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

Songkick

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

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

I think Midem may be just about done.

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 The whole event has become overblown, needlessly expensive, and woefully out of date (coming next year: WiFi!)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

twitter.com/ericbeall

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

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

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

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

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

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

I’m beginning to think that “independent” is becoming the most over-used and abused word in the music biz vocabulary.

What used to simply mean: anything other than one of the six, then five, now four and counting major music companies (EMI, Universal, Warner, Sony), now also describes a particular business approach, and even identifies a particular style of music (“indie pop” or “indie rock” as opposed, I suppose, to big, corporate pop or rock). No band is unsigned—they’re “independent”. No one is simply putting out the record themselves—it’s an “independent” release. Of course, I have my own part in all of this, as my book “Making Music Make Money” was aimed at encouraging songwriters to take control of their own publishing company. This means creating a new breed of “independent” publisher, which has a writer roster of one, a creative management team of one, an administration staff of one, and all the same one.

Not that there’s anything wrong with that. Especially as the major players in the industry either implode (like EMI), grow themselves into a beast that cannot be tamed (like BMG Rights ) or sink in their own swamp of political vitriol and incompetence (like Sony), there’s much to be said for bands, songwriters, management companies and others stepping into the void and creating some lean, mean machines with a willingness to fight for their own place in the market. I’m all for it.

But I’ve also been a songwriter and musician myself, and I know the dark side to the “independent” mindset. Too many hours in the formative years of our youth spent noodling around on our musical instrument of choice or searching for a lyric to express what we would never be able to actually say out loud can lead to an independent spirit that’s just a little too self-reliant. Running a record company and publishing entity out of your bedroom in a town with no music scene whatsoever, making music in which you write all the songs, play every instrument, sing, engineer, and mix,, and then distributing that music by yourself through the internet doesn’t necessarily make you “independent”. It makes you a recluse.

It’s worthwhile remembering that Howard Hughes struck it rich before he became a hermit, not after. And the truth is, despite all the wonders of technology and the internet, despite the fact that you can make music all on your own in your bedroom and sell it to invisible fans without ever having any actual human interaction, this kind of “hyper-independence” is not an effective business model. In fact, I’ll even go a little further. To those who dream of making it all on their own, with no help from anyone, no industry ties, no schmoozing and no compromises, I offer a prediction:

It will never work.

In twenty-plus years in the music business, I have never seen a single successful artist who didn’t have at least one major contact in the industry who opened doors and then brought in other allies and supporters to join the campaign. Even a quick glance at the Top Ten makes it obvious. Ke$sha has Dr. Luke; Luke had Max Martin; Max Martin had Swedish producer Denniz Pop. Rihanna had producers Carl Sturken and Evan Rodgers. Eminem had Dr. Dre. Some of these affiliations are obvious—of course, many artists and songwriters have much lower-profile supporters, whether it’s managers, lawyers, publishers, or other songwriters. Certainly, most successful artists and songwriters have not one, but dozens of key people who came on board at any given point to help move them from unknown, to buzzing, to the hot new thing, to superstar. There are virtually no examples of people who have done it alone.

I thought of this recently, as I had an opportunity to meet with several great young musicians who are using the “independent” model, but in a very “inter-dependent” way. At the company I work for, we have the good fortune to represent a fantastic Brooklyn, yes “indie” band called Savoir Adore, which features Paul Hammer and Deidre Muro. Paul and Deidre both attended NYU, where they became part of a diverse music community that has fostered a particularly “collective” approach to music-making. In addition to Savoir Adore, both Paul and Deidre are part of a variety of side projects, ranging from solo records, to writing, producing, or performing with other former NYU cohorts like singer/songwriter Ron Pope, The District, or the very buzzy electronica act French Horn Rebellion,. These are independent musicians, but not isolated ones. As a result, an upward move for any of the musicians within the circle only opens up more opportunities for everyone else.

In the same way, I had a meeting last week with a group of songwriters from Berklee College of Music, all of whom are determined to break into the writing & production world before—not after—they graduate. They’re drawing upon the wealth of talent around them to build a real independent publishing entity, with a roster of songwriters and producers who all interact with each other. They’ve even enlisted some music business majors who are able to pitch songs. The model is an independent one, but the spirit is “collective”. That makes all the difference.

