If The Shmoo Fits…

Mar 23 2011

In case you’re lying awake at night dreaming of being the next Rebecca Black (and really, who isn’t?), you might want to read a little further before you equate fame, which is cheap and getting cheaper, and fortune, which is ever more hard to come by. Just last week, the Copyright Royalty Board released the statutory royalty rates for Internet radio royalties, which are royalties paid by webcasters for the streaming of sound recordings. It’s not exactly the pot of gold at the end of the rainbow. At the same time, it’s actually a step forward from where we were several years ago.

To be fair, YouTube is not one of the services covered by these royalty rates (although YouTube’s rates are not much better). The published rates apply to “noninteractive streaming”, which refers to streams that do not allow the listener to specifically select each individual track– it covers everything from radio-like “broadcasts” to what are termed “pureplay’ webcasters like Pandora. And more importantly, these rates are for royalties paid through Sound Exchange to performers on the “sound recording”– that’s in addition to the royalties paid to music publishers and songwriters, through ASCAP, BMI and SESAC. If you are a performer who writes and publishes his or her own music, you should receive royalties from Sound Exchange (representing your earnings as a musician and/or owner of the sound recording) and from ASCAP, BMI or SESAC (who collect your money as the composer and publisher of the song).

Like most agreements that are the result of hundreds of negotiating hours between attorneys, the basis for the rates is almost entirely incomprehensible. There is a distinction between broadcasters (commercial radio stations for example) who are streaming their programming on the Internet and “pureplay” webcasters like Pandora, who do not have a broadcast component to their business. There are exceptions for small services that can’t afford the agreed upon rates as well as noncommercial services. NPR gets its own special deal. Then we get to do the negotiations all over again in 2015. Still, it’s worth at least getting a rough idea of what your music earns for you, as a performer, when it shows up on an Internet stream. To get the full story, check out:


Here’s the basic breakdown for 2011:

Broadcasters Per Performance Royalties:
$.0017 per performance

Statutory Webcasting
$.0019 per performance

Pureplay Webcasting
.00102 per performance

I know…. it’s alot of zeroes before you even get to the decimal point. You read correctly: it’s significantly less than one cent per performance. Ouch.

But keep in mind that this number is multiplied by the number of people listening to the stream. Therefore, a “pureplay” service offering 10 songs an hour to 1000 listeners would be paying a royalty of $10.20 per hour– or about a dollar per song. That’s not so bad, especially if you’re talking about a lot more than 1000 listeners.

Indeed, before we start complaining about the rates, it’s worth noting that performers are still fighting (after only about 80 years) to receive any royalties at all for use of their music on commercial radio. While songwriters and publishers receive performance income from the use of the songs in a radio broadcast, record labels and artists receive nothing, except that all important “exposure”. Which leads me to my real point…

Why is it that songwriters, publishers, labels and performers always seem to find themselves begging and pleading for a small crumb from the pie when it comes to every new media invention throughout history?

It happened with radio. In fact, it’s still happening with radio. Since the 1930′s, writers and publishers have been battling for what amounts to a tiny percentage of the overall profits from commercial broadcasting, when virtually every radio format in existence (except news, talk and traffic) is entirely built on music! And performers still haven’t managed to get anything at all.

It happened again in the 1980′s with MTV. Here was a television network built entirely on music, that paid nothing for the music videos upon which the channel relied. Today, the videos are in short supply, but MTV continues to pay almost nothing in synchronization fees for the music that it uses throughout shows like “The Hills”, “Gossip Girls” and “Jersey Shore”.

Then it happened yet again with YouTube in the last decade. In a virtual replay of the MTV story, the creators of YouTube constructed an Internet broadcasting network fundamentally based on the illegal, unlicensed use of any and all music, then sold the enterprise off to Google for a billion dollars, never having paid a nickel to OK Go, Soulja Boy, or any of the other YouTube phenoms who brought the company most of its biggest stories. Since then, Google has adapted a more acceptable position in regards to royalties, and YouTube is licensed by the PROs. However, as any songwriter or artist will tell you, the money being generated for the creative community is more symbolic than substantive.


When a problem keeps occurring over and over, it’s usually worth considering whether YOU might be doing something wrong. Sooner or later, the music community– labels, publishers, songwriters, artists, producers and musicians– is going to have to take off the headphones and step away from the control board, or duck out of the board meeting, or skip the after-party and take a few minutes to ponder:

Why do we keep getting screwed by the people building businesses around the music we create?

