Study Guide Music Business

History and changes in the music industry over time period:

What is needed in an artist?

• talent

• serious about career

• realistic

• hardworking and reliable

• open to feedback

• strong spine

• compatible personality type

• honest

What are some of the basic changes in the music industry:

• decline in record sales and the importance of record labels

• emphasis on touring and merchandise

• AI, streaming, and new technology

• sponsorships and branding

• importance of touring

What is the difference between “sound recording” and “musical compositions”

• Sound Recording: specific recording of the composition

  • can be owned by the same people writer

  • track, record, master

• Musical composition: the lyrics and music that are written

  • owned and controlled by a songwriter and a music publisher

  • song, tune, composition

    • Key terms in a record deal

      • Exclusivity: for a certain period of time so there is no competing interest

      • The term: commitment for a certain period of time with can include an option on the part of the label

What do record labels do?

• invest in recording artists by funding the production of audio, video, marketing and distributing

• owns their own copyright in sound recording

What are DIY artists? Self releasing

• Creating video content

• recording artist owns copyright in their sound recordings

• Limited Liability company - seperates you from the company -

• DBA - doing business as name

What is a digital aggregator?

• Digitally distribute recordings by artists who self release

What is an artists services company?

• company who provides the artist with services BEYOND just distribution

• fan club managment etc.

• artists services is fanclub

How to tell if a record label is good?

• trustworthy/integrity

• domestic and internationl distribution

• compensation and control

• promotion

• long term tracj record

• making money/working capital

• cares about you and your material

• maximize streaming and sales

How can you know if an artist will be successful?

1. Unique vision and talent

2. songs

3. emotional response to music

4. consistency

5. fan base/social media

6. live perfoamnces

7. audience

Pathways to recording artistry?

• National Association of Schools of music - two academic years

• home recording equipment

• working with a recording engineer

• creating cover records

• collaboration

• GRAMMY U

NASM

Music’s main areas of impact?

• entertainment

• commerce

• storytelling

• builds community

• conveys messages

• expresses emotion

• relieves stress

• self expression

• raises funds and awarness

• motivation

How do records get into the supply chain? Through distributing

supply chain

History of record labels?

• 1870s -phonograph

• 1890s- commercial discs in market

• 1900s- opera

• 1910s- jazz records

• 1920s- 100 million records sales

• 1930s - great depression

• 1940s- indie lables, LP

• 1950s- tv, rack jobbers, two channel stereo, Van cilburn million record seller

• 1960s- social turmoil, beatles

• 1970s- indie records, crossover, digital recording, casette

• 1980s- CDs gain market share, MTV

• 1990s- audio home recording act, electronic delivery of music

• 200s- lower cd prices, MP3 and napster piracy

• 2010s- vinyl becomes boutiques, 360 deals, music modernization

• 2020a- streaming

Major Label vs Independent label

• Major Label: owned by a major label group that has its own distribution division

  • less willing to take risks

    • Universal Music Group, Sony Music, Warner Music group

• Indie Label: operate independently from a distributor

  • only own 50% of stuff and 5% of market share

  • brand name awareness

  • nonesuch, odyssey

The record label market share?

• indies 29.6%

• Universal

• Warner

• Sony

name another type of production company model?

• only have artists and repetoire and enters a deal for a different record label to handle the rest

• Joint venture- prod and record label where they share the costs and the profits

People in record lables

• Engineer - works closely with the producer to execute their vision - pushing buttons, setting up mics

• Arranger - map out what if going to be performed

• musiscians, vocalist

• executive producer - title for the person who secures financing

Who is in the artists team?

• Manager of personal manager: represents the artist in all aspects of the business, serves as artist liason, advisor, gatekeeper

  • commision: 15-20% of artists “gross earnings” negotiated deductions for recording costs

  • commission base: based on artists gross income - doesnt include things from other jobs or recording costs

  • term: initial plus options if benchmarks are achieved

  • key qualities:

    • knowledgable

    • connected

    • honest/trustworthy/reliable

    • gets the artists vision

  • Three categories to look for in a manager:

    • reliability

      • fiduciary: held to a higher standard of care

    • Gets you musically

    • someone who can get you further than you can get yourself

  • Statutory regulation of managers: North American Performing Arts Managers Agents

  • union regulations

    • additional 5% commission

    • personal maanger code of ethics - died

Managers often have to look for?

• Publicists - media work

• materials - electronic press kits

• interviews

• creative director

• everything else

Categories to Negotiate with a manager?

