Moses Supposes - January 2008
-- Find Out Who Is Lying About Still Having Their Label Job
NEW YEAR – NEW LAW
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Happy New Year and welcome to the new, new music business, one that promises to keep you guessing as to how you'll be making a living in the next 365 days.
While the rest of us were hanging frayed mistletoe and giving even more money to labels via their "new and improved 360 deals," the California Legislature was busy figuring out better ways to regulate us. Since California tends to lead the way in new law, this affects everyone, really.
In the general scope, we have wired things that only those in Granola State could dream up: in domestic violence cases, pets can now be included in protective orders and coming soon are criminal penalties for even accidentally running over squirrels and wild animals that happen in front of your vehicle. Conversely, products made from Kangaroo skin can now be sold in the Sunshine State. So, you can't punish your dog for pooping on the rug, but you can slaughter as many marsupials as it takes to make a purse. Y'know, that ignorance of the law is no excuse thingy would be easier to apply if lawmakers could make up their mind.
To the music space we add a couple of vital items: Classic musical groups who market themselves as "the real deal" when touring, must contain at least one original member of the group. You'd think this was given, but wrinkle-rock impersonators have been skating away on the thin ice of misrepresentation for years using names like, "Credence Clearwater Survival" and "The One and Only Platters." There are also about a dozen "Original Beach Boys" and several variants on "Bill Haley's Comets." Those without an "original member" under the new law can only bill themselves as "tribute" groups. An exception was carved out, however, for STYX and Steely Dan, since no one can seem to agree on who the original members were.
The big news is the introduction of a concept that is already in place just about everywhere else in the free world and it involves how broadcasters pay royalties; specifically that they will now ALSO have to pay record companies/artists when a song is played on the air, instead of just publishers/songwriters. ASCAP ad BMI are understandably a bit concerned that this will dip into their "non-profit" revenue stream. But…
The new bill proposes the following:
1) Requires terrestrial radio and HD radio to pay labels and artists.
2) Non-commercial broadcasters (like Public Radio) pay only $1,000 per year and small broadcasters pay a flat rate of $5,000 per year.
3) Creates a statutory rate for Sound Recordings (finally!) and the rates will be set by the CRB: the Copyright Royalty Board (formally the CARP-- the same ad hoc group that is about a year late in setting the regular the statutory rates.)
And most importantly…
4) New law cannot diminish what songwriters are already paid by broadcasters. (So ASCAP and BMI can stop bitching.)
There's something here for everyone to both like and complain about. John Simson CEO of SoundExchange (SX) told me he believes that this will be a multi-year campaign, one that will not likely yield results until after 2009, but at least we're on the right track for once.
SX is putting a lot of cash into pushing this puppy through—and this is to be expected, but the question that I wish some credible journalist would ask them is—how much of this money will be deducted as an "expense" from the artist/label royalties they are already collecting? Hmm.
While labels want more from their artists and retailers, in 2007, Radiohead gave away their new record, "In Rainbows" for whatever a fan wanted to pay. It seems that of the 100,000 downloads (according to Big Champagne) the average fan--who wanted to pay anything--paid about $9 US. (How many opted to pay $0 is only the band knows.) Regardless, the campaign translated into great physical sales as well. Something few experts predicted.
The "In Rainbows" ranked as one of the top-selling albums this month, selling 122,000 copies in the US. While it's far less compared to 2003's "Hail to the Thief" and other major label releases, think of the gross revenue to the group; $1.50 per record on a major, compared to about $7.00 per unit sold "independently." The figures also back up something I've been saying for a while now: music fans still like owning physical product, namely CDs.
On the other hand, if the public thinks and album is worth $9 US, what do they think stealing it is worth to the poor label victimized by illegally downloading? In 2007 a civil jury spoke loudly on that as well— $9,700 per song (about $100,000 per album.) Now that "the people" have put a price on using illegal P2P, you would think that everyone would flock to the "pay whatever you want" model. But no, studies show that P2P file-sharing is still alive and well.
Massive major label downsizing last year hasn't stopped many a former Vee Pee from trying to impress eager artists (and the ladies) with the vestiges of their hip, label business cards. Meanwhile the odds are about 2:1 they are really collecting unemployment!!! Recently I was given someone's card at a party and after reading it said, "Didn't Universal downsize your entire label three months ago."
