timely move by Chris Lighty to cash in on an aging artist roster. After all, it’s been awhile since Mariah, P Diddy, and LL Cool J were at the top of the game. It could also reflect that a management roster consisting only of Cee Lo Green and Eric Benet wasn’t exactly the A-list that Larry Mestel had in mind. But most importantly, it is a bold statement by a music publishing company of what a lot of music publishers are starting to see, especially as the real payments from streaming services like Spotify start to come in and they’re missing at least three zeroes on the checks:

Music publishing is not going to be enough anymore.

The numbers are getting smaller and smaller, and even as uses of music climb, the payments are not sufficient to cover the tidal wave of paperwork that goes into collecting and accounting for them. In some ways, it was better when people were stealing. At least we didn’t have to keep track of it. Music publishers are going to have to diversify into other areas, and kudos to Primary Wave for making a bold move in that direction.

Of course, what makes sense for Universal Music, Live Nation, BMG Rights, and the afore mentioned Primary Violator (I love writing that) does not necessarily make cents for artists and songwriters. Not much surprise there.  It’s easy to see the upside for most of the parties involved in the past week’s festivities.  But the creative community would be wise to approach their new adopted family with the wariness of an orphan. Grab the bread if you’re hungry and someone’s offering, but keep one eye on the giver, and make sure there’s an exit nearby. And don’t get attached. Most of these families won’t be together very long.

For songwriters, artists, and independent publishers trying to make sense of it all, here are four quick things to keep in mind:

Music companies are becoming entertainment companies.  This is an inevitable thing.

Lucian Grainge and Larry Mestel are right—no one thing is enough anymore. As I’ve been preaching in this space for several years: publishers, record labels, managers, and booking agents have to see themselves not as part of the music industry, but rather as part of show business.   Not only is the value of music falling, but the intertwining of music with all other entertainment forms, from theater to video games to sports to television talent shows is increasing tenfold. In this sense, music creators are going to have to take some cues from the corporate decision-makers and begin building a network that includes not simply other musicians or songwriters, but game designers, film directors, music supervisors and visual artists. Diversification is not so much a business strategy as a survival mechanism.

Not all companies from one sector of music are competent in other sectors of music. Some are not competent in any facet of the music industry. This is an inescapable thing.

Here’s where creators are going to have to turn up the noise filter to “high” in the next few years. The fact that a company is a proven, known entity in one field, like music publishing, does not mean that they have a transferable expertise in the management business. Simply controlling the best record label does not guarantee having the best management company. If it did, Universal wouldn’t have sought out Live Nation at all.  The merger of two giant messes (Warner & EMI) guarantees very little except one really big mess.

When I was at a major publisher, I heard a similar argument made to songwriters every day—extolling the virtues of a worldwide publishing behemoth with offices in every territory, a film division, a record label, and an electronics arm. It was all true. But it didn’t mention that the UK office hated the New York office, and the country division wouldn’t speak to the Christian division, and no one had any contacts with the film company, and the electronics arm (I kid you not) didn’t even know they had an associated publishing company.  Bigger just means bigger.

The interests of all parties in the music equation do not necessarily align simply because they are all part of the same corporation. This is a proven thing.

Of course, this is the inherent problem within the 360 structure.  A manager is not always an ally of the record label—sometimes he or she is the person to put the screws to the company, albeit with the best of intentions.  A record label may not wish to pay the tour support that a manager demands or that a concert promoter would like. A publisher may not wish to send their artist to their affiliated record division(ask EMI), and a label A&R person is definitely not going to cut every song the publishing division sends over (ask any songwriter).  We are not in fact one big happy family.  We’re in it together, but not in it for each other.

The only person who will take care of you is you. This is a historical fact.

In light of the above, don’t take any advice from a manager, publisher, lawyer or record exec about where to sign, or who to engage until you consider: what’s in it for them?  Are they sending you to their business partner because it’s a perfect fit for you, or for them?

This is not to say that there are not real advantages that can be realized by keeping things “in house”.  I used to work at Zomba Music and Jive Records, the music industry’s best example of that particular approach over the last two decades.  But not all of these new alliances are going to work out. You can’t afford to let your career be the experiment in which two new corporate partners learn, or don’t learn to work together. Lots of people who believe in public schools as a concept send their kids to private ones—because you only get one chance.

Be assured that in a year from now, when your trusted manager tells you that he’s leaving that joint venture that he assured you would be “an incredible opportunity for all of us”, he will regale you with tales of how his new partners “just never got it”.  He’ll be gone, but you’ll still be in that publishing deal for the next three years.

Not only are we not really family, often we’re not even friends.  Whatever anyone tells you, it’s never all for one (except when it comes to BMG’s acquisition strategy). It’s one on one, everyone for him or herself.  Choose your partners carefully, each on their own merits. Not every match is made in heaven.

 

 

 

 

 

 

 

 

 

 

 

Try Try…Try Again

Jul 15 2011

It’s become the ultimate music awards show cliché: a twenty-three year old pop star telling aspiring musicians in the crowd to “never give up on your dreams”, as if Joe Rockstar’s three or four year climb to stardom offered irrefutable proof of the inevitability of hard work leading to success.

Of course, such advice overlooks the simple statistical fact that the career dreams of most musicians and songwriters do not in fact come true. The reality is: many people play dead-end gigs night after night to make ends meet, sure that one day their labors will lead to a record deal or a publishing agreement, or a big breakthrough moment—and it simply doesn’t happen. Most people who get the major record label deal put out one failed album and disappear. Most songwriters with publishing deals don’t write a hit. That’s not negativity. It’s just the numbers, and it always has been. In many cases, people might have been better off to give up their music career and focus their efforts somewhere more suitable for them.

And yet…

And yet, those of us in the industry who come in contact with the success stories know that one of the most common defining factors among the people who find not momentary, but long-term career success in the music business is indeed a grinding, relentless, near-obsessive determination that simply refuses to accept defeat. Successful artists, songwriters, and producers do not give up. Neither do successful managers, A&R people, or label owners. It is the one common trait between a wildly diverse population of creative types and music weasels.

So how does a young musician or songwriter reconcile the need for determination in the face of overwhelming odds with the equally necessary need to face reality? It’s a question that has been in the back of my mind since the day I started in the music industry. I haven’t had a day since without it spinning around my psyche. In all honesty, I hope I never do.

That’s because the two qualities, determination and realism, are only helpful when they’re closely intertwined. Without a balance of both qualities, you can be assured of either rushing headfirst off a cliff, or throwing in the towel without realizing you’re only inches from the goal. It’s true that you should never give up. But doing the same damn thing over and over is not going to work either. You need determination all right. But you need to be realistic about what “determination” actually means:

Determination is an endless capacity for reinvention.

I thought of this yesterday, when I saw a particular new act break into the Top Ten of the Hot 100 for the first time. We’ll leave the name of the band out of it, to allow for more candor in recounting the story.