• Authority to negotiate on behalf of artist

  • right of approval vs right of consultation

  • power of attorney: authority to enter into agreements

• rate of commission: same as above

  • sunset clause: no standard with respect to earnings that originate during the term of management

  • continue to recieve commission after the contract term ends

• the term: between one year to two years

  • option

  • benchmark: you will be a manager at the end of 18 months if you can do this or do this

What is the key person clause?

• protects artist, key person gets job security

• if my key person leaves company i can leave too

What is the expenses reimbursement clause?

• there may be reimbursement for certain items like sending boxes etc.

• Agent: securing employment

  • commision: 10%

  • needs to have a license

  • Types of agencies

    • boutique agencies - focus on one type of talent

    • full service agencies - mid to large size companies - CAA, UTA, APA

    • established agencies may combine with smaller agenices

  • Private employement agencies law

  • California Talent agencies act

  • Association of talent agents

Describe union regulations for agencies?

• AFM

• SAG AFTRA

• franchise agreements

  • cap on commission 10% ceiling for SAG

  • AFM- cap 20% commision and 15% if 2 days or more, additional 5% commissio

  • cap on contract duration 1-3 years

  • bar on agency collecting fees

  • funds agents collects has to be helld in a trust

• negotiate for carve outs - what to exclude

• written or hand shake agreement

• FIDUCIARY

• Attorney: works with contracts, negotiations, advice, counsel, copyrights, litigration (last resort)

  • commission: hourly only sometimes percentage

  • fixed fee

  • contingent payment plan: 5% sometimes higher

    • must be in writing

  • Conflicts of interest: multiple interconnected and depedendent contracts are enterened into at the same time

  • Termination: can fire attorney at any time

To know

• International Music Managers forum and related music managers foruym

• national conference of personal managers

• talent managers association

• international artist managers association

• north american performing arts managers and agents

• association of talent agents

• Business manager: financial aspects : book keeping, taxes, investments, financial planning - works closely with the manager

  • commisions: salary/fee or 5% of artists gross earnings

    • CPA - accountant

• Tour manager: road manager- aspects of tour, logistics, transportation, accomodations, per diems, dealing with venue management, guest list, press “in charge” when manager isnt on the road

  • salary - some super experiences may recieve a percentage

• Production manager - creative oversight who works with artist and sound engineer

• Crew - instrument, tech, sound and light tecnhicians, coreographers

• Artists and repetoire - evaluating and managing creative aspects of music

  • job is to find new talent

Key people within the studio

• Producer - oversees the whole project - like the director of film - creative issues, selecting studio muscicians

  • stitching tracks into a whole

  • depends on situation for artist of producer to have creative vision

  • Digital audio workstation

  • associations

    • audio engineering society

    • recording academy

    • music video production association

      • good people skills

      • emotional and muscial moods

Producing scenario examples:

• Producer as an employee of the label

  • a label could hire a producer with a salry and royalty based on income where projects are assigned to them - less say

• Independent producer under a contract of label

  • works on diff labels based on project basis - advance and portion of artist royalty

• Independent prodyucer under artist contract

  • project basis, budget and completion of master

  • advance and artist royalty

• Independent producer spec deal

  • on spec - speculation that recording wants to sign with an artist

  • producer gets a fee or ongoing royalty if master purchase

  • be hired by record label

• Producer as owner of a prod co

What is the royalty rate of a producer reffered to as?

• point and it equals a percentage

Explain a letter of direction?

• Informs the record company of the advance to pay the producer and how many of the artists royalty points the pridyer is to recieve

• Artist gets performance royalties

• a formal document that authorizes a third party to manage a music creator's catalog or songs

Elements of recording:

• Pre-production

• Basic tracks

• overdubds

• mixing

• mastering

Stafes of record production?

1. preproduction: budgeting and planning

2. In the studio: tracking

   1. creating all instruments

   2. Musical instrument digital interface

   3. record multiples takes

3. In the studio: editing

   1. composite track - multiple takes are stitched together

4. In the studio: Mixing

   1. multichannell

   2. mixing engineers

   3. EQ is applies

   4. compression - balance quiet and loud

      1. gives primary master, additional mix versions, full session files, pre existing content, lyrics, evidence of bills

5. Postproduction: mastering

   1. International standard recording code - credits

How to budget and plan during preproduction?

• think about session musicians

• equiptment

• contigency

• licenses

• travel and meal

• places

• people

• number of units

Music Video production

• MTV launched in 1981

• 1980s video exposure

• 2005 itunes

• Short form video- between 3-5 minutes

• Long foorm videos - 65 minutes

• most labels dont do this in house

• 60,000 are decent but can be for 5,000 for low budget

• director selection to pick a treatment (script about how they see the video)

• shooting schedule

• rought cut

  • Preproduction

    • audio master

    • production budget

    • director

    • concept

    • video prod

  • shooting phase

  • post production

What are types of studios?

