What Goes Around…
In the beginning, there was… publishing.
Not many people know it, since not many people in today’s music industry were around to see it, but the real beginnings of the music industry were not in those old vinyl discs or the antique phonograph with the RCA dog sitting next to it. The commercial music business started with music publishers, who first figured out how to move music beyond an endless succession of live shows, and turn it into an industry back at the end of the 19th century… through the sale of sheet music.
Back then; music publishing was the only game in town– both for songwriters hoping to eke out a living from their creations, and for audiences eager to be able to enjoy music outside of a concert of dance hall. Music stores would feature a piano player, who would perform the hot new songs of the day for customers passing by. If they heard something they liked, customers could come in and purchase their own copy of the song that they had just heard. Granted, that “product” had a definite do-it-yourself quality to it– it required the music consumer to take the sheet music home and learn to play the new song. Nevertheless, it represented the first time that people could purchase music as a “product”, enjoy it in the comfort of their own home, and songwriters could get paid on a mass scale.
From there, the business moved from sheet music to “piano rolls” from which the music played itself (the first actual “mechanical” exploitation of music) and then ultimately into the broadcast and recording era that has been the basis of the business we now know and maybe something less than love. Of course, sheet music continues to exist, and in fact, is undergoing a revival of sorts, thanks to the Internet and companies like Music Notes (Music Notes). But certainly, the industry has come a long way from the days when publishers were the primary game in town.
Or has it?
My friend Jerry Lembo, a legendary music figure himself and a great student of the industry (check out his blog at Jerry Lembo MySpace Blog), sent me an article today, titled Rock’s New Economy: Making Money When CD’s Don’t Sell. The story describes a terrain familiar to anyone in the music biz in 2008: falling CD sales, leading to an increased reliance on touring and licensing in order to generate income. And no one knows licensing like a publisher. After all, publishers created it.
Imagine how music publishers initially reacted to the advent of radio, and even worse, records, back in the early days of the 20th century. Probably with the same love that record labels now show Limewire and file-sharing college students. After all, publishers had just figured out a way to get rich selling music printed on paper– the last thing they needed was someone coming along and beaming it straight into people’s homes, or giving them plastic recordings they could play anytime they wanted. That’s when the publishing community hit on the bright idea that would carry them through the next nine, increasingly prosperous decades:
Licensing.
A company didn’t need to make a physical product. Just by controlling the underlying “rights” to a song, publishers and songwriters could make anyone who wanted to use that song, on the radio, television, records, or in films, advertising, nightclubs or elevators, pay for the privilege. Anyone using a song in public way for commercial purposes had to obtain a license, and the publishers controlled the licenses. This quickly became a very profitable business. The company, for which I work, Shapiro Bernstein, is one of the oldest music publishers in existence. Back in the early 1900’s, they had dozens of actual printing presses around the country in order to manufacture the sheet music to the latest Tin Pan Alley hit. Today, there are less than twenty employees in the New York office, and a scattering of employees and consultants in LA, London and elsewhere. And yet, profits continue to rise, year after year. Which leads us right up to the present day…
The music industry is growing and contracting, all at the same time. Music is selling less, and being used more than ever before. What publishers learned a hundred years ago, and what record labels are just starting to learn, is that licensing is far more efficient than manufacturing. It takes fewer people, fewer factories, less real estate and carries less risk to license music to people that wish to use it, than to create a physical copy of music for people to purchase. Bands are learning it too. It’s much easier to make money by licensing music to video games, advertisements, TV shows, and websites, than to create small pieces of plastic that has to be distributed and sold around the world. When the labels talk about a “360″– they’re more accurate than they know. The business of being a music creator has come full circle. Just as in the 1930’s, when sheet music gave way to broadcasts and recording, the game once again comes down to creating, performing and most importantly, licensing.
It used to be that old-school record business veterans almost boasted of their lack of knowledge about publishing. It was seen as a pennies business– a stodgy old conservative uncle who had somehow wandered in to the 24-hour party thrown by the high-flying, jet-setting record boys. Now most of those vintage music weasels have retired. The ones who haven’t are trying to start up music publishing companies.
Not understanding music-publishing means not understanding where the music business came from. But much more importantly, it also means not understanding where the business is going. If you want to get the picture in 12 easy steps, check out Music Publishing 101 at Berklee Music or “Making Music Make Money (An Insider’s Guide To Becoming Your Own Music Publisher)”. It’s time to go back to the future and start all over again.
