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The Future of Music – by Dave Kusek and Gerd Leonhard

The Future of Music book is available in various forms.

future of music

 

You can buy the book on Amazon.

 

You can purchase the audiobook from Audible.

 

You can listen to the book on iTunes as a podcast for free. Go to the iTunes store and search “Future of Music” podcasts and subscribe.

Here are a few of the reviews.

Publishers Weekly
Two innovators in music technology take a fascinating look at the impact of the digital revolution on the music business and predict “a future in which music will be like water: ubiquitous and free-flowing.” Kusek and Leonhard foresee the disappearance of CDs and record stores as we know them in the next decade; consumers will have access to more products than ever, though, through a vast range of digital radio channels, person-to-person Internet file sharing and a host of subscription services. The authors are especially good at describing how the way current record companies operate – as both owners and distributors of music, with artists making less than executives – will also drastically change: individual CD sales, for example, will be replaced by “a very potent ‘liquid’ pricing system that incorporates subscriptions, bundles of various media types, multi-access deals, and added-value services.” While the authors often shift from analysts into cheerleaders for the über-wired future they predict – “Let’s replace inefficient content-protection schemes with effective means of sharing-control and superdistribution!” – their clearly written and groundbreaking book is the first major statement of what may be “the new digital reality” of the music business in the future.

5.0 out of 5 stars THE FUTURE OF MUSIC IS NOW
Gian Fiero (Hollywood, California)

This book is so brilliant that it makes the vast majority of music industry books that are being published seem irrelevant. It discusses in detail, the reasons why the future of the music industry is headed into the digital/mobile entertainment era. It also provides statistical information that professionals, marketers, entrepreneurs, and educators can use constructively. Both Dave and Gerd (the books co-author), have their fingers firmly planted on current music industry activities and trends. They also possess and display a clairvoyant eye toward the future that offers beneficial insight and foresight to those who may not be aware of what this whole digital (i.e. independent) revolution is about, and most importantly, what it will entail to prosper in it. The book is easy to read, easy to understand and simply brilliant. If you buy just one industry book this year, this should be THE one. Buy it now!

5.0 out of 5 stars Indispensible
Stephen Hill “Producer, Hearts of Space” (San Rafael, CA USA)

A stunningly candid source of concentrated, up to date insight about the music business and its turbulent transition into the digital era. This book tells it straight and will make the dinosaurs of the music industry very unhappy.

Like Martin Luther’s ’95 Theses’ nailed to the door of Wittenberg Cathedral, Kusek and Leonard drive nail after nail into the sclerotic heart of the old-fashioned music business. Their rational vision of the future of music rests on the idea of unshackling music from the hardcopy product business in a yet-to-be-realized era of open content licensing, facilitating sharing and communication among users, and growing the business to its full potential.

It provides as clear a vision of the future of the music industry as you will find, from two writers with a rare combination: a solid grounding in the traditional practices of the music business, an up-to-the-minute knowledge of the new technologies that are changing it, and the ability to think through the consequences.

I’ve dreamed about a book like this, but thought it would be impossible in today’s hyperdynamic environment where every week seems to bring a breakthrough technology, device, or service. But by digging out the underlying trends and principles Kusek and Leonard get under the news and illuminate it. Along the way they provide a brilliantly concise history of the evolution of digital media.

I can’t think of any book more important for artists to get the full re-orientation they need to survive and prosper in the digital era. It’s no less critical for members of the music and broadcasting industries who need to consolidate their thinking into a coherent roadmap for the future. In a word: indispensible.

Other things to do from here:

We have a wide variety of blog posts and articles on the music business and the future of music. Please click on any of these links to read more.

How to Promote Your Music

How to License Your Music

How to get your Music on Spotify Playlists

How to book bigger and better Gigs.

Instagram for Musicians

The health of the “music industry” has been in question since the rise of the internet and digital communication technologies, and finding a happy medium between all the parties involved has not been an easy task. Countless companies and artists have risen up with unique business models, but for the vast majority of musicians, their income from recorded music has diminished dramatically.

I have argued as have many others, including my friend Fred Goldring, that we need a plan for reform to create a healthy music industry in which all parties benefit. That means artists, songwriters, intermediaries and the tech companies that have seeming taken over the hen house. Reform in how the digital money gets split up, reform in how inexpensive these digital services can be for consumers and reform in our antiquated copyright law.

The debate continues and this piece below is well worth a careful read. I agree with most of what Fred proposes (not sure the album is dead yet.) Enjoy…

This article below is written by music industry veteran Fred Goldring of Music Aficionado. Fred is a media/tech entrepreneur, entertainment lawyer with Counsel LLP, an Emmy-winning Executive Producer and a Member of The President’s Committee on the Arts and the Humanities appointed by President Barack Obama.  This post “Let’s Be Pigs Not Hogs: How to Thrive in the Age of Digital Music” originally ran on Hypebot:

In 2003 and 2005 after a wave of R.I.A.A. lawsuits, I wrote editorials in Billboard advocating an “eight-step recovery program” for a healthier music industry. Among other things, I proposed the “support [of] initiatives that will allow unlimited access to every piece of music in the MP3 format whenever and wherever someone wants it, with no conditions or restrictions in an easy-to-use interface [as] people will pay for this”.

As one of the first people in our industry to embrace the changes that became the digital music revolution, and in light of the public debate over streaming brought on by Taylor Swift’s decision to remove her catalog from Spotify, I thought it would be interesting to look back on my recommendations eleven years later to see how we’ve done – and offer some new suggestions about where we might go from here.

Let’s start with the obvious: streaming is our future. It will only grow and become more ubiquitous. The advent of on-demand streaming is making it clear to everyone that you don’t have to own something that you can get anywhere at anytime on demand on any device (how many of you have visited your CD collection lately?) How we deal with the financial ramifications of that adoption will determine the future health of our industry. In particular, we need to create a system in which all of the major stakeholders in the music business—artists, record labels, publishers, performing rights organizations, digital music services and consumers—are happy and thrive. And therein lies the problem.

