Alex Maiolo has worked with The Future of Music Coalition for almost nine years, primarily focusing on the health insurance crisis as it relates to the working musician. In addition, Alex plays in various bands, including the PsychPop outfit Violet Vector & The Lovely Lovelies and Ambient/Slo-Core staple Hi Fi Sky . He is a partner with an insurance agency in the Carrboro/Chapel Hill area of North Carolina. Insurance as it relates to the artist, studio owner and musician is all part of a typical day's tasks.

 

You don’t have to be a news junkie to know that the health care debate has been heating up in recent months. With all of this back-and-forth, it’s easy to forget that this is about getting more people covered. And musicians are one portion of the American public that could definitely use some help.

My name is Alex Maiolo, and I’m the project manager for Future of Music Coalition’s Health Insurance Navigation Tool (or HINT, for short). I’m also a musician. Like everyone at FMC, I’ve seen too many of my peers have to deal with unforeseen health calamities without the benefit of insurance.

I’m no fan of the big health insurance companies. I own my own business that’s based in other kinds of insurance, but I know a lot about the health business. And I can tell you point blank that my sympathies lie with the uninsured — especially my fellow musicians.

In 2002, Future of Music Coalition issued a report that found that 44 percent of working musicians lacked health insurance coverage. One of the main reasons, besides cost, was that many artists thought it was something they could just get to later. But as anyone who has ever played a benefit show for an ailing musician knows, “later” is often too late.

With the debate about health care raging on, we figured it would be a great time to re-launch the survey for 2010 to see if artists have made any headway in terms of insurance coverage. With a down economy and the music business in a state of seemingly permanent flux, we’re thinking things might look pretty grim. Still, getting updated numbers really helps us make our case that something needs to be done.

Of course, we haven’t been twiddling our thumbs waiting for someone to come along and magically fix things.

Our studies have shown that a lot of musicians think that health insurance is unnecessarily complex. We at Future of Music Coalition know that we probably cant do much about the costs of coverage. What we can do, however, is demystify the process and help musicians understand their options. This is exactly why we created the HINT program in 2005. HINT doesn’t sell insurance; we don’t even recommend specific plans. What we do have is a website with tons of musician-friendly information. And artists can sign up online to get a FREE phone consultation from a HINT representative (also a musician) to go over their options on a case-by-case, state-by-state basis. We’ll even call you on our dime.

 If you’re a musician, I want to encourage you to take a few minutes (literally, like 10) to fill out our online survey . It’s completely anonymous and confidential. And it’s incredibly important.

 I’ll also be at South By Southwest (SXSW) in Austin Texas on Thursday, March 18 for a special Mentor Session on musicians and health insurance . It’s a great way to learn about our HINT program and schedule an appointment for a more in-depth phone consultation. Hope to see some of you there!

 

 

John P. Strohm is a transactional entertainment and intellectual property attorney with the firm Johnston Barton Proctor & Rose LLP. John’s practice focuses on the representation of musicians, songwriters and independent record labels. Prior to becoming an attorney, John was a professional musician and producer for over a decade. He performed and recorded as a member of several notable alternative pop/rock acts, including The Lemonheads and Blake Babies. John is on Twitter @JohnPStrohm.

 

A great deal of what I do as a music business attorney involves negotiation.  Negotiation is such a common component of my work that I rarely reflect on the process of negotiation, or even pause to think to myself “hey, I’m negotiating right now!”  Nevertheless, although I’ve achieved a certain day-to-day comfort level, I know I have plenty left to learn.  In this article I’ll share some observations regarding the process of negotiating music deals that I hope will prove helpful.  As a disclaimer, I don’t purport to be the world’s foremost expert or to have superior knowledge to my music lawyer colleagues.  I’m simply presenting a few things I’ve noticed in navigating these particular wooly swamps.   

I took a class in negotiation in law school, which was pretty much pure bullshit.  I had high hopes for the class, because I knew my desired practice as a transactional (i.e. deal) lawyer in the music industry would require sharp negotiation skills.  I learned a lot of terminology to describe things that I understand intuitively.  I learned a bit about game theory and certain abstract, philosophical underpinnings.  But when I actually began negotiating deal terms for clients, I’d forgotten all of the terminology and most of the concepts.  For all practical purposes I knew next to nothing.  I did what we all must eventually do: I jumped in head first. 

Now that I’ve negotiated countless music industry agreements, I’ve learned that no two negotiations are exactly the same.  It’s never easy to accurately predict how things will go – each negotiation requires preparation.  I handle some negotiations that seem practically effortless, and some that may lead to post-traumatic stress symptoms.  If I took the class again, I’d probably relate better to the arcane terminology as it relates to my experiences.  But my point is you don’t really need all that terminology and philosophy: you just need to pay attention and keep a few basic things in mind.

I’m writing from the perspective of a lawyer negotiating on behalf of client, but you can apply these principles and ideas just as well if you are an artist’s manager or if you are negotiating on your own behalf.  In addition to being a music lawyer, I’m a working musician.  Sometimes I negotiate deals on my own behalf, though to be honest I probably do a better job negotiating on behalf of someone else.  The old saying goes (something like) “any lawyer who represents himself has a fool for a client” – yeah, I suppose there’s some truth to that, but I digress.

 The key, if you’re negotiating on behalf of yourself, is to treat the situation as if you’re negotiating on behalf of a client.  That is to say, mentally separate your business interests from any self-esteem issues or fears of confrontation/failure that dog most of the musicians I know (myself included).  When I state in this article that I have a duty to my client, I really mean my ethical obligation as an attorney; but that could just as easily mean that you owe it to yourself to get the best deal you can.  As a practical matter, however, I strongly suggest that if you are asked to sign a contract that transfers rights or includes ongoing obligations, you should hire an industry lawyer to review the document.   

I’ve learned that being a good negotiator in any sort of deal requires a thorough understanding of your client’s goals and sensitivities, and of the risks and your client’s risk tolerance.  It also requires and deep understanding of certain specific factors, including the actual people or parties involved (both directly and indirectly), the relationship of the adverse parties, the unique set of facts and the culture of the business in general.  It also takes a strong stomach and a willingness to be confrontational when necessary (or to respond effectively to confrontation).            

