With Memorial Day quickly approaching, it’s time for the annual migration of summer interns, returning from school to fill their summer with a dose of real-world experience, an insider’s view of the industry, and the kind of work history that will actually mean something when graduation rolls around. Unfortunately, three years of academic study have not necessarily provided a background of fundamental skills for a day in the office. Having been a songwriter for almost 20 years before I ever got my first taste of an office gig, I can assure you that it requires some adjustment.

Whether you’ll be spending your summer working in a small start-up venture or wandering the halls of 550 Madison Avenue or Rockefeller Center, you’ll need to know more than how to run the coffee-maker. That “Critical Analysis of Music and Entertainment Industry Paradigms in 21st Century American Popular Culture” class you took might not have fully prepared you for 12 weeks in the trenches. Here are 10 Tips for Maximizing Your Internship, and Getting Invited Back Next Year:

1. Be on time.
Most music companies do not open at sun-up. A 10a.m. start time will not strike most of the working world as cruel and unusual punishment. Nevertheless, showing up at 10a.m. for a job that begins at 10 will put you ahead of 90% of the other employees and interns. It’s that easy.

2. Do some homework.
I know—school is out. But the homework continues. One hour on the company website and a little Wikipedia should be enough to give you what you need to know: the company history, top executives, biggest hits in the catalog, top current acts, whether or not the company is being bought or sold and to whom. Now that you have all the essential information… memorize it.

3. Read Billboard.
The people around you are watching their lives and careers rise or fall with the chart positions each week. If you want to understand their mood, share their humor, feel their pain or avoid their wrath, it’s best to know who’s moving up and who’s falling down.

4. Accept all invitations.
If you’re asked to check out a showcase, attend a video shoot, go to a rehearsal, put up fliers on telephone poles or join in a birthday party for another intern, it is not actually a social proposition. It is a command performance. Be there. Everything else you’re doing can be cancelled or rescheduled. That’s life in the music business.

5. Know the music.
No one actually cares what kind of music you like. Or what new bands you’re into. Or that you’re a hip-hop kid who happens to have gotten an internship at Sony Masterworks. You need to know the music that your department works with, whether it has any appeal to your personal taste or not. This is not actually about you. It’s about the music that pays the bills for the office you’re sitting in.

6. Listen.
Even when no one is speaking to you. I had an intern once who overheard me speaking with someone about dub-step, and ten minutes later brought me information about an upcoming NYC show and two hot producers. Mastering the art of subtle eavesdropping is a valuable survival skill.

7. Elevate the communication level.
If someone asks you to give them an update, a report or a brief on something, they’re not looking for some jotted down notes on a piece of tablet paper or a print-out from the internet. Write a report, or a memo, or an email—with a proper heading, a consolidated and edited summary of what you’ve found, and bullet points for what you feel is the crucial information. Use spell-check. If you speak in a meeting, don’t ramble and don’t be shy. Especially in a large corporate environment, appearances matter, from the layout of your memo to your posture when you speak.

8. FOCUS.
It is possible to go a full eight hours without checking your Facebook page. Try it. If you’ve got a YouTube video on your computer screen, it better be an act on the label, a song in the catalog, or an artist the company is looking to sign—not a funny kitten or an SNL segment. Unless your boss has your number, turn off your phone. Listening to your iPod will preclude listening to what’s happening in the office—see item #6. You’re at work. So work.

9. Ask questions—that aren’t about you.
Everyone likes an intern that is full of questions. But not the following questions:
Will you listen to my band? “
“What do you think should be my career focus? “
“What’s the best way to work my way into a full-time gig at the company?”
“Can you introduce me to your contact at the company across the street?”

These are questions about you. The questions that are interesting to the people at the company are about them—the company itself, the artists or songs that the company represents, the people who work there, or the business strategies that are paying off or not paying off. Try:
“What were the key factors in deciding to sign that particular act? “
“What areas of this company will be the growth sectors in the next few years?”
“What are the skills that this company feels are the most important for entry-level employees?”
“How long have you been doing business with Joe across the street? How did that relationship develop? “

10. Bring the energy.
No one expects a young intern to know everything, to solve their company’s problems or even to drastically alter the workload. In fact, it’s pretty acceptable to screw things up once in a while—everyone’s done it. You’re supposed to bring the youthful energy. The know-how can come later. What’s not acceptable is to be tired, bored, distracted, or anonymous.

Even in the relatively small company where I work, we’ve had numerous interns who became full-time employees after graduation. We’ve had interns who we later signed to publishing contracts. We’ve helped interns get jobs with other companies in the industry. We’ve also had a reasonable number of interns fade off into the sunset, leaving no follow-up email address, no sustainable relationships in the company and no lasting impression on anyone. That’s a wasted summer.

Andre Harrell & Russell Simmons, with their best intern... P Diddy!

This is a very bad business for boring people. If you can’t make some kind of impact over a 12 week internship, then you may need go back to school considering other career options. This is the first mark you’ll make in the music industry. Make it count…

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.

The Gifted Songwriter

Dec 18 2010

While it may be more blessed to give than to receive, it’s also a lot more work. Anyone stressing about where and when to find that last elusive holiday gift will understand what I mean. I came to the realization last week that it’s a very dangerous thing to be at the end of my Christmas gift list– it’s like being named Zucker at a college graduation ceremony that’s proceeding in alphabetical order. By the time your name finally comes up, everyone’s lost interest and moved on to the reception. At this point, if I haven’t figured out what gift to buy for you, I’m likely to just give up and vow to do better next year.

The bottom line is: it’s crunch time. So in the interest of public service (and of course, being a music business weasel, some self service as well), I’m offering up a bag full of gift ideas for your songwriter friends or relatives. Or, with the understanding that songwriters tend toward the reclusive, buy these for yourself and save your family from buying you the scarf with musical notes on it, or the new edition of the rhyming dictionary.

