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The Music Biz

The Music Biz

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Sunday, September 25, 2011 • User Submitted

In the old music industry, there were only three media outlets that could cause an artist to "break" nationally: MTV, magazines like Rolling Stone, and commercial radio. Today, of these three outlets, only commercial radio is left, and the major record labels, in collusion with the station owners, control it.

Originally posted @ TUNECORE BLOG

In the old music industry, there were only three media outlets that could cause an artist to "break" nationally: MTV, magazines like Rolling Stone, and commercial radio. Today, of these three outlets, only commercial radio is left, and the major record labels, in collusion with the station owners, control it. Simply stated, if an artist is not signed to a major label the probability of getting airplay on a Top 40 or Hot AC station (or any other format that has an impact) is right up there with Congress getting along. It's just not going to happen.

There are a few important things to take away from this:

First, as of 2011, despite the still powerful (but diminishing) impact of commercial radio, and the stranglehold control on it by the major labels, the majors still have a 98% failure rate on their releases. Therefore, having access to commercial radio, or even getting played on it, does not guarantee success. Now some good news: artists no longer singularly need commercial radio to "break"- there are other way to do it, in particular, social networking via YouTube, Twitter and Facebook. Using these new outlets, many artists - such as Boyce Avenue, The Civil Wars, Lecrae, Jesus Culture, Blood On The Dance Floor, Kelly, Dave Days, Ron Pope, Chase Coy, Colt Ford, Ed Sheeran, Jon Lajoie, Rucka Rucka Ali, and tens of thousands of others - are achieving varying levels of success

Next, the potential money artists/songwriters can make from commercial radio is not limited to artist royalties from CD and other music sales. As a matter of fact, over 98% of artists signed to a major label never see an additional penny of artist royalties beyond their first advance. The additional money they can make from commercial radio play is tied into a copyright the songwriter controls, called "Public Performance."

Under U.S., and most international law, the moment a song leaves your head and becomes tangible (meaning it has been recorded and/or written down) you get six legal copyrights. One of these six copyrights is the exclusive right to "Public Performance." The right of public performance means that no other person or entity can publicly perform your song without a license from you. Radio play is a type of public performance.

All radio stations must get a "public performance" license from the entity that controls this right. The songwriter controls this right unless he or she has done a deal transferring it to another entity called a publisher or a publishing administrator. Almost all songwriters and/or publishers outsource the job of issuing public performance licenses to third party organizations called Performing Rights Organizations. These organizations deal with and license this one right on behalf of their members.

In the United States there are three performing rights organizations: BMI, ASCAP and SESAC. Radio stations get public performance licenses and pay these organizations on behalf of the songwriter and/or publisher. Each time a songwriter's song is played on the radio, the songwriter/publisher is to be paid by the performing rights organization from the money it collected from the radio station.

Until the advent of television, the largest income streams for songwriters/publishers from public performances collected and licensed by the performing rights organizations came from commercial radio play. With the introduction of TV (a song being played in a TV show is a public performance), more public performance revenue was paid and the pot got bigger. However, this just meant more money for the artists/songwriters who had their songs marketed and promoted by major labels.

As you move into the late 70's, cable TV came into existence. At first, the performing rights organizations dismissed cable TV as irrelevant in regards to generating revenue for public performances, over time this changed. With the maturity of cable TV, and the arrival of MTV, the swatch of artists making money from public performances finally began to get a little wider.

As you move through the 90's, the music labels entered their "golden years;" their control over market share and commercial radio was supreme. In addition, CD sales, revenue, and numbers of releases were at a record high and it was still the artists/songwriters, and their songs being marketed by majors, that almost exclusively made significant revenue from public performances.

Which leads me to the next point: what happens when commercial radio as we know it goes away and the last control point for the labels is gone?

The power of commercial radio is already diminishing, listenership for music-programmed stations is down. Stations that used to play music have flipped to talk radio formats (news, sports, commentary) and advertising revenue is not what it used to be. The final nail in the coffin will be when cars come with built in connectivity to the Net. At the moment, there are over 200 million cars in the U.S. with just about none of them wired to connect to Net. But that's changing. And as soon as "connectivity" becomes as common as air conditioning, commercial radio as we know it will be dead. This is not a matter of "if," it's a matter of "when."