As far as the people involved, I mean the attorneys or others who take the lead in the negotiation as well as those who stand to benefit or could be harmed from the result, whether they are directly or indirectly invested in the actual subject matter of the deal.  If I’m negotiating on behalf of a client, then the client is clearly directly affected; however, others may also have a dog in the fight.  I try to take a broad view and consider who will be affected by or take an interest in the outcome. 

If I’m negotiating a record deal for a recording artist client, the artist’s personal manager is clearly affected even though the manager is not my client.  If the artist is a writer with a publishing deal, then the publisher is affected as well (for example, by the mechanical royalty rate I negotiate).  It’s crucial to understand how each party is affected and how it will affect your client, keeping in mind that your duty to pursue your client’s interests should remain paramount.  For example, if my main point of contact to a client is his manager and the manager is pushing me to close a deal, I’d better communicate directly with my client and make sure the client is comfortable with the terms.  The manager benefits short term in the form of a commission, but I shouldn’t let that sort of pressure distract me from protecting my true purpose.  The manager may be gone in a month, but the artist could be stuck in a shitty deal for many years.

The relationship of the “adverse” (meaning opposing) parties and the facts are interrelated and relate to the respective leverage (aka bargaining power) of the parties.  It’s absolutely crucial to understand who has the leverage in any given negotiation.  The way I’ve come to define leverage is the existence (or apparent existence) of viable alternatives to closing the deal.  Sticking with the record deal example, if an artist has five or six record labels frothing at the mouth for his services, he has great leverage with respect to each potential deal.  The source of his leverage is his ability to walk away from one deal to sign another deal that’s already on the table.  An artist in this sort of situation will have a greater opportunity to negotiate favorable terms, and the artist’s representative can afford to take a more aggressive position without fearing consequences such as losing the opportunity.  On the other hand, if there is only one label in the picture, then the artist will likely not be as successful and will likely not be as well-served with an aggressive approach. 

Sometimes it’s clear who has the leverage in a negotiation, but there’s a skill in creating the appearance of leverage – which necessarily involves convincing the adverse party of your client’s willingness to walk away from the deal.  In the second example above, when there’s only one label bidding for the artist, I need to have a talk with my client and get a real sense of whether my client is actually willing to walk away from a deal.  If my client is strongly averse to losing the opportunity and is comfortable with the terms, then I’m probably not going to push hard for better terms – and I certainly won’t make a power move such as demanding the adverse party agree certain aspirational terms or my client will walk away from the deal.  If they refuse the demand, then there’s really no going back to the original offer without losing all credibility.  On the other hand, if the client is willing to take a risk, then it’s a matter of convincing the other side that there are credible alternatives to signing the deal (such as, perhaps, private investors or self-release).  One age-old way is to simply say “take it or leave it.”  Keep in mind, as a general matter, that attempts to orchestrate a bidding war can be perceived as crass and heavy-handed. 

It’s also worth mentioning that it’s a different dynamic if two parties frequently negotiate with one another, such as a vendor and buyer in a retail setting.  Because there’s an ongoing relationship, the parties are less likely to play hardball.  They’ll have to deal with one another next week or next month – why blow the relationship for a short-term gain?  This also holds true when attorneys frequently encounter one another in negotiations.  I encounter the same attorneys again and again in my own niche practice; it would not serve my clients well in the long-term to take an extremely adversarial, aggressive approach to each isolated negotiation.  Nevertheless, I must keep in mind that I have an obligation to represent my client.  So when balancing the conflicting goals of preserving a relationship with opposing counsel and pursuing the goals of my client in a particular negotiation, my duty really lies with my client.

Regarding the culture of the particular industry, there are many subtle variables.  When I first started practicing law most of the work I did was in commercial real estate and lending, working on mega-huge deals.  I didn’t seek out work in those industries; I went to work for a firm that placed me in that practice.  I had absolutely no background in commercial real estate, so I had to learn the very corporate culture from scratch.  After a couple of years I’d learned enough about the culture of negotiation in that industry to be somewhat comfortable, including how to determine who has leverage, what’s appropriate to ask for, means of communication, and other factors.  Then as my music practice started to pick up steam, I had to learn the culture of music industry negotiations from scratch as well.  Since I’d been heavily supervised as a new lawyer in the commercial real estate industry, it was a shock to be totally unsupervised in my music practice – nobody at my firm had any experience to offer.  Suffice to say I made a few gaffs along the way.  Like learning a new language or the rules to a complex game, there’s no way to avoid a few mistakes.

The culture of the music industry is generally very informal compared to the corporate world.  It can be informal to a fault as deals sometimes take forever and there’s a greater tolerance for sloppy work, but it’s a nice change from the pressure-cooker of the big money corporate deal.  Negotiation styles of music industry lawyers vary wildly, however, from extremely laid-back and cooperative to extremely aggressive.  My own style tends to be more cooperative if I have the opportunity to set the tone; however, I’m always prepared to respond to aggression with aggression in kind.  I’ve seen potentially good deals die as a result of overly aggressive lawyers, so it’s disappointing when a negotiation becomes trench warfare.  My attitude is, with respect to each negotiation (taking into account the interests and leverage of the parties), there is always a way for both parties to “win.”  It’s usually a matter of figuring out the goals and interests of your adverse party and making smart compromises.  If you can give on a point that doesn’t really matter for your client and get something of great value in return, then you’ve done well.  That sort of cooperation isn’t possible when one party or the other forces a zero-sum game.

Industry culture can also become a negotiation tactic in certain situations, such as claiming certain terms are “industry standard.”  Just today an attorney tried to convince me that it’s “industry standard” for a manager to commission 20% of an artist’s gross income.  Just because people have agreed to such a term in the past does NOT mean that it is the industry standard.  Certain things really are industry standard, but generally specific business terms do not constitute the industry standard – business points are negotiable.  It’s important not to confuse a “take it or leave it” deal offered by a party with superior leverage from industry standard.  If someone tries to claim that something is industry standard, then by all means ask around.  For the most part, claiming industry standard is just a lazy and overtly aggressive tactic.  Our industry is changing by the day – practically everything is, at least on some level, negotiable.

