Music Publishing & Songwriting

Alright—mark it down in the “Believe It Or Not” column. This interesting newsflash first appeared in one of my favorite industry newsletters, A&R Worldwide:

Fan-Financed UK Band Lands Multi-Album US Record Deal

Leaving aside one obvious question (isn’t every band essentially “fan-financed” to whatever degree?), the following story stood out like a flower in a mineshaft, sprouting up in the middle of news about more corporate layoffs and the ever-falling fortunes of the music industry. You don’t hear many stories like this one:

Scars on 45, a UK based band began making waves on the website Slicethepie back in 2008. The site provides an opportunity for music fans to provide ratings and reviews for unknown bands that they are passionate about, and then to take it one step further by actually getting involved. With enough positive response, a band can reach the “funding” stage, at which point they can raise funds directly from their fanbase to record an album. In return, the fans who choose to invest receive shares in the commercial success of the record. Fans can invest anything from 1 pound (GBP) on upward. Through Slicethepie, Scars on 45 managed to raise 15,000 pounds (GBP) to help record their debut album.

As it turns out, “Beauty’s Running Wild”, the fan-funded track on the album was subsequently featured on “CSI-NY”, and attracted more than 50,000 website hits within days of airing. This in turn attracted the attention of Alexandra Patsavas, a leading music supervisor best known for her work on “Twilight: New Moon”, “Gossip Girl”, and “The O.C.”. Patsavas brought the act to her label imprint, Chop Shop, which is distributed by Atlantic Records.

Great news for the band of course. But if you think this is a success story for Scars on 45, check out the even better ending to the tale:

Those who invested in the band through Slicethepie back in 2008 hit the jackpot. When the band was signed, a buyout clause was triggered and shareholders were bought out at a 50% premium to the then market-price—representing a whopping 800 percent return on their investment!!

Not too many people had investment returns like that in 2009. What’s most interesting though is that not many music companies, big or small, had returns like that. While “professional investors” like Guy Hands are going bankrupt after sinking billions of dollars into EMI; while investment bank-backed publishing companies are struggling just to stem losses, this group of music fans managed to turn a 1 pound investment into 800 pounds—without having to do any work! Slicethepie CEO David Courtier-Dutton was quoted saying, “We are delighted for both the band and their fans which, in this case, have truly been instrumental in their success. We believe that consumer-driven filtering has an increasingly influential role to play in the face of the music industry…” With an 800 percent return on investment, it certainly does. Count me in.

What’s interesting is that the success of this Slicethepie venture highlights several very useful concepts when it comes to investing in the music business—ones that seem to often slip by the more high-rolling music execs and investment bankers. If you’re looking to acquire music for your publishing company or record label, here’s a few principles to keep in mind:

1. Buy low. Sell high.

The problem with most big-bucks investors in the music industry is that all of them are looking for the same thing: hits. They want big-name artists, well-known catalogs, songs that are on the charts. In fact, most of the investment-backed publishing companies have avoided new artists all together. They focus solely on catalog purchases.

The problem is, when you’re buying hits, you’re paying the top price for something that in most cases, has only one direction to go. Established superstar artists can’t usually get much more super—they can only fade. Songs at #1 today can’t go any higher. What seems safe is actually the most risky investment you can make—you’re paying top dollar for something that is already at its peak. Whoever found Scars on 45 in 2008 was buying at a fire-sale price. That’s where you get a bargain, and it’s also where you find the big pay-off.

2. Bet what you can afford to lose.

One has to assume that no one who made the initial investment on Slicethepie.com was betting his or her grocery money on a new, unknown band. I’m confident that no one was taking out a loan just so they could buy a piece of Scars on 45. The problem with most large-scale investing in the music industry over the past five years is that the investors have taken out massive loans (and hence, have massive interest payments) or they’ve invested other people’s money, people who quickly grow impatient if the ink starts to turn red.

The sad, ironic and inescapable truth of the speculative bets made in the music business every day is that the worse you need the gamble to work out, the more likely it is to fail. Maybe it’s because investors who can’t afford to lose tend to over-think, throw good money after bad, or chase the popular trend a little too late. Maybe it’s just the way the world works. But don’t put your money in the game if you can’t afford to lose it. Better to bet one pound if that’s all you can afford, than to take out loans to bet a hundred thousand pounds. Ask the guys at Terra Firma.

3. Bet on things that people like.

This has always been a pretty good formula for success in the music industry. It’s amazing how few people do it. Clever as it is, the concept of Slicethepie and “fan filtering” is really not that much different than old-school music entrepreneurs who would check out their songs with local audiences, get a DJ to spin their records in the clubs, ask the local retailer what people were buying, or see who was getting the most applause at the talent show. In my book, “The Billboard Guide To Writing and Producing Songs that Sell”, Daniel Glass, the president of Glassnote Records talks about being a young DJ, and seeing Prince, Barry White and others in the DJ booth, watching the dance-floor reaction as they tried out new mixes they were still working on in the studio. Daniel himself uses web activity as a major gauge for his own signings at Glassnote, which led him to artists like Secondhand Serenade.

It’s always easier and safer to give the audience what they want than to create something and then convince the audience that they should give it a chance. Certainly, great art has been created with either approach. But the average hit rate is a lot higher with an approach that watches what audiences are responding to, and then puts money into giving those audiences what they like.

4. Bet with your ears.

Most professional investors in entertainment, and even a lot of music executives, bet more with their eyes than with their ears. They watch sales chart action, or look at past financial records, or watch what others in the industry are doing, but they never really listen to the music. Clearly, part of knowing what the audience wants (concept #3) is watching reactions and tracking audience response. But once you see what’s happening, you still have to listen.

Some things look good on paper for reasons that have nothing to do with the music itself. Perhaps the appeal of an act is not really rooted in their music, but in some other social phenomenon. That’s okay if you’re the record label, but you wouldn’t want to buy that song catalog. Maybe something is flying up the charts because a savvy manager is spending a fortune on radio promotion to make a stiff look like a hit. It’s been done. You can use your eyes to do initial research. But if your ears tell you differently, trust ‘em. In this business, they’re the only real friends you have.

5. Don’t be afraid to cash out.

As every gambler knows, there is a time to hold ‘em’ and a time to fold ‘em. The great thing about the Slicethepie venture is that if a band is signed, the initial investors are in a sense, forced to fold up and cash out. It’s likely the biggest favor they’ve ever received. The truth is, the odds are stacked against a band like Scars on 45, as talented as they are. It is entirely within the realm of possibility that Atlantic will never make money on the band—it happens with alarming frequency. But for the initial investors, the game is over, and they’ve won.

If you’re running a small publishing company, there will be instances where you will build a writer up from nothing, only to see a larger company swoop in and woo him or her away with the promise of untold riches, the moment that writer has his or her first big record.