Our industry is entangled in a Gordian knot. On the one hand, artists and songwriters complain they don’t make enough money from streaming. So they are demanding a bigger piece of the streaming pie before they will support it. On the other hand, streaming services protest that they already pay out too much of their revenues back to the labels and publishers (currently over 70%) and that if they had to pay out even more, they won’t be able to sustain their businesses long term (note: Spotify recently reported a 12% operating loss for 2013).

Next we have the record labels grumbling that artists have been overpaid by relying on the 50/50 split of “ancillary income” royalty provision in recording contracts for streaming income. The labels’ argue that since streaming is no longer “ancillary”, they should pay artists their regular contractual royalty rate for normal retail channel sales (translation: record companies would keep more of streaming income which they assert they need to sustain their business and continue to invest in developing and marketing artists as well as new required digital infrastructure).

To make matters even more knotty, Apple will soon to be entering the streaming business (along with YouTube which recently launched their Music Key service). This will inevitably result in more downward pressure on pricing for streaming subscriptions. Unlike the Spotify’s and Rdio’s of the world, companies like Apple (and Amazon and Google), don’t rely on streaming to pay their bills. For the tech giants, streaming is simply a consumer acquisition and marketing tool.

Finally, there’s our outdated copyright laws. They have not kept pace with the rapid change brought on by technology. The Digital Millennium Copyright Act (DMCA) has been in effect since 1998; and it’s pretty clear that, among other things, the Safe Harbor and Anti-Circumvention provisions of that Act need significant updating now that we have 16 years of actual experience to inform the discussion.

So as we approach 2015, here are a few concrete proposals for how we can make this business we all love work for everybody.

1. As my Dad always told me, “pigs get fat, hogs get slaughtered.” The 70% royalty paid out by streaming services to IP holders seems too high from the point of view of the payers and too low from the point of the recipients. In every negotiation I’ve ever been a part of, that’s a good sign it’s a fair deal. The streaming services should stop trying to lower that rate and the artists and labels should stop trying to raise it. Everyone seemed OK with that split on iTunes sales. Let’s just all shake hands and get on with making music.

2. The crux of the problem is not how much the streaming services pay to IP holders, but how that pool of money is divvied up and allocated. Currently, it is allocated like a parimutuel betting pool where all subscriptions are pooled and then allocated based on the number of streams listened to for each artist. This seems fair until you realize that it effectively means subscribers who don’t listen to a lot of music per month are subsidizing subscribers who do. For example, if a streaming service had two users, one who listened to 999 streams by Artist X and another user who listened to a single stream by Artist Y, 99.9% of that service’s royalty pool would go to Artist X even though both users paid the same $9.99. It doesn’t have to be this way. Streaming royalties could be accounted for on a “user-centric” basis: i.e., 70% of each subscriber’s revenue would be allocated amongst the artists that subscriber listened to in a given month. This small accounting change would make a substantial difference in the profitability of streaming for indie, up-and-coming and struggling artists: i.e., exactly those artists that we need to nurture if we are going to have a thriving music scene ten years from now.

1. Record labels need to earn their keep. The 70% payout to IP holders largely goes to labels who then pay each of their artists based on the intricacies and convoluted terms of their contracts with each artist. I should know. I negotiated many of those contracts for artists. It doesn’t really matter whether labels call it “ancillary income” or “development” or “digital gobbledygook.” What matters is that unless labels provide real and substantive value to musicians, musicians will take their business elsewhere. Every day there are more and more alternatives to the traditional big 3 labels for musicians to consider. And many of these alternatives are much more exciting and rewarding to deal with for musicians than a label’s lawyers. Labels need to return to their culture of being musicians’ champions and supporters. Or they shouldn’t be surprised if they get disintermediated, and nobody is crying at their funeral.

2. Digital copyright law is a mess. We need to craft and implement a comprehensive overhaul of the sound recording copyright law to include payment of performance royalties for sound recordings on par with musical compositions. And copyright protection for pre-1972 sound recordings should also become a federally mandated right, not just a state right. We also need to revamp the DMCA to bring it in line with the realties of a 2015 digital world, and make the restrictions, obligations and payments under the Act sensible for all sides.

3. It may be tough for the streaming services to acknowledge, but Taylor Swift was right: windowing works. The music business needs to adopt a windowed/tiered system for new releases similar to that implemented by the movie and television industries. CD’s and downloads should have the initial window, followed by the paid streaming subscription services and then ad-supported free streaming services. Each window should have a different pricing model so that the fans who are willing to pay a bit more can get access to new music they love first.

4. IP holders and streaming services need to agree on a higher per-stream minimum that applies across the board, both to subscription and ad-supported services. This per-stream minimum must be high enough to generate a fair income to IP holders while, at the same time, not being so high it kills off the ad-supported services (after all, this is provably the best channel for upselling consumers to paying for music).

5. The album is dead. Long live the song. Artists would be better served releasing a new recording monthly, weekly or in a batch rather than waiting until they have a complete album. (Remember: albums only became a format originally due to the physical limitations of vinyl). Consumers don’t have the attention span they once did to listen to an entire album. Web and mobile connectivity now allow for novel ways for musicians to connect directly with their fans and engage them in their creative process.

6. Neil Young is right: the quality of MP3 song files sucks. If we want music to thrive, it needs to sound good. The entire industry—streaming services, artists and labels—should support rapid adoption of lossless FLAC as the new audio standard for paid interactive streaming. Most young people have never known anything but compressed MP3 audio. Introducing them to music in all its sonic glory might make them more passionate about music (note the resurgence of vinyl among young music fans). Higher quality audio would also attract older music fans who can finally get the sound quality they grew up with in streaming format – leading to more paid subscriptions and sales of high fidelity hardware.