One thing that bears mentioning regarding the culture of music industry negotiations is that they rarely occur around a table or even over a conference call.  Typically the bulk of the negotiation occurs by email and by sending marked-up documents back and forth.  I generally prefer negotiating by email, because I have more of a chance to think through my responses and consult with my client than if I were negotiating across a conference table.  But then I’m sure the greatest of poker players prefer to sit at the table sizing up their opponent to playing an unseen opponent online.  Nonetheless, that sort of negotiation occurs so rarely these days that it’s hard to develop the skills that must have once been essential to negotiating lawyers. 

In summary, the key is to really understand your clients’ (or your) goals, sensitivities, and leverage in each situation.  Lawyers are necessarily competitive, but we must keep in mind that our desire to “win” can produce bad results for our clients.  If I take an aggressive approach and a client loses an opportunity as a result of my style, it’s a bad result of poor negotiation.  Conversely, if I take a weak position and fail to get the most value out of a deal without damaging relationships in the process, then that is a bad result from poor negotiation as well.  You’re looking for that sweet spot in the middle, where ideally everyone can walk away from a deal feeling good about the result, but you know that you did everything you could to create value.  As with pretty much anything in law practice and business in general, it’s mostly a matter of preparation and paying attention.  And of course it’s crucial to be ethical, both in terms of the rules of professional responsibility and our obligations to each other as fellow human beings.

Swank currently resides in Chicago, Illinois where he does radio promotion and tour press for Bloodshot Records. Previously he spent 7 years at Yep Roc Records as head of radio promotions. Swank also has a collective 20+ years as on air talent in both commercial and non-commercial radio, 5 years as an entertainment journalist for the Nightlife in Carbondale, Il, a six month stint as a stand-up comedian and has written, produced & directed 3 one-act plays. Joe Swank and the Zen Pirates self-released Hank Williams Died for My Sins on November 10, 2009.

I started playing music rather late in life. I was in my mid-20’s when I joined my first band. Mostly covers at first, but one by one, I started incorporating originals into the mix. Fast forward past several bands and two albums and I was starting to wonder how this music thing seemed to take plenty of money, but never really gave all that much back.

The music I have always played is best described as Honky Tonk. Honky Tonk fans make up a VERY narrow band of the Country Music crowd. They are the ones who seek out artists/groups like Dale Watson, Shaver, Wayne Hancock, Whitey Morgan and Hank 3 ….or to a further extent, Drive-By Truckers, Slobberbone and The Waco Brothers.  

My first record (The MoJoDeans – The MoJoDeans 1998 – Relay Records) was almost all my money invested. The band fund kicked in a few hundred dollars, and I ended up eating around 8K over the course of 2 years. Funding recording, hired radio promotion, keeping us on the road and general expenses. A key band member moved away and the band broke up. It was then I realized if I was going to invest in music, I was gonna need to get my name in the title, or it was virtually a wasted investment on my part as far as branding my music was concerned. The second record (Joe Swank & The Mule Skinner Band – Cowpunk! 2001 – Cowpunk Music/Self Released) was recorded in exchange for my Honda Shadow 750. The band had problems that can all be traced back to medication, and was a short-lived project. By the time mixing and mastering was done, the band no longer existed. I pulled together a band and about 200 copies of the disc for CD release and then put it to bed.

I already had eyes on North Carolina as they seemed to have the most thriving record industry outside of Nashville and L.A. I moved to North Carolina in 2001 and started working at Redeye Distribution in order to figure out where the money goes and how to get some of it back in my pocket. This was supposed to be a temporary warehouse job that would help me do it right the next time. I would learn where to spend the money vs. where not to waste my time. Something funny happened along that path in that I ended up taking a full time job with Yep Roc Records (owned by Redeye Dist.) and actually started liking the Rubik’s Cube that is the music industry. I became intrigued with the different patterns in an attempt to get to the same end.

This, unfortunately, put MY band on the back burner. I tried to keep up on nights and weekends, but time just wasn’t on my side. As I got deeper into the business, there was always something else to research and study. Just when I thought I had it almost figured out, the whole game changed with a little thing called the internet broadband connection. The computer was relatively useless back in the dial up days, but the high speed connections changed the game. I-tunes also changed the game. Pretty much everything that happened on the internet in the last 8 to 10 years has eventually changed the game.

I released our record HANK WILLIAMS DIED FOR MY SINS on November 10^th, 2009. I formed the Zen Pirates in Raleigh in late 2001. We played around and worked up a mess of my originals and tried recording them in 2002. Two days in, the sound just wasn’t right and we scrapped to re-group. Second attempt at recording in 2004 was with a cat that got a last minute gig offer to go on the road. He stored the hard drive with nearly a completed record. I have not seen him (or the $800 I paid him) since that day. Third attempt was in 2006. 3 songs in and the engineer got called away to a 3 month job in Ohio. Finally, (with an entirely different band than when I started), I got all the ducks in a row and booked studio time with Rick Miller in 2008. Between the time I booked the studio and the recording date, I was offered a job I couldn’t refuse. Despite my 7 years in the industry at this time, I was still a one trick pony as far as my views of how a label works, so I decided to make the leap, accepted the offer and literally recorded the album in the two days before I got in a U-haul and moved my life up to Chicago and went to work for Bloodshot Records.

The last year has been a difficult time of booking for overdubs and trying to mix from 850 miles away. I flew down a couple of times to do what I could in person, but ultimately, half the disc was mixed without me present. In the end, I had to remove two cuts because they just weren’t where I wanted them to be. Had my mastering done here in Chicago where I could be present, and finally called it done.

2 constant truths about the music business:

#1) If you don’t tour, don’t bother

#2) If your #1 concern is making money, join a cover/tribute band.

Now, without my presence in North Carolina and everyone in the band having a full time job, it’s pretty clear that we’re not going to be able to tour behind this record, outside of weekend bursts when all of us can get away. On top of that, we play Honky Tonk. Not a large demand for such a splinter genre. The Americana/Roots section at the store is already small enough, and there are some road warriors out there that deserve the coveted slot a lot more than we do. So what does one do with a record that doesn’t have much of a chance? Why even MAKE the record in the first place?