Here’s the Songwriters Gift List (or “What To Get the Guy Who Gets Only 9 cents Each Time Someone Buys a $20 dollar CD”):

1. A spot at the ASCAP “I Create Music” Expo

http://www.ascap.com/eventsawards/events/expo/

Granted it ain’t a cheap gift, but at this time of year, there’s some deep discounts on the cost of the registrations for an event that takes place April 28-30. And all things considered, there’s no conference as rich in educational, mentoring and networking opportunities for aspiring songwriters, whether they’re producers, performers, composers or lyricists. The Expo covers every corner of the songwriting business, virtually every genre, and brings superstars like Quincy Jones, Justin Timberlake, Dr. Luke and Bill Withers together with writers just beginning their journey in the music industry. There’s no other event quite like it.

2. A subscription to Billboard magazine.

http://www.billboard.com/

This one is pretty generous as well, but it represents a world of opportunity for whoever receives it. My first gig in the music industry came from reading an article in Billboard, so I’m a true believer. There is no way to survive in this business without knowing what’s happening– it’s how you discover the openings in the marketplace, jump on the trends, find your business model, or identify the people who you need to turn into contacts. Whether it’s online or in print, every songwriter needs to be looking at Billboard each week.

3. “What They’ll Never Tell You About The Music Business” by Peter Thall

Peter is one of New York’s top music business lawyers, a clear and insightful author, and one of my favorite people to run into on the weasel Habitrail– he’s always dapper, funny and leaves me with one piece of knowledge that I didn’t have before. If you need a guide to the contractual, legal and practical realities of building a music career, this new update of his classic book is a great place to start.

4. “The Hit Factory”: Making Your Music Make Money”, a one-day workshop at Songwriters Hall of Fame.

http://www.songhall.org/news/entry/939

I told you there was a little bit of self-interest at work here. This is my own one-day, six-hour, intensive class at the Songhall in NY, which I led last year as well. It’s a chance for me to help those songwriters attending the workshop to develop a strategic approach to their career– it’s part lecture, part song-critique session, and part open discussion, and I love doing it. Last year’s class was sold out, and we had people from all around the country. I’m looking forward to doing it again, and have a lot of new material to cover. The cost includes both of my books, “The Billboard Guide To Writing and Producing Songs That Sell” and “Making Music Make Money”, so it’s not a bad bargain. I think all of us from the last session, myself included, felt that it was a day full of discovery, good music and valuable new contacts.

5. A Tip Sheet of choice: Songlink International or myhitonline.com
http://www.myhitonline.com/
or

http://www.songlink.com/

There’s no greater challenge for most songwriters in getting their music out into the market than trying to figure out who’s looking for songs and where to send them. These are both very well put-together “tip sheets” that can clue you into both big and small projects around the world. It doesn’t mean your songs are going to get cut. But at least they might be heard. Every little lead helps…

6. The T.A.M.I. Show Collectors Edition DVD

It’s hard to imagine any pop songwriter or musician who couldn’t find something to love here. Filmed at a live performance in Santa Monica Auditorium in 1964, then lost for decades to legal disputes, this has just recently become available– it is a brilliant document of the energy and variety that made music the defining element of pop culture in that time. The mix of acts is simply a representation of what was, in the early 60′s, a Top 40 playlist. Now it reads like the roster of the Rock ‘n’ Roll Hall of Fame. This was a time when you could have a concert bill that included: Chuck Berry, The Beach Boys (with Brian Wilson), Marvin Gaye, Smokey Robinson, Lesley Gore,the Supremes, The Rolling Stones, and James Brown, who gives what most consider his greatest performance of all time. The most remarkable thing is the consistency of the live performances. No lip syncing, very little rehearsal, and yet, no train wrecks. It’s a long way from Katy Perry or Britney Spears.

7. “Murphy’s Laws of Songwriting: The Book” by Ralph Murphy

http://www.murphyslawsofsongwriting.com/index.php/buy-the-book

A legendary country songwriter and publisher, Ralph is both one of the most astute students of songwriting and one of the most engaging teachers. He has analyzed hundreds of popular country and pop hits to understand the nuances of what makes them work, figured out what audiences want to hear, and what radio needs to play. Then he’s able to actually explain it– and be funny as hell at the same time. I’ve recommended his classes and workshops before, but now he’s got a book coming out, just in time for Christmas. Definitely worth studying and sharing with every other songwriter…

Ralph Murphy


8. A consulting session with “Ask The Music Business Weasel”

www.ericbeall.com/consulting

So guess who the weasel is? This is my own hourly consulting service that I launched this year– it’s available to songwriters, publishers, or artists looking for specific advice for a career situation, some overall strategy, or detailed feedback about their work. Happily, it’s been a big success, not just on my end, but for the writers involved– there have been management deals, record contracts, and business partnerships that have grown, in least in part, from some of the discussions. I love the opportunity to really dive into someone’s business, rather than just offering up cursory observations or song critiques. If you don’t have a weasel on call, now you do…

As the phones in the office have gone eerily silent of late, I think we can safely say that the music biz is shutting down for the remainder of 2010, and I’m about ready to join everyone else in cueing up in the airport security line. So here’s wishing you a great holiday and all the best for 2011. It’s not always been easy out here this year for anyone, but the weasel’s greatest qualities are perseverance and resilience. You can’t kill this beast. I’ll see you all next year…

HAPPY HOLIDAYS!!

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.

The Great Pie Fight

Feb 19 2010

There’s an old musician joke about how to make a trombone player miserable… the answer being: “Give him a gig”.

The corollary to this could be, “How do you make music business weasels fight?”. Answer: “Give them some money.” Of course, not many people have been giving the hungry weasels anything for the past several years. But all of sudden, manna from heaven has arrived, courtesy of the National Music Publishers Association and the recent late-fee settlement with the RIAA. And now, true to form, the fangs are being bared, and the weasels are going to war…

Granted, the found money should be good news. The late-fee settlement reflects an agreement by the Recording Industry Association of America to pre-emptively settle on behalf of the four major labels the countless claims against them for monies (songwriter and publisher mechanical royalties, to be more specific) that have been held in what are known as “pending and unmatched accounts” for the years 2000-2006. We’re not talking chump change here. The settlement, which represents a negotiated total that is undoubtedly less than what is owed, but certainly more than publishers could have hoped to collect on their own (and perhaps more than labels can actually pay at the moment), provides a fund of approximately $285 million dollars that will be dug into like a giant pie at a picnic by music publishers both large and small. Or, at least that’s the idea…