7. Finally and most importantly, let’s make great music. We are all in a business built on a passion for great music. Music isn’t great simply because it is automatically installed on 500 million phones without the users wanting it. Music is great when it is brilliant and original and makes everyone with ears want to rush out and listen to it. If we stop making great music, it won’t matter how we divvy up the revenues because nobody will be listening.

What will the music industry look like eleven years from now? I’m optimistic – as long as ­all stakeholders accept that compromise will be necessary and inevitable to sustain long-term growth and innovation. More people are listening to a greater and a wider variety of music than ever before. The barriers to entry are dropping, and improved curation approaches and filters are being introduced regularly. We can get to a place where all participants can feel good about zealously supporting the rapid growth of streaming. But this can only be achieved if all parties recognize that “pigs get fat, but hogs get slaughtered.”

Follow Fred Goldring on Twitter @fredgoldring.

music copyright

Your copyrights are your business! So it makes sense to take the time to understand how it all works. Unfortunately, “copyright” and “law” tend to have pretty scary connotations. Just hearing the words is often enough to make our heads hurt.

This article from Digital Music News pretty much lays out everything you need to know about your copyrights, publishing, royalties, and licenses in a way that’s easy to understand. Here’s the copyright segment of the article.

I know it’s not the most exciting topic out there, but understanding your rights (and more importantly how you can monetize them) will unlock a lot of income opportunities for you in music. After you finish this article, check out this free ebook to learn how to take those rights and score awesome licensing deals.

We’re also hosting a free licensing webinar covering a surefire way to license your music. You’ll learn how to get your music on music libraries and how to make connections directly with music supervisors. Click here to register for free and choose the date and time that works best for you.

Copyright

As a musician you are a creator.  Whether you’re a composer, lyricist or performing artist, you create works.  These works automatically become copyrighted once they are documented; for example through recording or writing.

Copyright is a form of intellectual property.  The creator becomes the copyright owner.  If there are multiple creators, this right is automatically split equally.  Writers are free to deviate from this equal share through mutual agreement.

The duration of this copyright is generally until 70 years after the death of the last surviving author. It differs in some countries.

Copyright ownership rights give control over who can reproduce, distribute, perform publicly, display and create derivatives of a work. These ownership rights can be fully transferred and assigned to others.  Others can also be granted licenses to use your music, typically in exchange for a payment. These payments are called royalties.

There are two types of musical copyright;

Musical Composition Copyright:

A musical composition is a piece of music, in part or in whole.  The authors are typically the composer (writer of music) and the lyricist (writer of text, in case of lyrics). These authors are the owners of the musical composition copyright.  Typically in equal share, as both the composer and lyricist of a track get assigned 50% of the composition’s copyright, unless they agreed on a different split. This can be done when one party contributed more than the other.

The creators have the exclusive right to determine who can produce copies of their song, for example to create records.  This right can be granted to others by giving out a mechanical license, which is done in exchange for a monetary payment (mechanical royalties).

Whenever a record label or performing artist wants to record a song that they do not own, they have to get a mechanical license from the people that do. Always.

All decisions regarding the composition can only be made when agreed upon by all copyright owners.  As mentioned before, the ownership and control of copyright can be transferred to others.  Generally, songwriters get a specialized third party, namely a publisher, to control and manage their songs.  In exchange, they get a cut of the royalty streams which they help generate with the repertoire.

Writer-publisher splits tend to range between 50%-50% and 70%-30%, depending on the clout of the artist and sometimes even on the relevant country’s regulations.

Sound Recording Copyright:

A sound recording is the actual final recording of a song, a fixation of sound.  It often goes by the name of ‘master’ from the old ‘master tape’ expression.  The authors are the performing artist and record producer, who in essence are therefore the owners.  Producers typically get a small share of the master rights (up to 12.5%). However, recordings are typically made in assignment of record labels, whom have negotiated deals with both the artist and producer in which they transfer ownership of their copyright to the label in exchange for royalty payments.

Also, it’s increasingly more common and easy for performing artists to record independently.  In these cases, the master ownership belongs to just them, or them together with the producer.

Royalty payments to performing artists are called artist royalties.  Royalty payments to producers are called producer royalties.

Now that you know about the two different types of musical copyright, it is important that you grasp the difference between the ‘writers’ of a track and the owners of the actual ‘master recording’.  The composition, made by the writers, is typically represented by a publisher.  The sound recording, made by the performing artist and producer, is typically represented by a label.

To learn more about publishers, royalty calculations, and licenses, check out the full article over on Digital Music News.

Photo credit: http://bit.ly/1dCOr9T

Photo credit: http://bit.ly/1dCOr9T

One of the best ways to grow is to look at what’s worked for other indie musicians and adapt it to your own career. I’ve compiled 10 great strategies for indie musicians with 10 real examples to get you going. A lot of musicians I’ve talked to think they can’t start making strategies to move their career forward until they’re making money, until they take some business classes, or until they get a manager. The coolest thing about these strategies is that you can start using them TODAY.

Here’s strategies 1-5. (You can find part 2 right here).

1. Make a Plan from the Start

Making a great plan is one of the best ways to get to that music success you deserve. Not only do concrete goals give you something to aim for, they also help you decide what your first step should be.

Try to make your goals as specific as possible. Instead of saying “I want to be rich and famous,” try something specific like “I want to be able to be a full time musician with a yearly salary of at least $75,000 and be able to tour outside my home state.” Break down your lofty goal into smaller tasks like “gather contact information for local venues,” “contact 5 venues this week,” and “connect with another band to share a gig.” Suddenly finding a way to reach that goal becomes more manageable.

From the start Karmin knew they wanted to be a pop duo targeting a young teen audience. Manager Nils Gums suggested the duo cover current popular songs to get in front of their target audience. They followed the charts and consistently covered the most popular songs every week. The important takeaway here is that Karmin knew their goal, they made a plan to get there, and they stuck with it. If they had given up on the cover strategy after only a few weeks, they would never have gotten to where they are today.