Most of the time, that’s just fine. You will have that writer’s first big record, for which you probably paid relatively little. On the other hand, the big company will have spent far more than they should, and will usually wind up with a songwriter who never has another song as big as that first hit. In many cases, you’ll get a call a few years later from that same writer, now dropped from his or her big publishing company, and eager to come back to where his or her first success originated. When you’re a small player, you play for small victories. When you get one, take it and don’t look back. Put your energy into finding the next undiscovered jewel.

And somebody, pass that pie!

We’re seeing the future— all over again. Just when the music industry had finally started to almost get the hang of selling mp3s on iTunes (even if we still haven’t figured out how to sell music from around the world, which blows my mind) the weather shifts and suddenly our new technology is dead.

“Gone is the MP3!” all the headlines are reading, and indeed, for the first time, the sales growth of digital track downloads dropped drastically this year, from a growth rate of 26 percent in 2008 to only 8 percent in 2009. Apparently all of us who were waiting for legal downloading to make up the revenue lost to the death of the CD had better find a new dream to embrace, because this once-new technology appears to be over before it began. What once was the future now appears to be officially “past”.

What makes it official of course is Apple– as we all know, it’s Steve Jobs’ world and we’re just living in it. When the big Mac shells out money to purchase the start-up venture Lala, with its whopping 100,000 person customer list, something must be bubbling. As we enter a new decade, it now appears that bubbling sound is the music stream, which is bringing you the next big thing:

Cheap music!

Uh… wait. Don’t we already have cheap music? NO! This will be cheaper still!!! While iTunes, that old-school relic of yesteryear, still wants to sell you a download for a dollar, services like Lala will allow you to stream the same song once for free and then give you unlimited access for 10 cents a track. The hitch of course is that the music doesn’t really “belong” to you. It’s more like a library book that you never have to return– which is close enough to ownership for me. Rather than shelves of CDs (like your grandparents have) or iTunes folders full of MP3s, the listener can access a full collection of music from the Web-based “cloud”, for either a per-song fee, or perhaps a monthly subscription (as in the Spotify model).

In a perfect illustration of the new technology approach to finance, Lala, a company started with $35 million of venture capital (provided in part by Warner Music) generates revenues under $10 million dollars, but is purchased by Apple for somewhere between $17 million (not too great a deal for Warner) and $85 million (which seems completely inexplicable). The general consensus is that Apple did not buy the company with the intention of replicating Lala’s current business model, but rather using the start-up’s technology and executive talent to launch their own Apple streaming service, which if they do it really well, could render iTunes obsolete.

Interestingly, the one hitch in Apple’s plan, and the one silver lining for the music industry, is that the current music licenses allowing Lala to offer legal music streams are not transferable as part of the sale. This means that Apple will have to re-negotiate the licenses with the major labels and publishers before they can launch their new service– a prospect that has label executives digging in for their last real chance to save their industry (and their jobs). While it would appear that the general licensing framework on the publishing side has already been laid by the recent agreement with the DMA (see the blog “Triumph or Turkey”), both the labels and publishers are determined to protect their interests within whatever business model Apple eventually constructs. If songs downloaded from iTunes will now be kept in a permanent online “locker” from which they can be streamed at any time on any device, labels will want a higher price per download, a fee for each stream, and a cut of any fees that Apple gets to increase the size of the locker. Publishers will expect a “mechanical” royalty for the stream, as provided in the new DMA agreeement, and ASCAP and BMI will certainly consider the “stream” a performance.

http://ericbeall.berkleemusicblogs.com/?s=triumph+or+turkey#

That’s all good– provided the model catches on. Not too surprisingly, the jury is still out on that one. So far most streaming models have proven very popular when the music is free, but far less so once that whopping 10 cents per track price tag is attached. Subscription models have not caught on either. Spotify offers a premium subscription at 10 GBP per month. So far, only about 10 percent of their customers buy in.

The inescapable fact is that until these services become profitable, the money for music-makers and music licensors will be pretty paltry. On the positive side, Apple has proven quite adept at figuring out how to make money off of music. The danger is that the new streaming service kills off iTunes, which is just starting to make some real money for the music business, and replaces it with something that earns ten percent of what iTunes did.

In general, it’s hard for me to be overly optimistic about the technological trend. First, we replaced the CD, which sold for as much as $15-20, with a product that sold for a dollar. Now we’re poised to replace the service that sells music for a dollar with a service that sells it for 10 cents. That’s not a great direction for music publishers, music labels, artists and songwriters to be headed. Given the precarious position of major labels like EMI, collection organizations around the world, and the thousands of small and large music publishers who saw as much as a 30 percent drop in income last year, we MUST collectively drive a hard bargain with Apple. That won’t be easy. Then, once an agreement is in place, we must continue to take legal action against unlicensed services that undercut Apple and other legitimate business partners.

If streaming is the future, and it likely is, then we need companies like Apple to make that business profitable. We also need to see a fair share of those profits. Otherwise, our vision of the future will indeed look a lot like a cloud– gray, ominous and full of hot air.

EXT. A MOUNTAIN CLIFF DAY

OUR HERO hangs on the precipice, clutching at the rocky ground.

PULL BACK TO REVEAL:

It’s worse than we thought. OUR HERO is dangling from the edge of a cliff—
—- twisting in the air, arms extended, hands clawing at the ground to keep his grip. HE looks down to see:

A RUSHING RIVER, hundreds of feet below…

CLOSE ON:

OUR HERO’S HANDS, covered with dust. His fingers are slipping off the rocky edge, as his hold starts to give way…

HIS RIGHT HAND pulls off as the rocks and ground begin to crumble. Now it’s only the LEFT HAND still hanging on… but his strength is fading… one finger slips off the ledge… then another…

CUT TO:

EXT. THE MUSIC BUSINESS TODAY

We’ve all seen that scene in the movie– now we get to live it in real life. You know, the inevitable scene where the action hero is hanging on the ledge, fighting for his life. Unfortunately, there are no stunt-men to call in this time around, as we prepare to take a very big plunge. These next several months in the music biz look to be a moment of reckoning, when the illusion of business as usual can no longer be sustained.

What’s got everyone in the industry on the edge of their seats, quite literally, is the imploding debt situation with EMI Music, one of the four major multi-national corporations in the business. EMI, which was purchased (inexplicably) by the investment firm Terra Firma for $4.7 billion dollars two years ago, is in a genuine and highly publicized liquidity crisis, from which it might not escape. And it’s primary creditor, Citibank, which financed much of the Terra Firma takeover, is in no position or mood to renegotiate the financing terms.

With a debt load of nearly $5 billion dollars, EMI has found itself repeatedly unable to make the required loan payments to Citibank, and in grave danger of defaulting. With severe cash problems of its own, Citibank has shown itself to be very unwilling these days to take the usual measures of re-negotiating the terms of such loans. Insiders are speculating that Citibank’s willingness to force Escada, the German fashion house, into bankruptcy last month, as well as its current hard line with Valentino, the Italian fashion company, indicates that Citibank may likely opt to force EMI Music into bankruptcy if the British music company can’t meet the debt payments it has missed, and the new ones looming ahead.