If you’ve been reading your Billboard regularly, you’ve seen that a debate has already started about how this money will be distributed among major and independent publishers, and then consequently to the songwriters themselves. My friend, attorney Wallace Collins, recently penned an insightful op-ed for Billboard warning of the feeding frenzy to come, and the danger that major music publishers (Universal, EMI, Sony-ATV, and Warner Chappell) are going to gobble up all the good stuff, leaving only scraps for the independent publishers. That piece was quickly followed by a rebuttal of sorts from NMPA CEO and master negotiator David Israelite, who reassured the little guys that the process would be fair and equitable (if such a thing exists in the music industry jungle). Both pieces are worth reading and understanding. If you’re a songwriter who has had songs released on major labels within the last decade, we might be talking about your money.

http://www.billboard.biz/bbbiz/content_display/magazine/opinion/e3i220a283f9e160800ab47d42d660d4f87

But where did this bonanza come from anyway? And isn’t ten years a bit long for an IOU? If the money was owed, why have labels been holding it all this time? Don’t mechanical licenses require payment of the royalties owed to songwriters and publishers within a more reasonable time span than a decade?

This is where the textbook rules of music publishing crashes into record business reality. In my course at Berkleemusic.com, Music Publishing 101, I explain that under the mechanical royalty licensing system, the statutory rate provides for a royalty of 9.1 cents from the record label to the music publisher for every song sold. Sweet. But there is usually a chat later on in that week, detailing the less than pretty picture that prevails on many record releases. You can check out my book, Making Music Make Money, if you want to understand how the system is supposed to work. But the game isn’t always get played by the book.

http://www.amazon.com/Making-Music-Make-Money-Publisher/dp/0876390076

Most of the money in the late-fee fund results from the record company practice of releasing albums on which the licensing process for the individual songs has not been completed. Theoretically, every song released commercially should have a mechanical licensing agreement in place. The truth is, the licensing requests may not be sent from record label to publishers until months after the record is already in the stores. It would be easy to blame this on the usual record label inefficiency and administrative tangle, but that wouldn’t be entirely fair. In truth, when the labels finally do manage to get the license request out to pubs, it’s often the publishers and the songwriters who are ill-prepared to complete the paperwork.

If you have checked out “Making Music Make Money”, you’ll know that I harp incessantly on the importance of having written song split agreements in place for any song in your catalog. Here’s why:

If there is a split dispute on a song, and the writers and publishers are not able to agree on how the ownership shares are to be divided, there is no way for the publishers to issue the necessary mechanical license. That means no money until the fight is settled. But it gets much, much worse…

Over the last decade, the record labels, seeing an opportunity, have used those split disputes, along with arguments about controlled composition clauses attached to producer contracts, three-quarter rates, and sample clearances to withhold payment for ALL the songs on an album in which even ONE song has not been licensed. This means that one split dispute on one song on an album can hold up money for every songwriter and publisher with a song on that record, often for years and years.

Much of this relates to the nature of the “controlled composition and royalty cap” clause that is often a part of recording artist contracts and producer agreements. Under this clause, there is often a maximum amount of money per album allotted to be paid out as mechanical royalties. If one song is licensed at a “full statutory rate”, it may require that all the other songs on the record receive a reduced share. Thus, it is theoretically impossible to calculate what the royalty rate should be until all the licenses for all of the songs have been agreed upon. In reality, record labels have been only too happy to keep all of the money locked up in their coffers as songwriters, publishers, and producers fought their issues out among themselves.

Does all this sound esoteric and remote? Having worked at both major publishers and labels during this entire decade, let me clue you in– we are talking about hundreds of songwriters with cuts on superstar, multi-platinum albums that have never seen a dime in mechanical royalties. These are the kinds of cuts that songwriters work lifetimes to achieve– only to find out that because two other writers on another track are fighting about five percent ownership shares, they will receive nothing this year. Or next year. Or the next.

So now we should be happy, right? The labels have finally agreed to pay out much of the money they’ve been sitting on, and all those long-suffering writers and publishers are about to get their due. Again, it may not play out exactly by the book…

As Wallace Collins points out, the primary stumbling block is that the monies in the fund are set to be distributed based on “market share”, rather than attempting to distinguish the exact amount owed to each specific publisher and writer (probably an impossible task anyway). Each publisher who believes they are owed money will have to claim their share, and then the “special master” (who wouldn’t love that title?) Kenneth Feinberg (who administered the TARP bailout for the US Treasury) will determine who gets what, based on their share of the market. Collins is quite correct when he points out that this system is likely to greatly favor the major music publishers and the larger independents, at the expense of the very small independent publishers, who may only represent one or two writers. While it is possible for those who don’t agree with Feinberg’s determinations to pursue other action, those small publishers are very unlikely to have the resources to fight that battle.

Collins makes two other very important points:

These problems of split disputes, sample clearances, and producer “controlled composition clauses” that cause the withheld payments are predominately centered in urban music genres. My rough estimate based on experience would be that at least fifty percent of this money is owed to writers in the urban genre, where such disputes are almost constant, while the other fifty percent would be split between country, pop, rock and other genres, which are far less likely to have royalties withheld. The market share calculation is likely to mean that small independent publishers specializing in r&b and hip-hop will receive far less than their fair share, while those in the pop and rock fields may get a bit of a windfall.

At the same time, songwriters may actually be the ones most at risk of being shafted (wow, there’s a surprise). In a key point, Wallace points out that “each songwriter will need to pursue his or her publisher for a share of what the publisher collects from the NMPA settlement. Otherwise, there’s a strong likelihood that publishers will simply hold the monies that they collect in their own ‘pending and unmatched’ accounts indefinitely, just as the labels had done previously.”

Uh, yeah. Call me a cynic (you wouldn’t be the first), but I’m quite confident that one reason the major labels finally agreed to pay this money out was with the idea that they could move the “held” money from one division of the corporation (the record label) to another division (the publishing division), while still avoiding the massive late-fee payment penalties that would have been imposed, had they not agreed to settle. Having spent my whole life in either the songwriting or publishing business, I can assure you that Wallace is on target here– some publishers, not all, but certainly some big ones, will funnel most of this settlement into a ‘pending and unmatched’ account, sharing none of it with the writers, unless or until the writers demand it. The publishers will claim that they are researching who should get what, how to locate writers that are owed money but have fallen out of their accounting system, how to deal with writers that have changed publishers since the time the song was released, and on and on.