I first met the lead singer and chief songwriter of this band when he was still a teenager—he played and sang in my office, with unshakable confidence and undisguised ambition. He was clearly talented, but not yet ready to sign a publishing agreement. I didn’t sign him, and no one else in the business did either. Several years later however, he had grown both as a person and as a musician—and he did get that publishing contract, which subsequently led to him forming a band, toughening up his sound, and starting to record some demos.

Fast forward another 12-24 months, and those demos began to attract interest from managers. Soon the young band was being represented by two major industry veterans, who were able to secure a major label record deal for their clients. Now this project was off to the races—only about four years after that initial office performance in my office.

Once the band had finished recording their debut album, the label sponsored another showcase, this time at a major venue in NYC, and I had a chance to see the band a second time. While the depth of talent in both the songwriting and performance were obvious, the show didn’t sell me on the group. I felt they were a little too derivative and not terribly convincing, and definitely not packing a breakthrough first single. When the single came out several months later and quickly disappeared, I felt confident I’d made the right call.

Given the current propensity for record companies to drop an act at the first failed release, I was surprised to see the band get a second chance with a follow-up single. Most of this I attributed to their high-powered management team, who had clearly pulled some favors and issued some threats to give their act one more opportunity to grasp the brass ring. Still, even that power-base wasn’t enough, as the second single did even less than the first, garnering almost no radio action and little label support. Right around that time, I was given another opportunity to get involved with the band on a publishing level—and once again, I passed. When the president of the label and the Sr. VP of A&R, who signed the act, both left the record company, the demise of this particular band, after five or six years of local gigs, recording, showcasing and touring, seemed inevitable.

So imagine my surprise when several weeks ago the group’s new single, a third attempt at breaking through to radio, suddenly leapt onto the Hot 100. I was even more surprised when I heard the record. The band had radically shifted their sound and visual image toward a younger demographic. It worked immediately, and continues to build into one of the major success stories of the year. The band’s success is not only a testament to their talent, but also to their determination, and the determination of the business team around them. They never, ever gave up.

But they did adapt. In fact, their determination did not result in a refusal to change—their determination was expressed through their constant willingness to change. I’ve seen it through personal experience with artists and songwriters ranging from The Script to the Jonas Brothers to Stargate to Billy Mann. The kind of determination that wins in the music industry is the kind that never stops looking for a new angle, a new approach, or a new audience. Playing the same songs in the same city to an ever-dwindling number of the same people year after year is not determination. It’s futility. If you look at the careers of show business icons like Frank Sinatra, Elvis, Madonna, Tom Jones or U2, they are filled with an endless capacity for reinvention, and a conviction that there is always another way to get to the top.

The Jonas Brothers

Every artist or songwriter meets obstacles along their career path. Many of them vow never to give up—and don’t. Unfortunately, most of them fail, because they simply repeat the same mistakes again and again. The ones that succeed are like the best competitors of any kind—they simply refuse to lose, and will try everything until they find what works. Here’s four tips to keep in mind:

1. Keep an eye on the scoreboard
Anytime you’re on the playing field, you better know the score of the game, because you play differently when you’re behind and when you’re ahead. The most deadly danger is to tell yourself that you’re winning when you’re not. It’s easy to convince yourself that you’re making progress–gaining fans, building a network of contacts, refining your sound—when you’re simply standing still. Set measurable goals. Monitor your results. And be honest. If it’s going nowhere, admit it. Just because you’re behind, it doesn’t mean you’ll lose the game. But it does mean that you better be prepared to change something.

2. Change the team
Almost every great band has a member who never quite made it the distance (right, Pete Best?). If one member of the team, whether it’s a musician, a manager, a publisher or a record executive, is holding everyone back, then there has to be a change. Sometimes even the best people get stale, especially after a run of success. Look at how Madonna has switched producers or how songwriters like Billy Steinberg or Max Martin have found new collaborators. It’s never easy to do. But you have to find the chemistry that will make magic.

3. Change the field
Music is fashion, and like all pop culture, it’s constantly changing. Production sounds come and go, whole genres of music transform themselves, audiences grow older or are replaced by a new generation of listeners. Whether it’s Elvis going to Vegas, Darius Rucker going from Hootie to country star, or Rod Stewart transforming from rocker to crooner, you have to be willing to meet your audience where they are. Sometimes that means changing styles, genres, or geographical territories. Go where the grass is greener.

4. Change the strategy
Coaches put their game plan on a chalkboard, not a stone tablet. That’s because it’s inevitably going to change, based on how things are shaping up on the field. I recently signed a songwriter who had her first big cut in Nashville this week. She started as a pop singer, moved to Nashville as a country artist, got a few breaks as a songwriter and finally went with that. It doesn’t mean she’s given up her hopes of being an artist. It just means that she took her breaks where they came, and changed the plan as necessary. It’s only about winning.

5. Change the game
Kara DioGuardi went from songwriter to media personality to A&R person. Justin Timberlake went from artist to actor. Will Smith was a rapper once upon a time. Bono went from rock star to international political crusader. Sometimes the best thing to do with your musical talents is to blend them with your other skills, and use them to add a different dimension to a whole new field of work. Whether it’s in the entertainment or media business, education, music therapy, politics or technology, there are other places to bring your talents to the world, outside of the narrow definitions of the music industry.

In the end, the only mistakes I’ve ever seen that are career-ending are cynicism and bitterness. As soon as those elements set in, all is irretrievably lost. For most of us, no one suggested that we should get into the music business. In fact, most of our friends and family probably did all they could to warn us off it. We made the choice, and we continue to pursue the dream only as long as we choose to. There’s no room for bitterness in that.

I had three different chances to sign that band that I mentioned earlier—the one with the current Top Ten hit. I blew it every time. But tomorrow, I’ll pick up the phone and call the manager, who knows exactly how many chances I had to make an offer, and who is well aware of exactly why I’m calling now. I’ll tell him, in all sincerity, how happy I am for the band’s success, and what a testament it is to their determination. Then I’ll ask if the band has closed a publishing deal yet. Because real music business weasels never, ever give up.

Follow me on twitter @EricBeall

Tomorrow's Forecast

Jun 22 2011

Today was a strange day in NYC —not quite sunny, but not giving in to rain either. The skies were in constant motion, drifting from lightly overcast to grey and ominous to hazy and hopeful in a constant cycle that never seemed to reach a culmination.

It’s not unlike the music business these days. No doubt there are some dark and weighty issues hanging over us, including the massive restructuring (or lack thereof) of the major music corporations, the budding crisis at the PROs and HFA, and our continuing inability to sell music, except when we essentially give it away at 80% off. Still, the mood among the weasels is noticeably brighter these days, and it’s not only due to the promise of a summer weekend with Lyor in the Hamptons. It’s as if those dark grey clouds have lifted a bit, and have been replaced by clouds of the whiter, puffier sort. Clouds that look a lot like an iCloud.