2. Leverage Your Copyrights
Your copyrights are your business. They are your assets and your products, so it makes sense to take some time to understand them. You don’t need to be on the same level as a big-shot entertainment attorney, but it helps to have a general understanding of copyright law.

There are two kinds of copyright: composition and sound recording. Copyright is created when a musical idea is put into tangible form. So when you write that song down (composition) or record it (sound recording) you own the rights!  All those rights are exclusive, meaning you, and only you can leverage your song. Remember that copyrights are power! You own the copyrights, so you have the power. Think about it, without your copyrights would labels or publishers have anything to sell? Lots of musicians have been realizing this and have figured out cool ways to leverage their copyrights.

The Happen Ins are an Austin-based rock band that were featured in a catalog from the clothing company Free People, a corresponding video, many blog posts, and played at the catalog release party. In order to grow their fan base, the Happen Ins offered a free download to Free People’s customers. In many cases this exposure can be far more valuable than money.

3. Focus on Time Management

Today’s indie musician plays the part of the artist, and the business professional, and as a result, many find themselves juggling entirely too many tasks. It’s great that artists today can be 100% in control of their career, the problem comes when you can no longer find enough time for what matters most – your music!

If there’s anything you are doing that’s not bringing you closer to your goals, stop or take a closer look.  If you’re spending hours each day on tasks that don’t have much benefit, eliminate, simplify, postpone, or delegate to your team members. Try to prioritize the list. More urgent matters and tasks that you keep putting off and putting off should have a high priority. AND REMEMBER, make time for your music!

Michael Shoup is a musician and entrepreneur who turned his career around and started making profit with time management. After graduating college with a Bachelors degree in music, Shoup started his career as a musician and effectively gigged himself into $6,000 of high interest credit card debt. Time management has helped Michael Shoup become debt free. On top of that, he’s managed to self-fund an album, started a music marketing agency, 12SouthMusic, and created a social media app, Visualive.

4. Build a Team that Grows with You

DIY may not be the best option for indie artists. There are a lot of artists out there with excellent business chops, but they’re still not experts. And that’s okay, because you have more important things to do like creating music! The key is to find a team who is motivated and passionate. Instead of DIY, move towards a do-it-with-others (DIWO) strategy.

Your team doesn’t even have to be seasoned pros. If you have a band you’re already way ahead of the game. Everyone has their own unique skills, so take advantage of that!

Pop singer/songwriter Betty Who was able to be really successful with a team made of college classmates. Producer Peter Thomas and manager Ethan Schiff attended Berklee College of Music with Betty Who. With Peter Thomas she was able to find and really latch onto her signature pop sound, and Schiff helped set her up on the business side of things. Betty Who’s “Somebody Loves You” began drawing the attention of the pop music world after the release of her first EP The Movement in spring of 2013. In September 2013 the song was featured in a viral gay marriage proposal video and just a few days later she was signed to RCA Records.

5. Get out There and Network!

Networking is really important to success in music, but it’s easy to get overwhelmed with internal tasks and forget to take the time and introduce yourself. You don’t need a big speech or a prepared pitch. Just get into the habit of introducing yourself to one person at every show you play or at every studio you record in. Talk to the guy in charge of the soundboard, maybe he loved your show and wants to produce your next album.

Remember, networking is a two-way relationship, and collaboration is usually the best way to promote this win-win situation. If you collaborate on a show, a song, or a recording, both of you will be exposed to the other’s fanbase!  Always remember to give before you ask. Do something for someone and they will remember you.

Vinyl Thief used their extended network to find success. The band released their first EP, Control, in 2010 but were disappointed in the results. They called on a former high school classmate, now music marketing graduate, Wes Davenport who started working on improving their marketing efforts. Davenport helped them grow their fanbase through the digital releases of single, White Light, and second EP, Rebel Hill. (Source)

 To learn more strategies for indie musicians that you can be applying to your career RIGHT NOW, sign up to get a free copy of our most popular ebook, Hack the Music Business.

 

leveraging copyright

Your copyrights are your business. They are your assets and your products, so it makes sense to take some time to understand them. You don’t need to be on the same level as a big-shot entertainment attorney, but it helps to have a general understanding of copyright law.

There are two kinds of copyright: composition and sound recording. Copyright is created when a musical idea is put into tangible form. So when you write that song down (composition) or record it (sound recording) you own the rights!  All those rights are exclusive, meaning you, and only you can leverage your song.

So how does all this translate into actually making money? Other people and companies have to get your permission and usually pay you to perform any of the actions protected by copyright. Think of copyright like property – intellectual property. If you owned a large apartment building other people would have to get your permission to live in one of the apartments. They would sign a contract and money would most likely change hands. It’s the same principle for music. A record label or distributor pays you to be able to make copies of your song and distribute it to online and retail stores. A radio station pays you (through a PRO) to perform your song over the radio. A company pays you to sync your music to their promotional videos or advertisements.

One thing a lot of musicians miss is the fact that copyrights are power. You own the copyrights, so you have the power. Think about it, without your copyrights would labels or publishers have anything to sell? Many more musicians have been realizing this and figuring out how to leverage their copyrights.

Licensing is an obvious option, and there are surprisingly a lot of opportunities out there for indie musicians to make money licensing their music. In fact, there’s just 4 easy steps you need to take to START licensing your music.

Music publishing can be a tricky area to navigate when it comes to payment, especially when you’re just starting out. Many companies don’t have a budget for music and rely on small indie bands to license their songs for free. In these cases, don’t cave in or restrict yourself to just monetary payment. Think about what non-monetary things they can offer you in exchange for your music. Does the company run a blog? If so they could write up a quick feature or interview with links back to your site and social media channels. When done correctly, the publicity could be just as valuable as a check!