While they’re doing all that, the money will remain in the publisher’s special account, earning interest and in many cases, vanishing into the ether. It’s just how this game gets played. Listen to Wallace: songwriters need to make their claims to publishers now and let them know that they are aware of the NMPA settlement and want what they are owed. That too, is how the game gets played.

So is David Israelite wrong in his rebuttal to Wallace Collins, in which he defends the agreement? No– not at all. Israelite ends his reply saying “Distributing up to $285 million to an entire industry isn’t an easy task, but what a wonderful problem to have”, and he’s certainly on the mark with that. The truth is, Wallace Collins is an attorney, responsible for ensuring that individual clients, often small publishers or individual songwriters, get their fair share of what they are owed. Such work requires one particular type of mindset. David Israelite is a negotiator, who is responsible for reaching agreements between various parties that are each protecting their own interests, and he is extremely good at that work, to the benefit of the whole music publishing and songwriting community. It’s a different job, which requires a more forgiving point of view.

This agreement frees up money that has been tied up for ten years, and that alone is a very good thing. Much more importantly, it makes major strides in resolving the problem going forward, which will be of benefit to every songwriter and publisher, large or small. Wallace is right when he points out that the settlement distribution will not be perfect or without some injustices to the little guy. David Israelite is equally right in pointing out that it’s better than what we had, and certainly better than continuing to fight.

Something is better than nothing.
Them that’s got shall get, them that’s not shall lose.
You don’t get, if you don’t ask.

People don’t drop by $285 million dollar pies every day. Make sure you get your piece.

Happy New Year everyone!

I know I said that this blog would carry on our current theme, which is how to get your music out there to people– and it will. But I’m going to save my trouble-shooting blog, what to do when you run into obstacles in pitching your music, for just a minute. After all, has anyone really been making pitch calls over the last two weeks? If you have, you’ve been leaving a lot of voice mails, because it’s dead out there. All of the music business weasels have departed for ski vacations or the Caribbean (nothing like a weasel in a swimsuit) and left LA and NYC to the tourists. So instead, I thought I’d offer up a quick set of ideas to kick off the New Year, and to put me thoroughly in sync with the rest of the blogosphere, offering Top Ten lists ad infinitum. Here’s mine:

TEN THINGS THAT YOU CAN DO IN 2010 TO MAKE YOUR MUSIC MAKE MONEY!!

1. Identify your market.

This year, try narrowing your vision and focusing on the one specific market that best fits what you do. No more dabbling in one style, then another, then another. Most of the reason that songwriters struggle to create that two minute “elevator pitch” that we discussed last week is that they quite literally don’t know what they’re doing– they have never forced themselves to focus on one specific thing sufficiently to be able to articulate precisely what it is that they do.

2. Know your market.

In 2010, the music business is a business of specialists– A&R people, managers, publicists, engineers, producers, and yes, even songwriters, are segmented by genre, and expected to be experts in that particular area of music. That means being familiar with all of the artists old and new in that market, knowing the key business players, the labels, the current production styles. Sound like a lot of information to digest? That’s why you “identified” your market. It’s not plausible to be an expert in three or four genres at once.

3. Strategize.

Once you know your market, and you know all about the artists, labels, managers and producers in it, then you’re in a position to start looking for the openings. Where are the opportunities? Don’t focus on the superstars if you don’t have any track record– those are out of reach. Look for the up and coming artists, or the new trends, or the hot new label, or the young entrepreneurs. That’s where you’ll find your opportunities. Once you see where the openings in the market are, you need to look at every possible way in which you can take advantage of it.

4. Know who you are.

You can’t start meeting people until you know how to introduce yourself. That doesn’t mean just saying your name and handing out business cards. You need to be able to explain in three or four sentences who you are and what you’re doing. You can talk about what you’re doing now (“I’m promoting a new single that just came out…”), what you did in the past (“I had a song on Kelly Clarkson’s last album…”), who you work with (“I co-write with Brett James in Nashville”), or who you are (“I’m a producer from Norway” or “I’m a recording engineer for a jingle house, but I’m also a songwriter”), but you need to have two or three sentences to present a picture that’s clear, interesting and memorable. Whatever it is, memorize it. Ideally, it should be a conversation-starter– that way it won’t be the only two sentences you get.

5. Know what you want.

This is such a big one that it needs to be divided into a big picture and a small one. In the big picture sense, you need to know what your goals are for your music and what would constitute success. Do you want to get rich? Do you just want to be able to have a full-time career in music? Do you just want to support your hobby and have one song on a record somewhere? Everything is acceptable, and there’s a strategy to get you to each goal. But it won’t be the same one. You can’t read a map until you know where you’re going. If you want to take on the big picture question, and you shouldn’t waste a moment on any other plan of action until you do, take the “Music Business Weasel’s Pop Quiz” in my book, “Making Music Make Money”.

http://www.amazon.com/Making-Music-Make-Money-Publisher/dp/0876390076

On the small picture side, you need to think about what you want from the person to whom you’re presenting your music. Are you looking for a record deal? Do you want them to record your song with an artist to whom they’re connected? Do you want them to sign you to a publishing contract? Are you looking for an introduction to someone they know? If what you want doesn’t match up to what the person on the other end can feasibly deliver (a BMI rep can’t offer you a publishing contract; a NY-based A&R rep can’t get your song to a country artist) then you’re wasting everyone’s time. Figure out what each person can do for you BEFORE you reach out.