Ars gratia artis is latin for “art for the sake of art”. I have had many of these songs in my head for several years and needed to document them to let my brain move on to the next creative endeavor. The amount it might reap at the end was never even a concern. It would’ve been SO much easier on me to just call the 7 years in N.C. a wash and get a band together in Chicago to do the songs, but these guys in the Zen Pirates are the best band I have ever had and we’d been playing the songs so long that I knew they would nail it, and nail it they did. Now we have a finished disc and with the knowledge I have in my head about how the industry works, I knew it was a relatively dead project coming out of the shoot. Any artist will tell you, sometimes you just have to do things, regardless of how well thought out they may or may not seem at the time. 

BUT…There is hope. This new-fangled internet thing can at least give me exposure to a large number of people that, until the last few years, would’ve been unreachable. Tunecore is a godsend. With a nominal fee and a few weeks waiting time, they can post your record to most every major digital site in the game. You can hyperlink a button on your site to take people directly to your album. This is an amazing leap forward in getting music out there. Granted, it is also easier than ever to get free copies of stuff off the net, but one hopes that people who actually like the music, would want to compensate the artist. Myspace and Facebook are both huge tools to get the word out on your music and each day, new opportunities show themselves. Café Press is another site that is truly helpful in getting you some merch. Your take is about 10% for the use of your logo, but it at least makes your chosen image available to the general public world-wide. The newest event that I am excited about is the ability to “gift” song streams on Facebook for a dime. This business is BUILT on nickels and dimes, so even if that gifted song only shows up as a penny in earned income, a thousand pennies can make a different.

From a professional “what-you’re-supposed-to-do” perspective, I mailed around 100 cd’s to radio and about 60 to press. That is dramatically shy of what I would recommend on an artist we’re trying to work with professionally, but I am honing down to the precious few that have shown themselves to be Honky Tonk fans. I am paying for every mailer and every disc that goes out, so the shotgun approach is not an option. Also hitting a handful of Digital sites, but the main bulk of those can be serviced digitally. I have the record up on Airplay Direct as well as a private link I have to send someone the full download with art. Digital Distribution is also a boon to the new Music Industry. Stations that wouldn’t even consider downloading a song 5 years ago, now request digital delivery in an attempt to fight back the wall of hard copy discs that fill rooms in the radio stations. You can save a TON of money servicing people digitally. There are still people that require a hard copy, and you need to factor that in for radio service. I am also currently talking with film & T.V. licensing agents regarding video game, movie and television placement. There are thousands of outlets out there now, many for free or nominal cost. You never know where an album may earn its keep. 

The Zen Pirates will continue on as a band that rarely plays out, but I’ve learned that it’s a very small world and that you never know where the next wind will take you. As for me, I am going to take a break from MY music, at least through the holidays and see how this whole digital campaign works out for us. We have plans to do some touring next year. We’re pondering a couple of long weekends up the east coast and down to Texas, as we have connections in both directions. In the mean time, I love my day job and I’m gonna continue to punch in and try to get the word out about good music that other people have made. If I’m lucky, some of those same folks will find our stuff out there in the digital landscape.

Swank*

Hank Williams Died For My Sins can be purchased at http://zenpirates.com/ as well as digitally at I-tunes, Amazon.com, Shockhound and other fine digital outlets. You can listen to cuts from the record at http://www.myspace.com/joeswankandthezenpirates.  Joe Swank recommends you read this piece if you are looking for a label, as it has many answers: http://www.bloodshotrecords.com/faqs#b

 

 

 

Laura Williams manages SoundExchange’s communications strategies, including overseeing the launch of a new, better-than-ever www.SoundExchange.com in coming weeks. She holds degrees in Political Communications and Writing from Susquehanna University.

You may have heard about SoundExchange lately. We’ve paid out more than $111 million in royalties so far this year, are out in front fighting for fair compensation for artists, and making sure the 43,000+ recording artists and 5,000+ copyright holders we represent are getting paid when they get played.

With all those artists and all that money, it’s surprising how many people don’t know about SoundExchange yet. If you've got questions about what SoundExchange is or does, check out our ‘What Is SoundExchange’ video:

Here's the upshot: when sound recordings are played on certain digital services, satellite radio like SIRIUS-XM, Internet radio like Pandora, those high-numbered cable channels like MusicChoice, or streamed as background music in some restaurants or stores, the artist who performed on that recording earns a royalty. So does the copyright owner, which may be a label, or an independent artist who owns his own masters.

The digital services who owe those royalties either have to make a deal with each and every artist and rights owner directly (a direct licenses) and cut them a check, or they can use the blanket permission set up by the government (a statutory license). If they’re eligible for the statutory license, that service can use any commercially-released track ever made, without asking for permission from the artist. The service writes a check to SoundExchange, and provides a report of use - basically, a playlist of every track they've used, and who the artist and copyright holder are for that track.

SoundExchange is the only service the government allows to collect those royalties. Our job is to sort through the reports, find out what percentage of the money each artist or rights holder is owed, and then send them a check for what all the services together owed them. That's harder than it sounds. We don't always get good data from the services that use your tracks - how are we going to distribute to "various artists" or "label unknown"?

More importantly, SoundExchange collects royalties for EVERYONE whose tracks are played, even if they haven't registered with us, even if they've never heard of us! SoundExchange has only been around since 2001, so we're still getting the word out to artists and rights holders that this royalty stream exists. Unlike our friends at ASCAP, BMI and SESAC (more on them later) we don't just collect for our members. But we need artists to register with us, or we have no way of knowing where to send the money. We have many ways of contacting artists, from social networking to database matches to one-on-one meet-ups at conferences and festivals, but it’s a big job. Our 43,000+ artists and 5,000+ rights holders spread the word to their friends and colleagues, and success stories are our best method of outreach. So get registered, get paid, and tell a friend.

If you're not registered, get registered. Don't worry, though- SoundExchange hasn't given away your royalties. Artists and rights owners who sign up today can collect royalties they earned all the way back to the beginning of collections in 1998. We get a few hundred new registrations every month, and our online registration site has them coming in faster than ever. Remember, it’s always 100 percent FREE. We’re just giving you money that’s already yours. 