Here are three quick explanations of why the music business seem to continually find ourselves desperately, hopelessly passing the bucket around the media industry, hoping someone drops in some spare change:

1. We are incapable of acting in concert.

We can make concerts all right. But labels, publishers, artists and musicians can never manage to act “in concert”– that is to say, as a unified front capable of fighting for the rights of everyone in the industry. Publishers distrust labels. Labels take advantage of the artists. Artists desperately undercut one another, hoping to grab an opportunity to set themselves apart from the pack. Now we even have the problem of publishers and songwriters going around ASCAP,BMI, and HFA to license directly, effectively damaging their own representatives in the collective bargaining process, all in order to save a few percentage points worth of fees. Not surprisingly, everyone in the media, from advertisers, to networks, to film studios and Muzak programmers, have realized that there is always someone willing to license their music for next to nothing, or at least less than their buddy is charging. We are, by and large, an industry of weasels, and it’s not helping our cause.

2. We forever believe in the myth of “exposure”.

I remember when I first started playing the guitar, back in grade school. Soon I had formed a band, and even at that young age, I quickly realized: everyone always has a party, a dance, a wedding or a bar mitzvah that they want you to play for free– “because it will be great exposure”. Of course, it’s not entirely untrue. Clearly, OK Go got plenty of benefit from their “free” YouTube video, as has Rebecca Black. But as a business model, the idea of giving away the product to another company who then keeps all the money that your product generates has not panned out very well for us.

In perhaps the greatest irony of all, the music industry actually winds up paying out huge amounts of money to radio (and back in the day, to MTV) in order to get those media outlets to use their music for free. It’s not just that we’re giving it away for nothing. We’re actually begging, pleading, and paying out the nose just to be able to give it away. Meanwhile, someone else is building their Clear Channel, or MTV or YouTube, largely from people tuning in to hear our product. And the more people that tune in, the more someone else earns, while we get nothing. But don’t worry. It’s great exposure.

3. We continue to focus solely on creating music, rather than selling it or marketing it.
Why was it Apple, rather than Sony for instance, who created the iPod, and iTunes? Why didn’t the major record labels, having already learned about the power of music videos from all the “exposure” they got from MTV, come up with YouTube? Why couldn’t a music publisher have invented Pandora? Instead of battling endlessly with the corporations who control these ventures, none of which have any inherent investment in music, the industry could actually control and profit from the medium it uses to promote and disseminate its product to the public. Instead of passing the bucket around after the set, the musicians could actually own the club.

It never happens. The history of the music business is the story of one fatal flaw, and that is the inability to think beyond the music itself, to how the public wants to receive that music. We’re creators and owners of content. But we’re never interested in thinking about how that content could be used.

Doug Morris

A few years ago, Doug Morris, then the head of Universal Music, gave a widely publicized interview with Wired magazine– where he bemoaned the effects of the digital revolution, and complained that everyone was treating the record industry like “The Shmoo”:

“There was a cartoon character years ago called the Shmoo. It was in Li’l Abner. The Shmoo was a nice animal, a nice fella, but if you were hungry, you cut off a piece of him and put onions on it, and if you wanted to play football you just made him like a football. You could do anything to him. That’s what was happening to the music business. Everyone was treating the music business like it was a Shmoo.”

Acknowledging that his lack of knowledge in regards to technology made it difficult even to hire the necessary experts, Morris insisted that his job should solely be finding and developing new artists.

“There’s no one in the record company that’s a technologist. That’s a misconception writers make all the time, that the record industry missed this. They didn’t. They just didn’t know what to do. It’s like if you were suddenly asked to operate on your dog to remove his kidney. What would you do?”

Given an attitude like that, it does seem a little surprising that Morris would be the choice of Sony (didn’t they use to be a technology company? ) to revitalize their music division in the year 2011. But of course, that’s exactly the problem. We’re so used to being the Shmoo, we couldn’t possibly think of doing anything else. It might be wise for musicians and performers to keep their calculators handy. Because we’re going to have to continue to live off royalty rates like $.00102 per play for some time to come.

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.


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:


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)

It occurred to me as I walked the same quarter mile circuit along Sixth Street for the three hundredth time in three days that the primary benefit of SXSW for A&R people is not the opportunity to hear hundreds of up and coming bands in a single four day span. The primary benefit of SXSW for the music weasel is exercise. Instead of sitting around an office all day, the middle-aged weasel is forced to actually walk from place to place, thus ensuring more aerobic activity than most of us have seen in months. Many also seemed to be working on their arm muscles as well, with lots of pouring and heavy glass-lifting to build those biceps.