6. Take the conference call.

No industry in the world has more conferences and networking events than the music business. That just means that there is no excuse for not knowing anyone, or not understanding the business. Every conference has a full array of industry executives in attendance, many of whom are on panels where they share the knowledge of the business and take questions from the audience. Beyond that, there are ASCAP, BMI and SESAC educational events, programs sponsored by songwriter groups like the Songwriters Hall of Fame and NSAI, or events hosted by industry trade organizations like the Recording Academy, NARIP, and the NMPA. Depending on your genre, your goals, and your financial and geographical situation, you can check out: MIDEM, CMJ, South By Southwest, Winter Music Conference, Billboard & Hollywood Reporter Film and TV Music Conference, Biillboard’s Music & Money, Amsterdam Dance Event, or ASCAP’s “I Create Music” Expo. That should fill your calendar for the year. If you can’t afford to register, consider contacting the conference and volunteering to work at the registration desk or within the conference itself. Sometimes you can trade some labor time for a free pass…

7. Ask one good question.

If you do attend a conference, here’s a tip for meeting that key industry player that you want to know:

Find a panel on which he or she is speaking. Then, when the Q&A portion of the panel arrives, step up to the mic and ask one good question. A good question does not directly involve you (“why didn’t you listen to the package I sent you?”), and is not too basic (“how can I get music to you?”). A good question reflects a knowledge of the business and the panelist, is relevant to all of the industry people in the room, and could be the topic of discussion among other panelists (“What do you think of the new rate decision from the Copyright Board?”, “How is your business using the social networking sites to target an audience?”, “Do you see your show widening its use of music, or the genres it uses, or narrowing it?”).

Having done hundreds of such panels, I guarantee you that if you ask one good question, you will be the only one who does. I also guarantee that if you approach the panelist at the close of the discussion, you will be remembered, and probably walk away with a business card and an invitation to be in touch.

8. Educate yourself.

At the music publishing company where I work, someone called our office this week, and began the conversation with “I don’t really understand what you do there…” Believe it or not, this happens EVERY DAY! For whatever reason, music seems to attract a large number of people who are almost entirely ignorant of the business of which they supposedly wish to be a part. Is it any surprise that most of these people are either ignored or taken advantage of?

If you’re serious about pursuing music publishing and/or songwriting as a business, it only stands to reason that you need to have the same knowledge as every other professional in the industry. Invest 12 weeks in “Music Publishing 101″ at berkleemusic.com, and learn exactly what a music publisher does, how to do it, and how to set up your own music publishing business. You’ll come out not only with a thorough knowledge of the business, but also with a full strategy for how to make your music make money.

9. Write hits.

The truth is, most songwriters’ primary obstacle to success is not a lack of knowledge, contacts, or strategy. Most of the time, the real problem is that songwriters are simply not selling what the industry needs. Most songwriters are trying to write good songs. Some are even writing great songs. But what is needed by every A&R person, manager, artist, is something else entirely. These people need “hit” songs.

If you don’t understand the difference, then check out my book, “The Billboard Guide To Writing and Producing Songs That Sell”. In an age where the album cut has become entirely irrelevant, there is no formula for success that doesn’t involve writing “hits”.

http://www.amazon.com/Billboard-Guide-Writing-Producing-Songs/dp/0823099547

10. Do the work.

I read an incredible article last year in the New Yorker by author Malcolm Gladwell, called “How David Beat Goliath”.

http://www.gladwell.com/2009/2009_05_11_a_david.html

Perhaps the most profound point made in the article was this, and I paraphrase:
most people don’t succeed simply because they are not willing to do the work required.

Having had the opportunity to work with superstar writers from Steve Diamond to Billy Mann to Andy Goldmark to Stargate to David Guetta, the one thing that all of them share is a “work ethic” that simply dwarfs most of their competition. This is not to diminish their individual talent, which is significant and unique. It is to say that there is no way you will be able to compete with these A-level writers on the basis of talent alone. Even if you have the same gifts as a songwriter, their drive, ambition, and willingness to go anywhere and do whatever it takes will put them on top. If you are going to compete, you have to do what is needed to win.

I know that most of the songwriters reading these suggestions will ignore them entirely, and search instead for a shortcut to success that involves less effort. A few will resolve to try three or four of the ten, and at the end of the year, will have excuses for why they only accomplished one or two. But be aware: the successful songwriters and music publishers will do all of these every year.

You can’t “try” to do something. Either you’re doing it, or you’re not.

Best wishes for a great 2010! Thanks for your support of the blog. See you at the top of the charts…

Had quite a few comments this week from people who found “Back To Basics” quite helpful, and a good way to re-focus at the end of a year. So this time, let’s go one step further– not just how to come up with a general “strategy” to get our music out there and earning money, but an even more specific concern that we all run up against sooner or later:

What Do I Say?

It’s fine to understand that we should be directing our efforts to getting songs out to developing artists (as opposed to aiming at inaccessible superstars), or that we need to create a network to help introduce us to the A&R people, managers and artists that we need to know. We may even have forced ourselves to open up a specific window of time each day to make our “sales” calls. But once we pick up the phone, and hear a voice on the other end, we’re suddenly faced with an inescapable moment of panic when we realize… we have to say something! How do you present yourself in a way that will make the call or the meeting or the two minute “nice to meet you” moment at a cocktail party into something actually productive?

In my Berkleemusic class, Music Publishing 101, there is an assignment on “Song Pitching” in which each student is challenged to actually pick up the phone and make a pitch call to the instructor, just to get the feel of what such a call is like. Inevitably, students greet the opportunity with initial enthusiasm, which quickly gives way to high anxiety, as soon as they try to figure out what they’re actually going to say. Especially when you’re still in the early stages of developing your career, it’s hard to imagine how you can grab someone’s interest without wildly exaggerating your experience in the industry. Clearly, the more you have going on in your career, the easier it is to present yourself to others. Nevertheless, there are a few basic principles that can help even a beginning writer put his or her best foot forward, once you actually have another human being standing in front of you, or waiting on the other end of the phone:

DO YOUR RESEARCH

Just because you are a beginner in the industry, you don’t need to sound like you’re a beginner in the industry. Knowledge is free, and in the age of the internet, it is immediately accessible to everyone. Before you call anyone, or meet with anyone, or go to an industry event, you MUST do your research on who it is you’re speaking with, or who you’re hoping to speak with.

