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New royalty for music played online

Wednesday, October 15th, 2008

On September 23, 2008, songwriters, publishers, record labels and digital music services announced they had finally reached an agreement on mechanical royalties for songs played on online music services. It only took about 8 years for them to figure it out…

Called a “breakthrough that will facilitate new ways to offer music to consumers online,” the voluntary agreement crafted by the Digital Media Association (DiMA), the National Music Publishers’ Association (NMPA), the RIAA, the Nashville Songwriters Association International (NSAI) and the Songwriters Guild of America (SGA) ended the longstanding dispute about mechanical royalties for interactive streaming and limited downloads.

The agreement must be still be approved by the Copyright Royalty Board to take effect, and states that limited download and interactive streaming services will pay a mechanical royalty of 10.5 percent of revenue, less any amounts owed for performance royalties. In certain instances, royalty-free promotional streaming is allowed.
The agreement tries to solve the dispute about what invokes a mechanical royalty in the digital environment, and permits certain kinds of promotional streams without payment, and agrees that webcasters will not owe mechanical royalties for non-interactive, audio-only streams.

The statutory mechanical royalty rate is currently 9.1¢ per song, unless you negotiate with the publisher directly and come up with a different rate.
With physical product, calculating the mechanical royalty using the statutory rate calculated by: # of songs on CD x # CDs manufactured x 9.1¢. But calculating mechanical royalties in the digital environment is more complicated because of considerations like what type of use (download, live stream, etc.) and how each is determined online.
The agreement states that all parties agreed to a “percentage of revenue” calculation so interactive audio-only webcasters and subscription services will pay 10.5 percent of their revenue to songwriters and publishers, minus any performance royalties already being paid to labels.
If a songwriter has a publishing deal with a publisher who’s a member of Harry Fox, the royalties should go from the music service to the publisher through HFA, then be passed along to the songwriter/composer as per their deal. For self-published musicians the royalties should go from the music service to a digital aggregator, which then would pass them on to either the musicians’ indie label, or directly to the musician.
The agreement primarily affects Rhapsody and Napster, for both their on-demand streaming services and their “to-go” services that allow subscribers to put music on portable players. But it will also affect other major services like MySpace, imeem, iLike and others for their interactive streaming options they want to provide.

However, this agreement is not the answer to the ongoing digital performance royalty fight between SoundExchange and webcasters like Pandora and soma.fm. That’s another issue, related to a different copyright. As i’ve mentioned many times, the music industry is unequaled when it comes to beauracracy… According to the press release, the parties agreed that non-interactive, audio-only streaming services like Pandora and soma.fm do not require a mechanical license. This means webcasters no longer have to worry about paying the publishers both for a performance and again for the cache and buffer copies made to enable that performance.
However, this agreement does not solve the debate between webcasters and sound recording rightsholders, which has to do with the non-interactive public performance of a recording on a digital platform. To keep it simple, I’ll just say that the disagreement about this digital performance royalty rate is ongoing. Hopefully a settlement will be reached soon, before it kills internet radio and brilliant musical innovations like Pandora.com

There are many parts of this agreement, like the acceptance of a percentage of revenue calculation that make a lot of sense. Hopefully it will influence and allow new business models to continue and flourish and allow musicians to benefit from increased access, exposure and revenue, and let music fans discover more music.

Data proves that free or shared music files are not lost sales

Saturday, August 2nd, 2008

For some time now I, along with many others in the music industry, have been going on about free music not representing a lost sale, but a gained listener.

Frequently, many music industry professionals suggest that an increase in legitimate sales must necessarily coincide with a commensurate reduction in ‘piracy’, as if this were a fact, yet, the research company BigChampagne has made no such consistent observation in nearly a decade of analyzing online data about music. Rather, it finds that piracy rates follow awareness and interest… The biggest selling albums and songs are nearly always the most widely pirated, regardless of all the ‘anti-piracy’ tactics employed by music companies.

Wired magazine talked about the factual data supporting mega rock band Radiohead‘s decision to allow users to pay what they wanted for their latest album.
All of the torrenting/free downloading of Radiohead’s of In Rainbows album contributed to the album making such a big impression on a listening public that’s bombarded with an ever increasing amount of information. Without it having been so widely traded, BigChampage’s data report says that Radiohead’s album wouldn’t necessarily have shot to the top of the charts and their worldwide tour wouldn’t have been such a smashing success, and I have to agree.