The Happen Ins are an Austin-based rock band that were featured in a catalog from the clothing company Free People and a corresponding video in July 2011. In this case, Free People had to get permission to sync the Happen Ins music to their video. Free People is a fairly well known clothing line, so the band most likely got some monetary payment, but we’ll focus on the non-monetary publicity, as it is something most companies can offer even the smallest bands. Members of The Happen Ins were in the catalog, were the feature of many blog posts surrounding the catalog release, and played at the catalog release party. In order to grow their fan base, the Happen Ins offered a free download to Free People’s customers.

If you want to make the most of your copyrights, the key is to find business partners that have a similar image or audience to yours or one you want to reach. In this case, Free People, their customers, and the Happen Ins have a vintage rock and roll vibe. Think about your image, personality, and music when you go out looking for publishing deals. But if you have a solid licensing strategy in place, you can make a decent amount of money licensing your music, even as an indie musician or band.


Want more music licensing tips? We’re hosting a free webinar that will take you through a surefire way to license your music. Everything we’re going to cover is tried and tested by our own Joyce Kettering, who has used everything she teaches to make a full time living licensing her music. Click here to register for free and choose the date and time that works best for you.


Want to know the other 9 musician mistakes?

  1. You Don’t Have a Plan
  2. You Skip Time Management
  3. You Don’t Have a Team
  4. You’re Not Out There Networking
  5. You Don’t Focus on a Niche
  6. You Don’t Let Your Fans Market
  7. You Don’t Have a Brand Strategy
  8. You Overuse Free Music
  9. You Don’t React to Opportunity

New-Artist-Model

The New Artist Model online course teaches you specifics of copyright law and creative publishing in detail. By the end of the 8-week course you will fully understand what copyrights you have and can create, what you can do with them, how you get paid, and how to effectively pursue music publishing and licensing.

 

According to this article from Digital Music News, Maria Pallante, the US Register of Copyrights, is looking to move US law towards the full payment of performance rights.  This means that radio broadcasters, who historically have not paid for their use of the sound recording, may be required to do so in the future.  While this statement is certainly not a guarantee of action, the fact that the topic is being openly discussed by US officials represents progress for the issue.

US copyright law protects two separate copyrights – the composition and the sound recording.  Additionally, copyright law grants exclusive rights in the public performance of the composition, and of the sound recording via digital transmission.  Missing from this equation is the payment of the public performance royalties to the sound recording owner for non-digital performances.  This means that if you hear your favorite song on Pandora, both the composition and sound recording owner will be compensated, but if you hear that same song on terrestrial radio, only the composition owner receives payment for the performance.

Similar to the US, most other developed countries do not specifically grant public performance rights to sound recording owners, but the rights are assumed via neighboring rights.  This means the US is one of the few countries not paying their sound recording owners for public performances.

This illogical exclusion is perhaps one of the most frustrating and baffling aspects in US copyright law – it remains relevant in today’s society simply because it has always been.  In the past, broadcasters avoided payment to the sound recording owner (usually the record company) by arguing that their services provided free promotion.  This precedent has remained to this day despite terrestrial radio’s diminishing significance, especially regarding indie musicians.

The movement towards the full payment of sound recording owners most likely found its roots in Pandora’s recent litigation attempts to lower their public performance fees.  Pandora argued that the disconnect between the fees paid by terrestrial radios and the fees required of Pandora put them at an unfair disadvantage.

While this is most likely not the outcome Pandora litigators wanted or expected, most would agree that it is necessary for the US to drop old, irrelevant precedence and enter the modern age of copyright law.

The future of the profitability of the recorded music business is unquestionably in jeopardy.  One might speculate that new “access based” services like Rdio and Spotify could re-start a failing record industry.  I hope so.

But as sales have fallen to less that 1/2 their heights at the turn of the century, artists and their managers and attorney are looking to every means possible of generating revenue both now and in the future from their recorded works.

The New York Times published a great piece on the coming battles over song rights, excerpted here.  This will be a very interesting fight to watch as it has the potential of forever driving the nail into the coffin of the traditional record labels, forcing a complete restart of the business if it is to survive at all.

“When copyright law was revised in the mid-1970s, musicians, like creators of other works of art, were granted “termination rights,” which allow them to regain control of their work after 35 years, so long as they apply at least two years in advance. Recordings from 1978 are the first to fall under the purview of the law, but in a matter of months, hits from 1979, like “The Long Run” by the Eagles and “Bad Girls” by Donna Summer, will be in the same situation — and then, as the calendar advances, every other master recording once it reaches the 35-year mark.”

“The provision also permits songwriters to reclaim ownership of qualifying songs. Bob Dylan has already filed to regain some of his compositions, as have other rock, pop and country performers like Tom Petty, Bryan Adams, Loretta Lynn, Kris Kristofferson, Tom Waits and Charlie Daniels, according to records on file at the United States Copyright Office.”

“In terms of all those big acts you name, the recording industry has made a gazillion dollars on those masters, more than the artists have,” said Don Henley, a founder both of the Eagles and the Recording Artists Coalition, which seeks to protect performers’ legal rights. “So there’s an issue of parity here, of fairness. This is a bone of contention, and it’s going to get more contentious in the next couple of years.”

“My gut feeling is that the issue could even make it to the Supreme Court,” said Lita Rosario, an entertainment lawyer specializing in soul, funk and rap artists who has filed termination claims on behalf of clients, whom she declined to name. “Some lawyers and managers see this as an opportunity to go in and renegotiate a new and better deal. But I think there are going to be some artists who feel so strongly about this that they are not going to want to settle, and will insist on getting all their rights back.”

“Given the potentially huge amounts of money at stake and the delicacy of the issues, both record companies, and recording artists and their managers have been reticent in talking about termination rights. The four major record companies either declined to discuss the issue or did not respond to requests for comment, referring the matter to the industry association.”

“But a recording industry executive involved in the issue, who spoke on condition of anonymity because he is not authorized to speak for the labels, said that significant differences of opinion exist not only between the majors and smaller independent companies, but also among the big four, which has prevented them from taking a unified position. Some of the major labels, he said, favor a court battle, no matter how long or costly it might be, while others worry that taking an unyielding position could backfire if the case is lost, since musicians and songwriters would be so deeply alienated that they would refuse to negotiate new deals and insist on total control of all their recordings.”