Of course, no one has utilized this approach more effectively than the hip-hop community, in which the “collective” spirit is so strong that it’s almost impossible for a rapper to succeed without being part of a particular “clique”, based either on style and genre, or geographical region. Every successful hip-hop artist brings with him or her a group of young developing artists, producers, and executives who then in turn, begin to develop a circle of up and comers underneath them. There is no way for those working in isolation to compete effectively from the outside. In this world, you have to become an insider within a group of like-minded creative people. As far back as the Renaissance or Tin Pan Alley, it’s the way that careers in art have been made.

When I first moved to New York, I was very fortunate to become part of a circle of songwriters who would gather once a month for what we called “Song Party”. Alexandra Forbes, who went on to write hits for everyone from Alisha to Taylor Dayne to Joey Lawrence (with yours truly), was the catalyst, and she brought together a group of songwriters, as well as the occasional A&R person, artist, or producer to listen to new songs, critique each other’s work, make plans to collaborate in various combinations, and trade industry tips and gossip. It was casual, completely unstructured, and always good fun.

It also worked. Within the core group of “Song Party” regulars was Alex, Jeff Franzel (who wrote the Taylor Dayne hit “Don’t Rush Me” with Alex, and has since written for everyone from *NSYNC to Shawn Colvin to Placido Domingo), Shelly Peiken (one of LA’s top writers, with hits like “What A Girl Wants” for Christina Aguilera and “Bitch” for Meredith Brooks), Barbara Jordan (who later founded the television and film music company Heavy Hitters Music), Nina Ossoff (who just recently had a single with Daughtry) and myself.

If ten random songwriters moved to New York, the odds would clearly dictate that the chances for success, even if you define success as simply sustaining a career in music, would be remarkably low. To suppose that even three out of ten would somehow find a life-long profession in music would be a statistical stretch. But what the odds don’t take into account is the power of a collective approach. Because we were able to work together, and pool our talent, and share our experience through things like “Song Party”, six out of ten people managed to build a successful music career. The same will undoubtedly be true of the NYU crew from which Savoir Adore has emerged, as well as the group of aspiring writer-producers at Berklee.

These opportunities are all around. I see it happening among some of the writers that work with the Songwriters Hall of Fame, thanks in part to the leader of the SongHall’s education program, Peter Bliss. I see it among many of the top writer-producers, like Dr. Luke, who are putting together teams of songwriters within their organizations to help deal with the growing workload. When I was at Sony ATV Music in New York, I saw it among the crew of writers and artists that grew out of clubs like the Living Room—people like Jesse Harris, Norah Jones, Richard Julian and others all interacting, working on each other’s projects, forming side projects and finding new acts to develop together. Wherever it happens, sooner or later you always see a success story.

The fact is that this kind of interaction is not so much a matter of opportunity as it is a mindset. It’s a determination not to go it alone, but instead to build a community of people that can play a part in your career, and to whom you can also contribute something valuable. If you make that your goal, you’ll find places and chances to do it. Independence is over-rated. It takes a village to make a superstar.

The Tears of a Clown

Dec 12 2010

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

Laugh till you cry. Cry till you laugh.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

*”Good Morning” (Duncan Sheik)

Great Expectations

Jun 22 2010

It seems almost cruel to kick a company when they’re down and gasping for a final breath, but the news from EMI Music just keeps getting more and more bizarre. Only 10 weeks after naming Charles Allen the executive chairman of EMI Music (he replaced Elio Leoni-Scelti, who himself lasted only 18 months), Terra Firma announced that the head of EMI Music Publishing, Roger Faxon, would be replacing Allen, taking over the helm at EMI Music (the record division) as well. Even by music industry standards, that’s an amazing bit of turnover– Allen has gone from executive chairman to a vaguely defined “adviser” role in less than one financial quarter. It’s like watching a bit of time-lapse photography, where a process of destruction that usually takes a year and a half has been condensed into 10 weeks.

And all of this is meant to reassure the investors.

Roger Faxon, Chief Executive EMI Group

The real irony is that after three years of completely inept decision-making, Terra Firma is actually making a pretty good call on this one. At least Faxon has a genuine understanding of the business. While he didn’t build EMI into an industry-leading publisher (that was the work of Marty Bandier, who is now at Sony ATV), he has maintained the company’s status despite the ever-present rumors of the corporate parent’s financial demise. EMI Music Publishing still has one of the strongest executive teams in the business, a catalog full of classic songs, and a current writer roster that made it the Publisher of the Year once again at this year’s ASCAP Pop Awards. The obvious strategy here is to try to use the strength of the publishing company to shore up the weakness of the recorded music division. It makes pretty good sense… on paper.

