ACCESS — NOT CONTENT — IS KING
The future of music is access. Forget sales and mechanical royalties, forget airplay and performance royalties. Those terms no longer represent how consumers use music. Today it’s all about access — to any song, by any artist, anyplace and anytime. But access doesn’t have to mean “free.” We have access to electricity most anyplace we go, but is it free? No. We have access to water most anytime we want it, but is it free? No. Whether at your local grocery store, your favorite restaurant or your neighborhood drycleaners, in addition to paying for the goods or services offered, you are also paying the establishment’s aforementioned electricity and water. It may not be itemized on your bill, but you can bet it is built into the operational cost of the business and reflected in the prices charged for the goods and services. To survive, the music business must embrace this same premise, and quickly.
For the first half of 2016, as compared to the same period in 2015, album sales have fallen by 15% and digital track sales by 25%. According to Nielsen, sales of digital track in the US are down a whopping 42% since 2012. Remember when digital sales were touted as the music industry savior? It now appears iPods may have fallen by the wayside faster than 8-track tapes. What is replacing these sales? Streaming, of course. And therein lies the problem. We do not yet know how to assess the true value of a stream. I think most knowledgeable of this issue would agree that when comparing streams to sales it is not a 1:1 ratio. So what is it? 10:1? 100:1? 1,000:1? 10,000:1? The truth is, the value is in a constant state of change. While the streaming of music is severely undervalued at present, I do not believe this inaccuracy will continue unimpeded.
The above opinion does not attempt to excuse Pandora, Spotify, YouTube, Apple Music or SiriusXM for the role each has played in the depreciation of music. But like any new business venture, the goal is to keep overhead costs low. And for these digital services, music is an overhead cost. They are in the technology business – technology that enables music’s consumers to access the end product. Music and technology are ancillary businesses – each needing the other to survive. But do not mistake these for the same thing.
As more people adopt streaming as their primary means of accessing ALL music, I believe the value of music will self-correct. In the interim, it will be painful – as it is anytime an industry undergoes a significant transformation. It is imperative that we, as an industry, look further into the future than tomorrow as we seek a solution.
© 2016 The Primacy Firm, PLLC
Will the SESAC-HFA Merger Prove to Be a Licensing Game Changer?
The rumor has been around the mill for over a year. Today that changed. SESAC, one of the three performing rights organizations in the US and the only one which does not operate under a consent decree, has closed the deal to purchase the Harry Fox Agency, the largest mechanical royalties collection service in the US. What does this mean for the rights users and the rights owners? In theory, the licensing process should simplify which could lead to financial benefits for the rights owners and fewer administrative headaches for the rights users.
According to SESAC chairman and CEO John Josephson, “[The current model] is a complex, opaque and currently inefficient licensing regime that fails to deliver the best outcomes for creators and publishers, as well as end users. [The new model created by the merger will] make the licensing process both simpler and more efficient, and in so doing create additional value for music creators and publishers, as well as the digital music platforms.”
To read more, click here.
Is it all just a bunch of “Monkey (Selfie) Business”?
What do you get when you cross an accessible camera with a curious monkey? (No, this is not the set up for a joke.) You get a monkey selfie, of course! It could be argued that some of the photos on Instagram and Facebook look like they could have been of primate origin, but I digress. Furthering the “who owns the selfie?”copyright debate that was generated Oscar night, thanks to the extended reach of Bradley Cooper, we now have the a similar debate brewing in, of all places, an Indonesian forest, thanks to the antics of a a crested black macaque. Click HERE for more monkey (selfie) business.
Young Entertainment Professionals–Q&A
The Young Entertainment Professionals, or YEP, is network focused on creating a platform for the entertainment industry to thrive in a supportive and creative environment for the betterment of its members as well as the industry as a whole via networking events, showcases and educational development. I was asked recently to answer a few questions for their blog about my start in the Nashville music industry, and I was honored to do so. Here are links to the YEP website and blog.
Jay Z Faces Sound Engineer’s Bold Claim Over Song Rights
Can music engineers and producers, as independent contractors, claim ownership (in part) to the sound recordings on which they work? The ruling in this lawsuit involving Jay-Z and Chauncey Mahan could impact how that question is answered. Click HERE to read more.
Sony/ATV threatens to withdraw from ASCAP and BMI
Another shot across the bow in the increasingly heated discourse about streaming rates. While I may not agree that withdrawing from the PROs is the long term solution, there is no doubt that the consent decrees need to be reviewed and revised. To read more, click HERE.
Breaking the First Commandment of Legal Billing
When I started my law practice a few years ago, I was certain that inscribed on some ancient legal manuscript were the words “Thou Shalt Bill Hourly.” I attempted to adhere to this widely accepted practice, but without much success. Had I joined a firm, as opposed to hanging out my own shingle immediately after law school, perhaps I would have developed a different view of hourly billing – or at very least, been forced to master the task. But despite the tips and tricks offered by experienced, well-meaning attorneys, as well as trying various software solutions, I failed miserably at keeping up with my hours. Simply put, the process of hourly billing felt unnatural to me.
