Bald And Grey But Still Rocking

Throughout the semester, I have had the pleasure of helping to manage and advise Rick Treffers. Rick is the lead singer and creative force behind MIST. Check out his latest music video here

Rick is in his late 40’s and has never had any hit songs or major label deals. Nevertheless, he has managed to pay his rent and feed himself throughout his career as an artist. The key for him has been his songwriting catalogue. The majority of his income now comes from publishing royalties.

Over the years Rick’s music has been used in many TV shows and movies. Here is an example of his song Heart Surgery being used in the German Crime series Tatort.

Rick owns both the publishing and masters of his music which means you only need his permission to license a MIST song. In contrast to Rick, a song with multiples songwriters, publishers and a label might need 10 different licenses. That takes too long for music supervisors who often work on short deadlines.

Rick doesn’t look like a typical indie rock star anymore. For starters, he is bald and grey. However, Rick’s career will continue to flourish while many younger and better looking rockers will abandon their dreams. The key for Rick is a catalogue of songs that don’t discriminate based on appearance or age.

Russian Collection Society Blues

There is news lately that the Russian culture ministry has made new proposals concerning the Collection societies in Russia. One of these proposals is that the collection societies like RAO, VOIS and RSP should pay out 75% of what they collect to the authors and composers.

In principle this would be a positive step forward. 75% should be a very achievable target considering that collection societies in Canada pay out 90% of what they take in. In Socans’ 2014 annual report they said that “SOCAN’s Corporate Net Expense Ratio was 9.5 percent, below 10 percent for the first time in the history of the organization, positioning it as one of the most cost-effective major music rights organizations in the world.

The part of Russia’s proposal that doesn’t seem to make sense is that they want the 75% to apply every type of authors right separately. Collecting licenses from radio has a very different cost ratio than restaurants for example. It shouldn’t really matter so much that each area reach 75%. The only thing that should really matter is the total average because it is out of that average that authors are paid.

I Don’t Trust Antitrust Laws In Music Publishing

The big news in music publishing is that a 2 billion dollar asset is suddenly up for sale. Sony and the Michael Jackson estate are co-owners of Sony ATV which is the largest music publisher in the world. They have reached a point in their business arrangement together where one side will have to sell their stake. You can read more about that here.

I find it disturbing that antitrust issues are being discussed in this case. “Vivendi-owned industry titan Universal Music Group is not expected to be a buyer, due to antitrust hurdles.” However, they do think it is possible that a major private equity company will get involved. “Potential candidates include  private equity firms such as Apollo Global Management.”

The main reason that the government enforces antitrust laws is because of the supposed damaging effects of monopolies on society. When a company is too large in its industry, people assume that they will gouge consumers and damage the economy.

In the case of music publishing I doubt that any company can set “monopolistic prices” that will damage society. The rate for mechanical royalties is already capped at 9.1 cents per song. The rate of performance royalties is generally set by the performing rights societies.  I don’t believe that a private equity company whose sole aim is to make huge returns will be a more ethical steward of those assets than Universal.

Peter Thiel also makes the argument that monopolies rather than being evil are good for society. “A monopoly like Google  doesn’t have to worry about competing with anyone. It has a wider latitude to care about its workers, its products and its impact on the wider world. Google’s motto—”Don’t be evil”—is in part a branding ploy, but it is also characteristic of a kind of business that is successful enough to take ethics seriously without jeopardizing its own existence.

Matchmaker, Matchmaker Make Me A Match

There was a very interesting article in billboard recently about solo songwriters. They are a dying breed. Today’s hits are almost exclusively penned by a team of songwriters.

This trend will have an interesting impact on music. Some of the greatest songs of all time were penned by solo songwriters. Bob Dylan, Paul Simon, Woody Guthrie and Billie Joel are some of the greatest songwriters ever who wrote alone. Solo songwriters are able to write great songs because they are able to write entirely from personal experience which is often more intimate and personal.

