SOUNDIES Music & Neighboring Rights Blog

Greg Kot Sheds Some Light on the 21st Century Music Biz

2009-05-29T11:50:00.001-07:00

Chicago Tribune readers have enjoyed rock critic Greg Kot's music reviews for years. Now he's set his sights on the broader topic of the transformative changes roiling the music industry, and with great results. Kot's new book, Ripped, is a highly readable look at the watershed changes brought on by the digitization and internet distribution of music, told largely through the voices of the musicians who have lived it.

The central point of Ripped is this: when it comes to music, the more the merrier. Availability means exposure, which ultimately works to the benefit of both artists and audiences, even if it doesn't immediately translate to revenue for rights holders.

Kot highlights the music business missteps that have led to an industry in crisis, but without harsh judgments and drama. He also recognizes that there's a long road ahead before we get to the Celestial Jukebox -- the nirvana of easy, affordable and legal access to all the music, all the time, from the device of our choice. But above all, Ripped recognizes the opportunities in and Kot's keen optimism for the "future of music," an assuredness born of the sheer joy of being a passionate fan.

Kot's mix of industry insight and reliable criticism combine to make a light read of a heavy topic.

Appetite for Self-Destruction

2009-01-08T12:37:00.000-08:00

Veteran Rolling Stone editor/reporter Steve Knopper, author of the just published Appetite for Self-Destruction: The Spectacular Crash of the Record Industry in the Digital Age, seems to agree with our assessment of the movie and music business parallels outlined in our last post. In a Village Voice interview he foresees this future for the major label business:

“Probably, you're going to wind up with a couple hit machines: Universal, maybe Sony-BMG. You still are going to need those kinds of companies, that expertise, to find the proverbial Toni Braxton singing in the gas station, discovered by some label talent scout. But those companies are going to make less and less money, and get smaller and smaller, and get less and less influential, and I think that maybe Live Nation or Ticketmaster or my mythical Apple-EMI is going to pop up and change the model and be more nimble. Another point I want to make is that these labels will always own some really incredible assets. EMI owns the Beatles catalog, so they're always going to be a player. You or I could own the Beatles catalog and make money. Just not make enough money to have hookers and blow.”

Movies + Music: No Long Tail, Please

2009-01-08T08:16:00.000-08:00

Lauren Schuker reports in the Wall Street Journal that GE's Universal Pictures has sold off its Rogue Pictures specialist label, "signaling that the major Hollywood studios are continuing to shift away from the specialty movie business. [T]oday's box office," she says, "favors big franchise films over more serious adult fare." Isn't this exactly what we can expect from the "major" music labels as well? The current business climate leaves no room for a robust A&R function, grooming a pool of potential future stars, or the production of more "serious" niche fare. Only the fattest "head" of the Long Tail (ie superstar clientele) will work for the majors -- all else will be left, more and more, to the independents. And therein lies the opportunities.

Webcaster Settlement Act - 35 Days and Counting...

2009-01-08T07:54:00.000-08:00

2009 is here, and under the Webcaster Settlement Act, webcasters and SoundExchange have just 38 days left (until February 15) to reach a voluntary agreement setting webcasting royalty rates payable to labels and recording artists for the period 2006-2010. The parties also have authority to extend any agreement through 2016.

Here's hoping they can finally get it done. Millions have thus far been spent in litigating the rates before the Copyright Royalty Board, whose 2007 opinion is still under appeal (thus the continued negotiations). Ironically, the CRB has now initiated a new proceeding to set the rates for 2011-2016, so if no agreement is reached, the current rates will remain in limbo, even as millions more are spent litigating the very same issues for the new time period.

In recent weeks there have been glimmers of hope expressed, but no concrete information on whether an agreement is forthcoming.

Punk for Sale!

2008-11-03T08:52:00.000-08:00

Further to our "Johnny Rotten sells butter" blog here, on November 24 nostalgic (and well-heeled) punkers will be able to buy their very own piece of punk and new wave history at Christie's first-ever auction devoted to memorabilia from these genre. According to an AP post, the various items -- from Ramones concert posters to a flier for a 1976 show featuring the Clash, the Sex Pistols and the Buzzcoks -- are expected to sell in the range of $300 to $6,000 per lot.