“Right now this is kind of like a game of chicken, but with a shot clock,” said Casey Rae-Hunter, deputy director of the Future of Music Coalition, which advocates for musicians and consumers. “Everyone is adopting a wait-and-see posture. But that can only be maintained for so long, because the clock is ticking.”

Read the entire NYTimes article here.

Here is an excerpt from a great piece from Wyndham Wallace of The Quietus on how the music industry is killing music and blaming the fans. This rather dark opinion is spot on in so many ways and raises some very difficult questions about the future of the music business that most people do not want to talk about.

“All the time the industry talks of money: money it’s lost, money it’s owed. It rarely talks about the effects upon artists, and even less about how music itself might suffer. But no one cares about the suits and their bank accounts except shareholders and bankers. People care about their own money, and the industry not only wanted too much of it but also failed to take care of those who had earned it for them: the musicians. And it’s the latter that people care about. Because People Still Want Good Music.”

“In March this year, for instance, the RIAA – the Recording Industry Association of America – and a group of thirteen record labels went to court in New York in pursuit of a case filed against Limewire in 2006 for copyright infringement. The money owed to them – the labels involved included Sony, Warner Brothers and BMG Music – could be, they argued, as much as $75 trillion. With the world’s GDP in 2011 expected to be around $65 trillion – $10 trillion less – this absurd figure was, quite rightly, laughed out of court by the judge. The RIAA finally announced in mid May that an out of court settlement for the considerably lower sum of $105 million had been agreed with Limewire’s founder.”

What is questionable about all of this is exactly how much of the settlement of $105 million will flow to the musicians, songwriters and producers whose work was the subject of the infringement to begin with. In previous settlements including Napster ($270 million), Bolt ($30 million), Kazaa ($130 million) and MP3.com ($100 million) it is unclear how much, if any, of the money received by the labels ever reached the pockets of the artists. I have yet to see an accounting of this and many managers I have spoken with have simply laughed when I asked the question if they ever received any payment from these settlements. I suppose that proceeds from litigation may be considered recoupable costs.

“But if the industry wants to talk money, let’s talk money, albeit the ways that developing musicians are encouraged to make up the loss of sales income in order to ply their trade. Someone’s got to bring this up, because it’s not a pretty picture. Consider, first, direct-to-fan marketing and social networking, said to involve fans so that they’re more inclined to attend shows, invest in ‘product’, and help market it. In practise this is a time-consuming affair that reaps rewards for only the few. Even the simple act of posting updates on Facebook, tweeting and whatever else is hip this week requires time, effort and imagination, and while any sales margins subsequently provoked might initially seem higher, the ratio of exertion to remuneration remains low for most. It’s also an illusion that such sales cut out the middlemen, thereby increasing income, except at the very lowest rung of the ladder: the moment that sales start to pick up, middlemen start to encroach upon the artist’s territory, if in new disguises. People are needed to provide the structure through which such activities can function, and few will work for free – and nor should they – even though musicians are now expected to.”

“Still, if an act can find time to do these things, or has the necessary capital to allow others to take care of them on their behalf, then they can hit the road. Touring’s where the money is, the mantra goes, and that’s the best way to sell merchandise too. But this is a similarly hollow promise. For starters, the sheer volume of artists now touring has saturated the market. Ticket prices have gone through the roof for established acts, while those starting out are competing for shows, splitting audiences spoilt for choice, driving down fees paid by promoters nervous about attendance figures. There’s also a finite amount of money that can be spent by most music fans, so if they’re coughing up huge wads of cash for stadium acts then that’s less money available to spend on developing artists. And for every extra show that a reputable artist takes on in order to make up his losses, that’s one show less that a new name might have won.”

“Touring is also expensive. That’s why record labels offered new artists financial backing, albeit in the form of a glorified loan known as ‘tour support’. Transport needs to be paid for, as do fuel, accommodation, food, equipment, tour managers and sound engineers. These costs can mount up very fast, and if each night you’re being paid a small guarantee, or in fact only a cut of the door, then losses incurred can be vast, rarely compensated for by merchandising sales. Again, financial backing of some sort is vital, but these days labels are struggling to provide it. In the past, income from record sales could be offset against these debts, but with that increasingly impossible, new artists will soon find it very hard to tour. Everyone’s a loser, baby.”

From Beck’s ‘Loser’

Forces of evil in a bozo nightmare
Banned all the music with a phony gas chamber
‘Cause one’s got a weasel and the other’s got a flag
One’s got on the pole shove the other in a bag
With the rerun shows and the cocaine nose job
The daytime crap of a folksinger slob
He hung himself with a guitar string

Soy un perdidor
I’m a loser baby, so why don’t you kill me?
(Know what I’m sayin?)

“Whether the industry likes it or not, music is now like water: it streams into homes, it pours forth in cafés, it trickles past in the street as it leaks from shops and restaurants. Unlike water, music isn’t a basic human right, but the public is now accustomed to its almost universal presence and accessibility. Yet the public is asked to pay for every track consumed, while the use of water tends to be charged at a fixed rate rather than drop by drop: exactly how much is consumed is less important than the fact that customers contribute to its provision. Telling people that profit margins are at stake doesn’t speak to the average music fan, but explaining how the quality of the music they enjoy is going to deteriorate, just as water would become muddy and undrinkable if no one invested in it, might encourage them to participate in the funding of its future. So since downloading music is now as easy as turning on a tap, charging for it in a similar fashion seems like a realistic, wide-reaching solution. And just as some people choose to invest in high-end water products, insisting on fancy packaging, better quality product and an enhanced experience, so some will continue to purchase a more enduring musical package. Others will settle for mp3s just as they settle for tap water. Calculating how rights holders should be accurately paid for such use of music is obviously complicated but far from impossible, and current accounting methods – which anyone who has been involved with record labels can tell you aren’t exactly failsafe – are clearly failing to bring in the cash.”