During Austin’s giant music-fest, it also occurred to me that the only thing sustaining the music industry at the moment has nothing to do with music. The only people at SXSW that brought their checkbooks and actually had money in their accounts were the media and branding companies. Record label A&R were there of course– after all, there were parties with free food– but there were far fewer than in years past, with whole major label teams missing in action. Music publishers were there too, hoping to meet people in the advertising business. Of course, the music supervision crew was in full effect, but unlike the good old days of two years ago, they were no longer the coolest kids in the room. Given the falling revenue at most broadcast companies and the ridiculous glut of music that is chasing the same gratis spot on The Hills, synchronization licensing fees have dropped to the point where even indie bands desperate for a break have realized that there is no pot of gold at the end of the Hollywood rainbow.

The only people left with any juice at SXSW are the magazines, the websites, clothing brands, car companies, or beer companies. Like it or not, music’s greatest value at the moment is as a marketing or branding tool for companies eager to target a very specific, target audience. Musicians of course are eager to embrace what they see as crucial avenues of exposure– meanwhile, the brands view music as simply one more way to attract the all-important but ever-elusive, A.D.D.-addled college and post-college demographic. The music industry may think they’re using the media. But it’s clear from the amount of music being used by the media, advertising and branding businesses, compared to the amount of music actually being sold, that it’s the media, advertising and branding people using us.

Not that there’s anything wrong with that. It’s just that once more, the music industry finds itself a pawn in a game that it doesn’t control, a plight that seems to be the underlying theme of music business history. First it was radio– since the Fifties, the record industry has found itself on bended knee, pleading (or paying) for any favors that the gatekeepers of radio might dole out. Then it was television, with MTV able to extract free 24-hour programming courtesy of the record labels. Make a half a million dollar video, give it to MTV for free, then hope they choose to play that video from among the other fifty half a million dollar videos they received that week. Wow, what a business model.

Of course, the previous decade brought us a new power player in Apple, and once again, the record industry was left at the mercy of a different business, which sees music largely as a means of selling electronic equipment. And now, with the loss of album sales draining any profitability from the business of selling music to the consumer, there’s a new power alignment emerging– and once again, the music industry finds itself a supporting actor in someone else’s play.

Why couldn’t music companies have created Sirius Radio or iTunes? Why could a music company not have diversified into the advertising business? How did Sony, which is an electronics company as well as a record company, manage to get beaten so badly with the iPod? Why do music companies not own music magazines or music websites? Even when someone tries to create some synergies with moves like the Time-Warner-AOL merger, they manage to let the politics of the various businesses impede all attempts to make the companies work together. Only a handful of organizations, Disney being the most obvious example, actually seem to have understood that controlling the means by which the music reaches the audience (the Disney Channel, Disney Radio, Disney Girl magazine, even Disneyland) or the merchandise related to the music is far more valuable than simply finding and developing artists and leaving the rest to someone else.

Just as musicians often seem to have a blindspot when it comes to realizing that there’s more to music than simply the technical level of musicianship, music business types seem to be unable to see that the power lies with those who understand how to use music to attract an audience (radio, television, internet companies and other brands) rather than those who simply discover and manufacture the music. As a result, the music weasels are left outside the Levi FADER Fort trying to talk their way past the doorman so that they can see their own band perform.

Of course, there’s not much we can do now to undo the mistakes of the past. So given this new world order, what can a savvy publisher or songwriter do to make sure that his or her music is a media magnet, that it’s brand-friendly and advertising-attractive? The one thing that even the most short-sighted weasel can see is where the money is– and ain’t in radio and records. Here are four things to keep in mind when you’re making music as a marketing tool:

1. Versatility is not an asset.

The only time versatility is valuable to a musician today is in a wedding band. The rest of the world is all about narrow-casting, about appealing to a specific, definable core audience and being immediately recognizable to that group of people. Take a look at the magazine stand– there are very few general interest magazines left. Most media companies, whatever their format, work hard to appeal to a very specific, specialized audience. That’s what gives their advertising space value. In the same way, when they consider an artist or a band, they don’t want someone that appeals a little to a lot of different types of people. They want someone that appeals a lot to a very specific group of people.