For reasons that are fathomable only to the executives that run major media companies like Universal, Warner, Sony and EMI, none of the major music companies have ever managed to create any relationship between their record companies and their associated publishing companies. There are remarkably few acts that are signed both to Warner Bros. Records and Warner Chappell, or to Sony ATV and Columbia Records. In fact, the relationship between many of these publishing companies and their affiliated labels is downright hostile. At Sony ATV, I was well-aware that many top-level A&R people at Columbia and Epic were steering their new acts to EMI Music Publishing, convinced that the artist would get more money and promotional support at that company than at Sony ATV. Likewise, EMI Music Publishing has made no secret over the years of their disdain for the hapless label that shares their name.

Some of the hostility can be attributed to executive envy, political gamesmanship, and the general corporate tendency to put one’s personal bonus ahead of the interest of the company itself. Some of it comes from the fact that many of the publishing companies and their associated labels have very different histories, areas of specialization, and financial means. To call the relationships “dysfunctional” would be something of an understatement.

Not too surprisingly, in the world of independent music companies, the idea of having a label and publishing company cooperate for the greater good has been far less elusive. In fact, many of the great success stories among independent labels have been built around the idea of record company and publishing company working together– from Motown Records and Jobete Music, to A&M Records and Almo-Irving Music, to Jive Records and Zomba Music, to Disney Records and publishing. It’s not terribly tricky. It simply means that the record label either strongly encourages or demands that their artists make a publishing deal with the related company, and likewise, the publishing company tries to keep any new talent they discover or hit songs generated by their writers “in house”, by bringing them to the associated record company.

So the idea now being put forward by Roger Faxon and the string-pullers at Terra Firma, to use EMI Music Publishing to bolster the fortunes of EMI Records, is not a crazy one, even if it’s relatively untried at a major music company level. I can almost understand how the non-music business weasels within Terra Firma could see this as the last best hope– and could have great expectations for the power of the two companies when finally brought together. It certainly won’t be the first time during their grand experiment in the music industry that Terra Firma has had their hopes dashed, though it may be the last time.

As obvious as the idea to unite the two companies sounds, it’s about ten or fifteen years too late. At this point, with EMI in such precarious condition, it’s almost impossible to see how this plays out. Most top artists with any other options would be understandably hesitant to sign to EMI Records right now, and quite frankly, it is probably not the first place that anyone from EMI Music Publishing would recommend for their artists. The publishing company needs its top writers, artists and producers to focus on creating the biggest hits possible, regardless of which label they happen to be released on.

Even if EMI Music Publishing were to encourage their top new artists to consider going to EMI Records, many are under contract with other labels for years to come, or are signed to production companies with ties to other companies, or have managers with relationships at other organizations. To create any real synergy between the two divisions is probably a five-year program, even in a best-case scenario.

Best-case scenarios have not served Terra Firma well. Indeed, the real problem with its buyout of EMI and the subsequent meltdown that followed has been a simple case of unrealistic expectations, which when unrealized, only increased the need for greater miracles in the next financial quarter. The ultimate result of this is the kind of ridiculous game of CEO musical chairs that we see now, where each new person is brought in with high hopes and a touted “turn-around” plan, only to find themselves doing a disappearing act as soon as the “turn-around” doesn’t turn out as planned. Every business should challenge its leaders to do the very best they can do. But if you challenge people to do the impossible, you will inevitably be disappointed. If you bet on them doing the impossible, you will not only be disappointed– you’ll be broke.

Terra Firma CEO Guy Hands

From the moment that Terra Firma purchased EMI in 2007 for the wildly inflated price of $4.7 billion dollars, they put themselves in a corner from which they can never escape. The loans that made that purchase possible were made on earnings expectations that were unrealistic for any music company in the present business climate, especially a company that was hardly a market leader even three years ago. In order to make the interest payments on those loans, Terra Firma now needs EMI to generate income at a level that is simply not possible for a music company in this environment.

If you try to drive a Volkswagen in the Indy 500, it won’t win the race– even if you press the gas pedal to the floor and keep it there. It’s not that it’s a bad car. It was never built to run that way. Further, if you insist on trying to do it, you’ll eventually ruin the engine– all because your expectations were not remotely in keeping with what the automobile was designed to do. EMI has plenty of talented, dedicated people in its offices around the world. It’s not inherently a bad organization. But music companies are not investment banks or oil companies. They don’t generate that level of cash. If you try to force them to do it, you’ll wind up cutting the creative experimentation you need, taking dangerous chances on high-priced “sure things”, demoralizing your staff, and draining your most productive assets to pay for your least-productive ones.

