Music Marketing [dot] com

Burnlounge Revisited

For the last 18 months (or more), people have tried to get me involved wtih Burnlounge, an online music retailer, similar to iTunes, but with a MLM element.

See past comments on Burnlounge here.

A couple of thoughts, since the Burnlounge people are coming around again...

1. David Jackson of Musicians' Cooler is doing a live podcast on the subject on May 6 at 8pm Eastern. Visit musicianscoolerlive.com to get more information on that.

2. Word is that Burnlounge is no longer charging people to sign up.  This could change your  change of making money with the program, although I've yet to find a single person who has purchased music from a Burnlounge store.

Why Artists Get Dropped

by Chris Stranding

MusicDish Network Sponsor

Question: Why is it that so many albums don't get released once a label signs an act?

Answer: A few things can go wrong. First, it can take a long time for a record company to court an artist or group, and then another good amount of time while attorneys are going back and forth getting the contract right. Once the deal is locked in, the label has to schedule the release and the band has to make the album. From the beginning of courtship to the time an album is slated for release could quite easily be two to four years. During this time several factors can cause a project to go south.

If the A&R person who originally championed this act gets fired or leaves the company, 9 times out of 10, the company will drop that act. Unless the act has had past success, the new A&R guy on board usually has his own vision, or bands he or she is courting, and doesn't get involved.

During the courting/signing and scheduling period, if the project is a band, then it is likely that this band may fall apart for many different reasons. It could be personal, or they decide they can't stand each other. Quite often band members are not good business people and their lack of grounding gets in the way. I do see a trend away from this these days, as labels are more and more reluctant to get in bed with artists who are losers at life, despite their creative talent.

Finally, the band might deliver a rotten album. If the album does not contain any marketable songs, i.e., something radio can strongly get behind (labels can usually do research to see if a song will be a hit before it is released), then the label will either drop the artist or have them re-record as much of the album as needed. This is where hit producers come in to lessen the odds of disaster. If the project is over budget and a crappy record comes through, usually the band get dropped as it doesn't make good business sense to keep them on.

Last but not least, the record company can go bankrupt, causing a band to be stuck in limbo until legal things turn around. This can be the worst scenario of all.

Provided by the MusicDish Network. Copyright © MusicDish LLC 2007 - Republished with Permission

Big on the Internet

Ohhh...  I'm in Wikipedia.

Boy Band on the Run

Well, not really a Boy Band, but the guy known for making a "system" out of the concept and bringing it to a new level with acts like the Backstreet Boys and N'Sync, Lou Pearlman, is currently at large. 

According to Florida state officials, Pearlman swindled people out of $317 million and, more surprisingly, bilked banks out of an additional $150 million.

More info...

New Media Income Streams In The Music Industry

by Dina LaPolt

MusicDish Network Sponsor

In addition to income generated from traditional record sales, music used in films and television, and sources from music publishing, there are other income streams (some new and some not so new) available to the music industry. Please note that although the information contained in this article has been updated, it may be obsolete in a few months time as the music industry is changing so rapidly that those of us who work in it can hardly keep up! However, the one fact that remains constant is that music is now available everywhere.

Today, music is available through digital download services such as iTunes, eMusic, and Napster; streaming interactive subscription services such as Rhapsody and MusicNet as well as non-interactive subscription services via MusicChoice, Sirius, and XM Satellite; video games such as Grand Theft Auto and  Madden Football as well as through your cell phone.   

In addition, there are many Internet destination sites that are music driven and visited by millions and millions of people everyday such as MySpace (who, incidentally, just announced that they are working with SnoCap to try and launch a music download service that would let musicians sell music directly from their profiles and their fans' profiles).

In an effort to keep the confusion at a minimum, below are just a few of the descriptions for some of these formats and the breakdown of some of the income paid to artists and songwriters and others.   

Digital Downloads

According to Billboard Magazine, U.S. album sales dropped to 588.2 million in 2006, which is a 5 percent decrease from the 619 million copies scanned in 2005 and which is the first time since 1993 that the U.S. sales figure has slipped below the 600 million mark.

However, as grim as the foregoing may seem, the increase in U.S. digital sales hit an all time high, especially the week after Christmas 2006, with a whopping 30.1 million tracks sold according to Nielsen Soundscan (582 million downloads sold total for 2006). 

This is a 51 percent increase from the 19.9 million digital tracks sold during the last week of the year in 2005. In addition, Fergie's popular hit single, "Fergalicious" also set a new record for the most tracks sold in a single week with 249,000 downloads. 

Although there are numerous digital download services available throughout the world, the most prominent seems to be Apple's  iTunes. Through mass marketing campaigns that extend throughout the world and feature such globally recognized artists such as Eminem, U2, and the Black Eyed Peas, iTunes is offered via both PC and Mac computers, which is then downloaded to a handheld device called an iPod.

By September 2006, iTunes reported a total of 1.5 billion downloads sold. In addition, indie-only specialist, eMusic, announced they have just surpassed the 100 million mark at the end of 2006. Pursuant to the iTunes agreement with the record labels, the iTunes share of income is $0.29 cents out of each $0.99 download.