Punk still can't compete with the mainstream however; classic rock collectibles in the same auction are expected to bring much more, highlighted by the portable organ played by John Lennon at Shea Stadium in 1965, anticipated to go for up to $200,000.

UK Performance Income to Exceed CD Royalties

2008-10-22T10:57:00.000-07:00

Consistent with our post earlier today, and reported through Coolfer here, Britain's MCPS-PRS Alliance has released figures showing that, for the first time, British performance royalties from music aired at concerts and in other public places are expected to exceed royalties received by publishers from the sale of CDs. (Money from the broadcasting of music on TV, radio and online already exceeds CD royalties.)

In Music, the "Buy" Becomes the "Listen"

2008-10-22T06:23:00.000-07:00

The transformation of the recorded music industry to a performance-based business can be seen in the mechanical royalty rate decision issued by the Copyright Royalty Board on October 2.
Since the early 20th Century "mechanical" royalties have flowed to music publishers based on "units" of product "sold." Nowadays, "units" are becoming digital, and in the case of streaming and subscription services, are simply accessed and "listened to" as opposed to being purchased and owned.
For these reasons, the Harry Fox Agency (the principal collection agency for mechanical royalties) is starting to look more and more like its PRO cousins -- ASCAP, BMI and SESAC -- who perform the same function with respect to public performance royalties.
HFA has released a chart reflecting its mechanical royalty calculations under the CRB decision for the use of musical works in connection with interactive streams and limited download services. In these scenarios HFA calculates fees based on a percentage of a service's revenue, then subtracts the PRO royalties paid by the service. Based on that number, HFA then calculates "the total number of plays of all musical works" to determine a "per play allocation," and multiplies the allocation by the "number of plays for each musical work," arriving at the royalty owed for a particular song.
Is HFA equipped to draw data and determine "plays" for each of the millions of musical works it represents? Time will tell, but one thing is clear: Increasingly, the future of music is in the "listen," not the "buy."

The Punk Revolution Is Over

2008-10-21T06:28:00.000-07:00

In another era rock, and particularly punk, stood for rebellion, angst, or at least an alternate way of looking at society from outside the commercial mainstream. But the wall between art and commerce has chipped away in recent years, as rock stalwarts (and upstarts) embed their music more and more with brands, campaigns and promotions. It's not "selling out" any more, just business as usual.
When "Lust for Life" stumps for the Carnival Cruise Line we've pretty much accepted that the punk ethos has faded, but the process can now be declared complete: Johnny Rotten is stumping for British butter brand Country Life. Why? "It's about great butter!!!"
http://laughingsquid.com/sex-pistols-john-lydon-stars-in-butter-commercial/

Congress Passes "Webcaster Settlement Act of 2008"

2008-10-01T07:09:00.001-07:00

During the same frenzied sessions addressing a potential $700 billion financial bailout package, Congressional leaders have also found time for music, sending the Webcaster Settlement Act of 2008 to President Bush for signature on September 30. Contrary to its title, the measure merely provides the opportunity for settlement, by giving SoundExchange and webcasters authority (until February 15, 2009) to resolve and implement a new Section 114 "webcasting" royalty rate following Congress’ adjournment. On the theory that the parties would not seek authority unless they were prepared to act, there is reason for optimism that this contentious issue can be resolved by the time a new presidential administration changes the terrain once again.

Who Finds Solace in Black Monday?

2008-09-15T06:51:00.000-07:00

Few of us can take solace in this Black Monday -- Bear Stearns is history, Lehman Brothers has declared bankruptcy, Merrill Lynch is getting gobbled, and even the goliath AIG has watched its stock go from 70 to 7, as it looks to borrow billions to stay intact.

But those who sit at the top of the remaining major labels can perhaps find respite in these developments: for a few moments anyway, the music industry is no longer the poster child for the demise of a business model built on excess and greed. The investment bankers will remain on the hot seat as the credit crunch eats its victims.

But this is no time to be complacent. The relentless march of the credit crunch also reminds us that the market ultimately has no conscience: if there is no one to save the venerable investment banks and financial institutions who have greased the wheels of our economy for over 150 years, certainly no one will blink an eye when a music label or two -- or three or four -- bites the dust, or "restructures" into a shadow of its former self.

Guy & Glen, Part II

2008-08-21T06:42:00.000-07:00

EMI chief Guy Hands must hate Glen Campbell, whose "Meet Glen Campbell" has dropped like a ton of country bricks on the doorstep of your favorite music retailer.