• rehearsals and demos can be in one backing can be in another and mastering in a final one

• project studios- common

  • could be at home or in prod facility

  • not avaialble for rent small in size

  • DAWS

• commercial studios

  • rentals by the hour

  • warehouse or office building

How to select a studio?

• cost

• location

• equipment investory and reliability

• control room acoustics

• live room acoustics

• intangibles

when would you need license? these are copyrightable

• Reproduction

• derivative

• modification

• public performance rights

• public display

• digital transmissions- sound recording

Railroad tracks

songs publishers and composers

• sheet music and lyrics

• physical

• digital downloads

• social media apps

• film tv video games

• digital streaming

• live perfomance

• interne tcable

• YES AM/FM radio

• YES public background

Artists and record lables

• physical

• digital downloads

• digital streaming

• social media app

• film tv vidoe game

• digital streaming

• internet cable

• not am fm radio

• not public background

• not live

Who deals with who? (ask this tonight)

table in the textbook

Union Regulations

Record deals

• These are not as important now but still important for certain artists for infrastructure, manufacturing etc

What are key terms of record deals?

• Term: how long the deal will last

• Exclusivity:

• Release Comittment:

• Creative control:

  • technically;

  • commercially

• Advances:

• Royalties:

• Controlled compositions:

What are 360 deals?

• after piracy, cutting into different forms of income for the artist, revenue from tours

• record label participates in artists

• passivley recieves portion of revenu from all this

• good for artist - they get marketing

• First type: artists remains in charge

• second: label gets active management roll

• third: whether money due to label is calulated from artists gross or net- usually net

What is an ALL INCLUSIVE DEAL?

• Whatever you don’t spend you can keep

SAG AFTRA agreements

• sets forth minimum wages

  • soloists, group singers, recordings, actors etc

• health

• digital exploitation - SRDF

  • distributes money to non royalty artists

  • MOA

• conversions

  • reuse of recording pay union conversion fees

• aquired masters

AFM agreements

• Sound recording labor agreement

• royalty artists: entered recording agreements with labels under whcih entitled royalty of at least 3% of retail priced

• capped t minimi scale for one session

• b-4

• contractors: musician as leader for self contained groupes double scale wages

• health and welfare- fixe.

• new use

  • rerecordings

  • union new use fee

• aquired masters

  • retroactive payment

• streaming

  • pension fund twice a year

• sound recording special payments fund

  • 2x a year

  • percentage of revenue

• Music Performance trust fund

  • direct payments 2x

  • free live music performance

What is royalty artists?

• entered into recording agreements with labels which they can recieve royalties

• labels scale obliation is capped at 3x the minimum scale

What are vocal contractors?

• 3 or more SAG singers

• additional services beyond singing

• keeps track of activities with charges such as overdubbing

Who are the key label staff?

• A & R

  • helps artists with the campaign

  • finds talent

  • recognize the diamond in the rough

• Marketing

  • release planning distribution marketing management radio streaming promotion, publicity advertising

    • internal

      • deal with exchange rates

  • Licensign and catelog marketing

    • sync licensing - catalog of music in marketpplace for more than 18 motnhs

  • technology and data

    • market analysis record label softwar

  • royalties and participation

    • gathers information about the revenues

  • manufacturing and distribution

    • how things get into stores

      • indie: pressing and distribution contract

  • publishing affiliates

    • publishing division

• Executive officers: C-suite positions

  • former label president

  • business arrangement and organization

• Business Affairs

  • outside counsel -for specific things

  • mechanical licensing

  • sync

  • government affairs

• Sales and accounting

  • DSP non DSP streamers and psycial retail

Income for record labels?

• Sales of physical records and video products

  • who pays: distributor who is paid by retailer

• On demand streams and permanent downloads

  • who pays: distribuor who is paid by digital service

• Noninteractive streaming

  • who pays: soundexchange paid by digital service

• Sync in film tv commercials and games: film producers etc

• Sample uses

  • who pays: other record labels

What are some trade associations?

• Recording academy

• Recording Industry Association of America

• American Association of Independent music

• Music Artists coalittion

What is multitrack recording?

Songwriting

What are songs that have withstood the test of time?

• standards

What are some characteristics that good songs tend to show?

• memorable -HOOK

• immediate appeal

• lyrics contain a theme and are vivid

• well crafted song with an arc - question that the chorus answers and bridge for a twist

What are characteristics of a hit song?