As remote as the problems of EMI might seem, the lesson of unrealistic expectations is one worth keeping in mind, even for individual songwriters and entrepreneurs entering the publishing game. As Andre de Raaff, the CEO of Imagem Music once sagely pointed out to me in a discussion about the disappointment of many investment firms who recently acquired publishing catalogs– music publishing is indeed a relatively steady business, but only over the course of about ten years.

When looked at over a decade, most established music publishing catalogs tend to hold their value and provide a relatively predictable rate of return. But within that ten year period, there can be wild swings in income from one year to the next. Currency fluctuations, copyright lawsuits, split disputes, hit songs or big flops can cause unexpected spikes or dips in the financial picture. Should you happen to buy into a catalog during the wrong three or four year period, you could easily panic when you don’t see the results you expected. If you can’t afford to wait it out for ten years, at which point the good and bad times will probably even each other out, you risk taking a sizable loss on your investment.

For those starting up a company, that means that you need to have a clear, level-headed understanding of the risks involved, the potential profits, and the time-frame in which you expect to see some action. Here are three rules to keep in mind that should help you avoid the dangers of great expectations:

1. Don’t buy anything based on what it could be.

The music business is built on dreams of endless potential. Every catalog you will ever be offered for purchase will be “full of undiscovered hits that have never been recorded!”. Every songwriter you consider signing will be on the verge of becoming the next big thing. Every cut you get will be under consideration to be the next single. None of it means anything.

Of course, all of it is possible–and hopefully one of the acts or songs you sign will turn out to be wildly successful. But you don’t do the deal based on that expectation. You negotiate the price based on what something is earning now (if it’s an established artist or catalog) or on a very conservative estimate of what it could do (for new artists or songs). You don’t plan for success. Plan for slow and steady growth, and make your financial decisions based on those plans. Then be surprised by success.

2. Don’t look for a quick money.

There isn’t any. All money in music publishing comes through the proverbial pipeline– a CD is sold at a retailer, who pays the distribution company which then pays the label which then pays Harry Fox or the equivalent which then pays the music publisher. Most of the time, that process takes somewhere between a year and a year and a half– longer than that for international royalties. Performance money is somewhat quicker, but still at least 9 months from when a song is on the radio. This is why songwriters want advances from publishers– because it’s very easy to find yourself starving, even while you’re hearing your song on the Top Forty countdown.

If you sign a new writer with an advance, no matter how minimal, it’s very unlikely that you will recoup that advance within the first year. Even if the songwriter is able to write a song in the first week of the deal, and you’re able to get the song picked up by an A&R person in the first month, it will still take three to six months for the artist to record it and release it, and another month and a half before it starts to impact at radio. It’s almost impossible that the money for that airplay or sales will show up in your coffers before the end of the first contract period. When it comes to signing and developing songwriters, you have to be willing to stay in the deal for at least a couple of years in order to get your money back.

3. Desperation is dangerous.

Decisions only get harder when you’re desperate. If you need to show results quickly, you will take foolish chances, be too aggressive, overpay for deals, or put too much pressure on the songwriters signed to you.
If you’re trying to stave off financial disaster, you’ll make budget cuts that will impair your ability to find new acts, drop unrecouped songwriters too soon, and sell off songs or catalogs at a fraction of their real value.

The music biz is a risk-taking business– but in order to take risks intelligently, you need a solid, supportive environment in which to work. That means enough capital in the business to survive while you’re waiting for your pipeline to come in, low overheads that can be covered by slow and steady growth, and enough patience and belief from your partners or investors that you are able to follow your instincts, and even make a few mistakes along the way.

A little more than a month ago, when Terra Firma was desperately trying to raise funds from its investors to stave off a Citibank takeover of EMI, they trotted out the new CEO at the time, Charles Allen, and announced that Allen would be unveiling “the new plan” to turn EMI from investment bust to boom. It was hard not to feel badly for the new leader, who was essentially being asked to create a fantasy picture in which everyone’s expectations would eventually be met, even as everyone knew that this was a completely unlikely scenario. As it turns out, he didn’t stick around long enough to even initiate the plan. And now there’s a new dream on the table.

As my father in law likes to say, you can’t teach a pig to fly. Trying will only frustrate you, and annoy the pig. Keep your expectations in line with reality, and you’ll have a far greater chance at not only meeting them, but maybe even exceeding them.