Someone once told me that Michael Eisner, the former head of Disney, used to ask anyone with whom he was scheduled to meet to fax a resume or bio prior to the appointment. Of course, he would also have his staff google each person on his calendar, and he would expect a brief the day before the meeting. If the power players whom you dream of having an opportunity to meet are prepared to invest that kind of research time when they conduct meetings, you can be sure that they expect you to do the same.

At some point in the first two minutes of meeting someone, emailing them, or having a phone conversation, you need to send a clear signal that you know who you are dealing with. You do that by dropping a compliment to them for a recent success, by inquiring about the status of a current project, or at the very least, by tailoring your pitch to fit their specific needs. You don’t call an A&R person and offer to send songs in for an act that writes all their own material. You don’t call the manager of Avril Lavigne to pitch him your new artist who will compete directly with Avril Lavigne. You have to show that you understand not only who you are speaking with, their background and their current activity, but also their interests– what is it that they need or want? How can you help supply that?

Of course, some meetings– the scheduled ones or the phone calls– are considerably easier to prepare for than the chance introductions at an industry event or backstage at a show. Certainly, if you’re attending the ASCAP Holiday Party in New York, you can anticipate meeting some of the Writer Representatives, some of the major New York writers who are affiliated with ASCAP, and some of the A&R people from the top publishers. At a minimum, you’ll want to have done some basic research on those people, and have formulated a “wish’ list in your mind of the ten people with whom you would really like to connect. If you have a chance to go backstage at a concert, you should have researched the artist’s manager, A&R person, tour manager, music director, and booking agent, as those are all people you are likely to see there. If you attend a music conference, you can easily get a list of attendees and panelists in advance, and begin to plot out who your key “targets” will be.

Beyond that, the best preparation is to always be prepared for anything. You do that by always maintaining a wide knowledge of the industry in general. Every songwriter and publisher should read Billboard, Hollywood Reporter, Variety and the more specific trade magazines for specific genres. You need to follow the industry blogs and newsletters. Check out:

AnR Worldwide.com (http://www.anrworldwide.com)
Music Connection.com (http://www.musicconnection.com)
The Deans List (http://www.ascap.com/playback/2009/spring/action/Dean.aspx)

If you have a genuine knowledge of the music industry, that intelligence will immediately come through to any industry insider that you meet, and you will have instant credibility. Without it, you will eventually be exposed as a neophyte, no matter how thorough your research for that specific meeting might have been.

STAND AND DELIVER

While it’s important to convey a knowledge of the activities of whoever you happen to be meeting, that alone will not produce much in the way of results. After all, the point is to let the other person know who you are and what you’re doing. Often, even songwriters with plenty of background in the industry falter when the conversation leaves the area of small talk, and turns the spotlight on them. In a business as “schmooze” oriented as the music industry, you can not survive out there without a well-oiled, frequently updated, confidently delivered “elevator” pitch– that is, a thirty second explanation of who you are and why you matter.

Essentially, there are four basic approaches you can take to your thirty-second bio– and they will change all the time, depending on the person to whom you’re speaking and your current activity in the industry. If you can, try to prepare a quick pitch for yourself around each of the four angles– just to have in case you need it. But if you’re relatively limited in your experience, accomplishments or current activity in the industry, you may need to work your way down the list, until you find an angle that works for you. Here are the four approaches you can consider. You can talk about:

1. What’s happening.
“I’m releasing a new album.” “I’m playing a show next week.” “I’m nominated for a Grammy.” “I’m traveling to Europe to work on a project in France.” Clearly, this is the easiest and most straightforward angle to take– its success will depend entirely on how interesting or relevant what’s happening actually is. Do not lie. You can stretch a bit, but if nothing is happening, or what’s happening will clearly not be of interest to the person with whom you’re speaking, then move on to idea #2…

2. What you’ve done.
“I wrote the first single for Madonna’s last record.” “I was in a band signed to Mercury.” “I toured with Charlie Daniels.” “I DJ’d at Pacha.” Past credits are never as strong as current activity, but depending again on their relevance, the level of achievement, and how long ago they happened, they can still pack a mighty punch. There are plenty of industry types who have been living off one hit project for a decade. If you’ve only got thirty seconds, you go with your best shot. If you’ve got a big past success on which to hang your hat, by all means, get that into the first two or three sentences out of your mouth. If not, then read on…

3. Who you’re with.
“I write with Keith Urban.” “I do some programming for Howard Benson.” “My friend Dan at ASCAP suggested I call.” “My lawyer has mentioned that I should meet with you.” “I worked at a studio with Dan Huff.” “I studied guitar with Pat Metheny”.

It’s always helpful to have a name that you can pull out. Most credibility in the music industry is through association– if you can indicate that you are part of the hot buzz scene, or that you work with people who are established, or that you have a team of industry players around you, or that you share a mutual acquaintance with person to whom you’re speaking, you will be viewed as an insider. As we discussed before, this is why it’s so important to build your network on every level, with other musicians and songwriters, engineers, club owners, or local radio people. Without a lot of current activity or past accomplishments, you will need a little help from your friends.

4. Who you are.
Now we get to the angle that is the hardest to pull off, and also the one where far too many songwriters and publishers find themselves. When faced with concocting an effective thirty-second presentation about “who you are”, you may realize that it would be easier to go out and generate some current activity, or add some people to your network, than to try to figure out a way to describe yourself that sounds interesting and engaging. Still, it’s a good skill to learn– the ability to present yourself in a way that is consistent and interesting will serve you well in many walks of life. What is unique about you that will engage a person meeting you for the first time?

Maybe it’s your background or family (think Paris Hilton, Ivanka Trump or Jakob Dylan). Maybe it’s where you come from (“the new writer/producer from Norway”, or “the new DJ from France” or “the new urban writer from Atlanta”). Maybe it’s a funny experience you had that led you into the industry, or charity work that you’re involved with, or political causes you’re associated with. Perhaps its something quirky in your industry background (“I started out in hip-hop, but now I’m writing an opera…”) or in your approach (“I use only vintage gear from the Eighties” or “I primarily play at private listening parties in people’s homes”). But you have to find something that will give someone a quick idea of who you are, something identifiable that they can remember, and a reason to at least follow your statement with a question, which can lead to more conversation.