That’s scary stuff. In more than twenty years in the music industry, I’ve seen plenty of bankruptcies– over-extended indie labels, individual musicians or writers with life-savings that went up their nose or into the pocket of their business manager, indie record distributors who left dozens of labels and artists with no payment for records already pressed, shipped and sold. But I’ve never seen a major multi-national music company go bankrupt, or ever really contemplated it. Nor have most people in this industry. This is genuinely unchartered territory. In the worst case scenario, what happens?

If I had to guess, I would predict a marriage– of the shotgun variety. EMI Music has long been the target of Warner Music, who may finally have the old girl right where they want her– tied to the railroad tracks with the train bearing down. The question is whether another major music company, most likely Warner or Universal, would have the means to buy EMI– given that none of the music powerhouses are looking very powerful these days. It’s questionable whether someone in the industry, already struggling with their own business, seeing clearly the structural problems that will continue to drag down earnings, and being of somewhat sound mind, would want to acquire another record company. Almost certainly, anyone who did buy the company would shutter the label, save the valuable catalog of masters, and focus on the music publishing division, which is the only thing still making money.

More frightening than that, it is possible that EMI could simply go bankrupt. If that were to happen, it would not only spell the end of one of the most important historical legacies in the music industry (particularly for the United Kingdom), but it would drag the lives and finances of hundreds of artists, producers, publishers, independent labels, recording studios, and songwriters right off the cliff. Anyone who was owed royalties or production fees, anyone who had distribution arrangements with Caroline, anyone who had outstanding invoices could find themselves in a very long line, somewhere behind the Beatles, Coldplay, Robbie Williams and of course, good old Citibank. In such a situation, it’s hard to know if the small players, like songwriters, producers and publishers, would ever get paid. It certainly would be a disaster that would take years to resolve.

This is not a situation for which I can offer up much brilliant advice. It’s not something for which there’s much precedent, nor are there any sure-fire solutions. But given that this is the way our world looks in the music business of 2009, with once-invincible companies sliding quickly into oblivion, I will offer up a few lessons that can be learned from our predicament:

1. Patience is not always a virtue. This is not a time to let things linger. If you are owed money by any label, distribution company, publisher, production company, etc., go out and get it. Fast. A bankruptcy by a company like EMI will have massive repercussions for everyone in the music industry, from Harry Fox Agency to small independent labels to individual session musicians. If you’ve ever tried to collect a debt in the music business, even if it was only a simple studio invoice, you know that it can mean months of collection efforts. You’ve also probably learned that whoever screams loudest (particularly if the words being screamed include “lawyer”, “lawsuit”, or “Suge Knight”), usually gets paid first. Make sure your paperwork (song registrations, billing info, payment addresses, etc.) is in order, then start calling and don’t let up until you get a check. Don’t let anyone hold onto your money for any longer than a contract allows.

2. Don’t talk to strangers. Make sure you know who you’re doing business with. If you’ve got a contract on the table, or a distribution offer, or any kind of long-term agreement in front of you, you need to do your homework–not only on the individuals with whom you’ll be working, but on the company that will be paying the bill. EMI’s problems have been well-publicized since the Terra Firma purchase, as were BMG’s, prior to their exit of the music industry a year ago. Ignorance is not bliss in times like these. You need to be reading Billboard, Variety, and watching the financial pages of the newspaper, and thinking through the implications of today’s news on those with whom you’re doing business.

3. When cash is king, sometimes it makes cents to take the money and run. It’s always been a maxim of the major players in the music business that you don’t sell copyrights. Publishers and labels have always resisted the idea of selling catalogs, even in the toughest economic situations, believing that the business was built on acquisition and ownership of more and more copyrights. For many years it’s proved a profitable philosophy, as the value of most hit songs or master recordings continued to climb. Until now.

The lesson of the past five years is that there is a time for buying, and also a time for taking your profits. The songwriters and publishers (and there were many of them) who sold their catalogs three years ago, at the height of the flood of investment money into the music publishing industry, made a killing.Those prices would be far lower today, and probably will remain so for at least the next five years. If corporations like Sony or EMI had sold off their recorded music divisions five or six years ago, they could have still received a reasonably favorable price. Today, they would have a hard time finding any takers at all.

As Kenny Rogers put it, you have to know when to hold ‘em, and know when to fold ‘em. If you think your songs, recordings, studio, music publishing business, or independent label is at the top of its value in the market, that’s usually a good time to make an exit, smiling all the way.

4. Don’t mistake size for security. It’s always easy to feel safer when you’re dealing with a company that everyone knows, with a big office building and a CEO who shows up on the front page of Billboard. It’s all a sham. These days, there are small, lean, smart independent labels who are far more secure than any of the Big Four. In fact, if you’ve set up an effective business model for yourself, you may be better off putting out your own recordings, managing your own publishing and booking a steady calendar of live dates than being signed to a major label. Better to collect your own money and manage your own affairs than to find yourself a pawn in a game that is out of your control.

Don’t be fooled by music industry glitz. If the EMI death-watch teaches us anything, it should be that the bigger they are, the harder they fall, and the more people they take with them. Clearly, Terra Firma, despite the reassuring name, is on very shaky ground. Don’t stand too close to the edge…

Alright, to be fair, I haven’t gone on a really vicious rant since I tackled the subject of YouTube all the way back at the beginning of the summer. I’ve tried to be patient and positive and encouraging and educational and not get sidetracked on a subject that frankly, just completely sets me off. But I’ve hit the wall tonight. Look away if you’re easily offended or your feelings get hurt easily. I’m on the warpath.

It all started innocently enough. This evening, as on probably about 7000 other evenings of my life, I went out to what I thought was a showcase performance of a singer/songwriter who had sent me a couple of promising songs. Not hits really, but songs that showed enough potential, both in the writing and the performance, that my curiosity was sparked, and I felt it was worth an hour to go see what the artist could deliver live.

I’m still waiting. Because what I saw left me scratching my head. I don’t know what I saw. It was at a club that ostensibly features live music and charges money, so I assume that it was a performance. On the other hand, the artist seemed to view it more as some kind of therapy, in which she could drag all her friends to listen to her as she sleepily worked out her career path, artistic direction, set list and relationship challenges in public. The back-up band clearly viewed the evening as the rehearsal that they had not had previously. I saw it simply as my own personal hell, in which I watched yet another evening drift into some horrible nightmare of missed cues, false starts, wrong notes, poor song choices, and some hapless manager or attorney telling me how much better last week’s show was if only I’d seen that one.

I did see that one. I’ve seen them all. I’ve endured enough showcases to fill a YouTube channel, except that no one would watch them. I can’t take it anymore.

One seems to read constantly these days that the future of music is in live performances– that’s where the money is to be made, as it’s the one thing that can’t be stolen. It’s all about the live show. If what I’m seeing at showcases recently is the future of the industry, God help us all. The only thing we can be sure of is that no one will figure out how to steal it. No one would want to.