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.

Radio Daze

Aug 05 2008

So you thought the record business was bad?

Turns out that the record label’s best friend/worst enemy is doing as bad or worse— these are tough times in radio-land. News came out this week that CBS, the number 2 operator in the country, is selling 50 of its mid-market radio stations. This comes on the heels of a mass of lay-offs across the radio industry and news of continuing declines in audience. If you think that this is just a natural shift from the old and stodgy commercial radio format to the more progressive, forward-thinking world of satellite and Internet radio, don’t be so sure– Sirius and XM are desperate to merge, as they’re barely surviving as well.

For record labels, songwriters, artists, producers, and others who rely on broadcasters to get their music out to the public, the decline of the radio industry brings on a strange mix of conflicting emotions: it’s hard not to enjoy seeing Clear Channel and their likes getting their comeuppance; it’s hard not to think that the rampant corruption in the radio biz has at least something to do with its current condition; it’s difficult to imagine how declining revenues and tighter budgets could do anything but squeeze playlists even tighter and make risk-taking more unlikely; and it’s unfortunately still impossible to offer up any solutions for alternative ways to expose new music that has the power to create a superstar overnight in the way that radio does. For the music industry, radio is the ally that you can’t live with or without. As frustrating as it is, nothing sells music more effectively than radio play.

The truth is, radio is not much different than any other declining industry. Whether it’s a Big Three automaker, a major record label, or a radio conglomerate, there are three inescapable observations:

1. Despite any number of outside factors affecting the business, most industries in decline have no one to blame but themselves for the bulk of their problems. Corporate arrogance, malfeasance, blindness to future trends, an unwillingness to give the consumer what he or she wants– not surprisingly, all of these factors usually lead to disaster, whether you’re in the business of making mortgage loans, recording music, or running a Top 40 station in Boise.

2. While acknowledging that most declining businesses are reaping their own just rewards, it’s impossible not to notice that a huge number of good, honest, smart, hard-working and devoted people are being dragged down in the process. In fact, those most likely to lose their job or even their career in an industry downturn are rarely those who are actually responsible for orchestrating the disaster. It seems like the guy who drives the bus off the cliff is rarely aboard when it’s going into a free-fall.

3. The way out of an industry slide is not more conservative corporate thinking, number crunching, and centralization. The only hope for reversing a business gone bad is risk-taking, creativity, and entrepreneurial spirit. Doing more of what got you into the mess in the first place is generally not a sound strategy– although it seems to be a very popular one.

When it comes to the broadcast business, it’s clear that it wasn’t the Internet, or satellite radio, or anything else that killed the radio-star. The wounds have largely been self-inflicted. The destruction of the radio business began more than a decade ago, with the move toward consolidation championed by Clear Channel and others, and signed off on by the US government, which transformed the radio business from one of small local fiefdoms controlled by small to mid-size companies, into a national media business at the mercy of a few massive corporate conglomerates. Like most of these kinds of moves, cheered on by the investment banking community, the plan looked better on paper than it played out.

If you want to understand why it didn’t work, check out Jerry Del Colliano’s blog, “Inside Music Media”, and his Friday, August 1 posting “The CBS Radio Firesale”. In it, he points out bluntly:

“Playing by Wall Street rules has nailed the coffin shut… Too much consolidation and not enough operation has led to a once vigorous industry too bloated to take advantage of opportunities in the new media. Consolidation failed for too many reasons to get into here. But can we agree on that? If it had worked, the industry would either be more vibrant now or it would be aggressively present in the world of new media. Instead, it’s MIA.”

Or if you want a more visceral explanation of what happened, just turn on the dial. If you’re hearing a lot of generic, personality-free programming that sounds like it was dreamed up by a computer in some central office, that’s because it was. Corporate consolidation has exorcised much of the regional, quirky, unpredictable charm right out of radio, and created something only a corporate control-freak could love. Radio programmers that were once crucial creative players in the music industry, willing to use their own personal taste and a knowledge of their local market to take chances on new music, have now been hamstrung by a corporate environment that relies on endless audience testing, centralized decision-making, and rigid playlists.

I was out to dinner last week with several people still alive and thriving in the radio biz, and the conversation was enough to terrify anyone who loves music or radio, or at least recognizes the vital role that radio plays in the music industry. Tales were swapped about how in today’s environment, major Top 40 channels in markets as large as Miami are actually being programmed out of Los Angeles. Lists were compiled of groundbreaking Music Directors now hunting for jobs. A dire inside news scoop was shared that Clear Channel is soon planning to eliminate Music Directors entirely, and program everything based on one national playlist– a decision that would be in direct violation of commitments made at the time that permission for consolidation was granted.