The following sets forth the way in which many of the record labels in the U.S. pay third parties with respect to each $0.99 download, assuming that the recording agreement allocated the artist an "all in" royalty rate of 15% (i.e., which includes a producer royalty of 3 percent, leaving a "net artist" rate of 12 percent): 

Artist iTunes Royalty (with wholesale mark-up)

$0.99 download single song price to the consumer
less $0.29 to Apple
left $0.70 x 130% (wholesale markup) x 12% (net artist net rate) = $0.1092 cents per download

Producer iTunes Royalty (with wholesale mark-up)

$0.99 download single song price to the consumer
less $0.29 to Apple
left $0.70x 130% (wholesale markup) x 3% (producer rate) = $0.027 cents per download

Artist iTunes Royalty (without wholesale mark-up)

$0.99 download single song price to the consumer
less $0.29 to Apple
left $0.70 x 12% (net artist net rate) = approximately $0.084 cents per download

Producer iTunes Royalty (without wholesale mark-up)

$0.99 download single song price to the consumer
less $0.29 to Apple
left $0.70 x 3% (producer rate) = $0.021 cents per download

Although not widely practiced, there are some labels that take this further by first deducting the mechanical royalty from the $0.70 cents prior to calculating the iTunes royalty, which is then paid to the artist and the producer and which results in a lower royalty rate as follows: 

Artist iTunes Royalty (with wholesale mark up)

$0.99 download single song price to the consumer
less $0.29 to Apple
left $0.70 less a digital mechanical royalty of $0.091 cents
left $0.609 x 130% (wholesale markup) x 12% (net artist net rate) = $0.095

Artist iTunes Royalty (without wholesale mark up)

$0.99 download single song price to the consumer
less $0.29 to Apple
left $0.70 less a digital mechanical royalty of $0.091 cents
left $0.609 x 12% (net artist net rate) = $0.073

With respect to mechanical royalties paid for digital distributions of musical compositions, although this may change in the future, record companies in the U.S. have been using a notice of compulsory license when notifying music publishers of their intention to offer digital downloads of musical compositions. 

This 'notice' usually lists the record company, the recording artist, the name of the musical composition, the identity of the songwriters and music publishers, and the expected distribution date of the 'digital phonograph delivery' of the song. 

These compulsory licenses are typically referred to as "DPD Licenses" and they are paid at the maximum statutory rate which is currently .091 cents for songs under 5 minutes or 1.65 cents per minute if the song is over 5 minutes.

For recordings produced pursuant to contracts entered after 1995, the law prohibits a controlled composition provision of the artists' contract from discounting the compulsory DPD rate, so even if there is a controlled composition clause in the contract, the singer-songwriter should receive the entire .091 cents.

Can Unsigned Artists be digitally distributed through iTunes?

An artist who has not signed to a major or independent record label can still get their music distributed via iTunes by a number of various companies also affiliated with Apple. The two that I will mention in this article are cdbaby.com and iFanz.com.   

Out of the $0.70 cents remaining after Apple takes its $0.29 share, cdbaby only takes a 9 percent fee for each download, passing through to its artists a whopping 91% of the income! iFanz charges 40 percent per download.   

In both cases, the artist is responsible for all third party payments including any royalties payable to producers of the recordings and digital mechanical royalties which are paid to owners and/or controllers of the musical compositions contained in each recording. 

With respect to digital mechanical royalties, the online service (i.e., iTunes), like a physical retailer, pays these royalties to the record companies (who own and control the recordings containing the songs) who in turn pay either the songwriters, music publishers or the Harry Fox Agency who in turn pays the music publishers. 

WEBCASTING ROYALTIES

There are two types of licenses available for either interactive or non-interactive services. See below for a brief description of both: 

A. Interactive Subscription Services

"Interactive" services enable the consumer to interact with the service to hear a specific recording and to create personalized radio stations and play lists.

Examples: Rhapsody (through RealNetworks) and Napster.

- For a monthly subscription fee, these types of services offer continual non interrupted interactive streaming of music, which also allows the user to download tracks to a CD for a separate fee, sometimes as low as $0.79 per download. 

- Some music providers such as Yahoo also offer the streaming of music for free (downloads are separate) because they are funded through advertisers. As result, the streaming of music is interrupted by its advertisers' ads.

- Specifically, with respect to Rhapsody, once logged on, it plays all day long and the user can create personalized radio stations.

- Although some notable artists are missing on Rhapsody and some other prominent subscription services  (e.g., The Beatles, Led Zeppelin, and AC/DC), they are rapidly increasing content every day.

- Generally, these services pay $0.01 to the record label each time a recording is streamed.

- With respect to downloading, generally the iTunes royalty formula applies.

Although permanent royalty rates are still being worked out between the record labels and some of their artists as the industry evolves more into the digital realm, a partial list of interactive digital subscription services and information pertaining to approximate royalty rates and fees can be found by logging onto www.cdbaby.net. Once logged on, click on "Sell Your Music" and then click on "Partner Companies."   

As a matter of fact, the information presented on the www.cdbaby.net website is very informative with respect to digital distribution of music and I even urge many of my colleagues to review this information.    

B. Internet Radio Stations and Non-Interactive Subscription Services

Terrestrial radio is a "regular" radio station ­ No performance royalties are paid to recording artists or owners and controllers of sound recordings. Performance royalties are only paid to songwriters and music publishers through ASCAP, BMI and SESAC.

- Very few terrestrial radio stations have corresponding Internet radio stations that broadcast the station over the Internet waves. (According to Ron Gertz of Royalty Logic, only about 600 radio stations out of 16,000 were making Internet simulcasts as of September 2006) 

- Under the Digital Millennium Copyright Act of 1995 ("DMCA"), Congress provided for a "Webcasting Royalty" to be paid to the owners and/or exclusive licensees of master recordings being streamed.

·  Webcasting royalties are only paid for "non-interactive" radio and subscription services. Unlike Rhapsody and Napster's interactive services, the consumer cannot pick and choose which particular songs or artists he wants to hear.

·  The two FCC-approved non-interactive satellite digital subscription services are XM Satellite and Sirius.

   

-  In addition to Sirius and XM, there are also non-interactive music subscription services available via most digital cable television lines and similar services via satellite transmission for DirecTV and Dish Network. These services, referred to as "pre-existing satellite subscription services" (or "PES") are MusicChoice and Muzak. Originally, there was a third PES service, DMX but they filed for bankruptcy and Capstar purchased some of their assets.