Prior to joining the ranks of the legal profession, I found the attorney-client relationship to be somewhat intimidating; particularly with regard to the costs involved. I may have liked the person representing me, but I was uncomfortable with the process. I felt as though there was a wall between me (as client) and my attorney, due in a significant part to my concern about costs. Each time I thought of calling or emailing my attorney with a question or comment, or to simply get a status report, that wall grew ever larger.
Upon moving to the other side of the desk, I found the first question asked by most new clients was “how much will hiring you cost me?” When I quoted an hourly fee, I sensed an immediate shift in the dynamics of our rapport. Not because my hourly fee was shockingly high, but because of the total cost the client could incur was unknown. My clients seemed to be experiencing the same “wall” effect that I had experienced when I was in their shoes.
When I first mentioned to attorney-friends my disdain for hourly billing and my plan to convert my billing method to a flat fee only basis, responses ranged from the curious (“Really? How will that work?”) to the skeptical (“I don’t think that will work.”) to the offended (“If you do that you’ll devalue all of our legal services! And besides, it won’t work.”). Suffice it to say, there was not a lot of encouragement for my flat fee idea.
Determined to find support somewhere, I turned to the Internet. I began by searching for law firms in my practice area (transactional entertainment law) that used some type of flat fee billing method. To my surprise, examples were plentiful, with varied approaches to setting and implementing flat fees. When establishing the flat fees I charged my clients, I wanted to be competitive with the other attorneys in my practice area and region who charged hourly fees, while also being fairly compensated for the services I provided. After a considerable amount of research, I came up with the following questions, which I used as a guide to establish the flat fees for my practice:
- What types of documents / matters / clients do I see most regularly?
- Of these, how often am I drafting, and how often am I reviewing someone else’s draft?
- When I am drafting, which types of documents / matters / clients typically take the longest period of time, from initial meeting to execution? Which take the shortest period of time?
- When I am NOT drafting, which types of documents / matters / clients typically take the longest period of time, from initial meeting to execution? Which take the shortest period of time?
- When I am drafting, what is the most, least, and median amount billed for each type of document / matter / client? What are the variables of each?
- When I am NOT drafting, what is the most, least, and median amount billed for each type of document / matter / client? What are the variables of each?
- What other criteria may be most useful when establishing the flat fees I charge for my services?
- How do I determine the appropriate flat fee amount if I have not previously handled a particular type of document / matter / client?
Answering these questions to the best of my ability, and quantifying my answers, my findings included:
- Regardless of type of document / matter / client, in general, I spent more time (and thus billed my clients more) when I was NOT drafting.
- The amount billed correlated most directly with the length of the document as opposed to the type of document / matter / client.
- It may not be possible to establish a flat fee for every type of document / matter / client that I encounter; however, by defining those that I see most frequently, I can establish flat fees for over 70% of my work (I charge flat fees for the remainder of my work as well, but those flat fees are determined on a case by case basis).
Using my findings, I created a flat fee “rate card” for my legal services. I continue to tweak my flat fees, and also develop other means of billing (e.g. – charging a per page fee for some types of documents when I am not drafting; offering a lesser fee when I review a document and provide a written assessment to my client, but I do not handle the negotiation with the other party).
While there may not be one perfect legal billing system that works for everyone – flat fee or otherwise – and occasionally I may charge less than I would have, had I been billing hourly, I am now six months into what I refer to as my “flat fee freedom,” with no intention of returning to an hourly billing system.
Major Publishers Awarded $6.6 Million in Lyrics Lawsuit–Music Row
The NMPA and plaintiffsWarner/Chappell Music, Peermusic and BMG (Bug Music Inc.) were granted $6.6 million for copyright infringement from various websites under the umbrella of LiveUniverse and its owner, MySpace founder Brad Greenspan, on Oct. 9. Read more.
Nashville Songwriters Hall of Fame Finds First Home–Music Row
Mayor Karl Dean joined Hall of Fame songwriters Wayland Holyfield, Pat Alger and Kye Fleming and convention center officials today to announce that the Nashville Songwriters Hall of Fame will have its first home in the Music City Center. “The music industry is a vital part of Nashville’s unique culture, and songwriters are often the ‘unsung heroes’ of the business,” Mayor Dean said. “This location at the Music City Center is a fitting space to honor songwriters and their creativity, and it gives both local residents and visitors from out of town yet another reason to stop by our new convention center.” Read more.
Indie Artist Mumford & Sons Scores Biggest First Week Sales of 2012!–Billboard
It’s official: Mumford & Sons’ sophomore release, “Babel,” has earned the biggest debut of any album this year in the United States. “Babel” sold 600,000 in its first week, according to Nielsen SoundScan, and becomes the rock quartet’s first No. 1 on the Billboard 200 albums chart. It’s also the first No. 1 for Mumford & Sons’ record label, Glassnote Records. Read more.