Negotiating season is over, and for once a new music technology is being brought to consumers with the blessing of the music industry—we’ve not been blindsided, ignored, or misled. Or at least we don’t know it yet. In fact, for the first time in decades, the music industry and the publishing business in particular acquitted themselves quite nicely at the bargaining table, not sticking in the fork to gouge a promising innovation but not settling for table scraps either. Maybe ten years of trouble has taught us something. No one wants to mess up what might be the last great hope for the music business.

Of course, at the moment, it is indeed a matter of hope. On the positive side, a partner like Apple certainly instills some confidence. Since the inception of iTunes, they’ve managed to consistently comprehend the way the modern consumer wants to listen to music, and to provide the best, most stylish, and most iconic technology to meet that need, in a way that music companies, including technology giants like Sony, have not.

At the same time, it remains to be seen how much of that genius stemmed directly from Steve Jobs, and how much will endure now that he is no longer an active presence in the company. I’m sure I’m not the only one to at least ponder why someone who refuses to pay even 99 cents for a legal download will pay $25 a year for a music locker, in which to store the contraband. But like the rest of the publishers, labels, artists and songwriters that have suffered through a decade of downloading and file-sharing, I sure hope they do.

In fact, one of the best aspects of the new licensing agreements between labels, publishers, and Apple is the chance to actually monetize, in retrospect, much of the music that has been pilfered in the past. With iCloud, Apple is charging $25 a year to scan and match a user’s existing music collection for songs not purchased from iTunes against the iTunes library—users will then be able to redownload up to 25,000 tracks to those same devices. With labels and pubs actually getting significant share of that $25 fee, this is a chance to recover at least part of what we missed the first time around. Life does not offer many such second chances.

Even better, the technology of the cloud allows true, verifiable accountings of what is being purchased, using iTunes Match to monitor what each individual consumer is putting into their locker. Unlike radio monitoring at the PROs, which is an error-ridden exercise inevitably weighted toward the mainstream pop playlists and the major publishers who represent the bulk of those writers, or the questionable system of divvying up the pots of gold netted in settlements with YouTube, Napster and the like, the accounting practices of iCloud should allow for a reasonably transparent system. While Apple has yet to lock in deals with the indie record companies and independent publishers, they have said that they will offer independent publishers the same percentage as is received by the major publishers who have signed on. Happily, the deal structure that’s in place would seem to be capable of getting everyone a piece of the pie.

Most importantly, unlike previous deals with companies like YouTube, we might be getting a share of a pie that’s actually large enough to mean something. Under the current agreement, the revenue from iCloud will be split with 30% going to Apple, 58% to record companies, and 12% to the publishers (and songwriters). For publishers and songwriters, that’s a big raise from the .091 cent per unit statutory mechanical rate—and most of us haven’t been seeing full stat rate on a consistent basis for a long, long time.

David Israelite

On the songwriter and publishing side, much of the credit for wrangling a more equitable split of the money goes to David Israelite, the president and CEO of the National Music Publishers Association. Easily the savviest of those trade group lobbyist/media spokesperson/diplomat/enforcers who’ve become the real champions of the music industry while the label presidents and publishing chiefs have been busy moving offices, schmoozing with hedge fund managers, and judging TV talent shows, Israelite was not directly a part of the iCloud negotiations. But according to Greg Sandoval’s insightful article in CNET News, Israelite was key in encouraging the publishing community to put some steel in their all too flexible spines. It’s a little like telling Charlie Brown, the perpetual loser, to man up and kick the ball. But lo and behold, it seems to have worked.

http://news.cnet.com/8301-31001_3-20071823-261/apple-google-music-clouds-can’t-snub-publishers/

Now, we can only hope that the publishing powers that be will also listen to Israelite’s advice about the essential need to streamline the process of licensing. Tech services have been demanding this for years, and every person that labors in the publishing community on a daily basis knows that the system as it currently exists is entirely dysfunctional. It doesn’t work for the new technology services, it doesn’t work for the old ones, it doesn’t work for the publishers themselves, and it certainly doesn’t work for the songwriters. If you want a peek at how bad it is, check out my blog “Life In The Slow Lane”:

http://ericbeall.berkleemusicblogs.com/2010/08/12/life-in-the-slow-lane/

But with the prospect of clouds on the horizon, publishers are going to have to sacrifice a certain level of independence in order to make sure that this new technology can be successful. The ability to access all music all the time without restrictions is a key factor in winning over the public to a format that could be the miracle cure for our business. We simply can’t afford to cling to our old system of clearing songs writer by co-writer, publisher by co-publisher, territory by territory around the world. No one has been a more outspoken advocate for the rights of publishers and writers than Israelite. But even he realizes that now is the moment to seize the initiative.

For the first time in a very long while, music publishers are in the drivers seat, but we have to keep the motor running. As we’ve already seen with YouTube, technology will move ahead with or without us. If people can’t get what they want legally, they will simply find another way. It’s up to us to create a centralized, global, uniform licensing system. If we can provide that, we are in a position to leave behind a mechanical royalty rate that even at its best was wildly weighted in favor of the record labels.

The current deal with Apple is a good one, and any competing service is going to have to match or better it in order to get in the game. Moreover, no one can win this game unless they have access to all our songs—old, new, hits, misses, and obscure album cuts.

All we have to do is go back to making music that matters to an audience, and figure out a quick way to make it available to them. The opportunity is there. As any kid who’s ever stared into the sky could tell us, clouds are what you make of them. If we make the necessary changes in the licensing process, they could bring an end to the longest drought of our lives. But there has to be something to put inside them. The cloud without our music is just that – an empty, substance-less piece of dead air. It’s up to us to make it rain.

Follow me on Twitter @EricBeall

This Year's Model

Jun 14 2011

It’s all about songwriters and publishers in NYC this week, with the AIMP (Association of Independent Music Publishers) annual lunch on Wednesday, followed by the NMPA (National Music Publishers Association) annual meeting that afternoon—then if all that wasn’t quite exciting enough, some real star power with the annual Songwriters Hall of Fame dinner on Thursday evening. But amidst the rubber chicken meals, the cocktail chatter and the endless self-congratulation, it’s probably worth taking a minute to try and tackle the tougher questions, like considering what lies ahead for those who want to be in the business of making music.

Clearly, this is not the same business as it was for many of the writers being inducted on Thursday into the Hall of Fame. That’s not to say it’s harder— it’s never been an easy road, after all. But at a time when the role of the record company is evolving (or perhaps evaporating), sales are plummeting, and at least two of the four major publishers are laying on the “For Sale” shelf like tchotchkes at a bargain garage sale, there’s no reason to plod blindly down a career path with a detour sign set in the middle of the road.

I had a couple of A&R meetings at the major labels this week, and it was clear that regardless of who stays and who goes—which is the only real topic of discussion at any of the four major companies these days—the needs of a music company in the 21st century are pretty much the same across the industry. Falling revenues, reduced A&R staff, a singles-oriented market, and an audience with an attention span barely sufficient for a twitter posting are the realities that everybody has to face. Across the board, the companies that sell music on a national or global level are all looking for the same three things:

1. Ready-made artists
Record labels are no more in the business of developing artists than Wal-mart is in the business of growing apples or raising cattle. The A&R people who once brought some amount of expertise (meager as it may have been) to making records, choosing songs, or helping an artist define his or her sound have either been downsized into the role of an occasional consultant, or upsized into being label presidents, which of course means they don’t have the time to spend making records, choosing songs, or helping define an artist’s sound. Labels need a product that is ready to sell, but they are no longer in the business of making that product. That’s someone else’s job.