It is currently under dispute whether or not Capstar can be a "PES" since it is not a successor to DMX. Other services, including Sirius, who are now providing background music channels to DirectTV and Dish Network have also taken the position that they can be a PES even though all PES services were named in the original 1995 statute. NOTE:  The foregoing information could be obsolete very soon.

All these services must pay the statutory performance license fees for the master recording and must also pay the performance right organizations for the performance of the musical compositions.

PUBLIC PERFORMANCE  ROYALTIES FOR INTERNET LICENSES

A. The Master Recording

With respect to the non-interactive subscription services and Internet radio stations, there are currently two collection societies that collect money for owners (or those who have the right to collect for the owners) of the master recordings and featured artists.  These two collection societies are SoundExchange and Royalty Logic.

SoundExchange was the first performing rights organization in the U.S. to collect and distribute royalties to sound recording copyright owners and featured artists and they are a not-for-profit organization governed by a board of artist representatives and major and independent label representatives.

Royalty Logic, based in Los Angeles, is an independent performing rights organization for the negotiation, licensing, collection and distribution of digital performance royalties payable to featured performing artists and sound recording copyright owners. Royalty Logic is actively engaged in promoting regulations to maximize license fee collections and royalty distributions on behalf of affiliates at the lowest possible cost.

WHO JOINS?

- Record companies or any owner/controller of sound recordings; and
- Recording artists, etc.

Featured recording artists have the same right to designate a collective as the sound recording copyright owner (i.e., their record company). Therefore, an artist can choose to be represented by a different collective than the artist's record company. 

THE PROFIT SPLIT

The law provides that the statutory license revenues be split as follows:

50 percent to the owner of the master recording (i.e., most often the record company), 45 percent to the featured artist*

5 percent to the non-featured musicians and vocalists (paid to the independent administrators who are responsible for paying the non-featured performers. Union membership is not required for payment).

*Please note that it has become industry custom to share a portion of the featured artist's royalty with the producer of the sound recording through a letter of direction which is attached as an exhibit to the producer agreement between the recording artist and the producer. 

SoundExchange and Royalty Logic receive license revenues from satellite, cable and Internet radio with licenses for both commercial and non-commercial services, which include track level accounting of performances to its members and the most up-to-date information on streaming and digital transmissions.  More information can be found at www.soundexchange.com  and www.royaltylogic.com

B. The Musical Composition

With respect to the musical composition, there are three (3) performing rights organizations in the U.S.: ASCAP, BMI, and SESAC.

ASCAP, BMI, and SESAC collect public performance income with respect to musical compositions and  all have various licenses that allow these Internet services, whether interactive or non-interactive, to perform all of the songs in each of their repertory.   

These Internet licenses do not allow the reproduction or distribution of the songs (which would be handled through the record company) nor do they allow the pubic performance of the master recordings (which would be handled through SoundExchange).

Types of Public Performance Internet Licenses

The following applies to the public performance of songs via the Internet BUT please note that a lot of these licenses are still in their "experimental stages."   Accordingly, please regularly check the website of your respective performing rights organization to make sure they have the most up to date and accurate information.

ASCAP currently offers three (3) types of Internet licenses. The first is a non-interactive license that does not allow consumers to download or otherwise select particular songs. The second type of license is an interactive license that does allow consumers to download or otherwise select particular songs. ASCAP's third type of license authorizes the public performance of its songs in its repertory via wireless devices such as mobile phones.  The fees paid to ASCAP by these Internet sites are based on revenue or activity of each Internet service.   For more information please log onto the ASCAP website at www.ASCAP.com and click on "Customer Licenses" on the left side of the page.

BMI's main license type is one where fees are computed on a "gross revenue calculation" where music is the primary feature of the particular site or a "music area calculation" where music is only a part of the total website traffic for that particular site. For more information go to www.BMI.com.

SESAC also offers a license that provides for fees based on the number of monthly page requests as well as whether or not there is advertising on the site. For more information go to www.SESAC.com.

The above information is excerpted from the music business person's bible, Music, Money and Success:  The Insider's Guide to Making Money in the Music Industry  (4th edition) by Jeffrey Brabec and Todd Brabec.

MUSIC USED IN VIDEO GAMES AND ON YOUR MOBILE PHONE

A. Music in Video Games

It appears as if the video game industry has followed the model used by the film industry when it comes to licensing music for video games. Accordingly, with few exceptions, most game companies license music as a 'buy-out' as opposed to paying a royalty per each game sold like is customary for CDs.

Buy-outs are somewhere between $5,000 to $10,000 per master recording and $5,000 to $10,000 for the musical composition embodied on the master recording which is then divided up among the songwriters and/or music publishers relative to each parties' copyright ownership interest.   

Most of these licenses tend to be short term usually spanning 5 to 10 years with some stating that they are for the 'term of copyright' or for as long the game is distributed.   The territory is usually the world unless the artist has a lot of leverage.  Additionally, there may be language providing for the game to be available on-line as well as any other 'new media' format that is developed in the future.   

Beware of language in these agreements that grant the game company the right to release the music in the game on an audio only CD or a DVD.  If this language is in the agreement try to take it out or at the very least try to pre-negotiate the royalties for the CD like obtaining a full mechanical royalty for the song (usually it will be 75 percent of the statutory rate) and a 'most favored nations' artist royalty rate for the master recording.

B. The MobileTone formerly known as the "RingTone"

The downloading of music on cell phones has become a relatively new source of income for record companies and their recording artists. Prior to being able to download an actual master recording on to a cell phone (for purposes of this article we will refer to the downloading of master recordings on cell phones as  MobileTones),  a consumer could only download a 're-play' of that recording which was referred to as a  RingTone and  only songwriters, music publishers, and performance rights societies made any money from the traditional RingTone.

Before I go into an explanation of "who gets what" for every MobileTone download, it is important to understand how monies were paid out for the traditional RingTone. Because the traditional RingTone was a re-play (i.e., re-creation) of a song contained on a recording, there was no use of the actual recording which is usually owned by the record company.

