It Takes an Army

Jun 20 2009

Okay, so let me start by saying that after watching “Total Eclipse of the Heart” (Literal Video Version), I take back all the bad stuff I said about YouTube. Sure they steal from copyright holders (think about the fact that this literal video version has earned nothing for the songwriters or publishers of the song, despite millions of views). But I gotta be honest, this video is really, really funny.

http://www.youtube.com/watch?v=4XkD5sJwwrE

On a completely different note…

One of the more important events in the world of music publishing took place last week, and most songwriters probably didn’t even know it happened. The International Confederation of Authors and Composers (CISAC) held its second annual World Copyright Summit on June 9-10 in Washington, DC, with an invitation list that included representatives from across the entertainment and technology fields, including executives from the Motion Picture Association, the Consumer Electronics Association, Microsoft, my good friends at YouTube, as well as government officials and legislators. But the guest list was heavily weighted toward the music publishing community, with senior executives from a wide variety of publishers large and small, as well as collection societies from all over the world.

While I did not attend (someone’s gotta stay home and take care of business, after all), I understand that the discussions were comprehensive and thoughtful, and relatively free of vitriol, despite sizable differences amongst many of the parties involved.

The truth is, both sides are frustrated with the licensing systems that exist, which are admittedly far out of step with the realities of the digital, global world in which we live. Rights-holders feel utterly unprotected and incapable of mounting any defense against the endless and uncontrolled proliferation of copyright violators. On the flip side, many well-meaning entrepreneurs watch their business plans crash on the rocks of the licensing laws, where the use of even one song on a website can require the permissions from publishers and collection agencies around the world. Having recently completed a book that required lyric reprint permission from a number of sources, I can tell you first-hand that the licensing situation, as it exists today, is a slow-moving horse and buggy caught in the middle of a high-speed, worldwide Information Highway.

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

From what I’ve heard, one of the most constructive ideas that emerged in the conference was the idea of a worldwide licensing database that would allow licensors to go to one stop to obtain permissions on a worldwide basis. Just the challenge of tracking down the rights-holders in each individual territory can often be overwhelming. I still remember working as an A&R person on the “Wild Thornberrys” soundtrack for Jive/Nickelodeon, and trying to license a beautiful African song called “Awa Awa”, a journey that took us from France to Africa to Brooklyn that almost resulted in a last minute change in the movie due to the difficulty of tracking down the rights holders. Multiply this by several thousand songs and you start to get some idea of the challenges faced by many start-up, music-based ventures who are trying to do the right thing by licensing the music they use.

The spirit of cooperation and thoughtful discourse that dominated the Copyright Summit is exactly what we need to begin to address the challenges of making music make money in 2009, and beyond. But the Summit is also a demonstration of the increasing advantages of being in business with a large publisher or collection society in this generation of copyright disputes and international piracy. I’ve been outspoken in my first book, Making Music Make Money, about the importance and viability of songwriters creating their own music publishing venture, and this blog has emphasized over and over an independent approach to the business of songwriting and music publishing. But, it has to be acknowledged that it is becoming increasingly difficult for small, independent publishers, especially those who are not affiliated with the major collection societies like Harry Fox Agency, to get paid, and more importantly, to protect their interests on a worldwide basis.

If you look at the attendees at the Copyright Summit, they were predominately representatives from the major publishers, large independents, the major collection societies like HFA, ASCAP, BMI, SESAC and their international equivalents. By virtue of size and influence, these are the people who will be at the table when the decisions about the future of music publishing are made, and consequently, whatever new systems emerge will be designed primarily to serve these companies and organizations. Between the battles with the record labels, the digital music providers, the international licensing organizations and the governments of countries all over the world, it’s becoming more and more challenging for a lone songwriter/publisher to defend his or her rights, and also to actually collect the royalties that are due.

Having said that, I’m not telling anyone that they should give up their independence. But I am suggesting that songwriters and independent publishers are going to feel increasing pressure to find partnerships with larger entities, at least in the short term. We are living in a moment in which the rule-book is being drastically re-written. At least during that formative period, there are definite advantages to having one of the major players on your side. When you’re in a street fight, it’s good to have a big friend.