2. Marketing platforms
Even with allowances made for the impact of file-sharing and free YouTube music videos, it’s hard to deny that music, by itself, no longer packs the entertainment punch that it once did for the general public. Today, music competes with video games, social networking, and homemade movies of someone’s funny cat—and at the moment, we’re losing the game. As one A&R veteran bluntly told me, it’s simply not enough to try to get a song on the radio and hope that it will cut through the pop cultural clutter. This is why Columbia has just done a deal with the upcoming TV show “Smash”, that they hope will be the next “Glee” (another Sony Music project). It’s why Universal signed on for not one, but two, talent contests, with “American Idol” and “The Voice”. It’s why Bono and the Edge are spending endless hours reworking “Spiderman”. To be effective in the present entertainment economy, music needs to be teamed with some other entertainment or marketing element, whether it’s theater, live performance, television, brands, video games, books, or nightclubs. Music is becoming like sugar—it’s part of everything on the plate, but it’s not really a meal in and of itself.

3. Machines that are already up and running
They don’t have to be Big Machine’s, like Taylor Swift’s. But in the same way that a record label’s A&R department is not looking to develop an artist, a marketing department is not looking to create a marketing plan from scratch. Everyone wants to be part of something that is already happening. A marketing plan is a theory, which often looks good on paper, but doesn’t play out quite as expected. A marketing campaign, even on a very small, local scale, is already generating a response, showing what strategies work, which ones don’t, and whether or not there is an active audience passionate about the artist. Whether it’s artists selling their own downloads, YouTube videos getting seven figure responses, hot mixtapes generating a buzz, or high-profile guest spots with established stars, music companies are looking for artists with a story—and they’re looking to enter that story on page 50, not on page 1.

In an environment like this, it’s interesting to see that the Songwriters Hall of Fame has chosen to give this year’s Hal David Starlight Award (usually handed out to relatively young talent—young being anyone under the age of Hal David himself) to Drake. Here’s an artist who was already on the charts before locking in his label deal, who used marketing platforms from “Degrassi” to mixtapes to features with artists like Lil Wayne to launch a career that seemed almost a fait accompli from the moment he first emerged onto the scene. Whether Drake’s actual music warrants a Songwriters Hall of Fame award is arguable. But there’s no question that his business model is, quite literally, state of the art.

Drake


Where does this leave the isolated songwriter who spends his day making demos to send out to the strangers listed on tipsheets, hoping for that one big cover? Or the singer/songwriter recording her own album with the hopes of finding someone to distribute it? Most likely, it leaves them endlessly behind—forever chasing an industry that has changed, one which demands new skills to play a new kind of game.

Producers have to be talent magnets—finding artists, defining their sound, and making records that break through the white noise of a thousand other entertainment options. Lyricists have to be able to capture, or in many cases, give an artist an identity, with a provocative, reactive message. Artists need to be multi-faceted—singers, dancers, actors, DJs, fashion or lifestyle icons, or all of the above.

Every music creator has to be in the entertainment business, not just the music biz. Producer/writers like David Guetta, Will.i.am, or Dr. Dre, artists like Lady Gaga and Rihanna, and topliners like Kara DioGuardi are not simply songwriters. They’re entertainers on multiple different levels. And in many cases, successful songwriters have to be catalysts—capable of getting something started on their own. It’s not enough to put together great songs, or even great records. In order to build that initial momentum, songwriters have to be able to pull together the right team, network to find the key relationships, strategize a street-level marketing campaign and invest the effort to get the whole thing started.

To hear a hit on the radio and blithely announce “I could have written that song” is to miss the big picture. Could you have found the artist? Developed the artist and defined their musical, visual and lyrical persona? Identified the other marketing platforms that could be the initial springboard to launch their career? Welcome to the big leagues, kid. There’s more to it than meets the ear. With the understanding that no one can do everything well, and it’s not only advisable, but essential to bring others into the process, here are five things you can do to be a songwriter for the here and now:

1. Start looking for artists to develop. Or start looking at yourself.
Remember, you’re not the only one out there searching for stars. You’d better be looking as hard or harder than any A&R person. On the other hand, if you are an artist/writer, then put yourself to the A&R test. Do you have the look? If you’re an urban/pop artist, can you dance, act or rap, as well as sing? If you’re a singer/songwriter, are you a musician and performer at the level of a John Mayer or Alicia Keys? If you’re investing your songwriting in your artist career, you have to be realistic about that investment.

2. Write singles
You’ll never break an artist, whether it’s yourself or someone you found, with a collection of album cuts. So don’t bother writing them. Focus on songs that are mid to up-tempo, fit into a radio format, and have a lyrical idea exciting or provocative enough to cut through the clutter and define the artist.

3. Know your audience
Who are the people who will buy this music? What do they look like? Where do they live? Why do they listen to music? What are they doing when they listen? What’s important in their lives? If you don’t know who will like this music, then neither will a record company, or a radio station, or the press. Successful songwriters hit the target consistently because they aim.

4. Find the platforms
Once you know your audience, it’s not that hard to find the other marketing platforms that might reach them. Classical crossover acts appeal to an older, somewhat sophisticated audience—consequently, you look to land a special on PBS. With a dance artist, you look for a song placement in a video game or Jersey Shore.

5. Do something. Don’t wait until you can do everything. Just do what you can.
Now that you have your artist, your single, a clear picture of your audience and the marketing platforms that can be used to reach them, what will it take to get something started? What could you do on a local level? What can you do for nothing on the internet? Who do you need on your team?

Not many of us are strictly songwriters. Think about your other skills and how you can use them to support your project. If you’re a great musician, can you put together a band for the artist? If you’re a DJ, can you get the artist a few track dates or play the record in your club? If you’re a studio owner, can you shoot a great YouTube video? If you write jingles, can you introduce the artist to some of the advertising agencies you work with?

Perhaps there once was a time when you could make a living writing songs in the secluded privacy of your living room and sending them out to artists around the world to cover. I don’t know—I wasn’t there. I’m old, but not that old. But just as a contemporary author has to be a media personality, talk show guest, and public speaker, or a modern soldier is expected to fill roles ranging from technician to policeman to community organizer, the job requirements for songwriters have expanded. Times change. The good news is, this new model songwriter has a lot more power and influence in the industry than his or her counterpart from even a decade before. At least if you build the machine, you control it.

So what better way to celebrate the end of a week spent celebrating songwriters and publishers than New York Songwriting Day 2011, a songwriting clinic aimed at jump-starting your songwriting in one day! Put together by well-known songwriter and producer Tony Connif, and with a variety of speakers that includes Berklee professor John Stevens, my buddy Alex Forbes, and myself, this should be a great educational and networking opportunity. It’s held on Saturday, June 18 from 12-6pm, at The Collective School of Music Performance Space, 123 West 18th Street. Contact tonysmusic@earthlink.net for more info.