Accordingly, record companies and their recording artists were not entitled to any sound recording royalties for the downloading of the traditional RingTone (although crafty record company lawyers attempted to try and stop music publishers and their songwriting recording artists from licensing the right to re-create their songs for RingTones by limiting the re-recording provision in the recording agreement, few record companies were successful at this).

The "traditional" RingTone was either a  monophonic tone (i.e., single tone)  or polyphonic tone (i.e., many tones) whereby the actual song was recreated  through a series of tones/notes, most of them through MIDI (i.e., musical instrument digital interface) as opposed to the download of the actual master recording featuring the artist's performances. Accordingly, only songwriters, music publishers, and performing rights societies (i.e., ASCAP, BMI, and SESAC) were receiving any income from traditional RingTones. 

With respect to the old RingTone deals, an agreement was made between the  cell phone carrier (such as Verizon or Cingular) or a third party cell phone aggregator (such as Xingy or Hudson) and music publishers and/or songwriters for the re-creation (i.e., re-play) of a song either monophonically (archaic) or polyphonically (preferred). The terms of these agreements were short ranging from 1 to 3 years. 

Although most of the deals were worldwide, the music publisher would most often try to limit the deal to the U.S. and Canada. The traditional way in which the phone carriers (or third party aggregators)  paid royalties to the owners and controllers of musical compositions in the U.S. was the greater of ten cents ($0.10) or ten percent (10%) of the RingTone price paid by the consumer. 

Accordingly, there was always a floor of ten cents ($0.10) per RingTone which is a step up from what songwriters and publishers were used to being paid for each song contained on record albums pursuant to the statutory rates set by the U.S. Copyright Office (currently the rate is $0.091 cents for under 5 minutes of playing time).  Accordingly, if a RingTone  sold for $2.49 then the royalty paid to the owners and controllers of that particular musical composition would be $0.25 cents.   

In addition, many of these older RingTone deals were contingent on the company's also obtaining licenses from the respective public performance organization (i.e., ASCAP, BMI, or SESAC), and those monies will flow to the publisher and songwriter as well.

Finally, in the later part of 2005 and in 2006, the U.S. caught up with the rest of the world with respect to the 3G technology required on the cell phone in order to download the actual master recording (and other content) on cell phones. (As stated above, we will refer to master recording downloads on cell phones  as MobileTones as opposed to RingTones.) 

Because the technology has advanced so quickly, cell phone carriers now can provide customized cell phones which offer a number of personalized services such as music shops, music video channels, buying tickets to concerts through mobile ticketing, visual radio, personalization content such as wallpaper and imaging featuring your favorite artist, and editorial content.   For these mobile deals, it is important to note that the cell phone carrier (i.e. Verizon, Cingular, etc) receives fifty percent (50%) of the fee paid by the consumer for each MobileTone downloaded.   

Accordingly, if a MobileTone costs $2.49 to download then the carrier receives $1.25. Please note that sometime in 2006, the carrier started paying the public performance societies (i.e., BMI, ASCAP, and SESAC) directly out of their fifty percent (50%) share ($1.25) (see below), but this had not always been the case. Early on the public performance societies were being paid out of the remaining $1.24 along with everyone else! Of course, this resulted in a lower royalty paid to the recording artist.

With respect to the licensing of the song contained on the MobileTone, it is important to remember that the old RingTone deals allocated music publishers and songwriters a mechanical royalty equal to ten percent (10%) of the retail price to the consumer, so they were getting really used to a $0.25 cent royalty for every Ringtone sold for $2.49.  Of course, as you can imagine, record companies flipped out when they were told by music publishers that the mechanical royalty for a MobileTone was $0.25 cents per download!    

REMEMBER, record companies are used to paying the statutory rate (many times less!) for songs embodied on albums. As noted above, the current the minimum statutory rate is currently .091 cents for songs under 5 minutes of playing time. For the record company, that is a $0.16 cent increase per MobileTone!    The key point is that this 'mechanical royalty' was freely negotiated between the parties because the MobileTone was considered a derivative work, outside the compulsory license system of Section 115 of the U.S. Copyright Act.

Fortuitously for the labels, the newly created Copyright Royalty Board ("CRB") had been engaged in a 'mechanical rate setting procedure' since the beginning of 2006 to set the mechanical royalty rate for all Section 115 uses. The record companies argued that MobileTones are not derivatives but instead "cover versions" of songs, which would make them subject to the compulsory license requirements.

Before the labels could attempt to try and enforce their position, they needed the CRB to rule on the matter and the RIAA (lobby group in Washington for the major labels) demanded such a ruling from the CRB who referred the question to the Copyright Office.  On October 16, 2006, the Copyright Office ruled that a MobileTone is subject to the Section 115 compulsory license system. Currently, the CRB will now proceed to set mechanical royalty rates for MobileTones, which could be as low as the $0.91 (or lower if the labels get their way!) that is currently paid for cover versions of songs.   

The songwriters and publishers, represented ostensibly by the National Music Publisher's Association (NMPA), reacted very negatively to this ruling, as it effectively reduces their MobileTone income by over sixty percent (60%). In a weird quirk in the rules, the songwriter/publisher interests cannot appeal this decision to the DC Circuit Court until after the CRB sets the mechanical rate, which could happen sometime in 2007. Naturally, this has become a highly contentious issue between the RIAA and the NMPA. And this may not even be the most contentious issue raised before the CRB.

In a daring move, the RIAA is also seeking a decrease in the rate for all Section 115 mechanical uses. Their filing asks for a return to the statutory rate as set in the year 1981. This would apply to both physical and online/satellite product. The statutory mechanical rate has never been reduced. If the RIAA succeeds, all songwriters and publishers will be faced with an unprecedented decrease in statutory revenue. 