If your company is at the stage of earning consistent, measurable royalties, it may be time to consider striking at least an administration deal (an arrangement in which one publisher does not share the control of the copyright, but simply collects the income and distributes it, in exchange for a percentage fee) with a larger company or organization. Beyond the major publishers like EMI, SonyATV, Universal or Warner Chappell, there are numerous independent publishers that excel at these kinds of services. Check out:

Kobalt Music: www.kobaltmusic.com
Bug Music: www.bugmusic.com
Royalty Network: www.roynet.com
PEN Music: www.penmusic.com

You could also use a collection service like Harry Fox Agency, which is the largest collection organization for mechanical royalties in the US. Remember, these partnerships are not a matter of giving up any control over your copyrights. These partnerships are simply a means of issuing licenses and collecting your money. Just as importantly, they can offer some assurance that you will have a piece of the often haphazard payments being made by digital music companies or monies collected in lawsuits. At the very least, you need to become an active member of ASCAP, BMI, or SESAC, as well as trade groups like the NMPA. Now is not the time for going one on one. The challenge of getting paid requires some teamwork.

http://www.harryfox.com

http://www.nmpa.org

If you want to learn more about administration deals and how they work, I’d encourage you to check out my online course, Music Publishing 101 at Berkleemusic.com. The whole course is focused on helping you to create your own independent publishing company. Nevertheless, there is also ample discussion of how to build an effective team to support you in your independent venture, and that includes organizations that can help you get paid. The new semester is starting soon– so check it out today…

Are you…

a songwriter and producer starting your own record company?
a singer-songwriter signing to an independent label?
a band negotiating its first major label record contract?
or a dj, manager, booking agent or club owner?

Whatever your role in the entertainment industry, you need to understand music publishing. Why? Because that’s where the money is.

In the online course, “Music Publishing 101” at Berkleemusic.com, aspiring songwriters, entrepreneurs, producers, and others can begin to understand the role that music publishing plays in their careers. Over the 12 weeks of the class, you’ll find all you need to know about how to make your music more marketable, license your songs, protect what you write, and collect the income you earn.

For those that don’t know, and that includes plenty of folks who’ve graduated from music school, have their music business degree, or have been in the music industry for decades, the fundamental role of a music publisher is to make music make money. Songwriters write the songs. But music publishers turn those songs into money, by licensing them to those who want to put them on records or ringtones, in a TV show, movie or advertisement, inside a greeting card or a singing stuffed animal.

Anyone can be a music publisher. There are large music publishers, which are divisions of the same corporations that operate the major record labels—like Sony ATV Music, EMI Music Publishing, Universal Music Publishing, and Warner Chappell Music. There are medium-sized, independent music publishing companies—like Cherry Lane Music, Kobalt Music, or Bug Music. There are music publishing companies owned by independent record labels, artist management companies, prominent producers, movie studios, and advertising companies.

But most importantly, if you’re a singer-songwriter, a producer, the owner of a record label, or the manager of a band, YOU can be a music publisher. Anyone that works with songs and songwriters should be in the business of music publishing.

In fact, if you’re a songwriter, you already are a music publisher. You became one when you wrote your first song. As soon as a composition has been written, the songwriter is not only the composer, but also the publisher of that song—until he or she decides to assign those rights to someone else. You may already be a publisher. Now you have to learn to be a good one.

Music Publishing 101 was designed to be a step-by-step walk through the process of constructing your own music publishing company. Many students have found that by the end of the course, not only have they learned about this particular segment of the business, but also they already have become operating music publishers. After 12 weeks, their business is up and running, with an effective team to support the day-to-day needs of their company, and a strategy to start making money from their songs.

As the author of
Making Music Make Money1
“Making Music Make Money: An Insider’s Guide To Becoming Your Own Music Publisher”, as well as the designer of Music Publishing 101, I’m often asked why someone should take the course, if he or she has already read the book. Of course, the two are closely related, and “Making Music Make Money” is the textbook for the online course. Still, there are plenty of things that set the class apart from the textbook—the most important one being this:

Experience. Would you want to fly in an airplane with a pilot that had merely read a book about flying? Or would you prefer someone with some hands-on experience?

The assignments in “Music Publishing 101” go far beyond textbook examples. In one instance, students actually make a pitch call to their instructor, to get the experience of selling their material. In another assignment, we look at an accounting spreadsheet and learn to understand the income flow and the splits involved in a co-publishing or full-publishing agreement. In another instance, we actually try our hand at picking hits on the Hot 100, trying to estimate where some of the new entries may actually end up. These things are the real day-to-day work of publishing, and the experience of actually doing them can’t be replicated any other way.

The other key element that sets online learning apart from book learning is Interaction. Music Publishing 101 offers students an opportunity to interact with dozens of other musicians and songwriters, many of them already active professionals in the industry. In a classroom setting, you don’t learn only from the teacher—you learn from everyone around you, sharing their experience, insight, and mistakes. Plus, you can ask questions and get advice tailored to your own professional and musical needs in the weekly online chats with the professor.