Hope to see you there!

Here’s a shocker: Billboard reports that Germany has now overtaken the UK as the #1 European market for music.

This is while obscure, little-known UK acts like Adele, Tinie Tempah, and Taio Cruz are sitting at the top of the charts around the world– and the biggest selling track in Germany last year was by Unheilig. How is this happening? How can the country that gave us the Beatles and the Stones fall behind the country that gave us Falco and Milli Vanilli? And what does it mean to the future of civilization?

Adele

As in most things statistical, there is more than one way to read these numbers. The IFPI (the international music trade group) reports that the trade revenue generated by sales of recorded music in the UK dropped 11% in the past year to $1.38 billion USD, while Germany generated $1.41 billion USD, which clearly gives Germany the edge. However, the UK remains a considerably bigger consumer of music per capita than Germany, with Brits buying 1.93 albums per capita compared to 1.32 for the Germans. But the more interesting stat was the one that explained the difference in revenues between the two countries:

The primary reason for the relatively stronger performance from Germany in 2010 was the continued dominance of the CD in that market, where physical sales still account for 81% of recorded music purchases. This contrasts with the UK where the move to digital music, whether it’s iTunes purchases or services like Spotify, is much further along. In the UK, physical sales are only 67% of total sales.

Bottom line: you generate a lot more revenue selling CDs than you do selling downloads.

Putting a positive spin on their fall from glory, UK experts (and quite a few US experts as well) explain that because Britain is further along in the transition to a digital market, their country is actually better positioned for the future, even if they are lagging a bit in the transition period. To put an Easter spin on it, you gotta die before you can be resurrected– therefore, the sooner you die, the better off you are. Of course, if digital sales stall (which they have started to do) and the coming Cloud actually brings less income than the physical business that’s been cleared away, well then… there is no resurrection. You’re just dead.

This may be one of the lessons in the turnabout between the Brits and the Germans that’s worth noting:

Anytime you encourage the new kid, you’re discouraging the old one. Of course, one wants to support the future, and it’s only natural that the music industry should get behind successful digital distribution channels like iTunes. But we have to remember that by doing so, we only hastened the demise of the old, brick and mortar retailer on the corner. It might have been worth asking if iTunes really had the potential to make us more than our old friend did. Likewise, an industry embrace of streaming services like Spotify will only fast-forward to the end of download sales. Are we sure that the income from streaming services, that vague mix of advertising revenue (which has been soooo profitable with YouTube) and subscriptions (which no one seems to buy) will beat 99 cents a download?

While the UK industry has sacrificed retailers like Zavvi, Borders, and though they’re still breathing, HMV, all in the name of progress, the German industry has continued to support it’s retailers with new product and packages. Explains Frank Briegmann, president of Universal Music Germany, “Over the past few years, we have repeatedly tried to generate impetus for the physical product without merely lowering prices”.

In return, the retailers have supported the local acts, and in particular, veteran artists, making local repertoire a dominant factor on both the German radio and sales charts. Pretty remarkable– given that it would be hard to name one genuine worldwide superstar in the German market. While the UK has compiled its numbers based on Adele, Tinie Tempah, JLS, and Taio Cruz, Germany topped them with the likes of Rammstein, Lena, Ich + Ich, and the Scorpions. What can it all mean?

Scorpions

It comes down to this one terribly unsexy truth:

The weasels that win over the next three to five years will be the ones that play to the past, not the future.

The writing is on the wall everywhere– even if no one particularly wants to read it. The top touring acts? Bon Jovi and U2. The top-selling albums of last year? Lady Antebellum, Susan Boyle, Sade, Michael Buble… all aimed at the adult demographic. Even Eminem and Alicia Keys are not exactly new faces. The reason people are bidding to buy Warner Bros. is not for their new stars (there aren’t many) but for their catalog. The same is true of Warner Chappell and EMI Publishing. Their value is in the classic songs, not in their current market share.

Roger Waters

Across Europe, it’s not only the Germans who are profitably investing in revitalizing or re-packaging their older superstar acts. In Italy for example, the charts continue to be dominated by names like Eros Ramazzotti and Vasco Rossi. Given the predominately aging populations of most of the major European countries, this trend won’t change anytime soon. In America, Rihanna has had an unprecedented string of #1 hits, and still can’t manage to mount a successful tour, while acts like Roger Waters pack arenas, without having had a hit record in more than a decade.

Rihanna

For music publishers, the older catalogs are far more profitable than chasing current hits. It’s the classics that show up on American Idol; the classics that get made into jukebox musicals like “Jersey Boys”, “Mama Mia”, or “Rock of Ages”; the classics that will bring the worldwide money with the advent of mobile music and video. As for me, I’m giving up my spot at Mercury Lounge or Rockwood and checking out whoever’s playing at Foxwoods casino.

If you’re in the record or music publishing business and you’re looking for safe ground, put your money on heritage acts. Old acts singing old songs to old people may not be the future of the music business, but it sure looks like the here and now. The generation that created lasting superstar acts like Bon Jovi and U2 is one that continues to support live music and buy CDs. Until something better comes along, that’s what keeps us all in business.

Like the Germans, you may only be holding off the inevitable Five years from now, all that investment in older acts might well put you out of position to face the future. On the other hand, if there is no future, you will have stayed alive longer than anyone else. Sometimes winning is just not losing. It’s better to be #1 than #2, even if it’s only for today. Just ask the Brits.

Now that Midem has faded into a blizzard of press releases and Carlton bar tabs, we can safely say that the quote of the week belonged to Ianl Hogarth, of Songkick, who called Midem 2011 “a year of transition.” Indeed.

Songkick

This is a little like describing a person who has fallen off a bridge, but has not yet hit the water, as being in “transition”. It might also be described as plummeting to one’s demise.

In his rather amusing description of Midem’s first official “Hack Day”, an attempt at acknowledging the music business’s new, technology-based innovators, he recounts the challenges of presenting his company’s new developments, along with those of other young music/tech firms, in a final presentation at the Majestic Hotel. Despite being one of the three primary hotels around which Midem is centered, the Majestic was apparently unable to provide WiFi. For a technology demonstration, mind you. On the other hand, if you’d like a $25 glass of orange juice, they’ve got that covered.

I think Midem may be just about done.

Attendance this year at the conference plunged once again, and especially in America, Midem felt almost non-existent. The annual pilgrimage of lawyers and label execs to Cannes has slowed to a trickle—fewer deals are being done there, and the ones that are done there don’t justify three nights at the Majestic. It’s hard to imagine one or two European albums from last year that generated enough money to cover the costs of sending four or five A&R people to Midem. The whole event has become overblown, needlessly expensive, and woefully out of date (coming next year: WiFi!)