If you can’t find anything that fits into one of those categories, it may be time to do some serious soul-searching. If you don’t have any current activity of interest, no past accomplishments, no friends or colleagues in the industry, and nothing unique about your personality, work or background, it’s hard to know why anyone would be interested in speaking with you.

Someone once commented to David Letterman that he could be a bit hard on his guests. He responded, and I paraphrase, that anyone coming on his show came to promote a project or themselves or both–if they can’t bring along one funny story or observation, or at least an interesting topic for discussion in order to fill five minutes of airtime, then they deserve what they get. It’s cold– but the same is true of making pitch calls. Remember: you’re the one making the call, or pushing for the introduction. It’s your obligation to have something interesting to say.

Next week, we’ll take a quick look at what to do when you run into problems in getting your music out there– and believe me, you will. In the meantime, to all of you who support this blog throughout the year, here’s a big Thank You for all your comments and encouragement. Have a Merry Christmas, a Happy Holiday, or good vacation, whatever suits you.

Living On The Edge

Oct 09 2009

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…

Risky Business

Aug 22 2009

In the past nine months, we’ve all learned a great deal about risk. As soon as the mortgage crisis struck, and the stock market plummeted, the realities of risk became starkly evident. Lenders and borrowers learned that an acceptable level of risk in one environment can become extremely dangerous should that environment change. Stockholders learned that risks have real consequences, and that risks can turn sour in an instant, without warning– that’s what makes them so, well, risky. The government learned that even very smart people, when lulled into over-confidence by a run of success, will usually take on far more risk than they can handle, or even understand. Without risk, there is no reward. This is true. This does not mean that risk usually leads to rewards. More often than not, risk leads to failure. Even the best hitters in baseball make an out 70 percent of the time. It’s worth keeping in mind.

It’s especially worth keeping in mind if you’re in the entertainment business. Most of us in the music business, or show business in general, have more than enough personal experience to understand that ours is not the most secure existence in the world. Even those who have not had a great deal of music industry experience are usually blessed with family members and friends who are more than willing to point out what a “risky” business it is to try to carve out a career in music. In fact, many successful music weasels cultivate a certain swashbuckling, riverboat gambler persona, making sure their colleagues and competitors understand just how ready they are to put the big chips on the table and roll the dice.

In a slightly different way, many musicians and songwriters take a similar approach, affecting a sort of rock ‘n’ roll nonchalance that says “I don’t really care about success, or making back the record label’s investment, or even paying my own bills. I don’t even care if anyone buys my record.” And neither pose is all that different from many of the top figures on Wall Street, including the head of Goldman Sachs, who are now busy telling the media that they were never really that worried about September’s meltdown, that it’s just the ups and downs of the marketplace, and that they’re not the kind of weak-willed softies that lose sleep at night about a few bets that go wrong.

It’s interesting that in any business in which you tend to lose as often as you win (or in the case of the music biz, where you lose FAR more often than you win), there emerges a certain honor in fearlessness, and a willingness to lose big without breaking a sweat. There’s also a certain business strategy that cultivates big gambles– the large record labels and publishers actually profit from a risk-taking culture, as it forces alot of the smaller companies, who can’t afford to lose, to stay out of the game entirely. Amidst all the bravado and posturing, there’s something that’s often overlooked:

The music business doesn’t need to be nearly as risky as most people make it.

Let’s take music publishing for instance. For those of you who may be operating their own music publishing venture, or thinking of starting one, the gut-turning excitement of wagering a six figure advance on an unproven rock band about to release their first album is probably not the kind of thrill that you’re seeking. That’s the business of the large major publishers, so leave them to it. The truth is, they’re wrong about eight out of ten times. For most major record labels, less than ten percent of the acts on the roster pay (or try to pay) for the other ninety percent of money-losing artists. As Tom Sturges at Universal Music Publishing once told me, an A&R person could say “No” to everything that came across his or her desk and only be wrong about ten percent of the time.

Instead, what if you were to seek out the low-risk opportunities that are usually not sexy enough or profitable enough to interest the big gamblers? Trust me, they’re out there:

1. Evey week, a simple reading of the Billboard charts will reveal dozens of songs already having at least some success and activity in which some or all of the publishing is available. Some of those unpublished writers are of course holding out for a big check. But others may be very happy to make a limited administration deal with a small advance, or even no advance, simply to have someone else on their team to help them collect their income.

2. Focusing on genres outside of the musical mainstream, like jazz, modern classical, folk, dance, or world music will immediately open up inexpensive, low-risk opportunities. If you can seek out leading composers or artists in these less competitive environments, you’ll find someone with a steady, if small income, a loyal fanbase, and probably a long-term career. And you won’t be trying to outbid a dozen other publishers to get into the game.

3. Why not seek out moderately successful small publishers in foreign markets and offer to be their sub-publisher in your territory? Sub-publishing has one of the best risk/reward ratios of anything in the music world. You try to work the other company’s catalog in your part of the world, helping their writers to find new opportunities, and collecting whatever money is generated by their music in your territory. Sometimes, you’ll need to pay a small advance in order to persuade a company to let you sub-publish them, but often you won’t. To put it bluntly, if you don’t manage to have any success with the catalog in your territory, it means that there’s not much collection work to be done. If you hit the jackpot and create a success story, then you’ll collect a percentage fee for all the money you generate. Hard to lose in that game.

4. Look into the library music business. This is a world in which you can take all of the instrumental tracks in your catalog, and make them available for low-cost, one-stop licensing to production companies and ad agencies looking for inexpensive, non-exclusive music for their indie films, local ad campaigns, or television shows. If you’ve already got the music on hand, it’s pretty easy to create a library. Then it becomes a matter of selling it to music supervisors and producers, and collecting the performance payments. You won’t get rich. But you can’t lose much more than your time itself.

Of course, this is an inescapable aspect of low-risk investing of any kind. Risk does not equal reward. But it does usually run proportionally. Big risks get big losses or big rewards. Little risks are a nickel and dime business. But if you can string together a lot of small profits, with very few losing ventures, you’ll start to make money. Best of all, sooner or later, one of those things that started small will somehow turn out to be something bigger than anyone anticipated.