• well known recording artist

• Record label or promoter gets behind the project to promote it - NEED ARIPLAY

• song nd recording suit tastes of current market

• marketed and distributed

How to get good at songwriting?

• successful lyric writing

• study popular songs - wilder american popular song

• seek input from trusted sources

How to locate a collaborator?

• regional offices for PRO

• songwriter organizations

• songwriting

What are some deals for collaboration?

• pay for collaboration - only when the artists already have songs in the market place

What should you ask yourself for a collaboration?

• Is all income generated shared equally?

• what conditions can they withdraw worls?

• termination

What is a lead sheet?

• presents the essential elements of the song

  • melody harmony and lyrics

  • maybe an arranger could help

What does exploited mean?

• published, licenses, recorded, distributed and performed

Where did song writing really start?

• tin pan alley in the 1800s

• 1950s- radio changed the game

• 1960s- bob dylan and the beatles

• 1960s- carole king

1. Music publishers give advances to songwriters and that money is recouped as royalties are collected

2. Music publishers maintain an A&R / creative staff

What are elements of the home studio?

• the singer- songwriter

income sources for a songwriter?

• Public perforamcnce, terrestrial radio, all audio and video streaming, tv and cable, non broadcast (clubs hotels gyms etc)

  • who pays: the PRO

• Mechanical uses - reproduction and distribution, cds, interactive streams

  • who pays: songwriters music publisher

• Synchronization uses- DVDS video products, video streams and video downloads

  • who pays: songwriters music publisher

• Dramatic uses - grand rights - use of music in story musical or opera

  • who pays: music publisher

• Sheet music, folio, songbook, band arrangement sales

  • who pays: music publisher

• all other uses music publisher pays

What is the publishers role?

• To help generate placements and income for songs

  • there are different kinds of publishers deals

• Explain writers share vs publishers share

  • Publishing deal: “unknown writer”

    • writer gets full “writers share” half of the pie and publisher gets full “publishers share” - established writers may have their own publishing company but its still the same

  • Co- publishing deal

    • used more for establishd writers

    • publishers share divided between writer and publisher

  • Administration deal

    • writer contracts with publisher to administer rights in songs, collect and distribute royalties but publisher does not acquire ownership interest and writer retains ownership, publisher takes a fee of 5-15% of income for services

  • Single song agreements

    • admin and publishing

    • writer may get upfront and advance

Income for publisher

• Public perfomance by pro

• mechanical - record label or MLC

• sync - film producers

• print - publisher music license

• drama - producer of dramtic

• all others - publisher license

• foreign countries - license abroad , CMO

What is split ownership?

• different publishers administer portion

• fractional licensing

Interpolation

• sampling

What are some trade associations?

• music publishers association

• national music publishers

• association of independent music publishers

Publishing administration?

• working with performing rihghts organization

• collect and track royalties

• more than 5% of global publishing revenue

Full service music publishers?

• own large catalogs with wide genres

  • kobalt bmg

Writer owned music publishers?

• smallest

• run by manager or lawyer

• coppublishing arrangement

Specialty music publishers?

• classical, gosepl , jazz

• specialize in certain areas

• wise music, boosey and hawkes

• subsidized by foundation of university

Publishing administrators?

• focuses solely on administration

Print publishers?

• specialize in creatin gand selling copies of musical works in digital of physical print format

• print publisher license

• International standard music number

• Hal Leonard

• CCLI - church purchased by SESAC blanket license

What is song casting?

• reaching out to artists match material

• need promositon

Copyright

• conducting title searches

• registering copyright

• recording transfer of copyrihgt ownership

• what is no longer copyrighted

• rights reversion

Calculate selling price

• net publishers share * multiple = selling price

• NPS - average annual net revenue

• multiple- varies with estimates of future 17 average

International copyriight

• - collective management organizations

• Subpublishers

• foregin not granted ownership

• finance: sub 15-20 and primary 75-85

• at source language - no deduction of amounts

Staff writers

• publisher spends time developing promoting and creating demos

• negotiated agreements

Different types of songwriting piublishing income?

• Mechanical royalites

  • mechanical reproduction of musical compositions

  • paid by the label DP, to publisher who then pays the writer, “statutory rate” 12.4 cents per song but can be negotiated

  • once a song is recorded it can get a compulsory license at a full statutory rate even if publisher doesn’t grant that license

  • paud to the Harry fox ganecy for physical

  • MLC for digital then to publisher then to songwriter

• Public performacne royalties

  • collected and distributed by Performance Rights Orgs.