You can just hear them screaming over at Capitol/EMI: "Whose idea was this?!?!? In case no one has noticed, we're getting squashed by a crushing mountain of debt, and the Stones have just split town! How are we supposed to make money on a pile of covers by a has-been of 70s-era countrypolitan schlock?

"How much did we pay this guy? Are they even our songs?! Are we really supposed to spend time and precious money getting "the word" out to the digerati on this crap? Did you actually pay for the "New or Noteworthy" display at Borders?

"How many units has this thing shipped? Is there anything happening on iTunes? You're paying attention to a record that can't crack the top 25 even on the Country chart?!?!?!? Were' not in the nostalgia business!!!!! Dump this like a hot potato and get your butts in gear! Or you're FIRED!!!!!!!"

Guy & Glen: Part I

2008-08-21T06:35:00.001-07:00

EMI Chief Guy Hands must love Glen Campbell, whose "Meet Glen Campbell" marks the country legend's return to the Capitol label after many years. No ridiculous advances to pay, no new media wise guys demanding this digital campaign or that, just good ole' Glen playing it straight and true, finding its way onto the featured end caps at music retail, where Glen fans actually pick it up, take it to the counter and pay for it, just like the old days.

And no new songs to push either: "Meet..." is a cover project, with Campbell putting a personal touch on ten songs, including compelling versions of Tom Petty's "Walls" and Billie Joe Armstrong's "Good Riddance (Time of Your Life)". The project is reminiscent of Rick Rubin's work with the late Johnny Cash; it's not acoustic, but it brings an artist back to his own basics (including the swirling string backings) and demonstrates the continuing vitality and chops of a master craftsman.

The record won't change the world (even with a successful cover of U2's "All I Want is You"), but "Meet Glen Campbell" peaked at # 27 on Billboard's Country Album charts, a respectable re-entry for a stalwart of the Countrypolitan 1970s.

Dangers of Direct Webcast Licenses

2008-08-01T11:45:00.000-07:00

Nashville attorney Fred Wilhems has launched a blistering attack on Tennessee Senator Bob Corker (R) with respect to his written statement presented to the Senate Judiciary Committee's hearing on "Music and Radio in The 21st Century."

Wilhelms argues that webcasters will ultimately avoid the high statutory webcasting rates set by the Copyright Royalty Board by entering into "direct licenses" with copyright holders (record labels). Under such a license, the broadcaster would agree to pay something less than the statutory rate under Section 114 of the Copyright Act. Labels would be happy with such a deal, "because the money comes straight to them, and doesn’t go to SoundExchange first. Under the Copyright law, they don’t have to split that money with the artists like they do on statutory payments. They can pay the artist whatever the artist contract calls for."

In addition to avoiding or reducing artist payments, Wilhelms says recording artists will suffer from the inevitable failure of smaller, niche-oriented webcasters, who simply cannot afford the rates set by the CRB. With less outlets for niche music, the webcasting landscape would start to look a lot like terrestrial radio -- constricted playlists, and control leverage exerted by the major labels with the lion's share of mainstream content.

Wilhelms' strident tone sometimes overwhelms his message, but in this case he's right on: It doesn't take a jaded industry lawyer to see the plausibility of this scenario, given labels' history of "artist relations."

All of which points up the importance of the manager's amendments offered by Representative Howard Berman (D-Calif.) in connection with H.R. 4789, the House version of the Performance Rights Act, which would extend sound recording performance royalties to traditional, terrestrial broadcasters. The amendments would require that 50% of "direct license fees" be paid to SoundExchange for distribution to recording artists, thus eliminating the direct license loophole.

XM-Sirius Deal Bad for Recording Artists

2008-07-25T14:00:00.000-07:00

As reported through the Daily Swarm and Wall Street Journal, the now approved XM-Sirius Satellite Radio merger will likely lead to "a number of programming changes as the companies get rid of redundant programming." It remains to be seen whether such changes will benefit consumers, but recording artists will almost certainly lose royalty revenue from the decreased number of channels offered by a single, combined service.

Unlike terrestrial broadcasters, satellite radio pays recording artists and labels a "public performance royalty" each time a track is broadcast digitally. Less channels means less plays, and less money in the artists' royalty pool.