“The problem is, it’s not really the industry that is being cheated. It’s the artists and their fans. People get what they pay for, but – whatever the industry claims – most fans know that. They just don’t want to hear the businessmen fiddle while the musicians are being burnt. Revenues are unlikely ever again to reach the levels of the business’ formerly lucrative glory days, but in its stubborn refusal to recognise that both the playing field and the rules themselves have been irreversibly redefined without their permission, the industry is holding out for something that is no longer viable. Lower income is better than no income, and the industry has surely watched the money dwindling for long enough. Musicians, meanwhile, are being asked to make more and more compromises as they’re forced to put money ahead of their art on a previously unprecedented scale.”

Read the whole ugly story here at The Quietus.

The comments alone tell the sad story of the state of affairs in the music industry today.

WASHINGTON, D.C. —  The wild, wild West of Internet anarchy that was the first decade of the new century has a new sheriff.  And she paid a visit to the 10th annual Future of Music Policy Summit with a  badge bearing a 33-point strategy for restoring law and order.

The summit concluded Tuesday after three days of presentations and spirited dialogue among tech heads, policy makers, artists and recored-label executives plotting a new future for the music industry. But it was a visit by President Barack Obama’s new copyright czar, Victoria Espinel, that was the talk of the conference.

The music industry’s implosion has become a cause that even the federal government can’t ignore because the same issue – unfettered exchange of Internet files – has bled into the movie and publishing industries. Now any intellectual property that can be digitized can also be shared/stolen/cannabalized within seconds of hitting the Internet, and multibillion-dollar businesses — most of them with roots firmly planted in the pre-digital 20th Century — are crying foul.

At the Future of Music summit, Espinel waxed rhapsodic about the artistic community, echoing the Obama adminstration line that American innovation and intellectual property are key to its economic recovery.  But without directly indicting consumers, she outlined a strategy for containing file-sharing that suggested that many digital music fans will need to alter their behavior or else risk being cut off from the Internet at the very least.

Espinel noted that 95 percent of file-sharers consume music “illegally” — that is, they traffic in copyrighted music files that are readily available on the Internet. Does that mean tens of millions of Americans are technically “criminals” by federal standards? Espinel didn’t directly answer.

When questioned about the apparent disconnect between government policy and the way many American citizens behave when using their computers or cellphones, she merely insisted that there is “no inherent conflict” and that “the majority of consumers don’t want to engage in illegal content.”

She added that the administration would focus its crackdown on Web sites distributing illegal content, particularly those attempting to profit from it via advertising or subscriptions. But that’s a small percentage of the problem.

The rest of the conference took a more conciliatory approach, attempting to engage the way ordinary citizens/music consumers actually behave (regularly downloading music in their homes without checking into the nuances of copryight) and searching for ways to turn that behavior into a revenue stream that could eventually trickle down to artists.

“Everyone here is a file sharer,” said David Touve, a professor at Washington and Lee University. To restrict people from sharing files would compete against the basic design of the Internet — “and good luck with that,” he added.

“The last thing we need is more sticks” to beat down file sharers, said Eddie Schwartz, president of the Songwriters Association of Canada. “We need to find legal ways to file-share.”

The most popular trend is to insist the Internet service providers become part of the solution. A number of European countries have enlisted service providers to police their customers; those who engage in illegal file-sharing have their Internet access restricted or cut off.

“You can’t get revenue until you get the ISP’s to the table, by force if necessary,” said David Basskin, president of the Canadian Musical Reproduction Rights Association. His agitation was palpable, reflecting the attitude of many license holders and content providers tiring of seeing certain technology companies profit from music without cutting in content providers on their profits. Among the many examples derisively cited were the Google search engine that leads consumers to an illegal music file, or the Apple iPod that stores countless music files of dubious origin.

“If you are making money off artist content you have to ask yourself whether you are helping that artist pay his mortgage,” said Jesse von Doom of CASH Music, a nonprofit that creates tech tools for artists.

Steve Marks of the Recording Industry Association of America, which represents the major labels, said, “It’s not a secret that all content holders are interested in pursuing deals with ISP’s that make sense.”

That could mean the imposition of additional fees on Internet users, which opens up another set of issues: Who would collect the fees and who would distribute them not only to license-holders but to the artists themselves — often the bottom of any revenue food chain? Those questions are crucial, said Jim Griffin, a longtime tech consultant.

“Until we know how to properly distribute the money, is it even worth doing?” he asked.

These reasonable doubts clamored for space with anxious content creators and license holders who want to see revenue streams open up as soon as possible. No one questioned that music still has considerable value — more people are listening to more music than at any time in history. But how to turn that stream into a river of green for artists remains unresolved.

Wading into the middle of this decade-long debate is Victoria Espinel, copyright czar. Though she wields considerable power, she has a daunting job ahead of her reconciling a legion of business interests all looking for a stake in the new digital money pool and a nation of consumers who are used to getting their music for free.

Espinel was appointed by Obama earlier this year as the nation’s first-ever U.S. intellectual property enforcement coordinator.  A few months ago she introduced a strategy for dealing with Internet file-sharing  (or “smash and grab” as it was described by Vice President Joe Biden), which has been linked to a 50 percent decline in music-industry revenue over the last decade.

From Greg Kot – Chicago Tribune

I was hanging out with my friend Charlie McEnerney last night and asked him about his interview with Larry Lessig.  Here is his post and a link to the complete interview from Well Rounded Radio.  Check it out.

In many music and entertainment circles, the name Lawrence Lessig needs no introduction, but for those who don’t know his work, here’s some background.

Lessig is a lawyer and activist whose interests are mostly in intellectual property, copyright, technology, and political reform. He’s has written five influential books, including Code and Other Laws of Cyberspace (2000), The Future of Ideas (2001), Free Culture (2004), Code: Version 2.0 (2006), and Remix: Making Art and Commerce Thrive in the Hybrid Economy (2008).