It is, I fear, a perfect symbol of the music industry itself. It too is in a state of “transition”, and it looks like 2011 is the year where it may take the final plunge and hit bottom. Sales in 2010 fell by more than 15% for yet another year, and even digital sales have started to flatten out. This can’t go on forever. Here are a couple of predictions that are not exactly going out on a limb:

1. There will not be four major music corporations at the end of this year.

Of course, EMI is the most obvious choice for the chopping block, but now it appears that Warner may be sold as well. Or they may buy EMI. Unless EMI goes bankrupt. Or maybe KKR will buy all of them. Who knows? Someone is going bye-bye and it will mean a major upheaval in terms of A&R staff, artist rosters, new signings, and (I dare to predict) royalty payments. Have you ever watched two elephants mating on one of those television wildlife programs? These mergers are never pretty.

Meanwhile, we can also probably expect to see many of the major label imprints fall by the wayside. Def Jam/Island looks likely to either disappear or to be split apart, Epic is an Amanda ghost of it’s former self, and Virgin may have already shut down (and someone forgot to send the memo).

2. The major label “A&R” executive will officially go on the endangered species list. If you see one, be gentle and if you can, give them a job.

There was a rather ominous letter that came out along with this month’s edition of the A&R Registry that outlined the real scope of the blood-letting in the A&R community over the past several years. Rich Esra at Music Registry has been tracking the massacre for some time now—check out the article below from TJ Chapman which quotes some of Rich’s numbers.

http://www.tjchapman.com/aandr-star-makers-the-vanishing-gatekeepers

These are not the kind of statistics that you want to trot out for the kids at Career Day.

It’s clear that most of the large companies have realized that the discovery and nurturing of talent is better done in a much more hospitable and economical setting than 550 Madison Avenue or Rockefeller Center. Managers, producers, and “consultants” have become the talent scouts and the record makers. The old-school A&R “star-maker” now exists only on television talent contests.

3. The collection crew for music publishers and songwriters is next on the downsizing list. If you’ve got money in the pipeline, be prepared for some leaks.

Across Europe, the various local societies responsible for collecting income in their respective countries have reached a crisis point. Year after year of drastic income drops, new pressure from the European Union to compete with each other for top writers and catalogs, and the ever-escalating paperwork demands have made it a foregone conclusion that GEMA, SACEM, BUMA/STEMRA, SIAE and the like cannot all survive. Consolidation is inevitable. If you thought it was hard to put two major music corporations together, try a marriage between mechanical rights societies across international borders—with all their language, cultural and copyright differences.

The even scarier thing is that Harry Fox Agency, the primary mechanical rights collection organization in the US, is only slightly more stable than its counterparts across the ocean. If HFA is forced to raise its commission significantly, and it’s hard to see how it can avoid it, sooner or later, one of the major companies is bound to pull out. If that happens, the whole collective enterprise could quickly come tumbling down.

Transitions are a tricky business. With so much tough news, it would be easy to toss in the towel. But the point of a transition is that we are going somewhere—even if the ultimate destination is not yet clear. It’s always easier to predict the impending disasters than pinpoint the new opportunities.

But if you’re starting your career in music now, or trying to continue it, you don’t have the luxury of waiting until things are more settled. We’re all living our lives in the here and now. So what can you do to manage the change, and maybe even make it work in your favor? If the old order is passing away, what are the new realities to build around? Here’s four pillars to get you started:

1. Small-time is the new big-time. This is now a business of entrepreneurs.

It’s not just that things have down-sized, and big companies have become small. It’s a change in the kind of people that will become the power-brokers of the industry over the next decade. They will not be corporate executives, lawyers or people who worked themselves up through the ranks of the labels’ marketing or radio promotion departments. They will be talent-finders and developers, creators, and start-up guys—producers, managers, songwriters, indie label owners, app and game designers, and others who are willing to invest in their own big idea and sell it to others.

Not good news for those looking for a steady salary and benefits. But it will be a hell of a lot more fun than working in the Alice-in-Wonderland world of the modern major music corporation. To plot a career in the music business of tomorrow (and I’m talking the near-future), you’ll need to be willing to get entrepreneurial.

2. If you’re not entrepreneurial, go work for the phone company.

No, literally. If all things considered, you’d happily opt for the safety of a large company, but still want to be in the business of music, you’d probably be better off at Nokia than at Sony. Because of the growth in mobile entertainment via the phone networks, particularly in difficult to monetize markets like Asia and Eastern Europe, the telephone networks are poised to become some of the most important big players in the music world.

Look at Verizon’s recent purchase of Terremark, a technology company focused on cloud-based services. In many ways, companies like Verizon, Nokia, T-Mobile and others are the new gatekeepers—as alternatives like Pandora and Sirius reduce the power of commercial radio, access to a young, taste-making audience will increasingly flow through the mobile networks. The communications business will be a key breeding ground for the next generation of entertainment executives.

3. There’s a lot of people lolling around in the talent pool. Use ‘em.

With so much consolidation in the industry, there is a wealth of good, experienced, savvy people floating around out there. While no one wants to take advantage of people when they’re down, many extremely talented A&R people, radio promoters, music publishers, lawyers and others would be eager to come in as a consultant or part-time help for an exciting young company that they believed in—at least until they can put the next pieces of their life together. If you’re starting your own company and you’re running into challenges, you can be sure that there are people out there who have seen those problems before. There’s never been a time when expert advice was as plentiful and affordable as it is right now. Take advantage of it.

In the same way, the emergence of the D-I-Y model in the music world has led to thousands of start-up companies offering alternatives for everything from tipsheets to radio promotion to video production. Many of these companies will never turn a profit and will be gone within a few years. But while they’re here, why not use them as much as you can? Watch my Twitter posts at:

twitter.com/ericbeall

I regularly try to highlight new companies that I come across. There should be a couple coming up just this week…

4. When it comes to money, consider an enforcer.

As much of a proponent as I am of the “independent” model, some of the problems on the horizon for collecting and distributing royalties are going to cause real pain to small, songwriter-owned publishing companies. The merging of societies in Europe, and the possible disintegration of HFA could leave money in limbo all over the world, and that’s not an easy challenge for any new start-up venture to surmount.

If you have money being generated by your music now, or if there is going to be money in the “pipeline” in the next 12 months, I might suggest that you explore the possibilities of finding a larger company with whom to partner, at least on an administration or collection basis. It doesn’t need to be a major company (in fact, it probably shouldn’t be). You just need someone who is sufficiently stable and established to be able to fight for your money, and to be part of any settlements or class-action lawsuits that may arise. Happily, there is a reasonably good selection of small and mid-size publishers, some who specialize in administration or collection. Provided you can show that there is significant income out there to be collected, someone will be happy to partner with you and help you get your money. In times like these, it’s sometimes good to have a bigger, stronger friend in your corner.

I had lunch last week with an old friend who reminded me that this is not the first time in our careers that we’ve seen the music business “in transition”. Back in the early 1980’s, when I was first entering the industry, the business was in a shambles— with falling sales, lay-offs, and dire predictions for the end of the world as we know it. All was saved by the advent of the CD, “Thriller” and MTV.