Another big difference between SoundExchange and other performance rights societies is that we advocate and expect per-play reporting from services. That means that instead of relying on sampling reports – four weeks a year or a few days a month – to determine what to pay, we ask services to report every track they play, every time they play it. In fact, 95 percent of the money we distribute is accompanied by ‘census data’ – that is, every track played, every time it’s played. We strongly believe this is the fairest way to distribute, and to make sure royalties get to the people who’ve earned them. We still accept sampling data from a few webcasters as a special accommodation, but we believe that census data is the way of the future, and SoundExchange is on the cutting edge of that movement. 

SoundExchange is a nonprofit. None of our staff of forty-five music lovers is in this for the money. We come to work every day excited about helping the people who create music get paid for their work. A lot of us are musicians ourselves, and some are recording artists. Our Board of Directors, who set our organization’s course and priorities, is evenly split between the representatives of recording artists and of rights holders. We're run by the people we pay, and staffed by people who believe in what we do.

When we’re out on the road spreading the word about SoundExchange and digital performance rights, we hear and answer the same questions over and over. So in case you’re wondering, too, here are a few of our top FAQs.

Q: You have money for me? And it’s free? What’s the catch?

A: There isn’t one. Zero, zip, nada. We were set up by the Library of Congress and the Copyright Royalty Board to collect money you’ve already earned. It’s your money, waiting here for you. You just have to tell us where to send it. That’s all there is to it. No registration fee. No Nigerian email addresses. Promise.

Q: I’m already a member of ASCAP, BMI or SESAC. Can I be a member of SoundExchange, too?

A: YES! We collect for a different royalty, for a different copyright than our friends at these organizations. They pay songwriters and publishers, the creators of music and lyrics written down on paper, and we pay recording artists and copyright holders, the creators of the master sound recordings. We encourage you to be a member of one of these organizations, AND of SoundExchange. They’re in no way in conflict.

Q: How does SoundExchange make money?

A: As an organization, we don’t. We’re a non-profit. We do retain a small percentage of the royalties we collect to pay our staff and keep the lights on. Although all performance rights organizations are funded this way, we have the lowest rate in the industry.

Q: Who does SoundExchange pay?

Of the royalties earned on a track, we pay 50% to the copyright holder and 45% directly to the featured recording artist. 5% goes into a fund which compensates backup musicians and session players. Independent artists who own their own masters keep 95%! 

Q: If I register, will I get paid right away?

A: Although we’re improving efficiency every day, SoundExchange can take up to 180 days to fully process a registration, including tax information, and compare it to our database of 7 BILLION performances. If those searches show you’ve accrued more than $10 in royalties, you’re eligible to be paid right away by Direct Deposit. Our average annual payout per registrant is about $3,000.

Q: What don’t you collect royalties for?

A: SoundExchange DOES NOT collect for digital downloads (like iTunes or “podcasting”) or “on-demand” plays like YouTube or MySpace, where a user can select and immediately play the song she wants to hear. SoundExchange also does not collect for the streaming of any audiovisual work, including music videos.

We also don’t collect royalties for AM and FM radio plays. Why? Because artists and copyright holders don’t get paid for radio plays. When you hear “Respect” on the radio, Otis Redding, who wrote the song, gets paid. Aretha Franklin, who sang the song and made it famous, doesn’t see a penny. Surprised? Most people are. Sound unfair? We agree. That’s why when our members authorize us to use a little bit of their money to protect and promote their rights, SoundExchange uses some of that to help out a group called musicFIRST (Fairness in Radio Starting Today). Our allies at musicFIRST are trying to close the loophole in copyright law which lets over-the-air radio stations to use your music without compensating you. Check out their website at www.musicfirstcoalition.org, and get in touch with your representatives in Congress, and let them know you support a full performance right for artists.

So if you hadn’t heard about SoundExchange, or you thought digital performance rights were just too good to be true, now you know. Get registered, get a friend registered, and let us help you get paid when you get played.

Laura Williams

Since co-founding Bloodshot Records in Chicago in 1994, co-owner Rob Miller
has dirtied his hands in all aspects of keeping an independent label afloat
in a world beset by American Idol, illegal downloading and a collapsing
economy.  Before that he lived in and around Detroit where he was a middling
music writer, college DJ and Production Manager catering to the demands of
everyone from GWAR to the Pet Shop Boys.

 

We all like music, right?  We love it, as a matter of fact.  It’s the art form that speaks to us on a profound level, connects us to the greater world and taps into some of our most deeply held feelings and beliefs.  Many of you, like myself, have used music to aid in your personal journeys, have let it expand and define your outlooks and, yes, if we want to get all mawkish (don’t worry, no one is looking) let it touch our souls.

The Sex Pistols told me to GET PISSED and I took it to heart, I looked around me and saw that I didn’t have to take what was being shoved down my throat and follow someone else’s rules.  I felt Otis’ pain in the lapping bass line of “Sittin’ on the Dock of the Bay” when I moved to the Bay Area on an ill-fated follow-the-girlfrie-out-west fiasco.  Man,  that was lonely.  When the Mekons dared me to “destroy my safe and happy life, before it is too late” it was like a jagged rock being thrown into a pond, the ripples spreading through my life to this day.

Even an entire generation of trust-funded, junk-bond-traders-to-be were entranced by the rallying of Give Peace a Chance.

Music means something.  Right? RIGHT?

When I was at college in Ann Arbor, Michigan, there was a pizza place that would, at the end of the night, throw all the unclaimed pizzas away.  Being right in the prime years of our stick-it-to-the-man, Raskolnikov-light poverty we’d stake out the dimly lit alley by the dumpster and make off with whatever pizzas were discarded. 

Toppings?  Size? Square? Round? Who cared!

Fresh? Hot?  Slices missing? Misshapen pies that had slid to one side of the box?

Didn’t worry about it…

Bags of doughy, greasy bread sticks? Bonus!

Soon word spread, and, like an army of Morlocks, a growing horde of students descended on the dumpster for their rightful repast.  Every evening the garbage gourmands had to stake out their space earlier, or be craftier with their timing.  Eventually, complaints about noise, concerns over health and safety and liability led the place to start locking the dumpster.