In the past five showcases I’ve attended (some of these presented for major record labels, others at major NYC clubs, all with industry A&R in attendance) I’ve seen the following:

One band, having generated interest at a major label based on an EP of material, played a set-list with an entirely different musical direction than that of the EP. In fact, they played only two of the six songs on the record.

A singer/songwriter chose to play three almost entirely inert ballads in a row, somehow oblivious as the entire audience was lulled into a slumber.

Another singer-songwriter managed to hit six obvious wrong chords in a thirty-minute set, forget a lyric, and had to start one song all over again– all on songs that he had written himself. If you can’t play your own songs, what can you play?

All of the performers proved unable to manage even one interesting, provocative, amusing or insightful spoken introduction or bit of banter with the audience. Most were inaudible, which was a plus. The others opted for things like “How you guys doin’? Is everyone having fun? This next one’s about a girl I knew back home…” Wow. That sounds really fun.

What the hell is going on? How has the standard for live performance slipped so low that most of the artists I’m seeing can barely struggle through a six song set? Could even 10 percent of the acts playing at The Living Room, or The Bitter End, or Mercury Lounge, or the Whisky in LA draw even fifty paying customers if you excluded close personal friends, relatives, and industry people who were coaxed there? Does anyone ever see a performance that truly wins over a crowd, the way Elton John did at the Troubadour or Springsteen did at the Stone Pony?

I’ve heard all the explanations. I’m always reminded that most of the young artists playing these showcases are still developing and defining their sound. They need to experiment. Of course, I totally agree that there is a place for development and experimentation. It’s called a rehearsal studio. More bands should use one. I also agree that the costs of maintaining a band, finding a rehearsal space, and setting up a show are growing more and more overwhelming. Which should mean that artists make sure the performances that they do give actually mean something. It might also suggest that rather than showcasing at pay to play venues, they should concentrate on actually building a live following of people who will pay to hear them.

Here’s the bottom line, for those artists who have not yet come to this realization:

We are not simply in the music business. This is the entertainment business. Musicians do not simply compete with other musicians for opportunities and an audience. Music competes with television, movies, sports, video games, social networking, a dinner out, and anything else that fills the average person’s time when not at work. If your musical performance is not more fun, or more interesting, or more emotionally satisfying than those other things, you will not be successful. Eventually, friends will get tired of coming out of a sense of duty. You will need to entertain them. Here’s four tips as to how:

1. Ponder your pacing.
Every form of entertainment, from movies to theater to sports is focused on grabbing an audience’s attention, holding it by raising the tension and the intensity, then releasing it at the end with a big climax. How then does a songwriter offer up three ballads in a row? When you think of the time and effort that goes into editing a feature film, how can a band get onstage and think to work out the set list on the spot? Broadway shows spend weeks in previews, just trying to fix those few moments where the energy lags. Any performer should put that same amount of thought into his or her set list, to grab hold of the crowd and not let go.

2. Practice at home.
If you can’t play your guitar without looking at the frets, or the piano without looking at the keys, or remember the words or the chords to your song, there is a very simple solution available, and it works for everyone. Sit alone in your room and do it over and over again until you can do it perfectly. No one watches John Mayer or Alicia Keys and wonders if they might hit a wrong note. This is because at some point in their existence, they spent hour after hour learning to do what they do. There are no shortcuts and no excuses. Practice. In private.

3. Don’t speak, unless or until you have something to say.
If you have a funny story, or a witty aside, or feel like saying something outrageous, by all means speak up. But remember, if you are awkward and uncomfortable and prone to mumbling things that can barely elicit a titter of laughter from a group of your friends, it’s very easy to hide it. Just don’t say anything. Know your set list, move immediately from one song to the next, and let the music speak for itself. No one ever complained that Bob Dylan didn’t speak onstage. There’s a power in silence. Use it.

4. Compete.
Put any two great performers together, whether it’s Billy Joel and Elton John, or Tina Turner and Mick Jagger, or Jay-Z and Kanye, and you’ll get a war. An entertaining war, but a battle nonetheless. Great performers take the stage as if they own it, are sure that they’re the best band or artist on the bill, and will not stop until they have won the audience over. No audience has an obligation to listen attentively, or give you a chance to express your feelings. You have to grab the opportunity and make believers out of people. The music business is not a self-help group or an open forum for all interested parties. It’s a jungle, with thousands of aspiring artists fighting desperately to cut through the clutter and reach an audience. Superstars understand that it is a world of “kill or be killed”. You have to be ready to compete.

It would be easy to assume from the description of some of the recent showcases that the artists themselves simply weren’t talented. Unfortunately, that’s not the case. In fact, that’s what makes the whole thing so frustrating.

There are always lousy bands or untalented singer/songwriters, and there always will be. From an industry perspective, they really don’t matter much, as they rarely get far enough to get on anyone’s radar screen other than their immediate family. What has set me off on this tirade is the sight of talented people, with real potential, giving poorly-planned, under-rehearsed, low-energy performances that don’t do justice to their own gifts. No one minds watching a bunch of grade-school kids on a playground playing a sloppy basketball game. But when you go to an NBA contest, and see great players playing without strategy or focus or desire, you want your money back. More than that, you go home depressed, to have seen people who didn’t respect themselves or their craft enough to put in a solid effort.

I read an article recently that talked about the tradition of opera audiences openly booing performances that they feel are sub-standard. Someone commented that it’s rude and hurtful to the performers. Which it probably is. But sometimes, for some performances, it’s the only appropriate response. At least it shows that the audience understands the standards, respects the art form, and cares about what is being presented. Next time you’re at the Bitter End and you hear a loud “boo” coming from somewhere near the bar- you’ll know I’m in the house.

It’s probably safe to say that no one knows more about your bad habits and the stupid things you do than your neighbor. With the advantage of a little distance and the protection of a backyard fence, your neighbor has the perfect post from which to catalog all your most annoying and perplexing idiosyncrasies. Of course, you’ve probably got a pretty good list of your neighbor’s annoying habits just to balance things out.

Consider this then an open letter from one neighbor to another– from a music publisher, albeit one who has also worked in the record industry as a songwriter, producer and A&R person, to the guys across the street, the multi-national, major label record company. As we head into what is looking to be a dismal fourth-quarter in what may be one of the worst years in history for record companies, and we take into account that the previous five years have been pretty disastrous as well, it’s hard not to shake your head at the utter cluelessness of a once profitable industry. More amazing still is the record industry’s complete unwillingness to change, despite almost a decade of falling income.