Applying economic principles to digital music, BigChamagne found that “the challenge of achieving popularity (or attention) when the old rules of scarcity (of product) and excludability don’t apply (to information goods) the way they used to, changes the monetization game completely.”

BigChamagne came to the undeniable conclusion that the music industry needs to stop thinking of shared files as lost sales, and start treating them as an aspect of reality upon which they can build part of their businesses.

You can download a detailed paper on this topic here. I haven’t studied it in detail yet so I would love to hear your insights.

Coldplay Conundrum

Wednesday, July 30th, 2008

So I’m thoroughly embarrassed to admit it, especially publicly, but I like a few of the new Coldplay tracks on their new album. Their sound isn’t really my thing, but they have some more edgy, upbeat and interesting production on songs like Viva La Vida (my current fave song) and Violet Hill from the new album.

But when I went to their website, there was no music! Oh, except for a free song that was so poor, it was a slap in my face. NO MUSIC ON A BAND WEBSITE?? How does this kind of thing happen? Maybe it was there and I just didn’t see it? That is just as bad.

Note to major labels, if your going to jump on the ‘free song’ bandwagon, if you offer a lousy track, it is like the 30 second preview, it’s just a slap in the music fans face!

But eliminating the entire music section from an artist website? That is beyond belief.

You know the only place online you can hear more than one full length song from the new Coldplay album? ‘Illegal download’ torrent sites.

But since they offer non DRM tracks on iTunes, perhaps I will get a few songs from there… Maybe.

Shocking music industry facts they prefer you don’t know:

Saturday, July 19th, 2008

From Soundscan stats released at the yearly NARM conference:

– 80,000 Records were released in total in 2008
– 80 percent of them sold less than 100 copies each.
– Most sales were from only 1000 titles
– Only 10 percent of hit records represent actually purchased music

And regarding copyright according to Andrew Dubber:
“It’s estimated that less than 2% of all music that has ever been released in a commercial format is currently for sale in any way, shape or form. That 6-million tracks thing that iTunes goes on about is hardly even the tip of the iceberg.” (Because of corporate ‘copyright hording’, preventing creators from access to their own works)

There are many more, but I don’t want to overwhelm you…

The problem with digitally distributing cover songs

Sunday, July 13th, 2008

I’ve just finished producing a fantastic new cover song for Heather Doré’s Pop music debut. I’ll tell you more about it soon when she launches it. She is a 21st century artist, so she is releasing her music, as it is completed, from her website, and you don’t have to wait, you can get it right away!
But releasing a cover song for digital distribution only from her own website has proven to be complicated as many simple things are in the music industry as it is overrun with paranoid obsession and unbelievable bureaucracy…

If you want to release on CD, or on iTunes within the country it was produced, then it is much more simple, but on your own website, where anyone in the world can buy it? Problems.
This is because the music industry works on a per country basis, that’s why it took forever to get iTunes in most countries because of all the deals and paperwork they had to do for practically every song.

That’s right, the corporate music industry complains, bitches, moans, publicizes and sues about losing money, but they make you jump through hoops and practically give up your first born child to help them make money with their music! Just give us what we want! How simple is that? It’s what, the first rule of business or something? Give the customer what they want. How could scores of billion dollar corporations worldwide forget that rule? It seems intense greed and lust for power blinds one quite severely, and this is why they’re losing money, NOT because of downloading. They would rather destroy their entire business before making it easy for you to give them money.
Good, change is good, and this is all causing music business to move back in the hands of the artist, making the importance of good music key. And that is a very good thing! Ok, rant over.

Basically I am still on the phone with the Canadian Music Rights Reproduction Agency and the song publisher regarding the song, so I don’t have any definitive answers for you. (The CMRRA doesn’t even have anything about digital distribution on their website, but at least we have such an agency to make some things a bit easier than they would be with payment of mechanical royalties in Canada)
What I can tell you is iTunes has done a deal where they pay out royalties as required for sales in each country for cover songs sold, so that simplifies things when releasing cover songs digitally this way.
But if you want to sell the songs on your own website to the world, which is my recommended method of selling music (NOT on myspace or facebook, but on www.yourname.com personal website), you have to obtain special rights for the world to sell the song, AND pay monthly royalties to the publisher yourself with detailed financial statements. And you may have to negotiate with different publishers for different parts of the world. Imagine having to negotiate with 3 or 4 publishers for each country in the world just to sell a song digitally from your website! Within 5 years, most music will be sold electronically!