When you write in a group the ideas are more scattered because it’s harder to write one unified story. On the other hand, group writing allows for more complex ideas. The group also benefits from the ability for people to specialize in what they do best. A great lyricist can pair up with a great melody writer etc. This is a clear example of the economic law of comparative advantage. This trend means that we will continue to produce less intimate but more sophisticated songs from a production standpoint.

The death of the solo songwriter also presents a new challenge for publishing companies. Successful publishing companies today will have to think like the general manager of a sports team. They can’t only look at how skilled the players are but they also need to evaluate the chemistry that each player will have with the rest of the team. Since songwriting today is about working in groups, it will be key for publishers to not only identify talent but to serve as matchmakers

Like the song in fiddler on the roof – Matchmaker, matchmaker make me a match!

Universal Music Publishing Signs Michael Chabon

There was news last week that Universal Music Publishing signed Michael Chabon to a publishing deal. There has been a long history of novelists becoming songwriters and songwriters becoming novelists. Paulo Coelho was a famous lyricist in Brazil before he started writing best selling novels like the Alchemist. Leonard Cohen started as a novelist and eventually crossed over and became famous for his lyrics. I have been a huge fan of Michael Chabon for a while and his novel Kavalier and Clay is one of my favourites. To hear of his interest in writing pop songs was a bit surprising even if it isn’t something new for novelists.

One part of the verge article I found interesting is where the author wrote “At the very least, it’s a fascinating expression of intent from an author who’s always been interested in culture’s impact on people’s behaviour and experience.”

The music business itself and the potential for a songwriter like Michael Chabon to earn mechanical royalties will probably continue to diminish every year.The recorded music business used to be a 40 billion dollar industry and has now shrunk to under 20 billion. From a business perspective it doesn’t seem like he is riding a growing wave.

We are living in a generation where people’s attention span continues to diminish each year. Kavalier and Clay was a 640 page book but a Mark Ronson song lasts just 3 minutes. It’s easy to imagine that even if people won’t pay for music anymore that at least they’ll continue to listen to it in some form. In a recent landmark study, Edison Research found that, “America is in a golden age of audio consumption and that Americans spend roughly a fourth of their waking day listening to some sort of audio.” If Michael Chabon’s main goal is to impact culture then he probably picked the perfect time.

A Rounding Error For Len Blavatnik

Anyone involved in the music business has probably heard about the copyright dispute involving happy birthday.  Warner Chappell thought that they owned the copyright until 2030 but the judge ruled that the song already belongs to the public domain. They were making 2 million dollars a year in licensing fees and would have collected 30 million dollars more without this ruling.

The legal aspect of the dispute largely deals with issues of authorship that date back nearly 100 years. It is very hard as a third party bystander to form an opinion on who really composed the song and who really owns the copyright since we don’t know any of the parties involved.

The majority of people will rejoice at the decision because it is good for artists who now don’t need to pay to license the song for their work. Len Blavatnik owns Warner Chappell and was the man previously profiting off the Happy Birthday Copyright. Len is the wealthiest man in Britain and has a net worth that exceeds 20 billion pounds. Blavatnik owns many businesses in a variety of sectors including oil& gas, real estate and entertainment. Blavatnik loses more money with each dollar that oil prices go down than he will lose with Happy Birthday. For Len, this is nothing more than a rounding error and for everyone else it is a happy day.

SESAC Acquires Harry Fox

I am really impressed with SESAC. Their acquisition of Harry Fox is a brilliant and strategical move. SESAC is currently the 3rd largest PRO in the USA but will now be in a much more powerful position by owning Harry Fox who are the largest mechanical rights organization. New methods of consuming music like streaming require complex licenses. With all the new technologies and possibilities for new ventures, the ability to quickly license music will be pivotal. SESAC will make it much simpler to get access to all the necessary rights in one place.

This brilliant acquisition comes after an equally great one last year when SESAC acquired Rumblefish. Rumblefish is one of the leading services for micro-licensing for small youtube videos and other digital media. As an independent musician, micro licensing has become one of the best ways for me to earn money and distribute my music. SESAC is looking to the future and making all the right moves. Kudos to them!