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

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

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

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 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!

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

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"

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."