Naturally, it’s always easier to see the sliver in your neighbor’s eye, rather than the log in your own. Of course, publishers do a lot of dumb stuff as well. But at least the publishing business is making money. When the NY Times is running a story that officially declares your industry “dead” (as happened recently), it might be time to re-examine the way you’re doing business. So from the old, slightly worse for the wear, in need of a paint job but still standing house that is the home of music publishing, I’ve got a couple of questions for the record company guys next door, who are padding around a twenty-room mansion that is now half-empty, unheated, with a flooded basement, a leaking roof, and an overgrown yard:

1. Why are record companies still obsessing about “leaks” from albums or singles in advance of a release date?

For those not involved in the everyday, back and forth of the music industry, it would come as a complete shock to know how much energy is devoted to guarding against the dreaded “Leak” of music. Executives are summoned to the boss’s office to listen en masse to mixes or comment on running orders, because no one trusts a VP of A&R to be left to listen alone, without supervision. Every mix that absolutely must be circulated is carefully water-marked. Publicity campaigns and efforts to place music in advertising campaigns, television shows or films prior to the album release are hamstrung, as overprotective label execs refuse to provide music to anyone, including music supervisors, until days before the record comes out.

And then the record comes out– and no one cares. God forbid a radio station starts playing a single a week before the official release. But of course, a week later, labels will pay exorbitant amounts to get the same station to play the record– and most of the time it doesn’t work. Labels will spend hundreds of man-hours hunting down leaked versions of a song circulating on the internet, but then, one month later, spend a fortune in advertising to get the same consumer excited about that artist’s upcoming album.

Of course, there are different kinds of leaks. No one is excusing the unauthorized release of works in progress– circulating unmixed, early demos of a song leaked from the recording studio. Artists have the right and even the responsibility to control how and when their work is ready to be presented. But the furor that exists at record labels over “leaks” of finished singles that find their way onto the radio or the internet a couple of weeks prior to the official “street date” is something else entirely. From what I’ve seen, over-exposure is not a problem that most labels need to worry about. With 95% of major label releases, the core problem is that no one cares about them in the slightest. Labels should probably be glad anyone is interested enough to seek out a leak of the new single, or play the record on their station. Which leads to a second question…

2. Why are record labels continuing to make albums at all?

Most of the issues with “leaks” exist because labels continue to insist on controlling the flow and packaging of product, adhering to the age-old formula of a first single release six weeks in front of an album, followed by an album release and second single, followed (usually) by a swift descent into oblivion. In an age of digital distribution, there is no need to package music in an album format. One could put out an endless stream of singles, or a grouping of four or five songs every six months and eliminate the 6 month to a year disappearing act that has always been such a liability for artists between records. Why should there be one piece of product and a corresponding publicity campaign? Why not a steady flow of product and an ongoing publicity effort that never wanes. Which leads to another pet peeve…

3. Why do record labels not make all releases available worldwide simultaneously through iTunes and other digital distributors?

As perhaps their greatest fan this side of the Atlantic Ocean, several months ago I tried to download the new album from the Pet Shop Boys, a UK-based act. Not possible, I’m afraid. iTunes could only make the album available in Europe, as the record had not been released yet in the US (it has now). Uh… isn’t this the “world-wide web”? The same thing happened almost a year ago with the album from The Script, a massive hit in the UK just now receiving a release in the US.

Why the restrictions? Why the delay in release dates? Why would a label not wish to sell product to any consumer in the world that wanted to purchase it at any time the consumer wanted to purchase it? Isn’t that the goal? Given the almost astounding inability of US labels to break even superstar-level international acts in this country (call it the Robbie Williams principle), wouldn’t it be easier to stop with the half-efforts and unmotivated marketing campaigns promoting a year-old album in a new territory, and simply make the record available to fans everywhere, all at once?

Of course, the problem with a screwed-up neighbor is that his or her problems quickly become your own. When the guy next door doesn’t cut his lawn for a year, it only detracts from your own property value. When you decide to have band practice at 10pm in your basement, the doctor who lives on the second floor shows up the next day at the operating table with bloodshot eyes and a case of the shakes. Likewise, the idiocy of the major record labels is hurting publishers as well, who have seen mechanical royalties (the royalties paid for the sale of recorded product) plummet by as much as thirty percent this year. Most publishers are hoping that record execs will wise up before it’s too late– according to the NY Times, it may already have gone past that point.

Other publishers are taking an active role in trying to step into the void, by creating master recordings and distributing them on their own. It’s worth remembering that in the beginning of the music industry, back in the late 1800’s, the “product” was sheet music, and music publishers controlled both the production and distribution. Of course, publishers made their own share of mistakes back then, including not understanding the impact of recording technology. No one is short on embarrassing history. But at the moment, the entire music community is being dragged down by one particular sector of the industry that just can’t seem to operate with even a minimal amount of flexibility and common sense. It may be time for publishers not only to note and learn from the mistakes of the guys next door, but to actually expand the scope of the music publishing business and take advantage of opportunities in the other guy’s back yard. It’s time to take back the neighborhood.

In case, you haven’t heard, the grand new era of Guy Hands at EMI officially ended this week– not simply with the British financier bowing out of EMI, which he’d already done some time ago, but by Hands actually resigning the CEO position at Terra Firma Capital Partners, the firm he created. It doesn’t take a great deal of investigative reporting to get to the real story behind the press release It’s pretty clear that (a) no one gives up control of their own firm happily (b) despite the numerous problems for any financial firm these days, the EMI acquisition was clearly the straw that broke the backers’ back, and knocked Mr. Hands off his feet. And all this after only 2 years…

It’s hard to believe that it was only two years ago that Hands engineered the $2.5 billion dollar purchase of EMI, promising a new era of re-invention, cost-cutting, prudent, financially-savvy management, and a mission to bring a more mature, sensible approach to this business we call show. Of course, paying 2.5 billion for something worth probably half that amount was not a great start. Hands later acknowledged that Terra Firma was shocked upon acquiring EMI to learn how little of the company’s income came from current artists, as opposed to the old catalog. It seems that a financial capital firm’s due diligence does not include asking a couple of random music execs at the Soho House about the company’s prospects. After all, virtually any music weasel could have easily explained that aside from Coldplay, Radiohead and
Robbie Williams (he’s quite big in the UK)

, EMI hadn’t been able to buy a hit record since the Beatles. It was not a well-kept secret.

Nevertheless, Hands took over the teetering ship, made a number of oft-quoted and lofty announcements, took a rather quixotic approach to hiring (putting a UK A&R man in charge of the US, and a former Procter and Gamble exec in charge of him) and promptly began to feel the water rising up around his nose. Artists started lambasting him, Radiohead went off to release its album through the Internet for nothing, Robbie Williams bid adieu, and recorded music sales dropped like a brick. Earlier this year, Terra Firma disclosed a $1.78 billion dollar write-down on its investments, thanks largely to Guys’ foray into the world of rock ‘n’ roll. And now, we begin the wind-down, as second-level execs assume their positions, bow their heads, and prepare to submerge. The whole thing lasted just about as long as the equally ill-fated Sony-BMG merger. Come to think of it, that AOL-Time Warner thing didn’t do much better either.