Portions of the foregoing section were contributed by Jay Rosenthal, Esq., co-legal counsel to the Recording Artist's Coalition. Jay can be reached at JRose13@aol.com .

Current MobileTone Royalty Breakdown:

As for the other royalty participants of the MobileTone, here is a hypothetical breakdown: 

Retail price to the consumer: $2.49                                  

Less  $1.25 to the carrier (i.e., Cingular, Verizon, etc) (representing 50% of retail) (carrier pays the performing rights societies [ASCAP, BMI, or SESAC] 5% of retail which equals  $0.12.5 cents per download)                         

Leaves   $1.24

Less       $0.25     to the music publishers/ songwriters (representing 10% of retail)
NOTE:   As of October 16, 2006, the US Copyright Office ruled that compositions  contained in MobileTones (formerly the RingTone) is subject to compulsory licensing. We are waiting for new rates to be determined!

Leaves   .99 cents   to record company (then record company the Artist a portion of this amount- see below)

In addition to battling the music publishing and songwriter community, record companies are also having a battle with some of their recordings artists as to whether MobileTones (and downloads) constitute a sale or a license.

Under the terms of a recording agreement, when the record company 'licenses' a  recording featuring its artists' performance, the artist is entitled to fifty percent (50%) of net as opposed to an artist royalty. Obviously paying an artist fifty percent (50%) of the $0.99 cents the record company is receiving for MobileTones (or fifty percent (50%) of what the record company is receiving from iTunes) amounts to far more than what they are paying their artists.

Unfortunately, the "sale vs. license" battle is one in which the recording artists are losing.   See below: 

Sale vs. a License?

Sale:   

.99 'net' to record company for a MobileTone download multiplied by the Artist net royalty rate as follows: 

EXAMPLE:    $0.99 x 12% = $0.1188 paid to the artist if the Artist

License:

Artist receives 50% of the .99 'net' to record company for MobileTone download as follows:

EXAMPLE: 50% of .99 cents = $0.495 cents

By the time this article is published, much of the information in the article may have already changed as the music industry is moving at such a rapid pace.  The good news is that there are plenty of new opportunities for artists- both signed and unsigned.   

For the most up to date information pertaining to the music industry, please visit the following websites: 
www.soundexhange.com   
www.royaltylogic.com
www.ascap.com   
www.bmi.com
www.sesac.com
www.cdbaby.net 
www.billboard.com   
www.copyright.gov   
www.recordingartistscoalition.com

DISCLAIMER: The information contained in the foregoing materials is provided solely for educational and general informative purposes and shall not be deemed legal advice or a solicitation for business by LaPolt Law, P.C. As such, LaPolt Law, P.C., shall not be liable for any damages resulting from the use of such information contained in these materials.  Neither the presentation nor receipt of the foregoing materials creates an attorney-client relationship.  Please note that the attorneys at LaPolt Law, P.C. are licensed to practice law only in the State of California, unless otherwise noted. In addition, please note that the information provided in the foregoing materials may not reflect the most current developments in the law and are general in nature and, accordingly, said information should not be relied upon or construed as legal advice and is not a substitute for obtaining legal advice from an attorney licensed in your state. LaPolt Law, P.C. assumes no liability or responsibility for any errors or omissions in the contents of the foregoing materials. 

Provided by the MusicDish Network. Copyright © MusicDish LLC 2007 - Republished with Permission

RockPop Cover Story - Bowie's Ziggy Stardust

"The Rise and Fall of Ziggy Stardust and the Spiders from Mars", released in 1972 on RCA Victor Records

by Mike Goldstein

Always in the top 50 of everyone's "Greatest LPs of All Time" listings, this record tells the story of a visiting Martian, who's on a mission to save the world from its day-to-day humdrum. Of course, this is best accomplished via sex, drugs and rock'n'roll, with the Messianic main character being torn apart by fans in the end (so much for a "Peace & Love" message).

The Spiders From Mars featured Mick Ronson on guitar, Trevor Bolder on bass and Mick Woodmansey on drums. A note on the album cover suggests that it is "to be played at maximum volume".

The Brian Ward photograph that serves as the basis for this cover image shows Bowie-as-Ziggy standing on London's trendy Heddon St. (just off of Regent St., a popular shopping area in the West End). Many Bowie fans seek out this spot on trips to London (although the phone booth shown in the background was removed years ago).

In the words of artist Terry Pastor - "I was given a black and white photograph printed on matte paper - David Bowie's management wanted some colour put into it. I also did the cover for his previous LP, Hunky Dory. This was also a black and white photo that I coloured up in the same way. Perhaps this is why the label decided that the Ziggy cover would be similar? I applied the colour using photo-dyes with an airbrush (a DeVilbiss Super 93). The lettering for the front cover (which isn't included on this print) was lettraseted (rub-down transfer lettering) - a very hands-on way of doing things, but in 1972 that was the way things were done. No Mac computers in those days!

I was working on the back cover one evening at my studio, which at the time was in Covent Garden, London when I received a phone call from David asking how the cover art was going. I told him I had finished the front and was working on the back cover photograph. He was very excited hearing that, having no idea there was an image for the back cover. He asked me what the image was, and said that he was really looking forward to seeing it. From that you can assume David didn't have any real input into the art direction at this stage of the cover. He probably had much more input when the photograph was being shot. The back cover, featuring Bowie in a phone box was done in exactly the same way.

Also an interesting point - before this album was released, I would bump into David occasionally in the West End (Central London) or meet up in a pub, and he would go totally unnoticed. Within a matter of months from the release of Ziggy Stardust, he became a mega-star and would get mobbed if he appeared anywhere in public."