The new Music Business Registry gives a complete list of everyone who still has a real job. Cost: only about $80 and it will pay itself back in the many hours of bullshit you'll save. I highly recommend their publications. Go here for more details: www.musicregistry.com
Then there is The Indie Venue Bible. A revolutionary live music venue directory that was created with the needs of the touring/live performing artist in mind. It features 26,000 venues and 2000 booking agents in the US and Canada. I have not personally see this publication, but it's worth checking out. They respond to my request for a review copy, so tell me what you think. Check them out: http://www.indievenuebible.com
And now the "news"...
360 DEALS: THE FINAL NAIL IN THE MAJOR LABLE COFFIN?
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Will the "new model" bring record labels salvation or oblivion
By Moses Avalon
You know that theory about light and distant stars; the one that says that it takes so long for light to travel to Earth that some stars only appear to be shining when in fact they have burned out long ago? That's how artists should probably be thinking about major label record deals. Because the industry has burned so long on the fossil-fuel of major label cash, it can seem like they are still relevant. Are they?
New so-called "360 deals" on major labels want a piece of everything the artist makes. They get their name because a circle has 360 degrees and these deals take revenue from all directions, sales, touring, licensing, publishing, acting, modeling, merchandise—you name it.
They offer big bucks, higher percentages and look and feel like a major label deals of yesteryear, with the press releases and label executives shaking your hand in offices perched high in some big-city skyline. But are they? Could it be that these deals are merely a façade: one where the label may be committing fraud right at the onset of the deal, and, in all probability, even BEFORE the toner on the contract is dry?
What's the alternative: start your own label? Artists can and have tried in the past. (Failed attempts include The Rolling Stones, Grateful Dead, Bruce Springsteen and Pearl Jam.) But the Radiohead experiment of last year shows why I could be the only way to go if you're an established concern.
Radiohead gave away their new record, "In Rainbows" for whatever a fan wanted to pay. It seems that off the 100,000 downloads the average fan--who wanted to pay anything--paid about $9 US. (How many opted to pay $0 is information known only to the band) Regardless, the campaign translation into great physical sales as well.
The new album ranked as the top-selling album in the country this month selling 122,000 copies in the US. While it's a sharp drop compared to 2003's "Hail to the Thief," and other major label releases, think of the gross revenue; $1.50 per record on a major compared to about $7.00 per unit sold "independently." The figures also back up something I've been saying for a while now: that music fans still like owning physical product: namely CDs.
So... Pay-what-you-want, verses pay the label everything they want, which model will more likely attract the up-and-coming artist and keep the $10 Billion music business from becoming a footnote in history?
If you're just starting out, there might still no alternative to majors--even in the age of the internet. Many people who were attracted to the Radiohead offer complained. The lack of bandwidth caused time delays. Also the "shopping cart" utility jammed for many. All of these resulted is some waiting so long for the transmission they lost interest.
These problems are all solvable but none of them were solved. Why didn't Radiohead hire the best IT people to account for the extra traffic and glitches? Probably because artists don't think this way. They think about their fans and their product. Not about technical minutia. Majors are counting on this lack of business acumen as the commodity they peddle in the 360 deal.
Does this mean that once again emerging artists are stuck with accepting the junk contracts labels have given artists for years? Is the 360 deal the new junk deal they have to accept?
Maybe. But, there are several Achilles heals in the 360 deal that majors will not realize until years from now, after they are already entrenched in them.
THIS DEAL IS DUMB
Aside from CD and download sales, the 360 Deal dips into revenue was formerly the domain of other vendors to the artist: mainly, the agent, and manager the producer (and publisher, if the artist was a songwriter). If the label takes this cash, where is the vig for these other professionals going to come from? Two conclusions leap to mind:
1) The artist will pay a second set of commissions, ON TOP of the split that they give the label. This of course means the artist makes less money. A lot less.
2) The artist will decide they don't want to pay two parties for one job and not contract with outside vendors.
Since number two is the more likely scenario, and it will mean the inevitable extinction of the manager, booking agent, and (some) producers and yes... their managers, and handlers. We are talking about roughly a third of the people listed in The Music Business Registry. (An excellent publication BTW, check it out: www.musicregistry.com.)
Labels gouging the income from about a third of the professionals in the business will not be met with any degree of acceptance, I can assure you. They will fight back, exploiting some very alarming weaknesses in the 360 deal that will leave labels wondering, once again, how they could have been so short-sighted.
Next month I'll get into more detail. But you'll read about if you're on my mailing list. It's free. sign up here:
Moses Avalon
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