Certainly, it doesn’t take much foresight to see how the scenario of a national playlist passed down to all Clear Channel stations would limit the opportunities for new music, particularly from indie labels. But that’s not that worst part of the picture.

The worst thing is that it won’t work. Just as Guy Hands at EMI is already starting to see that creating and selling music is not the same as marketing household cleaning products, the corporate radio operators will learn (as they already should have) that creating engaging radio entertainment is not done in a rigidly controlled, number-crunching, risk-averse environment. You don’t succeed in a creative business by being un-creative. You succeed by being more creative– as messy and unruly and unpredictable as that process is. Just as with the rest of the music industry, the hope of the future lies with the little guys, not the big ones. Let’s just hope that there’s something left of the industry for those creative entrepreneurs to work with, by the time the big operators get bored enough or broke enough to finally walk away.

Here’s an idea whose time has certainly come:

Music companies have decided to sell music. Not just current music. Not just the hits of the moment. Not just the current hits and the classics. They’ve decided to sell it all.

Turns out that after decades of amassing hundreds of thousands of master recordings– some of them legendary, some serviceable, many of them justifiably ignored, and many of them prized by only a small cognoscenti of music freaks and collectors– the major labels have realized they just might have something of value back there in the archiving warehouse. Something they could sell. Perhaps not something they could sell to a mass contemporary audience, but something that could be sold in small numbers to people who know and love the breadth and diversity of popular music. Given that many current, chart-topping pop releases are selling less than 100,000 units a week, this is most certainly, an idea whose time has come.

EMI and SonyBMG have agreed to pry open the vaults and license their currently out-of-print content to Amazon, through a subsidiary called CreateSpace which specializes in providing on-demand delivery of physical content. Rather than printing up thousands of CD’s of old, hard-to-find recordings and sending them out to record stores, CreateSpace allows the companies to deliver copies based on customer orders. You want that old Hank Mancini soundtrack, or Cake’s “Motorcade of Generosity”? No problem. They’ll make one for you and send it out.

If you’ve read “The Long Tail” by Chris Anderson, then you’re already familiar with the underlying theory. Anderson argues that for too long, the music business has focused on the big hits, while ignoring the money to be made by selling a much wider variety of less-popular, more specialized titles. While I can’t say that I buy into the theory in its entirety (no one’s expecting that the orders for “Motorcade of Generosity” will keep the lights on in the Capitol Records building, or even cover Guy Hands lunch bill), there is certainly some truth in The Long Tail concept. The fundamental truth is this:

The record labels already own the master recordings. They’ve nurtured the artists, paid for the recordings, created the packaging and now they own them. In fact, those recordings are the only things a record company really owns. The office is rented. Employees on their way out will steal the pencils. The primary assets of a record company are (go figure) records. Why not sell them to people that want to buy them?

Once again, record labels seem to be learning something from the music publishing business. Granted, it’s much cheaper and easier for publishers to manage catalogues of thousands of songs than for labels to produce and market thousands of physical albums. But publishers learned long ago that some of those tunes gathering dust in the back of a file cabinet can turn into gold with a little bit of a luck and a timely film or advertising placement. Still, you have to get them out where people can hear them. The beauty of the internet, as well as new methods of manufacturing, is that finding any piece of music, no matter how obscure, need only be a matter of going to amazon.com and checking your mailbox a few days later. If the record companies are willing, the technology is in place.

Of course, music publishers will greet this new label initiative with open arms and open coffers. The numbers may be small initially, but this is an opportunity to suddenly revitalize thousands of old titles languishing in obscurity. New mechanical royalty streams will open up; new people will hear the songs and play them for their friends; new opportunities for film, TV and advertising exposure will invariably arise as forgotten songs and artists are re-discovered.

Of course, a skeptic might call the whole thing nothing more than a record company “fire sale”. Faced with plummeting profits and a major shortage of popular new stars, the labels are now down to selling the family silver. To be sure, record companies need income sources far more significant than those to be had from selling obscure catalogue pieces.

But I say every little bit helps. They say desperate times breed desperate measures. But sometimes those desperate measures are good ones that were long overdue.

To Read More about this Click the Link Below to Read the Article from Digital Music News:

EMI, Sony BMG Dusting Off Dusty Classics; Amazon Gets Catalog