Click here to see the limited-edition print - signed by Terry Pastor and David Bowie - available at RockPoP Gallery

Provided by the MusicDish Network. Copyright © MusicDish LLC 2007 - Republished with Permission

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Why The Music Industry Needs To Drop DRM

by Gerd Leonhard

DRM - A Question Of Belief Systems?

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After countless conversations and debates over the past eight years, I have come to think that the DRM issue is largely a question of which reality one believes to be true - and we must address the solution as such, too. No research, no statistics, no hard facts, and no futurists will tell us conclusively whether the record companies should or should not use DRM when selling digital music. To make this decision will not be science, but an art!

Do you believe that the sharing of music - and therefore its consumption, in general - needs to be controlled; that a certain amount of friction is required to extract any meaningful payments for music in a digital environment; that the average consumer will always try to avoid paying anything, if given any opportunity to do so; that it is impossible to sell something that is, to a large degree, also obtainable for free; and that the monetary value of music really is in "the copy: of a song? Then you would indeed need to be a strong advocate of technical protection measures and digital rights management software. In your mind the control of those 0s & 1s would be a definitive prerequisite for any monetization. No control equals no income; a Œfree for all' is the result of having too little control.

Or, do you believe that a consumer will always pay for something that is easy, enjoyable and trouble-free to acquire and that has demonstrated, tangible and trusted value; that it's not just the copy of a file or a piece of plastic that represents the real and inherent value of music; that friction cannot be successfully re-inserted into our increasingly frictionless commerce environments; and that our business problems cannot be solved with technological measures?  Then you would be against DRM or TPMs, unless they could be 100 percent device-compatible, unobtrusive and behind-the-scenes, and indeed offer actual benefits to the end user - this certainly looks an exceedingly tall order that is, imho, beyond reach as far as digital music commerce is concerned.

Do you believe that music can be sold "like water,'' i.e., as a ubiquitous asset that can both feel-like-free (like tap water), as well as be paid-for (like premium priced bottled water, a $100 Billion business), or should music commerce remain strictly in the realm of units, copies and their various controlled physical or digital embodiments?

The DRM issue cannot be decided as an isolated question.  Clearly the DRM question cannot be truly considered if kept separately from the drastic changes that are impacting all adjacent sectors of the record industry, such as music production and contracts, pricing, licensing, promotion and marketing, and without investigating how exactly the record industry's entire business model must evolve in those areas, as well. After having done so, my own conclusion is that eight years of badly implemented DRM have forced the major record labels into a detrimental fixed-pricing model for digital music, creating even more walled gardens and virtual monopolies such as iTunes, further perpetuating a myriad of unresolved licensing issues, and single-handedly stopping many promising marketing opportunities that could have worked if the music could only be provided in an open, i.e., MP3, format.

If you work for a major label, just take a good look at the deals that have crossed your desks during the past 12 months: how many of them could you have done if it wasn't for those business rules related to "strategic" principles such as DRM? How much revenue could you have generated? How much innovation could have been brought into this business if it wasn't for this bizarre stumbling block caused by the belief that the customer cannot be trusted and therefore needs a clever piece of software to restrain him?

The bottom line is that the record industry is literally starving itself to death by basing its digital business strategies on outmoded assumptions by way-out-of-touch leaders that have gone unquestioned for far too long. It's not about how much money the record industry has already made with digital music, but how much the record industry is leaving on the table ­ 90 percent, in my estimation.

Some good cases for DRM may exist ­ just not in music!

It is feasible that some use cases for using DRM / TPMs exist, such as with libraries, closed-content- systems such as the PSP, banking transactions, classified documents etc., anywhere where the results of DRM are indeed benefits to everyone in the food chain, and where it is not apparent to the average user that such safe-guards even exist.

The problem is that, as far as music is concerned, DRM is simply an impossible mission:

* The CD is and must remain an open and universally readable and convertible format, and this has set the standard for the digital music marketplace. In a digital ecosystem, consumers will under no circumstances accept less than what they are used to; rather, we need to expect and support an attitude that will be based on expecting more value. Charging more $ for less value, in an exponentially more competitive market with omnipresent and innovative competition, is a suicide mission.

* Too many different music formats have already been in the marketplace for too long; no single, universally agreed-upon and proprietary standard can and will emerge, and no 'SDMI take2' (aka CORAL) initiatives will achieve this goal ­ it is a technologist's pipe-dream that keeps the record industry locked out of reality while it's losing the market to new competitors

* The music consumers' (i.e. the public's) fair use expectations, ethics and traditions are totally incompatible with effective DRM measures, and 10 years of "secure digital music" has utterly destroyed the trust in the market space. The un-beautified result (aka the non-IFPI version) is that the public is increasingly turning off to legally purchased music, altogether; and this won't change until this policy changes

Challenging Your Assumptions

So...if you are a believer in control, and therefore in DRM, let me challenge your assumptions and convince you to reach for the reset button, as I firmly believe the record industry (in particular the major record labels) are destined for certain demise within 18 months if staying on the course of trying to Œprotect' and control digital music.

Assumption #1: if all of our music was available in an unprotected format, nobody would bother to buy CDs anymore, and 90 percent of our current revenues would quickly evaporate. We need to keep on selling CDs as long as we can!

My response:

* Your music is already available in open formats, for free, and the consumers that still like CDs are still buying CDs ­ but it has now become a choice, not a must; paying for music has de-facto become voluntary (as my fellow pontificator Jim "pool of money" Griffin likes to say). If the record industry made it easy, affordable and enjoyable to buy MP3s legally, a much larger percentage of the total target population would consider getting engaged. This would, in turn, generate more, and renewed, interest in buying all kinds of new physical media products, after a consumer has had his fill online ­ the sole downloading of music as MP3 files will, imho, never be the final stop for any real music fan. Rather, it is only the beginning of a new business, not the end ­ the new business is selling music as a 360-degree service and as a product.