So you think, ok how hard can that be, you just pay online at the publishers website with a credit card, right? Sorry, you must be taking about an industry that is efficient, progressive and meets the needs of it’s customers, and that’s not how the music industry works, and that is one of the many reasons why they are losing money.

Needless to say we aren’t going to work on many cover songs any more, as fun as it may be.

Help Me Help Your Music.

Thursday, July 10th, 2008

Are you a musician / artist?

I’m wondering if you can spend a minute to help me help artists like you.
I am trying to gather some anonymous research data from artists on what is an affordable amount of money per month for them to spend to obtain assistance towards a successful music career.

I have been in the process of trying to restructure my company, Pro Soul to be able to assist artists. We are exploring various monthly subscription based packages that will provide artists with consulting, services, and resources they need to develop a strong healthy career and fan base depending on what they need and can afford.

All you have to do to assist and state your opinion is fill out 2 short polls:

WWW.jarome.com/poll/

Pro Soul’s new mission is twofold: To provide music fans with great music by diverse International artists and to affordably assist artists in developing their career in a changing music industry to build a strong, long lasting audience they have a close relationship with that will create financial rewards that far surpass those possible with simple CD sales.

The new music industry is drastically changing, moving away from major record corporations and back to independent artists, moving away from physical product to digital media. Economics will bring in $4.8 billion in revenue from digital downloads in the US alone in 2012.
I blogged about the changes in the music industry more here:
the-end-of-the-music-industry-as-we-know-it

In this receding tide, Pro Soul’s aim is to assist artists to clear the path of discovery and purchase of music by enabling artists to more easily connect with their fans, and enable fans to purchase and access music more easily than they ever have before.

Pro Soul will consult artists with information provided by the worlds most knowledgeable experts in the future of the music industry, and provide virtually every aspect of what an artist will need in their career, performing those duties the artist does not want to take on themselves. We will provide the latest innovative techniques and services that have been proven to work to bring paying, dedicated fans to artists.

Key individual behind Pro Soul will be myself founder, music producer, audio engineer, and composer for over 17 years, Jarome Matthew. I achieved early acclaim with gold dance tracks on top 40 radio and a number of major label compilations in the early 1990’s and now produce and consults artists internationally and teach these things at a local college.

Although expenses and financial goals will be important in the first year, focus will be on assisting clients to become successful in generating enough new fans for them to see the signs of a successful long term career in the industry.

Right now all of this is just an idea developing. Based on the results of the poll and other research and consulting I am doing, and financial analysis, hopefully this will all be a great asset to artists and help me finally achieve my dream of really being able to help them.

Visit again to keep updated on how it’s going.

Feelings For A Machine

Saturday, July 5th, 2008

I’ve always been intrigued with the concept of having personal feelings for a machine. I’m not sure what sci fi experience started it, probably Star Wars, back when my parents took me with them to see it in 1977 in the theatre (yeah, that’s right, I’m kinda old). Then again with Blade Runner. I became fully aware of my fascination with feelings for a machine with the Kubrick/Spielberg movie AI which despite much hatred amongst most who viewed it, I loved. I vowed to see everything that Haley Joel Osment acted in since that movie. I also studied the idea further in the book “The Age Of Spiritual Machines” by music technology genius and futurist, Ray Kurzweil, who’s philosophies I only partly agree with.

It requires true talent for a director to make you have feelings for a machine, and they’ve done it again in Wall-E, the latest hit from Pixar. I was amazed at how the movie not only gives you empathy for a machine, but makes you forget your watching animation despite it being sci fi.

So another brilliant hit for Pixar (Disney’s just along for the ride), so that makes, what NINE hits? Every single movie Pixar has made has been a huge success. How can they sustain that when all the major studios fail?  If you ask Bob Lefsetz, he’ll tell you it’s because of a dedication to, a focus on, only one thing, quality.  EXCELLENCE! They don’t copy others, they don’t use cliches, they want nothing but to be the very best at what they do, and so they are. One could say it’s easy in a world overrun with mediocrity and people who are satisfied with making a quick buck. But it also takes the will and creativity and desire to do something a little different from everyone else, to take risks, but put your all into it, your best.

