The Future of the Music Business

In December, Hal Leonard Books will release the fourth edition of The Future of the Music Business by Steve Gordon, an invaluable guide on how to succeed in the ever-changing music industry. Here’s a look at what’s new in the fourth edition.

The Future of the Music Business

4th Edition

Similar to prior editions, the purpose of the fourth edition of the FUTURE OF THE MUSIC BUSINESS, which is scheduled to be published in December 2014, is to provide a roadmap for success in the music business – not only for musicians, songwriters and producers – but also for entrepreneurs and industry professionals. Technology has profoundly changed the recording industry and the music publishing business.  Entirely new rules, business practices and  models have emerged at breathtaking speed including in the several years since the publication of the third edition in 2008. The fourth edition explains the most recent rules,  business practices and models, and offers insights into how to take advantage of them.

Part I provides an overview of the basic rules and business practices that apply to the record and music publishing business today. We discuss how copyright law protects  songs and recordings, standard contracts including management, label and producer deals and the most recent rules and business practices that apply to the new means of distributing music, that is, downloading, streaming and webcasting, and how those rules differ in foreign countries.

Part II is intended for producers of audiovisual works such as films, documentaries, and television. This section includes information on audio-only projects such as compilations and music sampling, special projects such as musical theatre and fashion shows, and stand-alone digital projects such as web series and digital sheet music. The emphasis is on how producers seeking music for their projects can save money.

Part III offers a history of the recording industry’s struggle to come to grips with the digital era,  analyzes the current state of music piracy, explores various current  controversies, and provides some hope for the recovery of the record business.

Part IV provides a “how to” in the digital age on topics ranging from ranging from how to write hit songs in the digital era to using digital tools such as YouTube to succeed to how to use a music education to succeed as a creator or music business professional.

DVD and two free CLE credits: Attorneys will be able to obtain two free CLE credits by viewing the DVD included in the 4th edition. The DVD contains a conversation between myself and Bob Clarida, a leading copyright litigation lawyer and adjunct professor at Columbia Law School, about Robin Thicke’s copyright infringement case involving his monster hit “Blurred Lines” and Gaye’s song “Got to Give It Up.”
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360 Degree Deal

stevegordonGuest Blogger: Steve Gordon, author of The Future of the Music BusinessCheck out his blog for more music industry advice.

360 degree deals present major disadvantages for artists, but faced with a choice of the 360 versus no deal, the 360 may be worth accepting – but only if properly negotiated and only if the major pitfalls touched upon in this article are avoided.

First, let me give every artist and manager a quick primer on what a 360 degree deal is. Basically, the 360 is an exclusive recording contract between a record company and an artist in which, in addition to monies from sales of the artist’s recorded music, the label shares in other income streams such as touring and live performance, merchandise, endorsements, appearances in movies and TV, and if the artist also writes songs, publishing.

In fact, most 360 deals have catch-all phases giving the label a financial interest in everything else that the artist does in the entertainment business.

A traditional recording agreement only provides an income stream for the label from record sales. But similar to the traditional recording agreement, under the 360 deal the label acquires the copyrights in the artist’s recordings and options for multiple albums. The 360 deal also usually includes all the same deductions from record royalties as the traditional deal, including producer royalties and reductions for packaging, “net sales,” foreign sales, midprice and budget records, and even “new technology.” (originally applied to CD royalties and now to digital sales).

The traditional recording agreement had a lot of bad stuff in it for the artist. The 360 deal usually has all of that, and a lot more.

 Origins & Reason D’Etra

The 360 deal is not new. The first reported one was English recording star Robbie Williams’ deal with EMI in 2002. But in the last few years 360 deals have become common place. New artists signing with a major label or their affiliates can expect it as a matter of course. The reason for the prevalence of the 360 deal is the dramatic decline in income from sales of recorded music.

Income from sales of pre-recorded music reached its peak in 1999 at approximately 14.5 billion dollars. By 2012 that amount had shrunk to only approximately $7 billion — a decline of more than 50% not accounting for inflation.

Read more on Steve Gordon’s blog!

The Future of the Music Business – Third Edition provides a legal and business road map for success in today’s music business by setting forth a comprehensive summary of the rules pertaining to the traditional music business, including music licensing, as well as the laws governing online distribution of music and video.

Sony vs Apple

Steve GordonGuest Blogger: Steve Gordon is the author of The Future of the Music Business. Below is an excerpt from his blog The Future of the Music Business.

I recently published an article that the the blog, Digital Music News, titled “Songwriters May Never See a Dime from Apple’s New Music Service. . .”  To incorporate my thoughts after reading the comments on  the article, I revised the article  to demonstrate that, while songwriters may continue to receive royalties from ASCAP and BMI for Apple’s new service, it is likely that they will see much less money than they have in the past.