The impact can already be seen. Oddly enough, over the past decade, as revenue and market share for the major labels and listenership for commercial radio have gone down, revenue collected for public performances has gone UP over 70%, and it's not chump change.

Currently, the three U.S. performing rights organizations ASCAP, BMI and SESAC collect over 2.3 billion dollars in public performance royalties. The increase in revenue for public performances is coming from more places paying the performing rights organizations for public performances. Connectivity combined with a proliferation of hardware devices like smart phones, iPads, the Roku, Apple TV, computers, and so on have significantly increased the volume of public performances and the entities that need to pay for them. There is just more money in the pot. In addition, the legal definition of public performance has been expanded to include a stream. Every single time a song is streamed - be it in a YouTube video, via Pandora, Slacker, LastFM, Spotify, a website etc., - money is to be paid to the songwriter/publisher for a public performance.

In the old world, songwriters made public performance money when their music was played on the radio. In the new digital world, the songwriter generates revenue each time their song is played on devices via a plethora of interactive and non-interactive music services (think Pandora, LastFM, Slacker, Spotify, Mog and so on).

Unlike commercial radio, the majors do not control the future digital streaming music industry, consumers do. This means that although there will still be some mega superstars earning a disproportionate amount of public performance revenue, for the first time there will also be hundreds of thousands of new artists/songwriters making money of some significance from public performances. Each time anyone listens to a song via a stream, the songwriter of that song is owed money.

The problem then becomes getting these artists/songwriters their money. Unfortunately, the traditional performing rights organizations are not very good at this in the digital world. There is no transparency as to what is being charged and/or collected, and there are huge gaps of time between when they collect their money and when it is paid out. In addition, as they do not have an efficient way to pay out money to songwriters that have earned below a certain threshold, they have earning minimums,

With the shift in public performances moving from terrestrial based radio to the world of digital streaming, there must be a system that gets songwriters more of their money more quickly, with transparency and an "audit" trail to assure accuracy. For example, if an artist's recording streamed ten times, the songwriter should be paid for ten public performances.

This to me is the future of the music industry, and this is why TuneCore is now spearheading this change on behalf of the new emerging music industry. It's crucial for artists to understand that, whether they like it or not/whether they want it or not, they're increasingly in control of their destiny. The motto of the new music industry is transparency. Via unethical practices like Payola (see George's article), and the inability to adopt to technological transformations, the labels and the old school systems are no longer efficient and have lost and/or abdicated much of their power. Those artists (and the members of their team) and new companies who both understand the emerging landscape and embrace its opportunities will fill the power vacuum.

Monday, March 7, 2011 • BSR Admin

There have been six fundamental changes to the music industry that have revolutionized and transformed the business.

Originally posted in: TUNECORE | Written by: Jeff Price
 
There have been six fundamental changes to the music industry that have revolutionized and transformed the business. It is vital that artists are fully aware of these changes in order to make the most money and pursue their passion on their own terms.
 
These six changes are:
  1. Music fans now buy and listen to music from digital music stores and services.
  2. There is unlimited shelf space where everything can be in stock at no detriment to anything else.
  3. For no up front cost, there is unlimited inventory always available on demand as a perfect digital copy.
  4. With the launch of TuneCore, there is no gatekeeper to placing a song on Apple, Amazon's etc store or hard drive.
  5. Distribution of a release is now global and not restricted to just one country.
  6. Artists can market directly to their fans.
With these changes, gone are the days of needing to be able to negotiate a label and/or distributor deal agreement (provided you were lucky enough to get one).
 
Instead, with self-distribution and access to marketing, the artist is now: The Label, The Performer, The Publisher and The Songwriter. While wearing all of these "four hats" at once, artists are now uniquely positioned to profit from the best possible contractual distribution terms and highest revenue generation via the sale, use, or streaming of their music. The challenge is that many artists don't know what these rights are, or how to collect the money they've earned from these revenue streams. A comprehensive, streamlined, and completely inclusive infrastructure does not yet exist that enables every artist who is owed money to easily collect it. However, there are solutions out there for artists, and it's imperative that you understand these.
 