  • no exclusive right

  • compulsory

    • ASCAP, BMI, SESAC

    • pros represent writers and publishers and collect and distribute income based on radio, public performance, some streaming

    • 50% to songwriter 50% to publisher

• Syncronization liccenses

  • for the use of a musical composition in visual media -to use in film and stuff they must get a sync license for composition and master license for the recording

  • DVDs

• Print

  • lyric sheets

  • song folios

  • rates are negotiable

sound recording income? usually free market

When is a writer self published?

• DBA and sole proprietorship

What are two common contractual relationships?

• Publishing administration deal - full ownership

• co publishing deal - share ownership of publishing rights

What are some recording agreements?

1. Label enters agreement with an artist: staff producers handle project in house - the artist gets royalties and the producer recieves a royalty override- label may not pay advances to the artist

2. Label enterings into agreement with the artist- hired an indepenent producer to record and deliver a master- may be a production fee upfront, producer gets a royalty at a rate negotiated

3. Label signs an agreement with a producer - joint venture deal

What is a loan out company?

• Legal business entities to provide personal services of its owners to third parties

• artist has tax and liability benefits

• most complex

How to negotiate and the basic contract concepts?

1. term - options

   1. initial contract period length- such as one year followed by options

   2. exclusivity

2. Minimum Delivery

   1. record a minimum numver of tracks

3. Recording budget

   1. recording fund

4. Redcording Procedure

   1. has to release inot market place

5. Release and promotion commitment

6. copyright oeneship and usage rights

   1. works made for hire - 1976 copyright law

   2. assignment

   3. permission for likeness

   4. some artists give up copyright but need to get artists consent for certain things and get paid more

7. COntrol and ownership over website socials and trademarks

8. Advances and recording royalties

   1. advances: prepay some royalties before it starts getting income

   2. when they pay an expense and expected to be recouped its an advance

   3. Recording royalties

      1. 6 months

      2. base 15-20 of what label recieves

         1. territory

         2. lenght of the product

         3. price

         4. distribution

   4. sync: 50% of what label recieves

   5. Publishing licensing and royalties

      1. mechanical license - company needs from artist - controlled compisition

         1. artist has to grant a mechanical license to the record at a discounted mechanical royalty rate f

   6. Right of assignment

      1. artist to limit this

   7. Warranties and indemnification

      1. warrants - promises to do something in terms of contract

   8. Audit rights

      1. examine source of information to calculate royalties

   9. ALL in rate

      1. paid to the artis any royalties due to other contriibutions are deducted

9. Cross collateralization

   1. positive amount offset negative

   2. 360 deal

   3. advance doesnt get enough revenue - recoup investment from other sources of income or next albums earnings

   4. artist might not see additional income from music

What is the song writers guild of america?

• 1931

  • publishing contract

  • collects royalties

  • reviews contracts

  • audits publishers

  • copyright renewal service

  • catalogs

  • collaboration services

  • term

  • termination

  • wrtiers consent before granting use of composition

  • print royalties to writer not less than 10%

  • royalties due to writer for revenue are 50% of what publisher recieves

  • 50% of foreign advances

  • royalty statement semiannually or quartlerly

  • held in trust - writers royalties

  • AAA siputes

  • may not assign without writers consent

  • must agree on future use

What is the Nashville Songrwiters Association International?

• not for profit songwriter trade association

What is songwriters of north armerica?

• advocated for removal of minimum delivery release commitment

  • quota

What is a demo?

• calling card

What are the 7 steps to success?

• talent

• craft

• demos

• promotion

• city promotion

• network

  • feedback from radio stations

  • circle of family or friends

  • ASCAP BMI

  • travel to music hubs

  • contact publishers - sumbit demos

• relentless

Compulsory license

• set by the government copyrighted works

What is the hisotry of music publishing?

• Bi Sheng in China printing press is 1050 AD

• Venice italy Missale ROmanum

• 1640- first book published psalm

• 1770 - william billings

• 1790 - copyright law first posted

• 1830- minstrel shows

• 1850s- PROS

• 1890s- tin pan alley, player piano

• 1900s- music publishing 1990 copyright

• 1920s-ASCAP, radio broadcasting, synch, harry foc

• 1930s- great depression

• 1940s- ww2 more income on music, LP, radio feem cover records, frank sinatra

• 1950s- print business improves, beatles

• 1970s- genres, record sales and publishing booms

• 1980s- records move to cds and mtv

• 1990s- napster and piracy

• 2000s- dvd tv and commercials and file sharing, DIY artists

• 2010s- GML, MMA

• 2020- Mechanical Licensing collective