The point of a transition is to pass through it—and that means adapting, and re-adapting as fast as you can. As frightening as they are, even the current challenges can be surmounted. You just have to think strategically. Don’t fall off that bridge. Dive.

The Tears of a Clown

Dec 12 2010

If the record business were a movie, the ad line would read:

Laugh till you cry. Cry till you laugh.

This comic tragedy reached a new peak this past week with a particularly unusual bit of December madness– the move by Barry Weiss, the chairman and chief excecutive of Jive/RCA Records within the Sony Music family to Universal Music, and even crazier, the rumors of Doug Morris, the aging and soon to be departing king of Universal, taking over the leadership of Sony Music.

http://mediadecoder.blogs.nytimes.com/2010/12/07/barry-weiss-joins-universal-music-group/

As if it weren’t enough to lose the one genuine record guy in the entire company, and the only executive who has been able to consistently deliver profits year after year even through the downturn, Sony is now contemplating elevating Rob Stringer, who has been the author of several disastrous decisions, and entrusting the whole enterprise to a 72 year old man who as far back as 2007 was happily revealing himself to Wired magazine as a complete technological Luddite. If it weren’t so sad, it would be funny, and vice versa.

The truth is, while the travails of EMI have been grabbing all the headlines over the past two years, Sony Music has actually been delivering an equally poor, or maybe even worse, performance of its own. Obviously, Guy Hands made an extremely imprudent purchase– paid way too much, took on far too much debt, and bought a company in worse shape than he ever anticipated. Clearly his management decisions have been ill-fated, with more turn-over than a washing machine, and a decision-making structure that makes the European Union look streamlined. But to his credit, EMI has created a few genuine stars, like Katy Perry, revitalized a few older ones, like Kylie Minogue, and is making a pretty impressive show on the UK charts at the moment.

Sony on the other hand has reeled from debacle to debacle– including the hiring and firing of Amanda Ghost as Epic’s president and the installation of uber-producer Rick Rubin as co-head of Columbia– while achieving next to nothing on an artist development level. When Amanda Ghost left the company, the list of her signings during the two years she was at the company was dumbfounding. “During her time at Epic, she (Amanda Ghost) signed artist’s like Denmark’s Oh Land, British born Thai artist Hugo Chakra, and the German and Nigerian artist known as Nneka” the press release stated. Rob Stringer called her “an important creative force”. Wow. Meanwhile, Rick Rubin’s biggest success at Columbia has been an album for Neil Diamond– not exactly a ground-breaking new discovery.

At this point, Sony survives on product with which they have almost no actual involvement, like “Glee” soundtracks, Susan Boyle records and American Idol releases. Labels like Phonogenic have supplied them with The Script and Natasha Bedingfield. But the only real artist broken out of 550 Madison has been Keisha, which was Barry Weiss’s project. Now he’s leaving. Hope he turns the lights out when he goes.

If you want to know more about how a disaster like this is perpetrated, check out a very insightful blog posting by Wayne Rosso:

http://www.waynerosso.com/2010/12/08/rob-stringer-rick-rubin-and-the-real-story-at-columbia-records/

With EMI awaiting its day on the chopping block and Sony’s future cloudier than the haze of pot smoke in Amanda Ghost’s office, that leaves Warner and Universal as the two islands of stability in the churning major label seas. Unfortunately, things haven’t been too rosy at The Bunny either. Warner recently threw out its under-performing A&R leader Tom Whalley and went back to the drawing board with Rob Cavallo, as Edgar Bronfman Jr. continues his on-the-job training program, about a decade in the making now, in how to lead a major music company. Certainly, it would have been cheaper to send Junior to Clive Davis’s school at New York University. But not nearly as entertaining. For an inside look at Bronfman’s already heartbreakingly funny career, check out the aptly titled “Fortune’s Fool” by Fred Goodman.

So that leaves one. While it’s been common knowledge that the record industry was almost inevitably going to consolidate down to 3 major labels by the end of 2011, it’s starting to look like we might be going down to a lot fewer than that. At this point, Universal has an A&R line-up that dwarfs the other major companies, with the undisputed king, Jimmy Iovine leading Interscope, David Massey rising at Mercury/Def Jam and now Barry Weiss moving over in the spring, and a batting order of artists that includes most of the heavy hitters in the industry. As virtually everyone in the industry acknowledges, Universal is the preferred home for any artist, and the first call for every manager, lawyer, and talent scout.

Given the players in question, there’s not much interest in how the ongoing horror story that is the record industry in the Internet Age is going to turn out. The real mystery here is why the larger corporations that own these music companies continue to indulge the madness. As the triumph of competent managers like Barry Weiss prove– this isn’t rocket science. You just have to do sensible things in sensible ways and execute effectively. Sure, it’s not as much fun, but it might actually keep everyone in a job. When it comes to turning the major label music business around, here’s a couple of obvious suggestions worth trying:

1. Make the Chairman someone with a technology background.
I don’t like it, and neither do most other old music guys, but the reality is that music and technology are now inextricably linked. We don’t just need someone running the show who knows where technology is at now. We need someone who understands where it’s going, and has his or her own network within the tech community.

2. Make the label president someone who understands the nature of a hit song.
The labels that consistently win are those with a “song guy” at the top: Syco with Simon Cowell, Phonogenic with Steve Kipner, and Interscope with Jimmy Iovine. Today, it’s all about hit singles. We need A&R leaders who can recognize a hit song.

3. Put someone in power who can do arithmetic.
Despite the ever-dwindling sales of the past five years, the spending levels at the major labels remain in the stratosphere. The obvious problems, like the midtown Manhattan office spaces and the contractual payouts to departed execs, are only the tip of the iceberg. The perks that go into the care and feeding of executive “talent” (dubious as that moniker may be) are even more problematic for being less visible. Here’s a reasonable observation: if a record label president needs to relocate the company offices, completely re-decorate the interiors, maintain a private jet or fly his or her colleagues out to LA or New York simply to have a meeting, he or she is probably not the leader we need for the music business in the 21st century. It’s not that business anymore.

A week ago, I had lunch with a great young A&R guy, who had recently been hired by one of the major labels to head up a new imprint. This kid was exactly what record label presidents look for: ambitious, personable, aggressive, and clearly possessing a great ear for new talent. Over our lunch he recounted to me how he arrived at the major label for his new position, worked his butt off…and then promptly left, less than six months later– giving up in frustration, without having signed or released a single thing. As he explained, not only could he not manage to get the Business Affairs department to finish any of the deals he put forward, he couldn’t even manage to track down the lawyer who was supposed to be doing the work. The system was so dysfunctional that he couldn’t even manage to put out reissues of product the company already owned. Expressing his frustration to the label president on the way out, he was promptly rehired– as a consultant.

Funny? Kind of. Sad? Only because the careers of artists, songwriters, producers, engineers and yes, talented A&R people, are involved. In the words of songwriter/artist Duncan Sheik, who wisely left the record world to strike it big in the theater business:

Who needs to join the circus
C’mon just look around
We are surrounded
By a bunch of f… clowns.