2. Know your audience.

This does not mean being acquainted with everyone that shows up at a gig or having a million MySpace or Facebook friends. It means understanding exactly who your audience is– demographically, emotionally, and financially. What is the age range of your audience? What do they do (school, work, retirement)? What are their hobbies? What movies do they see? What books do they read? What other music do they listen to?

If you can’t define your audience in that way, then a brand, advertising exec, or press person probably can’t either. That means they have no reason to think that you would help them sell jeans or makeup or alcohol or magazines (which of course also need to sell jeans and makeup and alcohol). Bands that work in the Marketing Age have easily identified audiences, which is sometimes more valuable even than the size of the audience, as measured by record sales or downloads.

For those who are songwriters, rather than artists, the point remains the same. If you wish to write for a specific artist, you need to have some idea as to the nature of the artist’s audience, and what that audience wants to hear about. A song will define the person that sings it to his or her audience, so you have to be sure that the song is presenting the artist to that audience in a way they will understand and appreciate. I’m not suggesting you write jingles. I’m urging you to do your homework, and know how the artist for whom you’re writing is trying to define himself or herself.

3. Understand music as fashion.

The branding, advertising and media worlds are not in music for the long haul. They’re not in anything for the long haul. The media business relies on constant change and ever-shifting sands, that’s what keeps it relevant and entertaining. Fashions will change every spring– they have to, because there are magazines and new clothing collections to sell. Likewise, your music, when it’s part of the media world, has to be up to the minute, reflective of the moment, and sonically on the cutting edge. And then it has to change as times do.

There’s no point in criticizing fashion for being “trendy”. That’s the nature of it. It would be like complaining that water is wet. Likewise, there’s nothing wrong with music that’s trendy. But to be effective in this new media world, you have to stay one step ahead of the trends, knowing which sounds are in vogue and which are getting worn out, what subjects are ripe for picking and which ones are past their sell date, and when it’s time to move on and re-invent your whole musical approach. The advertising, media and fashion worlds make the weasels back at the record company look like long-term thinkers by comparison. In this world everything is always changing, and fast. Which leads us to:

4. Seize the Moment.

A music manager was recently telling me about an incredible placement he had just obtained for his artist, which had the young artist featured prominently in a major national advertising campaign for a big consumer product. If this artist had already landed one such huge opportunity, he suggested, imagine how many other brand or advertising related calls were going to come his way, once people saw this campaign?

My first thought was: None. The problem in working with a brand is that it is “branding”– the brand is now identified with the artist, and the artist with the brand. The bigger the campaign, the more “branding” takes place. Once you have defined yourself to your audience, and closely identified yourself with a particular product, it becomes harder, not easier, for other brands to embrace you. Once you’re on the cover of Rolling Stone, you’re not going to get hyped in Brooklyn Vegan. Because advertising agencies or products are focused on using your music to define their brand, it will, by definition (pardon the pun), take you out of the running for many other related products, who don’t wish to share their definition with any other company. In this media/advertising world, you’ll only get a couple of big chances.

That means you have to make the opportunity work for you. If you know that you’re going to be working with a particular brand, or getting a key placement at an important media outlet, then you have to build an entire strategy around that, making sure that you are prepared to use that exposure to build your audience (and database), drive sales (which means making sure music is ready and available) and establish yourself as a key part of the brand’s identity (which means supporting the company in every and any way possible).

This is not like the old music business, where you could tour around without too much planning, and slowly build a fan at a time for as long as it took. These opportunities are windows that open and close rapidly. You have to have your social networking, music distribution, touring and marketing campaigns ready to capitalize on whatever opportunity you get, and be prepared to measure and document the results. You also have to fully embrace the brand, to make sure you hold onto the chance for as long as you can. If it means going to Phoenix to play for a room full of car salesman or softdrink manfacturers one day, then you better do it with a smile. Trust me, it will be far more useful than any conflicting gigs your record company might have put on the schedule.

This week, I’m in Miami trick! I’ll be at the Winter Music Conference and Ultra Fest on Thursday and Friday– give me a shout if you’re down there. Or I’ll see you at the Beatport Party, or the Belvedere Vodka/Sirius Radio Listening Lounge, or…. you get the idea. If you can’t beat ‘em, let ‘em throw you a party.

Okay, I know you’re sick of It. I know you’ve already heard every angle of It discussed ad nauseam. I share your pain. I’m pretty over It as well. It. The Death. The Passing of the Gloved One.