Best of all, students leave the course with a support network already in place, as they go off to start their own music publishing ventures. Happily, I remain involved with many of the students I’ve had in Music Publishing 101—many of whom are now successfully using their skills in a variety of music industry settings. Their career development and success is a constant inspiration to me, and I always look forward to offering help or advice where I can.

It’s no secret that the current economy could make 2009 a challenging year for many of us. But the best way to face a challenge is head-on—and that means raising your own performance, knowledge and career ambitions. If you’re a songwriter hoping to make 2009 the breakthrough year, you might want to start by joining Berkleemusic’s “Music Publishing 101.” Enrollment is now open for the Winter Term, which starts on January 12th. Tell ‘em Eric sent ya…

Are you…

a songwriter and producer starting your own record company?
a singer-songwriter signing to an independent label?
a band negotiating its first major label record contract?
or a dj, manager, booking agent or club owner?

Whatever your role in the entertainment industry, you need to understand music publishing. Why? Because that’s where the money is.

In the online course, “Music Publishing 101” at Berkleemusic.com, aspiring songwriters, entrepreneurs, producers, and others can begin to understand the role that music publishing plays in their careers. Over the 12 weeks of the class, you’ll find all you need to know about how to make your music more marketable, license your songs, protect what you write, and collect the income you earn.

For those that don’t know, and that includes plenty of folks who’ve graduated from music school, have their music business degree, or have been in the music industry for decades, the fundamental role of a music publisher is to make music make money. Songwriters write the songs. But music publishers turn those songs into money, by licensing them to those who want to put them on records or ringtones, in a TV show, movie or advertisement, inside a greeting card or a singing stuffed animal.

Anyone can be a music publisher. There are large music publishers, which are divisions of the same corporations that operate the major record labels—like Sony ATV Music, EMI Music Publishing, Universal Music Publishing, and Warner Chappell Music. There are medium-sized, independent music publishing companies—like Cherry Lane Music, Kobalt Music, or Bug Music. There are music publishing companies owned by independent record labels, artist management companies, prominent producers, movie studios, and advertising companies.

But most importantly, if you’re a singer-songwriter, a producer, the owner of a record label, or the manager of a band, YOU can be a music publisher. Anyone that works with songs and songwriters should be in the business of music publishing.

In fact, if you’re a songwriter, you already are a music publisher. You became one when you wrote your first song. As soon as a composition has been written, the songwriter is not only the composer, but also the publisher of that song—until he or she decides to assign those rights to someone else. You may already be a publisher. Now you have to learn to be a good one.

Music Publishing 101 was designed to be a step-by-step walk through the process of constructing your own music publishing company. Many students have found that by the end of the course, not only have they learned about this particular segment of the business, but also they already have become operating music publishers. After 12 weeks, their business is up and running, with an effective team to support the day-to-day needs of their company, and a strategy to start making money from their songs.

As the author of
Making Music Make Money1
“Making Music Make Money: An Insider’s Guide To Becoming Your Own Music Publisher”, as well as the designer of Music Publishing 101, I’m often asked why someone should take the course, if he or she has already read the book. Of course, the two are closely related, and “Making Music Make Money” is the textbook for the online course. Still, there are plenty of things that set the class apart from the textbook—the most important one being this:

Experience. Would you want to fly in an airplane with a pilot that had merely read a book about flying? Or would you prefer someone with some hands-on experience?

The assignments in “Music Publishing 101” go far beyond textbook examples. In one instance, students actually make a pitch call to their instructor, to get the experience of selling their material. In another assignment, we look at an accounting spreadsheet and learn to understand the income flow and the splits involved in a co-publishing or full-publishing agreement. In another instance, we actually try our hand at picking hits on the Hot 100, trying to estimate where some of the new entries may actually end up. These things are the real day-to-day work of publishing, and the experience of actually doing them can’t be replicated any other way.

The other key element that sets online learning apart from book learning is Interaction. Music Publishing 101 offers students an opportunity to interact with dozens of other musicians and songwriters, many of them already active professionals in the industry. In a classroom setting, you don’t learn only from the teacher—you learn from everyone around you, sharing their experience, insight, and mistakes. Plus, you can ask questions and get advice tailored to your own professional and musical needs in the weekly online chats with the professor.

Best of all, students leave the course with a support network already in place, as they go off to start their own music publishing ventures. Happily, I remain involved with many of the students I’ve had in Music Publishing 101—many of whom are now successfully using their skills in a variety of music industry settings. Their career development and success is a constant inspiration to me, and I always look forward to offering help or advice where I can.