Far from being discouraged, the hungry rabble of the night merely moved on to the next pizza joint.  Brand loyalty? Hah!  Free pizza is free pizza.  Furthermore, since the alluring patina of OUTLAW had been attached to these raids, the pepperoni was that much spicier, the rubbery cheese that much more crema della bell’italia, the bland sauce that much saucier.  Every night was a potential pizza night and the efforts to obtain this free bonanza became more and more elaborate as security and competition heightened.  Soon, there were entire message boards dedicated to the wheres and whens and howtos of dumpster diving.  No restaurant was spared.  Hell, it didn’t even matter if we were hungry; it was the getting that mattered.

Sound familiar?

Just because we CAN have everything, should we?  Just because we CAN download entire bodies of work with a couple of mouse clicks are we experiencing them  Just because we watch Citizen Kane on an iPhone, does that make us appreciate artistry?  Does anything sink in? Can it sink in during an age when the expectation and a smug environment of entitlement insists it is all for our taking? Will Lollapalooza 2019 be celebrating the cultural impact of the Arctic Monkeys?  Is mere accumulation an end?

How do we craft an identity out of this?  “Everything” is not a self; it is not a journey of revelation and awareness.  There’s no soul in it.  The music becomes ephemeral, a mere soggy box.  If the Vampire Weekend dumpster gets locked or too crowded, we’re on to the Pains of Being Pure at Heart before the anchovies cool. The bins behind Snow Patrol and the Strokes seem like positively ancient ruins (like my brother TOTALLY dove there like forever ago), trite and dismissed.

I dunno.  Maybe these are just the rantings of a crank.  Maybe it’s a good thing that the only ways for musicians to ply their trade these days is to pray for getting a cut on Gray’s Anatomy or a plum slot at the latest “it” festival.  Maybe the effects of Twitter and MySpace, which make old fashioned Lester Bangsy criticism seem like a Russian novel, are a healthy democratizing of the hype machines.  Maybe it's a boon to creativity and artistic expression.   But maybe it’s something to think about the next time you’re at some mega-event with scores of bands, loads of “lifestyle” booths selling “ethnic” crafts and hemp shit all underwritten by phone companies and multinational retailers trying to get into your pockets.  You've spent $100 plus just to walk through the gate, but somehow putting a value on the music itself is outré. Way to stick it to the cruel overlords who’ve kept music from its rightful place in our earbuds!  Now, let’s play some ‘sack and enjoy that rad new energy drink!

 Ask yourself this, though:  Am I a music fan, or am I indiscriminately rooting around dumpsters and anything’ll do?  Is the event, the doing, what I carry with me?  Will I wake up in the morning with a deeper appreciation and insight to my life and my world, or with just a goatee of grease and a vile rumbling in my gut?

 

 

A Question from Bill in South Carolina

Howdy John,

I'm an independent roots/Americana artist and writer based in the Carolinas.

I've been involved in promotion and marketing efforts for a number of recording projects over the years, and am currently releasing and promoting a new solo record.

I am familiar with the role that performance rights organizations play in tracking, collecting, and paying for "usage" of music in radio and broadcast media, but could you comment on the role that a performance rights organization might play in an artist's overall career development, or in supporting the artist's efforts when releasing a new recording or batch of material?

What does that relationship look like, and what kinds of things can the artist do to establish that relationship, engage with the PRO, and take advantage of potential services or assistance the PRO might provide?

Thanks and Best Regards,

Bill Noonan

http://billnoonanband.com

http://myspace.com/billnoonanband

 

What Would John Doe Do?

Hey Bill,
  As you may well know there's a million + ways to market & promote a record. But let's leave those other 999,999 ways alone for now & get to yr question. The PRO's that you ask about are the complete opposite of record companies. Because their non-profit status, they are required to respond to your questions. 
  I spoke to a friend who was a VP at ASCAP & here's the low down.  You can call or e-mail either organization, BMI or ASCAP, and ask who handles or specializes in whatever style of music that you write. You can also check their websites & see who their representatives are and who they work w/. If you call they should give you a name of a rep particularly favorable to yr style.
   At this point, if you are an affiliate, you can send them yr music & hope that it resonates w/ them. They sponsor various events that showcase writers and if all goes well, you could be included in those events. As in all business relationships, it requires attention, compatible personalities and a bit of luck.
hope this helps and as always thanks for writing.
yrs,
Jd

If you have questions for John Doe about music, the music business or life feel free to email them to wwjdd@knowthemusicbiz.com.

For more information on John Doe check out theejohndoe.com or YepRoc.com .

 

 

 

The goal of the Indie Artist X Project is to develop a basic, actionable music marketing plan designed around simple strategy, prioritization of tactics, easy to use tools, and a reasonable budget that can be implemented by any artist who has the inclination to follow it. About.com Music Careers, Artists House Music, Hypebot, KnowTheMusicBiz.com, MusicianWages.com and Revolution Number 3 have banded together to create this community based music marketing plan.  We will be working with one anonymous artist to design and implement this music marketing plan then track and report the actual results over a four month period. To keep up with the latest news on the IAXP follow the project on Twitter and Facebook.

Below are the Indie Artist X Project statistics for the month of July. Since July is the first month of the project we plan to use these numbers as our baseline. Now the goal is to see if we can implement marketing strategy and tactics that will move all these metrics in a positive direction through the remainder of the project and beyond.

July Stats:

Band Metrics Score:            183 / Bronze

Website Unique Visitors:    355* (10 days only)

Website Total Visitors:        628* (10 days only)

Website Sales – CD’s:        Waiting on Report

Website Sales – MP3’s:      Waiting on Report

Website Sales – Merch:      Waiting on Report

Fan List:                              739

Live Show Attendance:      1120

Live Show Net Sales:          $1650.00

Live Show CD Sales:          $510.00

Live Show Merch Sales:     $460.00

Distribution Sales:               Waiting on Report

Licensing Royalties:             $0.00

BMI Royalties:                      $0.00

Soundexchange Royalties:  $0.00

MySpace Royalties:             $0.00

 

Some notes about July’s IXAP reporting:

• Band Metrics is a relatively new service so it’s not yet entirely clear how to interpret the score of 183. It’s assumed that if the IAXP marketing efforts are successful that the Band Metrics score will increase accordingly.

 

• Indie Artist X launched a new website on July 21^st so we only had 10 days of website traffic data to report during July. The indie label that released IAX’s two previous records hosted and managed the original website and didn’t provide site traffic details to the artist.