There’s a pattern here. Show business, whether it’s the movie business or the record business, has a long and hallowed history of fleecing the money guys. Inevitably, a wealthy financier blows into town, trailing money, and expounding on his determination to “re-make” the industry, or perhaps more precisely, to hang out with rock stars, their model girlfriends, and aspiring young actresses, while re-making the industry. Of course, this impulse is understandable (not necessarily the hanging out with rockstars and actresses part, although that’s understandable too) since the world of show business is one of the most illogical, inexplicable, nonsensical, and utterly insane business environments in existence. Inevitably, people from the financial world (or even anyone who can do high-school math) take one look at a business like music and conclude that all of the current executives are idiots, and that anyone with actual business acumen could easily better their dismal performance. To be fair, a lot of musicians and songwriters look at most music executives and think pretty much the same thing.

Remember that recent movie Grizzly Man, about the guy who lived with grizzlies in the wilderness? He thought they were his friends. In fact, he was so confident of his kinship with the grizzlies that he started filming his own experiences with them. And then one day, that ate him for lunch. It’s not all that different from a night at Spago in Hollywood.

The problem with real “business” people in the music business is that they’re inevitably sure that the secret to success lies in somehow eliminating risk, cutting costs, improving marketing, reigning in the artists, and making the whole thing more like other more predictable industries. It’s a nice thought. But all of history points to the fact that show business is reliant not on efficiency or prudence or common sense, but rather the completely unpredictable science of finding hits, based on open ears, a little luck, a lot of gut instinct, and plenty of chutzpah.

Most major players in the music industry are very limited in their executive skills. Most have almost no ability to contain costs, plan for the future, or create an efficient operation. However, the ones that survive generally do know how to accomplish one all-important thing: they know how to recognize a hit song or a hit artist. Most MBA-toting, professional CEO’s can’t do it. So far, none of the “too cool for school”, zeitgeist-reading advertising gurus or new media guys have figured out how to do it. Many artists can’t do it, which is why so many artists’ label ventures fail completely. One thing you have to say about the music biz sharks– when they hear a splash, they recognize the sound of opportunity calling. And they know how to take advantage of it.

There is no greater skill than the ability to recognize a hit song. It will cover up a multitude of sins. It will sustain you despite market meltdowns and marketing mishaps. A real, genuine hit song can’t be stopped– even by all the stupidity of the record and radio industry– it has a life of its own. The ability to create, or at least to understand the principles that go into creating a hit song, is what my new book,
The Billboard Guide To Writing And Producing Songs That Sell

is all about. If you understand what makes a hit record, you’re better positioned for success than 90 percent of the people with more money, more business connections, more artistry, or more book knowledge of how to run a company. It may not be fair or just, but it’s just how show biz works.

So now that the latest savior of the music business has tossed in the towel, where do we turn? If not Hands, then who? Certainly, there’s no denying that the music business needs fixing. Here’s my idea:

Rather than turning to an outsider, whose claim to fame is turning around a gas station chain, why not look to the survivors of the industry, those who have been on the inside, and have managed to find success over and over again? On this score, my vote goes to
Barry Weiss

the President and CEO of the Zomba/RCA label group within the Sony Music hierarchy. Barry will probably never be the head of a multi-billion dollar financial capital company. I can’t see him buying gas-station chains or running Procter and Gamble. He’s not even likely to become a high-profile personality revered by the record-buying public, like Clive Davis or Simon Cowell.

But having grown up in the record business, Barry understands what actually matters. He knows the fundamentals of getting records out into the market place. He knows how to make his numbers, both on the cost side, the calendar side, and the sales side. Most of all, he knows that a company survives in this business by making hits, pure and simple. He’s not always eloquent, or politic, and he doesn’t specialize in finesse. Nevertheless, Jive Records continues to turn out hits, year after profitable year. Call me crazy, but that might be a guy we could learn from. I say, with Hands down, this year let’s Weiss-up, and look at the people that have proven they can get it right.

Who doesn’t love getting a telemarketing call? There you are— inevitably, eating dinner, putting a child to bed, racing out of the house to catch a flight, or dealing with a plumbing emergency– when the phone rings and you’re greeted by that awkward silence that says, “I’m staring at a computer screen waiting for a name to flash up and tell me who I’m actually speaking to”. And then you know. A total stranger is going to try to sell you something.

Of course, there is actually one thing worse than receiving a telephone sales call:

Making a telephone sales call.

Even hardened, long-time sales people seldom relish the idea of the cold call– the act of phoning up a stranger and trying to get some kind of succinct, effective sales pitch delivered before the ever impending dial tone is heard. Not a gig that anyone relishes. But for anyone that wants to operate their own publishing company, it’s probably an unavoidable, inescapable part of getting your songs out to those A&R people, music supervisors, managers, or assorted powers that be, which can actually use your music. In my Berkleemusic course, Music Publishing 101, one of the final assignments in the class is to actually call the instructor and pitch some songs. You can study the technical side of music publishing all you want. But sooner or later, you have to pick up the phone and try to get someone to listen to some music. In the end, it’s all about the pitch.

I had an interesting inquiry recently from a blog reader looking for tips in making that awkward cold-call to people in the industry who might be looking for songs. How do you get through the protective phalanx of assistants and voice mail? If you do make it through, how do you avoid the immediate cut-off? How can you actually use the call as an effective means of pitching songs? I wish I could offer up four easy steps to success. But when it comes to selling, nothing is easy. So here are four steps anyway, to get you started working the phones. Before you start dialing, keep these things in mind:

And one last thing that doesn’t quite fit into the four steps, but is perhaps the most useful tip of all:

Never get mad. No one has a moral obligation to take your call or listen to your music. No one owes it to you to be courteous. After all, you called them. If someone refuses to take your call, hangs up on you, declines to hear your music, or goes into a tirade about how busy they are, there’s only one right move to make– and that’s to move on. Don’t argue. Just hang up the phone and move on to the next name on the list. You might want to ask yourself where you went wrong. Did you not pick the right person for what you do? Did you not explain what you do or who you are in an effective way? Was what you were offering not what the person needed? If you made a mistake, then correct it for the next attempt. If you feel that you got through steps 1-4 correctly, then don’t waste another minute on a call gone wrong.

The dark truth about these kinds of cold-calls is that they’re something of a numbers game. Without a reference from a friend of a friend, or a music lawyer, or someone in the industry, most attempts to reach out directly will fail. If that’s the only option you have, then the key to cold-calls is to keep dialing. You’re looking for that one call that yields pay dirt. The faster you move on from a bad call to a new call–the better your chances of hitting the jackpot.