In typical American fashion, it’s not enough to simply acknowledge Michael Jackson for what he was— a brilliant, if troubled, entertainer: heir to the traditions of Fred Astaire and Bill Bojangles Robinson, James Brown and Elvis, Sammy Davis Jr. and Jackie Wilson and Sly Stone. Across forty years of recording, including performances when he was ten and eleven years old, it’s almost impossible to find one poor vocal performance in Michael Jackson’s entire catalog. Some of his songwriting will certainly stand the true test of time, particularly “Billie Jean”, “Beat It”, and “Don’t Stop Till You Get Enough”. His best records, and they range from “I Want You Back” to “Man In the Mirror” to just about every song on “Thriller” are about as close as anyone can get to perfection in pop music. But apparently, that’s not enough. Instead, he needs to be lauded as a civil rights icon, a crusader for world peace, and a tortured victim of media bias. It’s done. Give It a rest.

What is interesting is that between the over-the-top eulogies and the media accolades, not much has been made of what may have been one of Michael Jackson’s most interesting and savvy career moves. In 1983 and 1984, Michael acquired the Sly Stone catalog, with songs like “Everyday People” and “Everybody Is A Star”, as well as songs by the Soul Survivors (“Expressway To Your Heart”) and Dion (“The Wanderer”). Then in 1985, Jacko purchased the ATV Music catalog, which included virtually all of the major Beatles hits by Paul McCartney and John Lennon, for $47.5 million dollars. Today that catalog is likely worth more than a billion dollars. Not so Wacko after all, I guess…

Several years after his purchase of ATV, Michael partnered with Sony Music to form a partnership, SonyATV Music Publishing, which gave 50% of his share in ATV to Sony. While the partnership was a strange one at times, with Michael at times an active presence (especially in the early years) in building the company, advising, and approving business moves, and at other times a shadow boss more likely to be seen in a TV court trial than to be heard from in regards to the publishing business.

After purchasing CBS Records in 1988, Sony was eager to begin a music publishing entity, but lacked any core catalog upon which to build. This is always an important factor in starting a publishing entity. If you were to simply sign up some new writers, wait for them to generate some hit songs, then wait for that money to come trickling in, a new publishing entity could easily find itself waiting five to eight years before seeing any meaningful income. That’s a long time to wait for a little cash flow. That’s why most publishing start-ups try to immediately acquire a catalog of songs that includes some classic hits. This is the basis upon which you can begin to acquire new material.

Without question, the Beatles catalog provides as solid a foundation to build on as any company could desire. Over time, Sony-ATV ( a company where I was an A&R person for two years in the beginning of this decade) built itself into a prominent player in the publishing world, beyond just the ATV catalog, and this year was named Publisher of the Year at the ASCAP Pop Awards, forcing EMI to share an award for the first time in any recent memory. While legal debts and financial mismanagement forced Michael to borrow heavily against his ownership share of Sony-ATV, he continues to retain a part of the joint venture, which now includes a catalog with hits ranging from Bon Jovi to Rihanna and the Jonas Bros. At the time of his death, it appeared that Sony-ATV was likely Michael’s largest and most tangible financial investment.

nullMichael Jackson & Paul McCartney

Ironically, the story goes that it was actually Paul McCartney who suggested to Michael that he begin to acquire publishing catalogs, as McCartney had already begun to build a lucrative publishing empire for himself by the mid-Eighties. Of course, he did not expect that Michael would buy Paul’s own catalog out from under him. Nevertheless, the advice was sound. The strange thing is that so few songwriters do the same.

After all, who knows the value of songs better than songwriters? Who has more knowledge of what makes a song truly timeless or a better sense of the potential of a young writer than another songwriter? Who else has the advantage of bringing in their own catalog as the foundation upon which to build a publishing company? A lawyer, real estate mogul or investment banker has to go out and buy everything they acquire. A songwriter can bring in their own work to get the whole ball rolling. And yet…

Almost none do. Certainly, McCartney has had a great deal of success with MPL, acquiring classics like “Stormy Weather”, “Autumn Leaves”, and “Sentimental Journey” and the early rock ‘n’ roll songs of Buddy Holly. In the urban genre, there have been a number of successful writer/producers who have established significant publishing companies, including LA & Babyface, Rodney Jerkins, Corey Rooney and P. Diddy. The country writers have probably had the most success in building successful publishing ventures– writers like Craig Wiseman (Big Loud Shirt), Roger Murrah (Murrah Music), and Keith Stegall (Big Picture Music) have all built successful catalogs.