If Apple wants to launch their much anticipated, Pandora-like music service, they must negotiate directly with Sony/ATV for public performance rights.  That’s the word on the street, and if true, could prove to be a dangerous turn of events.  The reason is that, until recently, performing rights organizations—ASCAP, BMI, and SESAC (the “PROs”)— offered blanket licenses on behalf of almost all the publishers, including all the majors.  Sony/ATV’s plan to license its music directly to Apple dramatically changes that practice, with severely negative repercussions to follow for songwriters.

So why is Sony/ATV—now the largest publisher after taking over the administration of EMI Music Publishing—doing this?  After chatting with chairman Marty Bandier, the New York Times reported that the decision is “simply an effort to obtain a higher royalty rate for [Sony/ATV] writers.”  Bandier was quoted as saying, “This wasn’t us not wanting the service.  We want the service.  It’s like oxygen.  We just want to be paid fairly, no different than the NFL refs.”

The truth, though, is that 1. songwriters signed to Sony/ATV and EMI Music Publishing will probably may never see a dime from the monies that Sony/ATV receives from Apple, and 2. The monies that they receive from the PROs will be dramatically reduced. Here’s why:

I. Publishers Generally Don’t Share Negotiated Advances

Individual music publishing contracts vary depending on the bargaining power of individual writers or the negotiating skills of their lawyers (among other reasons), but almost all agreements have a provision similar to this one:

“In no event shall composer be entitled to share in any advance payments, guarantee payments or minimum royalty payments which Publisher may receive in connection with any sub publishing agreement, collection agreement, licensing agreement or other agreements covering   the Composition.”

Keep reading Steve Gordon’s article at his blog, The Future of the Music Business

The Future of the Music Business, Third Edition

The Future of the Music Business provides a legal and business road map for success in today’s music business by setting forth a comprehensive summary of the rules pertaining to the traditional music business, including music licensing, as well as the laws governing online distribution of music and video.

New Music Seminar, an interview

Steve Gordon, author of The Future of the Music Business, interviews Tom Silverman, founder of Tommy Boy Records and co-founder of the New Music Seminar.

>>>Listen Here<<<

From Steve:
In the interview, Tom talks about the upcoming New Music Seminar 2012, being held June 17-19 at Webster Hall in New York City. Tom has secured a stellar list of speakers and panelists, including Lyor Cohen, Chairman & CEO of Warner Music Group, Bob Pittman,CEO of Clear Channel, Tim Westergren, founder of Pandora, and Sean Parker, co-founder of the original Napster and the first president of Facebook. In addition to keynotes, panels and presentations,there will be over 150 artists performing various genres of music at venues throughout NYC.

The Future of the Music Business (Third Edition) provides a legal and business road map for success in today’s music business by setting forth a comprehensive summary of the rules pertaining to the traditional music business, including music licensing, as well as the laws governing online distribution of music and video. The accompanying DVD includes a comprehensive lecture, “How to Succeed in Today’s Music Business,” delivered by the author at the Tisch School of the Arts at NYU.

Licensing Music for Fashion Shows


Guest Blogger:
Steve Gordon, author of The Future of the Music Business

 

This is an excerpt from Steve Gordon’s blog.

Music Licensing Primer
In order to understand music licensing for any project, it is necessary to know that every piece of recorded music contains two copyrights — one is the underlying musical composition or song, and the other is the recording itself. The copyright in the song is usually controlled by the songwriter or the writer’s representative, a music publisher.  The copyright in the recording is usually controlled by the artist if unsigned or and by a record company if the artist is signed.  Songwriters and music publishers have an exclusive right to publicly perform their songs.  If you sing a song in the shower, you don’t need a license. That’s a private performance.  But permission is required to publicly perform music on any radio or TV station, Internet radio and streaming on demand, and in bars, nightclubs, restaurants, arenas, stadiums, bowling alleys, amusement parks, and any other place or venue where music is publicly performed.

However, if songwriters tried to license each venue and place that publicly performed their music they would never have time to write music.  Even large music publishers do not have the resources to do this job.  Instead songwriters and publishers use performing rights organizations or “PROs” to license their music and collect the fees payable from the licensees on their behalf.  The vast majority of countries in the world each have one PRO.  For instance, England has PRS, Japan has JASRAC, Germany has GEMA, Australia has APRA and France has SACEM.  In the United States we have three: ASCAP, BMI and SESAC.  They all have the same function: to license and collect monies on behalf of their members, the songwriters and music publishers, from anyone who publicly performs music.  And each provides a “blanket” license that allow the licensee to play any song in their repertoire. Together ASCAP, BMI and SESAC represent almost every commercially successful song in the U.S., and through their reciprocal relationships with foreign PROs, they represent almost all commercially successful songs in the world.