The one thing of which you can be sure is that whoever you’re calling has probably had to make a few cold-calls of their own somewhere along the way. Publishers like myself get pitch calls all the time– but we also have to make a lot of them, trying to get our company’s songs cut. Music supervisors have to pitch themselves to directors and movie studios. A&R people have to call artists and managers to try to entice them to sign to the label. It’s an inescapable part of doing business. Therefore, everyone appreciates a well-done sales call– even if it doesn’t ultimately result in a sale. In the entertainment business, everyone is pitching and everyone is being pitched, all the time. The art is in the execution…

Who doesn’t love getting a telemarketing call? There you are— inevitably, eating dinner, putting a child to bed, racing out of the house to catch a flight, or dealing with a plumbing emergency– when the phone rings and you’re greeted by that awkward silence that says, “I’m staring at a computer screen waiting for a name to flash up and tell me who I’m actually speaking to”. And then you know. A total stranger is going to try to sell you something.

Of course, there is actually one thing worse than receiving a telephone sales call:

Making a telephone sales call.

Even hardened, long-time sales people seldom relish the idea of the cold call– the act of phoning up a stranger and trying to get some kind of succinct, effective sales pitch delivered before the ever impending dial tone is heard. Not a gig that anyone relishes. But for anyone that wants to operate their own publishing company, it’s probably an unavoidable, inescapable part of getting your songs out to those A&R people, music supervisors, managers, or assorted powers that be, which can actually use your music. In my Berkleemusic course, Music Publishing 101, one of the final assignments in the class is to actually call the instructor and pitch some songs. You can study the technical side of music publishing all you want. But sooner or later, you have to pick up the phone and try to get someone to listen to some music. In the end, it’s all about the pitch.

I had an interesting inquiry recently from a blog reader looking for tips in making that awkward cold-call to people in the industry who might be looking for songs. How do you get through the protective phalanx of assistants and voice mail? If you do make it through, how do you avoid the immediate cut-off? How can you actually use the call as an effective means of pitching songs? I wish I could offer up four easy steps to success. But when it comes to selling, nothing is easy. So here are four steps anyway, to get you started working the phones. Before you start dialing, keep these things in mind:

And one last thing that doesn’t quite fit into the four steps, but is perhaps the most useful tip of all:

Never get mad. No one has a moral obligation to take your call or listen to your music. No one owes it to you to be courteous. After all, you called them. If someone refuses to take your call, hangs up on you, declines to hear your music, or goes into a tirade about how busy they are, there’s only one right move to make– and that’s to move on. Don’t argue. Just hang up the phone and move on to the next name on the list. You might want to ask yourself where you went wrong. Did you not pick the right person for what you do? Did you not explain what you do or who you are in an effective way? Was what you were offering not what the person needed? If you made a mistake, then correct it for the next attempt. If you feel that you got through steps 1-4 correctly, then don’t waste another minute on a call gone wrong.

The dark truth about these kinds of cold-calls is that they’re something of a numbers game. Without a reference from a friend of a friend, or a music lawyer, or someone in the industry, most attempts to reach out directly will fail. If that’s the only option you have, then the key to cold-calls is to keep dialing. You’re looking for that one call that yields pay dirt. The faster you move on from a bad call to a new call–the better your chances of hitting the jackpot.

The one thing of which you can be sure is that whoever you’re calling has probably had to make a few cold-calls of their own somewhere along the way. Publishers like myself get pitch calls all the time– but we also have to make a lot of them, trying to get our company’s songs cut. Music supervisors have to pitch themselves to directors and movie studios. A&R people have to call artists and managers to try to entice them to sign to the label. It’s an inescapable part of doing business. Therefore, everyone appreciates a well-done sales call– even if it doesn’t ultimately result in a sale. In the entertainment business, everyone is pitching and everyone is being pitched, all the time. The art is in the execution…

While the music industry dives into its annual orgy of self-congratulation, backslapping, and media fawning that is known as the Grammy Awards, it may want to notice that quiet ticking sound in the background. No– it’s not simply the sound of the clock running out on the CD format and the outsize profits that went with it. It’s the sound of a bomb getting ready to level the battle field once and for all, between the record labels and publishers on one side, and the artists and songwriters on the other. While it’s almost guaranteed that most of the industry players will bury their head in the sand (just as they’ve done with every major shift in business model over the past decade), no one can say that they weren’t warned. It was right there in Billboard, in an Op-Ed feature by music lawyer Wallace Collins.

Forever, it seems, doesn’t mean forever anymore. And those words in your publishing or record contract that used to seem so scary– “in perpetuity” and “life of copyright”– just lost a lot of their sting. According to Wallace, an often overlooked provision of the 1976 Copyright Act may allow songwriters and artists to begin reclaiming the rights to their songs or their recordings from the record labels and publishers who thought they owned them “forever”.

For anyone that’s ever waded through the legalese of “an obscure provision” in copyright law, it will come as no surprise to know that there is a reasonably complex system of determining which copyrights are affected. But the bottom line is indeed pretty shocking. By the year 2013, only four years away, many composers of songs that are 35 years or older will be able to terminate their recording or publishing agreements, and reclaim the rights to license their own masters or publish their own songs.

Certainly, that’s good news for artists and writers. One of the cruelest elements to many recording and publishing agreements has always been the prospect of giving up control to your work forever, often at a very young age, when you have a minimum of bargaining power. The whole concept of a recording agreement, in which a company advances the cost of making the album, recoups it, and even after the album has paid for itself many times over, continues to own the rights to the master recordings far into the future, has always been a sore point with artist advocates.

On the other hand, it is the long-term ownership of rights that is the backbone of most publishing companies and labels. If a company like Columbia Records had to survive on the profits generated by current product, they wouldn’t last a week. It is the catalog sales– the Miles Davis re-issues, and the Dylan albums, and the Billy Joel records– that keep the lights on at 550 Madison (the lights are still on, aren’t they?). While there are publishing companies like Kobalt Music who have tried to develop a business model in which they administer copyrights on a short-term, easy to terminate, basis– no one has really shown that such a model can make money. There is no question that it doesn’t make the kind of money that built companies like Warner Chappell, where the cornerstone of the catalog is a collection of classic, standard songs owned in perpetuity. If your publisher or record label doesn’t return your phone call next week, it’s probably because they’re holding their breath– until 2013.

The truth is, in the battle between creators (songwriters and artists) and copyright holders (labels and publishers) the balance of power has been changing drastically over the past five years. In fact, it’s the empowerment of individual writers and artists to exploit their own music through the Internet and other venues that really makes the whole idea of terminating rights an appealing one to many artists and composers. When the Copyright Act was approved in 1976, artists needed record labels to get their albums into stores around the country. In the same way, songwriters needed publishers in order to collect their songwriting royalties from those labels.

But as CD sales evaporate, and licensing songs to film generates most income, TV and advertising, or selling the songs on I-Tunes, it becomes very hard to define what the record label is adding to the game. This is particularly true for artists who have big, legendary hits from thirty years ago, but are not currently receiving any promotion or marketing support from their record company. If Steely Dan can place a song in an advertisement or sell their music on I-Tunes, why should they have to cut the record labels, who haven’t spent a cent in promotion or marketing for the past 10 years, in on the deal? And if an act does get their master recording rights back, and is essentially marketing and selling their own music, why should they pay a publisher to collect the royalties only to pay the money back to them? They could just keep it all themselves. Say goodbye middleman. Potentially, say goodbye music industry– at least as we know it.