To return to the baseball analogy– if you’re a big-market team, you stock your roster with big hitters and let them swing away. But if you’re a small-market team, you try to hit singles, steal bases, bunt, hit and run and somehow manufacture enough runs to keep the game close. Then, you hope that a few lucky breaks at a crucial moment will get you a win. Certainly it’s a harder road that requires more work. But you won’t wake up every morning wondering if you still have a business, either.

I remember Tom Silverman, the legendary founder of Tommy Boy Records, telling me once about an older icon of the music business. This original music weasel had hit it big at least four times in his long career, only to gamble it all away each time on the horse races. Silverman was incredulous. “I always thought to myself, why? The music business isn’t gambling enough for one lifetime? You need to go to the horse races or Vegas to get your fill of risk-taking?”

Don’t buy into the show-biz myth that equates risk with courage. There is valor in a reasonable amount of caution. There’s also a pretty solid business in taking the money that everyone else is willing to leave sitting on the table. Look for the sure things- or almost sure things- that everyone else is missing, then build your business on those.

I’ll admit it– being caught up in the NY music business game, it’s a little bit surprising to find out that the industry is being reinvented somewhere in Kansas City.

Luckily, I have those of you who regularly read this blog, one of whom was able to clue me into the Tech N9ne phenomenon, which frankly, I had completely missed. In a response to one of the blogs, Arthur Fischer had cited TechN9ne as an example of a massively successful independent artist who had escaped the need for radio play and expensive promotion. Interestingly, only a month or two later, I opened Billboard to find a full article about TechN9ne’s groundbreaking business model. It’s worthwhile reading for any independent musician in any style…

Check out the Billboard , July 4, 2009 issue.

The interesting thing is that there’s really nothing that groundbreaking at all in Tech N9ne’s operation. It’s Business 101. Only in the fantasy land that is the entertainment industry could the ideas of “every dollar invested needs to make two dollars” and “everything is driven from the fan’s point of view” be considered innovative. In fact, the beauty of TechN9ne’s operation is that it’s rooted in the basic ethos of hard work and common sense. And most importantly, they actually execute it.

In general, Strange Music, which is the company controlled by Tech N9ne and his business partner Travis O’Guin, is the model of a 360 entertainment venture, which is housed in a 18,000 square foot facility in Kansas City, and includes a label, publishing, merchandising, booking and touring business. All of it is built upon the music and touring that have made Tech N9ne one of the least exposed, but most profitable rappers. The Billboard article revealed that in 2008, Strange Music earned more than $11 million dollars.

How does he do it? Touring is certainly the cornerstone– he does more than 200 dates a year. Just the way the textbook outline says it should, the touring drives the record sales– which are significant, with over 1 million sold on 2008′s “Killer”. Then there’s the merch, the licensing, and the publishing on top of all that. Sure– it’s impressive. But not exactly something that’s never been done before. By now, most of the independent artists out there are probably asking themselves “What has he got that I don’t?” Here are four things that Tech N9ne has learned, that many artist/entrepreneurs have not:

1. Patience
This is not a fast road to success. The journey of a successful independent artist is a very long and winding one. Tech N9ne survived two major label deals, numerous failed independent ventures and abandoned business partners. Not many businesses get their plan right on the first try. You have to be willing to come back again and again, learn from failure, reinvent the model and keep moving forward. Tech N9ne is 37 years old, and just hitting the prime of his career. Pretty unusual for a rapper.

2. The Ability to Get Reactions
As a self-described “weird rock alternative warlock with crazy hair, a painted face, who raps backwards”, Tech N9ne makes a strong impression– and that’s something you can build a business on. You can not build an independent business on music, performances or artist identities that are passive– to which audiences have no great emotional reaction, either positive or negative. There are thousands of bands that play 200 anonymous dates a year, and have for twenty years. And every night, the audience applauds politely, and immediately forgets about them. The only way the indie model works is when the music and imaging are so dynamic, or at least so perfectly in tune with a very particular audience (“jam bands” being a good example), that they inspire a passionate response. If you’re playing 200 dates a year, but your myspace site has 200 friends and you’re selling 1000 records, you’re not reactive.

3. A Place To Call Home
Tech N9ne’s success is strongly rooted in his core market within the Midwest. Very wisely, he built his following in a place where the competition was less challenging, and where he could get a foothold in the larger marketplace. His strength in one part of the country allowed him to bring a success story to other, more difficult markets. Too many artists think that being outside of a major market means they need to relocate. In fact, that small local market may be the best asset they have, provided that they are able to build a strong core audience there. Likewise, too many major labels spend a fortune in promotion costs trying to take an unknown artist and break him or her nationally, in every territory at once. Find one region that works, and then spread it out slowly.

4. An Ability to Control Costs
The other advantage to basing a business in a place like Kansas City is that the costs are a fraction of what they would be in a major market. Eleven million dollars a year in earnings is very impressive, but it doesn’t pay for the Universal Music office in midtown Manhattan. One of the major problems of the music industry is not that lack of earnings, but the fact that the costs are outrageously, and unnecessarily high. There is no inherent need for major labels to be housed in the center of the most expensive cities in the world. But that’s where they are, and consequently, they find it almost impossible to make money.

In the same way, many independent artists are seduced by the idea of trying to give the impression of power and success, and wind up wasting alot of money on unnecessary offices, too many employees, or inflated production costs. Tech N9ne’s business runs on inexpensive office space, interns, street team promotion, and careful control of the finances. If the music is reactive and you’re building on a solid local following, there shouldn’t be a need for huge expenditures. All it takes is patience and follow-through.

The growing DYI approach to the music industry is not for everyone. Many artists try it, only to find that it’s more work than they ever thought or that they simply don’t have any of the skills they need to run their own business. Without a doubt, it is extremely labor intensive, challenging, slow and decidedly lacking in show biz glamor.

But it’s not a mystery. There’s no secret method that Tech N9ne used to build a successful business. It all comes down to making smart decisions instead of self-indulgent ones, caring for the customer rather than the corporation, and pulling in fans, one by one, show by show, every time you play. “We’re Wal-Mart”, Tech N9ne has been quoted as saying. “There’s no Warner Bros., Def Jam or Sony in the Midwest, so we had to build our own.” Good thing he did.