*”Good Morning” (Duncan Sheik)

Where The Action Is

Nov 09 2010

Sometimes it’s good to get out of your safe, predictable environment (if anyone could call the US music business safe and predictable these days) and venture forth to new lands and new frontiers. Sometimes it’s a royal pain. After a trip to the Amsterdam Dance Event, along with stops in Milan, Verona, and London, four missed flights, a midnight desperation flight to Brussels followed by a two hour taxi trip (never tried that one before) to Amsterdam, I’ve seen the good, bad and the ugly. Trust me on this: nothing is uglier than Schiphol airport on the first day of a school holiday in Holland.

Nevertheless, the trip was a positive one, if only for the opportunity to see that despite all the difficulties of the music industry– and it’s far tougher in much of Europe than it is here in the US– there are still signs of life out there in almost every territory. The Dutch seem to be building primarily around the television model, with publishers like Talpa and CP Masters/CTM Entertainment making the kind of synergistic moves that have worked so well for Simon Cowell and Syco. The Germans and the Japanese are regaining control within their own market– American and British English-speaking records are far less dominant on those countries’ Top 40 charts than they were five years ago. The French are in a bit of a creative Renaissance, with worldwide success stories that range from David Guetta’s reign in dance music to Phoenix’s rise to prominence in the indie rock world. And the English looked poised to once again break the big new musical trend, as dub step continues to climb into the world of mainstream pop and urban music.

Interestingly though, the biggest international stories out there at the moment are from places even further away– which means I’ll probably have to start waking up at the crack of dawn (definitely not a good look for me) or staying in the office till 10pm in order to bridge the time zone gap. Some of these territories are being fueled primarily by new technology, and some benefit from traditional revenue sources, but all of them are spots that could be major bright spots in what promises to be a tough couple of years ahead. They’re not for everyone, and the markets there will certainly have ups and downs– but if you think your music fights the culture, and you have some frequent flier miles saved up, maybe it’s time to check out a couple of new lands of opportunity. Here’s the top three of the moment…

1. Russia and Eastern Europe

The big news at the ADE conference this year was that the Russian bear might actually be warming up to the music business weasels. Not only is music being sold over there– which is not all that new– but people are getting paid for it. That’s a real revolution. Despite the massive size and economic power of the country, Russia has been a black hole for both publishers and record labels, with a lack of industry infrastructure and a level of piracy so severe that there was almost no expectation of meaningful income out of the territory.

But over and over again in Amsterdam I heard reports of people receiving surprisingly big checks from Russia this year. Even better, I met young, smart, ambitious entrepreneurs from that territory who are convinced that the checks will keep coming, and get larger. What turned the situation around? Phone calls, and lots of ‘em. It turns out that the craze for ringback tones has finally shown a way to beat piracy, and is starting to prove that there’s a lot of money out there when people actually have to pay for what they use. Because ringtones and ringback tones have to be purchased by the consumer through the mobile distribution networks, and those mobile networks are the ones responsible for paying labels and publishers, these transactions bypass the black market where royalties generally disappear into the ether. Consumers purchase and pay their money; networks report actual sales figures and pay accordingly. Sounds crazy I know, but it seems to actually work.

Taken in combination with a very active and profitable live market, which caters to the highly affluent party-goers in the cities, the ability to monetize music sales could be a massive opportunity for the industry. Clearly, Russia, especially when you begin to include its many Eastern European neighbors, is a vast territory, with plenty of spending money, a passion for entertainment, and not a lot of entrenched competition. As the market for mobile music and video increases, things should only get better. For those in areas like dance, pop, and rock, you have to start thinking about how to get a piece of this brand new pie.

2. Korea

And let’s hear it once again for the cellphone! As befits their reputation of being five technological steps ahead of every other market, the Asians are already using mobile music in all its various forms, from ringtone to ringbacks to music videos to live concert broadcasts on their cellphones. That’s a good thing. Unlike Japan, which has been a major music market for decades, Korea, along with Vietnam and China had been another musical no-man’s land, where it was certainly possible to sell music, but was very difficult to get paid. Now that the phone companies are collecting directly, the strengths of this territory are starting to show, and Korea has emerged as the production center for the pop music that dominates all of Asia.

These guys make Lou Pearlman, the mastermind behind Backstreet Boys, *NSYNC, and LFO, look like a kindly old uncle. With companies like SM (Star Museum) Entertainment, Korea is the hit factory of Asia, and they specialize in pop so scrupulously manufactured that now even long-established Japanese companies like Avex and Johnny’s Entertainment go there to jump on the assembly line. It’s not a model of inspiration or innovation, but acts like BoA, Girl’s Generation, and Super Junior connect with audiences across that territory– each group is often carefully planned to include Japanese, Korean, and Chinese members. In the grand tradition of star-makers everywhere, SM finds its potential idols young, keeps ‘em under lock and key, and lets the act die before it gets old– there’s always a new one waiting in the wings.

SM Entertainment's Super Junior

Funny enough, the Swedes, who invented this model, are already onto what’s happening in Korea, and are the major foreign players there. They must feel right at home.

3. Australia

This ain’t Korea, mate. Other than the Minogue family and the occasional star-turn from the cast of Neighbors, the Aussie soap-opera, manufactured pop is not the strength of this country. But when it comes to new rock acts, Australia has a very impressive track record, with acts like Jet, Wolfmother, and the Temper Trap. They’ve also got a wealth of fresh, quirky pop acts, from Sneaky Sound System to Zowie. Matched with a strong set of indie labels, and most importantly, an avid, affluent audience for live music, these acts have generated some important success stories, particularly for the mainstream rock market.

Temper Trap

The key here is a relatively late transition from physical to digital, due to limited access to broadband service in many segments of the market, a long, entrenched history of supporting live music (similar to the UK), and a strong A&R community not entirely reliant on the major label system. The weather doesn’t hurt either– as Nick Dunshea, director of Mushroom Group’s Liberator Music said recently in Billboard, “People want to come to Australia, people like Australia. Bands like to come here, labels like to talk to Australians”. Even if we can’t understand half of what they’re saying.

The point is, it’s easy to grow myopic about the music business, especially when you’re centered in the US market, which tends to see itself as the center of the entertainment industry universe. Just like financial guys constantly monitor the world markets to watch for new hot spots, you need to do the same, whether you’re a writer, producer, publisher, label or all of the above. Once you find a land of opportunity, be prepared to take advantage of any growth area, no matter how far from home. The Swedes are doing it in Korea; the dance community is doing it in Russia. The UK and American rock community is keeping a constant eye on Australia. You gotta go where the action is– especially when it’s in such limited supply.

The moral is:

No matter how dark it gets in your neck of the woods, the sun is always rising somewhere. Except in London and Amsterdam, where the sun never seems to come out at all.

Now I’m off to Nashville, just in time for everyone to shake off their CMA hangover…

Life in the Slow Lane

Aug 12 2010

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.