Interestingly, the good/bad, ying/yang quality of all this is not lost on Wallace. Before going off to law school, he himself was actually an artist signed to Epic Records, and his copyrights are about ready to fall into the category affected by this obscure provision. From a creative point of view, I can’t say I mind the idea of artists getting back their own work. In fact, I wouldn’t hesitate to reclaim my own publishing catalog from Universal Music, who has done next to nothing with it over the past decade. On the other hand, the idea of witnessing the complete dissolution of the infrastructure of the music industry is a little daunting. Doesn’t look real good for my future employment outlook.

Or anyone else’s. Don’t assume that this only applies to old guys who wrote big hit songs in the 70’s. This will affect every new artist and new writer, simply because it will dry up what little money the labels and publishers still have to spend. Almost no music company could survive by having today’s hits pay for today’s expenses. When companies begin to lose major hit catalogs from the past, it will make the digital revolution seem like the good old days. The “do it yourself” approach will become a necessity, rather than a choice.

This is a complex subject, and there are many nuances to the Copyright Act itself. But if you own copyrights that date back to the late 70’s or early 80’s you should certainly read up on Wallace’s article and study which termination rights apply in your situation. If you own a publishing catalog that includes older hits, you better either start diversifying into another area, lobbying Congress to change the Copyright Act, or making yourself absolutely indispensable to those writers that you represent. If you’re a new writer or artist, you better start envisioning your career without a record label or publisher to kick around– but you should have been doing that anyway.

Enjoy the Grammy Awards this weekend. But remember: the clock is ticking…

While the music industry dives into its annual orgy of self-congratulation, backslapping, and media fawning that is known as the Grammy Awards, it may want to notice that quiet ticking sound in the background. No– it’s not simply the sound of the clock running out on the CD format and the outsize profits that went with it. It’s the sound of a bomb getting ready to level the battle field once and for all, between the record labels and publishers on one side, and the artists and songwriters on the other. While it’s almost guaranteed that most of the industry players will bury their head in the sand (just as they’ve done with every major shift in business model over the past decade), no one can say that they weren’t warned. It was right there in Billboard, in an Op-Ed feature by music lawyer Wallace Collins.

Forever, it seems, doesn’t mean forever anymore. And those words in your publishing or record contract that used to seem so scary– “in perpetuity” and “life of copyright”– just lost a lot of their sting. According to Wallace, an often overlooked provision of the 1976 Copyright Act may allow songwriters and artists to begin reclaiming the rights to their songs or their recordings from the record labels and publishers who thought they owned them “forever”.

For anyone that’s ever waded through the legalese of “an obscure provision” in copyright law, it will come as no surprise to know that there is a reasonably complex system of determining which copyrights are affected. But the bottom line is indeed pretty shocking. By the year 2013, only four years away, many composers of songs that are 35 years or older will be able to terminate their recording or publishing agreements, and reclaim the rights to license their own masters or publish their own songs.

Certainly, that’s good news for artists and writers. One of the cruelest elements to many recording and publishing agreements has always been the prospect of giving up control to your work forever, often at a very young age, when you have a minimum of bargaining power. The whole concept of a recording agreement, in which a company advances the cost of making the album, recoups it, and even after the album has paid for itself many times over, continues to own the rights to the master recordings far into the future, has always been a sore point with artist advocates.

On the other hand, it is the long-term ownership of rights that is the backbone of most publishing companies and labels. If a company like Columbia Records had to survive on the profits generated by current product, they wouldn’t last a week. It is the catalog sales– the Miles Davis re-issues, and the Dylan albums, and the Billy Joel records– that keep the lights on at 550 Madison (the lights are still on, aren’t they?). While there are publishing companies like Kobalt Music who have tried to develop a business model in which they administer copyrights on a short-term, easy to terminate, basis– no one has really shown that such a model can make money. There is no question that it doesn’t make the kind of money that built companies like Warner Chappell, where the cornerstone of the catalog is a collection of classic, standard songs owned in perpetuity. If your publisher or record label doesn’t return your phone call next week, it’s probably because they’re holding their breath– until 2013.

The truth is, in the battle between creators (songwriters and artists) and copyright holders (labels and publishers) the balance of power has been changing drastically over the past five years. In fact, it’s the empowerment of individual writers and artists to exploit their own music through the Internet and other venues that really makes the whole idea of terminating rights an appealing one to many artists and composers. When the Copyright Act was approved in 1976, artists needed record labels to get their albums into stores around the country. In the same way, songwriters needed publishers in order to collect their songwriting royalties from those labels.

But as CD sales evaporate, and licensing songs to film generates most income, TV and advertising, or selling the songs on I-Tunes, it becomes very hard to define what the record label is adding to the game. This is particularly true for artists who have big, legendary hits from thirty years ago, but are not currently receiving any promotion or marketing support from their record company. If Steely Dan can place a song in an advertisement or sell their music on I-Tunes, why should they have to cut the record labels, who haven’t spent a cent in promotion or marketing for the past 10 years, in on the deal? And if an act does get their master recording rights back, and is essentially marketing and selling their own music, why should they pay a publisher to collect the royalties only to pay the money back to them? They could just keep it all themselves. Say goodbye middleman. Potentially, say goodbye music industry– at least as we know it.

Interestingly, the good/bad, ying/yang quality of all this is not lost on Wallace. Before going off to law school, he himself was actually an artist signed to Epic Records, and his copyrights are about ready to fall into the category affected by this obscure provision. From a creative point of view, I can’t say I mind the idea of artists getting back their own work. In fact, I wouldn’t hesitate to reclaim my own publishing catalog from Universal Music, who has done next to nothing with it over the past decade. On the other hand, the idea of witnessing the complete dissolution of the infrastructure of the music industry is a little daunting. Doesn’t look real good for my future employment outlook.

Or anyone else’s. Don’t assume that this only applies to old guys who wrote big hit songs in the 70’s. This will affect every new artist and new writer, simply because it will dry up what little money the labels and publishers still have to spend. Almost no music company could survive by having today’s hits pay for today’s expenses. When companies begin to lose major hit catalogs from the past, it will make the digital revolution seem like the good old days. The “do it yourself” approach will become a necessity, rather than a choice.

This is a complex subject, and there are many nuances to the Copyright Act itself. But if you own copyrights that date back to the late 70’s or early 80’s you should certainly read up on Wallace’s article and study which termination rights apply in your situation. If you own a publishing catalog that includes older hits, you better either start diversifying into another area, lobbying Congress to change the Copyright Act, or making yourself absolutely indispensable to those writers that you represent. If you’re a new writer or artist, you better start envisioning your career without a record label or publisher to kick around– but you should have been doing that anyway.

Enjoy the Grammy Awards this weekend. But remember: the clock is ticking…