Will and Creativity are two things that have been sorely lacking in the music industry for some time. And that’s exactly what it desperately needs right now. But things are changing fast (unless you work for a large music corporation.)

The music has to be good…

Friday, June 20th, 2008

Bob Lefsetz has a lot of important truths to share about the future of music, and this sums it up in a nutshell:

“This whole business is top-heavy. And these lumbering giants are trying to maintain their power, however ignorantly.

The key today is leaving some money on the table. Be willing to give the audience something for free, you’ll get paid back in spades, if you’re good.

That’s what it’s come down to again… Are you any good? Can you play your instruments? Can you write innovative material? Can you touch people’s souls? Can you change their lives? Can you infect them to the point where they’ll come to your show for years?

That’s the future of this business. Not dominant superstars, but tons of journeymen, super-serving their fan base.

This is the more difficult road. But since the usual suspects, attorneys and major labels, are not interested in this road, they’re leaving the journey open to entrepreneurs. These entrepreneurs will inherit the landscape. A truly savvy one will roll up some acts to reach critical mass. The new entrepreneurs will not be chomping on cigars, going to lunch, but tapping their iPhones as they Skype contacts around the world, monitoring their business, giving those with the power to spread the word the tools they need to do so.

It’s not about less, but more. It’s not about drenching the public but starting with the trickle of one drop. It’s not about banging the audience over the head, but the sense of discovery and wonderment. It’s not about feeding the mainstream media, but the bloggers. It’s not about the deal, it’s about the music.”

The Future Of Copyright

Friday, June 13th, 2008

Today in Vancouver, the front page of the newspapers was a proposed copyright bill in Canada.
‘Is your iPod breaking the law?”

Once again, the government in it’s ignorance has caved to corporate industry, having no real idea what is going on with the future of copyright or music. The paper article quotes: “Rather than building a made-in-Canada proposal to help musicians get paid, the government has chosen to import American-style legislation that says the solution to the music industry’s problems is suing our fans”
Once again, Canada seeks to copy America’s ways with it’s Digital Millennium Copyright Act even though their efforts have failed miserably.

When are individuals, corporate America, religion, and government going to start independently investigating truth before making rash decisions that hurt the most vulnerable?
I talked about some of these decisions in this post that hurt content creators…
Backlash against the bill was swift and strong as this article details.

This bill does little to support the content creators and mainly seeks to continue compensating corporations who have become too lazy to market and promote using innovative techniques required in the digital internet age. Luckily it is still on the table and can be challenged.

What is really required is a complete shift in our direction about copyright based on our changing culture and society away from corporate interests, focused more on the content creator as Entertainment Lawyer and Stanford professor Larry Lessig details in his excellent speech, “How creativity is being strangled by the law” here. (also available at the end of this post)

Ultimately, change in copyright will come from the content creators (Most corporations own copyrights to works they themselves did not create!). So if you create content, lead the way by copyrighting using Creative Commons licenses.

Fear is the mindkiller! The resources and TRUTH are available to you dear readers! Please research things for yourself before believing the media, your friends, politicians, or religious clergy!
Let’s get back to instinct, and common sense, reality.

Entertainment Lawyer and Stanford professor Larry Lessig’s speech: “How creativity is being strangled by the law”

Asia: 60 percent of global music market

Saturday, June 7th, 2008

Read that headline and ponder, if your serious about music, how can you ignore Asia?

That’s what most labels and artists have done. “Bootlegging”, or “They don’t speak english” might be one of the excuses, but not anymore, and even if they don’t, that doesn’t mean they can’t memorize words to your song and sing along, it happens all the time.

When I went to Asia, I got bitten by some kind of bug. I didn’t get sick, I just got the fever – for Asia.
You could argue this is attributable to many things, and you would be right, but I think my instincts were sensing what this article is eluding to: That you can’t ignore Asia if your serious about music.

Asia Pacific Market Grows – radioandmusic.com

Oh, and if that article isn’t enough to boggle your mind, this WILL.
From my sources in China working in the industry: the Chinese internet base is the largest in the world with 221 million users. At 16% penetration, this still leaves huge room for growth. That’s right, that stat represents 16% of China. You do the math.

Keep your eye here for more about my plans for music in Asia through Pro Soul.

Jarome in Beijing, China 2008