 

• The Artist’s indie label also handled direct e-commerce transactions and fulfillment from the artist website and only provided semi-annual reporting so we don’t have any data to report for website sales during July. The label is winding up their operations and has agreed to let IAX handle direct website sales and fulfillment moving forward. Since IAX is now using the Audiolife for ecommerce sales and fulfillment on their website we will have monthly sales figures to report in the upcoming months.

 

• Distribution for the indie label is handled through InGrooves. Again, since the label only provides semi-annual reporting we don’t have distribution sales for report for July. The label has agreed to allow Indie Artist X to work directly with the distributor moving forward so we expect to have more frequent and better distribution sales reporting available in the months ahead.

 

Where are the streaming and online radio royalties?

Many indie artists have long complained about not receiving PRO royalties for terrestrial radio airplay. The census taking methodology the Performance Royalty Organizations (ASCAP, BMI and SEASAC in the US) have traditionally used to track terrestrial radio airplay falls well short of capturing actual plays for individual songs.  In defense of the PRO’s, trying to track actual terrestrial radio airplay for every individual song from every single radio station is no easy task since up until the last few years terrestrial radio stations traditionally used manual, hand written logs to track what songs were played. Given that compiling aggregate terrestrial radio airplay data from hand written logs is all but impossible the census methodology did seem somewhat reasonable, even if it was bound to exclude plays and ultimately royalties for many indie artists.

I am a big fan of the opportunity Internet radio provides for indie artists. However, after reviewing the Indie Artist X statistics from July it’s hard to comprehend why there are simply no royalties from BMI or Soundexchange at all. A quick check of IAX’s profile on Last.fm shows the artist is approaching 4000 plays. I personally hear Indie Artist X’s music daily on my Pandora station. Despite clearly receiving Internet radio airplay, being registered with BMI and Soundexchange and having their most recent record posted on multiple Internet radio stations for the last two years, Indie Artist X has never been paid any royalties for Internet radio airplay or on-demand streaming. Yes, IAX did write the songs and owns the copyright to all their music.

So where are the Internet radio and streaming royalties for Indie Artist X?

Is the problem that Last.fm, Pandora, Imeem, etc. are simply not reporting all their plays to BMI and Soundexchange? Are BMI and Soundexchange collecting royalties from the Internet radio stations but not paying royalties to Indie Artist X? Are the royalty organizations applying the same dated and flawed terrestrial radio census methodology to calculate Internet radio royalties even though the play data for each song is captured electronically and stored in databases by the providers?

These are all troubling questions. Admittedly, I don’t know where the breakdown in this process is occurring.  I’m no copyright attorney or topic expert but I’m operating under the assumption that the copyright law and court rulings that have set current royalty rates are supposed to apply to all artists receiving Internet radio airplay, not just those in the Billboard Top 200.

All of the above mentioned organizations and companies owe their very existence to the songwriters and musicians that create music.  It’s time they figure out how to calculate and pay royalties on a per play basis for all artists. Even a few thousands Internet radio plays deserve compensation.

Despite the very public debate and the tremendous amounts of time and money spent lobbying Congress and the Copyright Royalty Board over Internet radio royalties it appears the Internet radio providers and royalty collection organizations have left Indie Artist X out of the equation.

John Doe is the founder of the seminal Los Angeles punk group X, a solo artist and actor. John answers questions from our community members in the WWJDD? blog. Photo by Autumn de Wilde.

 

A question from Nick in the UK

Hey John,

I was thinking about how people measure success in music today - it used to be simply sales, but I'm curious what the other metrics might be that a band/artist can use to demonstrate an improvement in performance from album to album.  Is it email subs?  Myspace Friends?  Venue size?

It would be great to get your perspective.

Cheers,

Nick Fitzsimmons

www.pennydistribution.com

What Would John Doe Do?

Hey Nick,
  Not to sound too Zen but; How do you measure success?  If X would've measured it by sales, we would've given up after the third record. No one has to tell you that the music biz is a cruel master at best. You have to measure success on yr own terms. When I finally understood that making a record (writing & recording) was the greatest reward I would ever receive from the whole process; the eventual outcome (sales & reviews) took it's proper place. And I learned to enjoy it ten times more. I believe they call it "being in the moment".
   I would say that now-a-days the same holds true. As long as yr audience is maintaining or growing, @ either live shows or on the web, and you still love playing & singing, then you are succeeding. If your goal is to make a lot of money or wield power & you're not doing that, choose a different line of work. If your gift is to create or perform & the music biz gives you that opportunity, then you are succeeding. Many people in music have more than one job & that allows them to be as artistic as hell when they write & play. GREAT REASON FOR BOTH ! !  don't forget most poets in the 19th & 20th centuries had "day jobs". You, as the artist or label rep, will know when you are successful or not because we are all making this shit up as we go.
I hope this is helpful and as always,
thanks for writing,
Jd

If you have questions for John Doe about music, the music business or life feel free to email them to wwjdd@knowthemusicbiz.com.

For more information on John Doe check out theejohndoe.com or YepRoc.com .

 

This post is part of a group blogging event on this topic organized with our friends at MusicianWages.com and About.com Music Careers.

Hello,

I have a teenage son who tells me his pirating music is no big deal. Since he is a musician himself, I point out to him that someday that’s going to be his money people are stealing. But he remains unphased.

He tells me the record sales make money for the record label, not the artist. He says that the artists make all their money from touring and live concerts. He thinks the pirated music promotes the concerts and therefore helps the artist make more money. I still don’t allow pirating in my house.

But tell me what you think - as artists out there having your work “shared,” are you just glad to have it being enjoyed, or does it bother you? Admittedly, he is stealing music that is recorded by major record labels, so maybe its different than the independent musician working for his living. But I’d still like to hear what you think.

Thanks,
Valerie

 

Valerie,

Your son is correct when he points out that artists typically don’t get paid royalties from record sales and P2P file sharing can help artists generate awareness that can lead to concert sales. However, I believe your son’s argument that it’s “no big deal” to pirate music is largely misguided.