THE SIX COPYRIGHTS YOU MUST GET TO KNOW AND UNDERSTAND
The entire music industry is built on six legal copyrights.
 
The six copyrights are:
  • Reproduction
  • Derivatives & Samples
  • Public Display
  • Public Performance
  • Distribution
  • Digital Transmission
For a more detailed explanation of each one, please download or read the free TuneCore Music Industry Survival Manual: How Not To Get Screwed: The Six Legal Rights That Drive The Music Business
 
Money is made from music by either selling, licensing or using it -the sale of the music is the one that gets talked about the most.
 
The others also generate a LOT of money for artists, performers and songwriters. This money is made based on the USE of music as opposed to just the SALE of the music - in other words, music does not necessarily have to be sold to make the artist, songwriter, performer and label money. Much of the money from these six copyrights is collected by entities located on every continent around the world called Performing Rights Organizations (PROs). PROs tend to be not-for-profit or government controlled and/or mandated. Their function is to collect and distribute money owed to songwriters, labels and performers. The amount of money the writers are paid comes from federal laws in those countries that mandate entities MUST pay them for the USE of music.
 
This has become increasingly important now that the music industry is global - with one click your music can be distributed, sold, shared, tracked and marketed around the world.
 
As one example, unless the songwriter agrees not to be paid, every single time a song is streamed legally for free on the Internet, money is owed to the songwriter. This money is paid to the PROs and sits there waiting to be claimed.
 
As another, every single time a song is played on the radio (either via the Internet or broadcast from an AM/FM transmitter tower) the songwriter, label and performer must get paid. As an interesting twist, and to make a point, there is an exception to this rule - everywhere in the world the songwriter, performer and label get paid when a song is played on AM/FM radio EXCEPT for the United States. In the U.S., only the songwriter gets paid. This means from radio play, there is money sitting in other parts of the world with a PRO for the label and performer. If the label and performer are based in the U.S., they are not able to collect this money UNLESS there is someone in another country working on behalf of them to collect it.
 
As yet another example, if you are a U.S.-based band and you write your own songs and use TuneCore to distribute your music into another country like iTunes Japan, each time your music sells in Japan, iTunes pays the Japanese PRO money for the "reproduction" of your song. This money is in addition to the money iTunes pays for the sale of the song. This money sits with the PRO until it is collected by the songwriter/publisher. After a certain period of time, if it is not collected, it is given to other members of the PRO.
 
It is vital for you to know about all of these potential revenue streams and how to collect on them around the world.

Major Artist Initiatives in 2011

I view it as TuneCore's job to go into the world on behalf of its artists and help them plug into and collect all the money that exists for them. This is a major initiative for us in 2011. Over the next 90 days, we will be providing significant news and updates on how we intend on doing this for this new industry.
 
Also, in the next 45 days or so, we are rolling out a new accounting system that allows for even more transparency down to the one trillionth of a penny as well as even more advanced custom sales reports and free access to iTunes trending data.
 
A major education initiative is also being undertaken to provide the knowledge and information every artist should know. To that end, we will continue to post a large amount of specific information on the blog as well as create more PDF booklets for free download. George Howard (former President of Rykodisc, current professor at Loyola) and I are embarking on a series of free to attend multi-hour seminars discussing in-depth the nuances and information around the six legal copyrights.
 
If you are attending South By Southwest, please make certain to join us for a free two and half hour seminar on:
 
The Six Legal Copyrights:
Friday March 18
2:00 - 4:30 PM
Room 8 (Third Floor)
Austin Convention Center
 
The power of TuneCore Artists is now unquestionable - they have sold over 300 million songs via paid download or stream over the past 2 ½ years and have transformed the industry. Artists today not only can take the power and control into their own hands, but they must do so. This does not mean that you must go it alone; there are resources that you can avail yourself of in order to create and succeed on your own terms. It is our mission to continue to work with you to further transform the industry and provides these resources. Only by setting it free can the industry grow to its full potential.
 
Stay tuned for the next transformation...
 
Jeff
 

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