* However, clearly the price of CDs would have to be much more competitive and flexible, both in the way of offering low-priced CDs as well as with high-priced / higher value products (such as high-definition audio, video, and mixed media). By selling MP3s online, and by offering a lot more CDs in the $7 to $12 range, as well as positioning premium products in the $25-$40 range, the record industry would still generate more revenues than before, and put smart retailers back into business, as well.

Assumption #2: If there is no friction in the process of getting music (as a result of having a ubiquitous, open-format for music that can be shared by anyone), our entire business model will collapse. No control means no cash!

My response:

* It is not about absolute control versus zero control ­ it's about a new kind of relative, smart, opt-in, transparent, fair, and timely control. It's happening everywhere else ­ why not in music?

* The traditional record industry's unit-based business case has already collapsed: there is simply no future in only selling copies, so let's stop pretending there is. The record industry must first sell access to music and artists (and then sell units), in an all-encompassing portfolio of products and services ­ and there is absolutely no way you can do that by enforcing proprietary, locked music formats.

* There are many other ways to maintain and "enforce" value in an open format system; i.e., the record industry can insert something that is equally as effective as friction: stickiness, loyalty, trust, community and appreciation. The record industry will get the same, and even better results but must use a different path ­ think eBay, Amazon, Google.

Assumption # 3: If we offer unprotected music, everybody would just share their music with everyone else, and nobody would ever make any payments, and that would be the end of it!

My response:

* Flexible pricing (lower and higher $), bundles, flat rate services, free and ad supported models, and a host of new premium offerings would take care of this problem of "rampant sharing" ­ share all you wish because we will have a way of getting your dollars, regardless! If it's just a copy of the file I want, yes, I may be able to circumvent payment, but if want the whole thing, the experience, the complete access, I will have to remain with the provider that can dish up all of it.

* Why would I bother with circumventing a payment if the value, the service and the convenience I get is beyond reproach and makes irrefutable economic sense ­ a legal, open format music service just has to be better, faster and more compelling. And it can be!

* The bottom line: if the price is right, and the service value is high, and the trust is there, consumers will pay without fail: see cable TV and cell phone subscriptions ­ and again, the $ 100 billion bottled water business.

Assumption #4: Switching to open formats will make the record industry (in particular the major record companies) utterly vulnerable, and they will lose any remaining market advantages we currently still enjoy.

My response:

* Open formats will certainly create a more equal marketplace; however, the major record labels will still be able to extract a lot of value out of the existing assets, i.e., the catalogs, the relationships, and the global business network. It will indeed be a different business, but a lot more fruitful!

* Many traditional advantages (such as controlling distribution) are quickly and inevitably eroding in today's marketplace. By making a pro-active decision to embrace these changes, now, the record industry will be able to be in charge of it, rather than solely react to it.

What will happen if the major record labels stick with DRM?

* CD sales will continue to tank exponentially as even the most faithful customers in the most traditional territories are tapping into the ever more powerful online networks, while the growth of digital music will stall in all territories, paid-for ring-tones will decline, and all those fancy new mobile devices will play MP3 files but not those crippled and DRM'ed files, on a ratio of 50.000 to 70.

* The wireless broadband explosion will take the sharing of music to an unprecedented level: every single user becomes a moving super-node of content, and 99 percent of them will exist in a legal and economic gray zone of non-compliance - because there is no other option! In other words: unless the record industry's content is available in open formats, its music will be consumed outside of any system of monetization. Avoidance is not an option, participation is!

* New companies will show the way and quickly propagate entirely new ways of acquiring and presenting music: telecoms, handset manufacturers, networks, portals and ISPs will target the record industry's core business (i.e., talent); and within 18-24 months the traditional record labels' overall relevance will be greatly reduced. The markets will find a way around the protected digital music that the 'official' record industry is offering, and the rising digital music tides will float every boat except for... theirs!

* Very few outside investors will invest in any music-related ventures, not only because there will be no growth (and no demonstrable ROI) but also because the industry is, and will be, universally disrespected for its lack of leadership and decisiveness. This lack of outside investments will create a vacuum that new players will aggressively use to build their own ventures, based on new talent that the traditional record industry will no longer be able to attract.

Major music companies will become isolated in the capital markets, becoming sitting ducks for takeovers (is that good or bad?)

Take a look who has defined success in the past few years: eBay, Amazon, Apple, Google, Skype...they all give control to the user, provide open and transparent services, earn and keep trust, pull not push, have conversations not monologs, promote enablement not prevention - that is where things are going.

The Time for a Change is NOW

If you are still a believer in control, protection and enforcement, I urge you to reconsider your position and make a leap into the only future I believe there is for the record industry: open formats, ubiquitous access for music, new models of partnerships with artists and retailers, flexible pricing, and open and transparent licensing standards.

"Come gather 'round people
Wherever you roam
And admit that the waters
Around you have grown
And accept it that soon
You'll be drenched to the bone.
If your time to you
Is worth savin'
Then you better start swimmin'
Or you'll sink like a stone
For the times they are a-changin'"

Provided by the MusicDish Network. Copyright © MusicDish LLC 2007 - Republished with Permission

George DuBose & The Notorious B.I.G.

by Mike Goldstein

The story behind the photograph, in the words of George DuBose - "Mr. Cee, Big Daddy Kane's DJ, called me one day and told me that he was working with a young rapper. The track for the young rapper was going to be on a compilation 12" vinyl that would be released by a NY radio station. I forget the name of the station - I think it was WKTU.

Mr. Cee asked me if I would go to Bed-Stuy (Brooklyn) to take some photos. Cee went on to say that there was 'no budget' for the session and would I take the pictures for free. As I had already photographed and designed several packages for Big Daddy Kane and Kane had been a big factor in my buying a house, I could certainly offer a freebie to pay back Cee.