Below are few things to consider:

Record Labels are Not Inherently Evil

It’s true the traditional record label model for compensating recording artists is largely unfair and that the vast majority of artists never see any royalties from record sales. This needs to change and I believe recording artist compensation (among many other things) will have to change in the near future if records labels are going to survive. Many recording artists simply don’t have access to the financial resources or marketing expertise that is often times required to get their music heard by a critical mass of fans.  

Record labels can provide a valuable service to artists by investing capital and time into developing an artist’s fan base. Most record labels, majors and indies, have good people on their staff who are true, die hard music fans and work tirelessly to promote and support the artists on their rosters.

I would wager that if most music fans truthfully revisited their all time favorite albums and CD’s they would find that many of them were put out by the very record labels that are now so popular to despise.   

P2P File Sharing Networks are Not Evil Either

The field of artists vying for attention of music fans is more crowded than ever. The biggest challenge for most artists these days is just getting their music heard by fans. P2P file sharing networks have proven to be a great music discovery tool for fans and a great viral marketing tool for many artists. I encourage all artists (and labels) to find innovative ways to include P2P file sharing in their overall marketing strategy and make at least some of their some of their songs available to fans via P2P networks.

P2P file sharing is a concept and technology that is not going away. The debate about whether the technology should be allowed to exist is pointless at this stage. A real effort should be made by the multitude of rights holders in the music industry to figure out a commerce based P2P business model. It’s equally shocking and sad that 10 years after the rise of Napster none exists.

If your son uses P2P networks to discover new music then supports the bands he really likes by purchasing their music, merchandise and concert tickets I think that is a reality many artists are growing to accept and some even embrace. If he simply uses P2P downloads in lieu of ever actually buying music I personally think that’s very hard to justify.

Touring is Not Enough

It’s largely a myth that artists can simply earn a living by touring. With the exception of a small number of well established artists (who most likely have or had significant record label support) it can be quite difficult for even very talented artists to get booked at all, let alone tour. The artists who do tour can find it very difficult to turn a profit.  Anyone who claims indie bands make money on tour has never been in an indie band on tour. Record labels often times end up paying artists on their label roster “tour support” money to help cover some of the costs of touring just so the artist can stay on the road.

There are simply too many artists interested in playing for a limited number of venues and a limited number of fans even willing to pay to see live music.

Additionally, songwriters who are not performing artists are not able to earn money through touring.

Here’s the Real Problem

Record labels need to generate a profit from sales of recorded music in order to have cash to invest in new artists and to support their existing artist roster. If music fans no longer buy music (they just pirate it) record labels can’t generate the cash that’s needed to invest in artists or even survive.

I am a big proponent of the “direct to fan” movement where artists by-pass the traditional record label route and build a relationship directly with their fans. There are now a large number of innovative, technology related options available to artists for directly reaching fans through online distribution, marketing, commerce and viral promotions. Unfortunately, almost none of the companies that have developed these wonderful tools have sustainable business models (turns a net profit) and rely heavily on outside investors or support from a parent company to temporarily survive.

In other words, virtually no one in the music industry has figured out how to build a sustainable business model when fans don’t directly pay for music. The public and private investors who provide the capital for the industry will eventually flee for greener pastures. It doesn’t take a PHD in economics to understand how this trend, left unchecked, will ultimately play out for the industry, artists and fans.

Like all industries, the basic economic model for the music industry is fairly simple. The music industry needs revenue to survive and prosper.

If your son is truly a music lover I encourage him to seriously contemplate what the future of the music industry just might look like when music fans are no longer willing to pay for music.  I would then encourage him to go buy some music by his favorite artists.

 

Kristin Thomson is Education Director of the nonprofit Future of Music
Coalition and co-owner of Simple Machines, an independent record label, which released over seventy records and CDs from 1991-1998. She also played guitar in the band Tsunami, which released four albums from 1991-1997 and toured extensively. She currently lives near Philadelphia with her husband Bryan Dilworth, a concert promoter, and their son, where she also plays guitar in the lady-powered band, Ken.

 

You don’t have to be a super-genius to notice that the music economy isn’t exactly stable at the moment. (Then again, neither is the rest of the economy). One thing is certain — sales of compact discs continue to plummet, and it’s tough to predict which of the new music services will thrive — or even survive — in this period of transition.

Check out this article in Digital Music News for a thoughtful look at the state of digital music in 2009, and a few salient predictions of where things might end up a little further down the road.

Launching a music site or service that’s simultaneously affordable, appealing to music fans and fair to rightsholders is clearly difficult, especially in today’s economy. It’s a tough time for many of these new sites and services, but articles like the one above always get us thinking about those who create the music itself. From the beginning, FMC has stood for the right of musicians to be paid for their work, so we want make sure that artists aren’t overlooked in the ongoing experimentation with new music business models.

This is why today we’re releasing “Principles for Musician Compensation in New Business Models” (or “Artist Principles”) — a set of guidelines for ensuring creator compensation in an evolving music landscape. Crafted by Ann Chaitovitz with input from over a dozen industry experts, the Principles represent an important first step in ongoing discussions about musicians’ revenue streams.

We’re called the Future of Music Coalition, so we like to look ahead. In fact, the Principles are primarily meant to apply to music services that have yet to be brought to market. But, FMC also knows it’s important to learn from the past. The majority of the Principles are based on what we’ve observed from the launch of existing services. For example, you might recall our earlier post about the launch of MySpace Music, which saw the major labels enter a joint venture with the social network that reportedly included a cut of the advertising and equity stakes in the enterprise. Yet it remains unclear if or how the labels plan to share that equity or ad dollars with their artists.

And that’s just one example. With music moving beyond the physical (and even download) model, it becomes increasingly important to make sure that musicians are fairly compensated. Regardless of the system, artists deserve to be paid for their work — especially considering it’s their music that’s attracting listeners (and hopefully, dollars) to that service.

But without reasonable guidelines, creators could be excluded from any revenues generated by these new models. Hence, the Artist Principles. We’ve even drafted a point-by-point explanation of each principle, offering examples and what we think are possible ways forward, which you can read here. Just trying to be helpful.

Clearly, there’s no silver bullet solution to the challenges currently faced by artists, musicians and entrepreneurs. Yet, as always, we think the best thing to get a conversation going. And the Artist Principles surely will.