Nevertheless, in the pop and rock genre, there are very few examples of successful songwriters that have actively acquired copyrights by other songwriters and laid the foundation for a significant independent business. Surprisingly, most artist/writers that make their fortune are more likely to start their own record label, despite the dismal history of that particularly strategy. All indications are that publishing, not master ownership, is the long-term investment value.

Granted, buying up publishing catalogs is not for the faint of heart, or the under-funded. But many of the Nashville and urban companies have been built not by big money acquisitions but rather the discovery of young writers and artists that can be developed. This strategy is far more practical for most people’s budgets. Either way, the point is the same. If songs are your business, why not look at acquiring some that are not your own?

Of course, making and operating a music publishing company is harder than people like Michael Jackson and Paul McCartney make it look. In fact, Sony-ATV has had its share of business challenges, as has MPL Communications. But should you have an opportunity or a desire to one day get into empire-building, through music publishing, here are a couple of quick tips for songwriters looking to expand their horizons…

1. Find a business partner.
Preferably, this should not be a songwriter or musician. Instead, it should be someone very facile with a calculator. It’s not highly realistic for a successful songwriter, producer or artist to have the time available to operate an effective publishing venture without some helping hands. That could be a savvy lawyer/business advisor, like John Branca has been for Michael Jackson. It could be another music publisher that administers the catalog, as does EMI for Darkchild Productions and Bad Boy. It could be an investor willing to take on much of the financial risk. It could be a very effective manager, who runs the day to day operations of the company itself. Songwriting can be an independent activity. But music publishing is almost always a team effort. I don’t suggest going it alone.

2. Go with what you know.
It’s probably not an accident that Sly Stone’s catalog was one of the first that Michael Jackson acquired. If you listen to early Jackson Five hits like “A-B-C” and “I Want You Back”, the influence of Sly is unmistakable. Michael Jackson’s first premise of publishing acquisitions was to acquire songs that meant something to him. That’s not a bad place to start.

3. Go where you have an outlet.
In case you haven’t noticed, placing songs is no picnic. Believe it or not, it doesn’t get all that much easier, even when you’re a large, well-established publishing company. It’s always a battle to get songs onto records, or into movies, or somewhere they will make money.

That’s why most successful songwriter/publishers acquire songs that fit into what they are already doing. Most urban producers begin publishing ventures because they have more demand for their songs than they can fulfill– consequently, they hire new and upcoming urban producers to fill the need. The same is true for country songwriters, who quickly realize that there is only so much time in each day, and so many songs that they can personally write. By signing new country writers who create music in a similar style, successful songwriters and producers can take advantage of all the opportunities available while simultaneously opening doors for new writers in their genre. If a country writer were to sign the publishing of a young urban producer, or a successful urban hitmaker were to load his publishing roster with rock acts, all that synergy would be lost. Make your life easier. Find writers who fit into the world in which you are already connected.

4. Wait.
Publishing is not a fast-buck business. When Michael paid $47.5 million dollars for the Beatles in the Eighties, it didn’t look like he was stealing anything. Even Paul McCartney had essentially bowed out of the bidding at that price. It’s only now, more than twenty years later, that the deal looks brilliant. That’s often the case–as it was when EMI purchased Berry Gordy’s Jobete Music for what now seems a bargain-basement number. In the long-term, publishing is a generally solid, predictable business. But in any given year, publishing income can be very volatile. The key is to be in the game for the long haul. If you wait, you’ll almost inevitably wind up looking smarter than you were.

Michael Jackson left a wild legacy– plenty of brilliant moments and alot of twisted ones as well. It’s an inspiring, strange, and sad picture all at once. The one thing that has stuck with me is how many times I’ve spoken with people in the industry who had the chance to work with Michael Jackson, either in the publishing field or as musicians, singers, and engineers, only to hear the same story, over and over again. The story I’ve heard is not that of a crazy, Garbo-esque circus act, though that element certainly became a dominating factor somewhere toward the close of his life. But the story I’ve heard has consistently been that of an extremely focused, intelligent, savvy, competitive show-business veteran, obsessed with hitting the highest standard of whatever he took on. That’s the Michael Jackson that songwriters, producers and musicians should appreciate, and his creation of Sony-ATV Music is an important part of that legacy.