It’s no secret that the current economy could make 2009 a challenging year for many of us. But the best way to face a challenge is head-on—and that means raising your own performance, knowledge and career ambitions. If you’re a songwriter hoping to make 2009 the breakthrough year, you might want to start by joining Berkleemusic’s “Music Publishing 101.” Enrollment is now open for the Winter Term, which starts on January 12th. Tell ‘em Eric sent ya…

Smart Money Gets Dumb

Sep 21 2008

Wow– who could imagine a time when the music industry felt more secure than the banking business? And yet, EMI Records winds up outliving Lehman Bros. and Warner Chappell outlasts Merrill Lynch. While no one would declare the record biz to be a healthy, thriving industry, it is now obvious that things could be worse. Thank goodness we didn’t have many financial whiz kids in music– it may be the only thing that saved us.

As the term “investment expert” now enters the realm of oxymorons like “military intelligence” or “government ethics”, it is clear that a lot of those financial whiz kids were not as smart as they appeared. Interestingly, that’s true not only in fields like real estate, mortgage lending, derivatives, etc. Their results in music publishing haven’t been so impressive either…

As I’ve mentioned several times in this blog, music publishing recently became a favorite target of the investment community– as money men looking for new place to park their millions began to gravitate toward what they saw as the goldmine of the music industry. Convinced that they could make a fortune by buying up publishing companies and catalogues, investment companies and hedge funds went on a purchasing spree over the last five years– buying up publishers like Bicycle, Windswept, and Bug, and backing new acquisition-oriented publishing entities like Evergreen, Primary Wave, and many others.

Not surprisingly, there were a lot of theories floating around behind this investment-backed shopping expedition. Some made sense– primarily the idea that established music publishing catalogues, unlike record labels, were reasonably predictable income streams that could be counted on as a moderately secure long-term investments. Some of the theories made some sense– that the music industry was undervalued and that surely the industry would someday figure out again how to monetize the value of music, or that growth in China, Latin America, and Eastern Europe would eventually force those countries to tighten up on piracy– although those theories have yet to be proven.

But some of the theories fueling this new investment made no sense at all. Many of these “new” publishers were convinced that better collection and a bigger effort in the Film and TV department would allow them to greatly increase earnings, justifying purchase prices far beyond what any experienced publisher would pay. Catalogues that would have been purchased for 8-10 times their annual earnings a decade ago, were suddenly being snapped up for 14 or 16 times earnings. As most music business veterans shook their hands in wonder, the investment community assured the sellers of the catalogues, who were often songwriters or their heirs, that the new companies were in the game for the “long-run”, not just out to make a quick buck.

It will surprise no one then that most of these companies are now, openly or not so openly, up for sale. The bankruptcy of Lehman has already put one of the companies on the block, and it’s clear that almost all of these new “publishers” are now actively looking for someone to bail them out of the music business. Most likely, the people that will do the bailing are the music business weasels who sold to them in the first place– buying the catalogues back for half of what they sold them for 2 years ago.

What can we learn from this?

1. Music publishing is indeed a good investment– but ONLY for the long-term. If you’re looking to purchase music catalogues, particularly proven, time-tested ones, you can expect over ten years to earn a relatively predictable return. But you cannot expect to earn that return every year. Over a shorter time-span, there will be wild swings in earnings, based on collection issues, sync placements (or the lack thereof), currency issues, and pure dumb luck.

2. No music publishing company hits the ground running. If you’re starting a music-publishing venture today, you can’t expect to see money tomorrow. As I mentioned in a recent blog, there is generally a 3-4 year lag between a hit record today, and when the money actually arrives in the publisher’s pocket. That’s not such a big problem for a well-established company, with a catalogue that’s been earning money for decades. But for a new start-up, it virtually guarantees three or four very lean years in the beginning.

3. If you’re venturing into the music business for the first time, do it with people who have been successful in the music business before, and really know about music. Having met with a few of the investment guys as they embarked on their foray into the music biz, it was hard not to be impressed. They were smart, confident, and could actually add numbers in their head (and have them add up correctly, which almost no music weasel can manage). The only problem was that they had little or no knowledge of contemporary music; no gut instinct for what was happening with contemporary audiences, and almost no interest in the creative element of music publishing. What they learned was that this is an art, not a science. Most old-school music types don’t seem too smart– but neither does a shark.

In the end, it appears that music-publishing business will soon be handed back to old-fashioned music publishers. For all their faults, that might not be such a bad thing.