Remix was just published in paperback in October 2009.

Over the past 10 years, Lessig has worked for both Harvard Law School and Stanford Law School. He is currently a lawyer at Harvard Law School and director of the Edmond J. Safra Foundation Center for Ethics at Harvard University.

Lessig is a founding board member of Creative Commons. In 2008, Lessig launched the Change Congress campaign, now called Fix Congress First.

Lessig talks about Creative Commons during the interview, but in a nutshell it’s an organization with copyright tools that allows content creators to give various levels of freedom to others for them to remix and build upon the original work.

The idea behind remix culture is how an artist can take a work that a pervious artist has produced and build upon it to create something new. The term has become more commonplace in the last decade, but in fact the concept has been in use for decades, most notably in rap music starting 30 years ago.

Growing up in Queens, New York, I was lucky enough to hear the rap bands of the first era pretty early on (granted, thanks to bands like Blondie and The Clash and college radio putting Grandmaster Flash, The Sugar Hill Gang, Kurtis Blow, and Afrika Bambaattaa on my radar) which usually utilized sampling techniques when creating their music.

I have long been a fan of the groups who fine tuned the ideas behind audio sampling to perfection, in Long Island’s Public Enemy and De La Soul. I’ve always thought both groups pushed the ideas behind sampling in ways that few others did before or since, albeit in very different directions.

With Public Enemy’s 1988 album It Takes a Nation of Millions to Hold Us Back and De La Soul’s 1989 album 3 Feet High and Rising, at the moment it seemed like the idea of what music “is” was being reinvented.

But, after a series of lawsuits for a variety of musicians and labels, the art of sampling and remixing was largely hobbled, in either using others work with or without their consent.

Twenty years later, it is still mostly the domain of those willing to tread in dangerous waters or for artists who want to engage their own fans by allowing them to remix work as part of the growing participatory culture community. For remix artists who might be looking to push their ideas further, it’s unlikely they can put their work into the public without a sizable budget.

Having read all of Lessig’s work and seen two recent documentaries about the remix culture (Brett Gaylor’s RIP: A Remix Manifesto and Benjamin Franzen’s Copyright Criminals), I wanted to speak with Lessig about how current musicians could utilize Creative Commons and share with their own audience as well as look at how we music fans can better understand this era of shared creativity, which dramatically changes the idea of those performers vs. us in the audience.

In addition to these films and Lessig’s Remix book, some good reads on the subject include DJ Spooky’s book Sound Unbound (2008) and Matt Mason’s The Pirate’s Dilemma: How Youth Culture is Reinventing Capitalism (2009).

The show includes music from the earlier era of sampling as well as some recent examples of mainstream musicians offering up their work for remixing, including David Byrne and Brian Eno, Nine Inch Nails, Radiohead, and Bjork.

I sat down with Lessig at his office at Harvard Law School to discuss:
* why it’s unlikely the current copyright system will change
* why Greg Gillis, also known as Girl Talk, has not been sued
* how Creative Commons works and how musicians can use it to engage their fans even more

Songs included in the interview include:
1) Public Enemy: Welcome to the Terrordome (Welcome to the Terrordome) (in preview)
2) Grandmaster Flash: The Adventures of Grandmaster Flash on the Wheels of Steel
3) De La Soul: Me Myself and I (3 Feet High and Rising)
4) Public Enemy: Night of the Living Baseheads
5) DJ Moule: Black Sabotage remix of Beastie Boys‘s Sabotage
6) Radiohead: Reckoner (In Rainbows)
7) Nick Olivetti: Nasty Fish remix of Radiohead‘s Reckoner
8) David Byrne + Brian Eno: Help Me Somebody (My Life in the Bush of Ghosts)
9) Owl Garden: Secret Somebody remix of David Byrne + Brian Eno‘s Help Me Somebody
10) Mr. Briggs Hit me somebody remix of David Byrne + Brian Eno‘s Help Me Somebody
11) Girl Talk: No Pause (Feed the Animals)
12) Girl Talk: In Step (Feed the Animals)
13) Danger Mouse: Encore (The Gray Album)
14) The Album Leaf‘s remix of Nina Simone‘s Lilac Wine from Verve Remixed
15) Vind‘s remix of Bjork‘s Venus as a Boy
16) Fatboy Slim: Praise You (You’ve Come a Long Way, Baby)
17) Amplive‘s remix of Radiohead‘s Weird Fishes

Get the audio interview here.

Many people have asked me to explain the current status of royalty payments for online music.

A thorough discussion of this past year’s agreement on mechanical royalties was produced by my friends at the Future of Music Coalition.

There is also a good summary on the meeting of the Copyright Royalty Board this past fall here.

The royalties that songwriters receive from CD sales and digital downloads will remain the same, the same for both media and the same as the current rate: 9.1 cents per song. The rate for ringtones will increase to 24 cents a song, above even the 15 cents songwriters and publishers lobbied for.

However there is still great unease with the direction that things are headed on the part of online webcasting and streaming music services as they look into the reality of making payments at these levels. Pandora, NPR and others seeking a new structure want rates to be set as a percentage of total revenue, similar to how royalties are assessed for satellite radio or subscription music services. At the very least, they want a system that will favor webcasters big and small.

Webcasters are required to pay an escalating fee to copyright owners every time they play a song for a listener. This year, for instance, Web radio stations are supposed to pay 14 hundredths of a penny ($.0014) per song streamed, per listener; site operators figure that will cost them about 2.1 cents per user, per hour. That is a figure that most webcasters simply cannot afford to pay, since most sites are advertising supported and do not generate enough revenue to pay the license fees and operate their businesses. Read more from All things Digital here.

We will see what happens in the next month or so as things come to a head.

Watch a fascinating social commentary on the state of affairs in copyright and the internet.

See the whole hour long movie here.