'Sure, I'll go to Bed-Stuy, if you come with me. No way am I going there with my photo equipment without a bodyguard.' He agreed that I was being sensible and we made a date to travel together from Manhattan to Brooklyn by subway. We got to the corner of Bedford Avenue and Quincy, where I was introduced to Biggie Smalls and his DJ, 50 Grand. Biggie was BIG and not very friendly. I had worked with quite a few rappers by this time, so I was aware that some of them preferred a hard image. No smiles, no humor in their songs...

The young rapper wanted his photo taken in front of the street signs that marked the epicenter of his 'hood. I shot a dozen pictures of Biggie and 50G in front of the street signs, but to get their faces and the street sign in the same frame, I had to shoot from quite a low angle. I wasn't too pleased about this arrangement so I made some more shots of the two of them against a wall on the other side of the street.

Not particularly wanting to linger in this area of Brooklyn, I said I was finished, then thanked them and told Cee I was ready to leave. Biggie then asked me if I had more film. I had a few shots left on the one roll of film that I had used. Would I take a picture of his posse? OK', I replied, but I didn't see any posse...

Fifteen seconds later - it was like someone blew a whistle - there were 20 guys around me ready to pose for their fifteen seconds of fame. I looked around for a suitable background and told the crew to line up in a sunlit spot on a sidewalk across the street from where we were. I got Biggie in the center of the crowd, and then I told them to get closer together. I, then, looked into the viewfinder of my camera to focus and I saw that Biggie was pointing an Uzi at me. Oops! In my politest voice, I asked Biggie to point the gun away from the camera and then took only two photos before I realized I was at the end of my roll. I said 'Thanks. That's it, we got it.' I then looked at Cee and said, 'Let's boogie!'

A few days later, I gave Cee the shot he wanted of Biggie and 50G and that was the end of it. Until...Biggie was shot and killed only a few years later! I hadn't realized how hugely successful Biggie had become in only a few years. He had been signed to Bad Boy Records that was owned by a character named, Sean Combs. Now he was 'the Notorious B.I.G.'

Evidently, Bad Boy had decided make some kind of video right after B.I.G. was killed. I never saw the video, but Mr. Cee told me that a couple of the shots I had taken in Bed-Stuy were used in the video. I called my photo resale agent to ask them about this sale of my photos to Bad Boy. They confirmed the transaction and told me that I would net a few hundred $$ from the sales. I was told a few months later that the label refused to pay for them. I guess they don't call themselves 'Bad Boy' for nothing...So I just go went with my life."

George DuBose

The Notorious B.I.G.'s 2007 release on Bad Boy is titled "Greatest Hits" reached #1 on the Billboard Top Album charts in March 2007. It is the 3rd #1 record in his career and reached this position 10 years after he was killed.

Click here to see the entire George DuBose Notorious B.I.G. portfolio on the RockPoP Gallery site.

Provided by the MusicDish Network. Copyright © MusicDish LLC 2007 - Republished with Permission

Insane Clowns prosper even as album sales wane

by Todd Martens

Despite the No. 20 debut on the U.S. album charts by Insane Clown Posse's new disc, the principal player in the Detroit-based rock/rap hybrid knows what is about to happen.

"We do our best sales in our first two weeks, and then we fall off," Violent J says.

"The Tempest," self-released on the act's own Psychopathic Records, sold 33,000 units in the United States in its first week on the tally, according to Nielsen SoundScan. As ICP enters its 20th year of existence, the act's fan base, which ICP lovingly refers to as "juggalos" (for him) and "juggalettes" (for her), is still showering its support.

And even though first-week sales of "The Tempest" -- the act's 11th charting album -- are significantly lower than the 73,000 units sold by the act's last full-length, 2004's "Hell's Pit," Violent J isn't worried. That's because ICP has an entire industry to fall back on.

A smaller, more underground version of Kiss and its "Kiss army," perhaps, ICP feeds its juggalos and juggalettes a bevy of products, from board games and lunch boxes to lighters and watches, and stages its own multiday convention of sorts (the Gathering) every July. Dates have not yet been set for this year's event, but last year's fest -- staged outside of Columbus, Ohio -- featured such performers as Too $hort, Digital Underground and Drowning Pool. The Columbus Dispatch estimated last year's attendance in the 7,000 range.

"We do everything but the actual manufacturing of the CDs," Violent J says. "That's the only thing we don't do yet, but we're getting a damn pressing plant one day."

For now, the act will have to settle for about 30 full-time employees manning its own studio, office and 25,000-square-foot warehouse space. ICP also started an extreme wrestling league in the JCW (Juggalo Championshit Wrestling), and works such artists as Twiztid, Blaze and Boondox under the Psychopathic banner. A recently launched imprint, Hatchet House Records, will release lesser-known acts.

While ICP has worked with its share of major labels, it launched Psychopathic in 1991 to release albums from side projects and friends. The company is headed by Bill Dail, who declined to be interviewed.

"When we first started off, we did everything ourselves, and the goal was to get a record deal," Violent J says. "We sold more and more CDs and figured out how to get it in the stores and we figured out how to do merchandise. Once we got signed, we realized the label only did what we were doing."

The band has had a sometimes contentious relationship with major labels, most notably its well-publicized scuffle with Disney-owned Hollywood Records over the content of its 1997 album "The Great Milenko." The act eventually signed to Island, and went completely independent for the release of 2002's "The Wraith: Shangri-La." While the act's sales have never come close since to matching the 1.7 million units sold by "The Great Milenko," its two independent full-lengths have sold more than 220,000 units each.

The act's entire catalog of full-lengths and EPs has sold 6.5 million units, according to Nielsen SoundScan. And even though CD sales are declining, ICP business is doing just fine, Violent J says.

"Our merchandise today does better than it ever has," he says. "But there's probably no chance in hell that 'The Tempest' will go platinum. But if we can get it over 100,000 units, I'll be happy as hell because I know that'll bring a lot of revenue into the company."