Owners of “sound recordings” are also protected by copyright law. Only the owner of the copyright in a recording of music has the right to make copies of that record and sell it because the exclusive right to make and distribute copies is one of the rights afforded by the copyright law to copyright owners.  However, in the U.S., unlike owners of copyrights in songs, owners of copyrights in sound recordings do not have exclusive public performance rights.  When the Copyright Act was amended to protect sound recordings in the early 70’s the broadcast community heavily lobbied Congress to carve out this right. They argued that broadcasters, especially radio, promoted record sales and they should not be forced to pay for a service that they were providing for the artists and the labels. They also pointed out that record companies not only encouraged them to play their records, they often paid DJs to play them, a practice known as “payola.” Congress agreed with the broadcasters perhaps because the politicians needed radio’s good particularly during their campaigns for re-election, and they needed the good will the record companies far less.  In any event, because owners of copyrights in sound recordings have no exclusive right of public performance, anyone can publicly play a record without permission. There is one exception — the Copyright Act was amended in the 90’s to provide an exclusive right to perform sound recording via digital transmission.  I will describe the impact of this exception when we discuss transmitting fashion shows on the Web.

Keep reading this article on Steve’s blog

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The Future of the Music Business provides a legal and business road map for success in today’s music business by setting forth a comprehensive summary of the rules pertaining to the traditional music business, including music licensing, as well as the laws governing online distribution of music and video. Available from Amazon, B&N, independent bookstores, and halleonardbooks.com

 

Steve Gordon on Crowd Funding

Steve Gordon

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Guest Blogger: Steve Gordon, author of The Future of the Music Business (Hal Leonard Books)
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I recently posted two new podcast interviews with executives at RocketHub.com, a crowd funding company, and CrowdControlMusic.com a record label, licensing company, management firm, and booking agency.  Crowd funding is a great way of raising funds for various projects including recording music, as well as film, photography and fashion.
Co-founder Brian Meece gives examples of success stories and tells why his firm is different than other crowd funding services such as Kickstarter. As an artist and songwriter himself, he has used crowd funding for his own projects and says that crowd funding and music go together like “peanut butter and chocolate” because fans of artists love to support their favorite artists’ music.

Although Crowd Control specializes in “urban alternative” music, according to it’s co-founder, Paul-Anthony Surdi, they are open to any original talent that really stands out. Surdi also offers insights on licensing music for TV, film and other opportunities. He also explains the differences between the three different U.S. performing rights organizations ASCAP, BMI and SESAC and which is the best one for you to join as a songwriter.

Podcast 1

Podcast 2

STEVE GORDON AND THE FUTURE OF THE MUSIC BUSINESS, THIRD EDITION

New technologies are revolutionizing the music business. While these changes may be smashing traditional business models and creating havoc among the major record companies, they are also providing new opportunities for unsigned artists, independent labels, and music business entrepreneurs.

The Future of the Music Business provides a legal and business road map for success in today’s music business by setting forth a comprehensive summary of the rules pertaining to the traditional music business, including music licensing, as well as the laws governing online distribution of music and video. Available for purchase here.

STEVE GORDON (New York, NY) operates a music clearance service and is an educator on entertainment and copyright law. The recipient of two Fulbright Scholarships, Gordon has taught at Tel Aviv University in Israel and Bocconi University in Milan, Italy, and has also served as adjunct professor at the New School in New York City. He has lectured at many schools and universities, including Juilliard, Wharton, and Columbia University.

Big Copyright Extensions: They Still Don’t Trickle Down…

It’s starting to look obvious: sweeping, long-term copyright extensions simply benefit major labels and rich artists, and few others. And that still seems to be the case for soon-to-be-implemented copyright extensions on recordings in Europe, despite some nods to smaller musicians.

The quick catch-up: Instead of 50 years, this latest legislation extends it to 70, which saves a trove of valuable 60s masters from entering the public domain.  Predictably, big labels and richer-than-God artists were lobbying for this one, with rhetoric and sweeteners tossed towards the struggling musician.  But the broader benefit for those artists – and society in general – remains low.

In fact, heading into the vote, 8 European countries were seriously questioning the extension resolution.  The nays weren’t enough to curb passage in the EU Council in Brussels, though struggling artists were getting out-voted.  “Extending the term of protection will however not primarily be of benefit to this group,” Sweden declared.

And, Belgium itself was among the dissenters.  The others casting doubts included the Czech Republic, the Netherlands, Luxembourg, Romania, Slovakia, Slovenia, and Sweden, with Estonia and Austria abstaining.

Keep reading on Digital Music News.

STEVE GORDON AND THE FUTURE OF THE MUSIC BUSINESS, THIRD EDITION

New technologies are revolutionizing the music business. While these changes may be smashing traditional business models and creating havoc among the major record companies, they are also providing new opportunities for unsigned artists, independent labels, and music business entrepreneurs.

The Future of the Music Business provides a legal and business road map for success in today’s music business by setting forth a comprehensive summary of the rules pertaining to the traditional music business, including music licensing, as well as the laws governing online distribution of music and video. Available for purchase here.

STEVE GORDON (New York, NY) operates a music clearance service and is an educator on entertainment and copyright law. The recipient of two Fulbright Scholarships, Gordon has taught at Tel Aviv University in Israel and Bocconi University in Milan, Italy, and has also served as adjunct professor at the New School in New York City. He has lectured at many schools and universities, including Juilliard, Wharton, and Columbia University.