Preface ix Acknowledgements xii Chapter Introduction 1 Selecting the Right Attorney 2 Personal Representation 3 Deal Makers: Why You Need Them 4 Deal Blockers: How to Get Past Them 5 Staying the Course or Calling It Quits 6
Chapter 2 Investors: The High Costs of Low Finance 8 The Costs of Being Heard 8 Of Investors and Investment Agreements 9 Should He Who Pays the Piper Call the Tune? 16
Chapter 3 Why Advances Seem a Lot Like Loans (and Vice Versa) 18 A Sad Story and a Happy Story about Advances 19 Is One Person's Money Another Person's Motivation? 21
Chapter 4 Some Unvarnished Truths About Royalties 23 How the Royalty Pie Is Sliced and Who Gets the Pieces 24 Diabolical Deduction Devices 29 The Beat Goes On: Other Important Deductions 32 Prepayment of Royalties 35 The Myth of Royalty Escalations 36 Free Goods 37 Lost or Misplaced Royalties 38 AHRA Royalties 40 Accountings, Audits, and the Statue of Limitations 41 The Effects of Digital Downloading on Pricing & Royalties 43
Chapter 5 Personal Management 46 What a Personal Manager Should (and Should Not) Be Expected to Do 47 Managing The Five Stages of an Artist's Career 48 Choosing Your Manager 53 Paying Your Manager 57 The Term of the Agreement 62 Extending or Terminating an Artist-Manager Relationship 62
Chapter 6 Managing Your Business--and Your Financial Future 68 What a Business Manager Does 68 What Kind of Business Is Being Managed? 72 Money Means Options: Resisting the "Keep 'Em Poor" Philosophy 81 Managing Your Money 82 After You've Peaked: Catalogue Management 90
Chapter 7 When Your Job is More Than a Gig 92 Term of Employment 92 Duties 92 Reporting Lines 93 Confidentiality and Competition 94 Stock Options 94 Perks 96 Termination 96 Relocation and Re-relocation 99 Visas 100 Disability and Death 100 Provisions That Survive Termination 101 Vacations 101 Employment Issues Specific to the Music Industry 102
Chapter 8 Record Producers: are They as Sharp as Their Points? 109 How 25 Percent Can Equal 100 Percent 109 Cross-Collateralization: It Does Not Apply to the Producer 111 Some Points for Producers 112 Producers and Neighboring Rights 120
Chapter 9 Getting Your Record Heard: A Practical Guide to Marketing and Promotion 122 Marketing Tools 122 The Goal-Oriented Campaign 123 The Record Contract 125 Record Companies Can Only Do So Much 129 Victim or Victor? 130 Television Campaigns 131 Radio Promotion 132 The Same Old Song (Only the Coda Is New) 136
Chapter 10 Touring Concerns 140 The Club Tour 140 The Grand Tour 141 Tour Riders 143 Foundations of Success: Team Planning 144 Elements of Touring Agreements: Commonalities and Idiosyncrasies 153 Owners and Operators: Who Nets the Net? 154
Chapter 11 Merchandising: Your Band; Your Brand 156 Tour Merchandising 156 Retail Merchandising 165 Some General Considerations 169
Chapter 12 Audits: Truth or Consequences 174 Examining the Audit 174 Television Campaigns 179 Interest Charges 179 Statutes of Limitations 180 Conducting Audits In Foreign Countries 181 A Few Practical Suggestions 182 The Right to Audit: A Contract Issue 184
Chapter 13 Music Publishing: The Odyssey of the Song 186 What is a Music Publisher--And What Does It Publish? 186 Copyright: A Bundle of Intangibles 188 Financial Secrets and Realities 191 The Administrating Function 198 Foreign Taxes 199 At-Source vs. Receipts Deals 199 The Black Box Revisited 201 Copyright Reversions 202
Chapter 14 The Pros and Cons of Being Your Own Music Publishing Company 203 Self-Publishing 203 Why Both Doing It Yourself? 208 The Cost of Acquiring Copyrights 209 Reversion of Copyrights 210 The Value of the Copyright 211 The Impact of Administrating Costs on True Earnings 213 The Cost of Giving Away a Piece of the Publishing 213
Chapter 15 When Rodgers Meets Hammerstein: Determining Songwriter Credits 215 Co-writing Agreements 215 Co-writers Who Are Band Members 216 How to Split the Splits 217
Chapter 16 Copyright Issues: A Sampler 220 Copyright Infringement 220 Realpolitik: The Impact of the Internet on Recording and Publishing Agreements 225 Compulsory or Negotiated Licenses 227 The Fairness in Music Licensing Act 228 The Copyright Term Extension Act in Jeopardy 228 MP3: How Two Letters and a Numeral Terrorized an Entire Industry 229 Napster: A Seven-Letter Word for Revolution 230 After Napster: Exit the Central Server 231
Chapter 17 Compliance with Copyright Laws in the World of Cyberspace 233 Intangible Rights and the Internet 233 Licensing from Music Publishers and Sound Recording Owners 234 Copyright Law Provisions Applicable to the Internet 236 Term of Copyright 239 Sampling, Borrowing, and Stealing 239 Rights Management 240 Dangerous Language Alert 240 Music Clearance: The Music Industry's Revenge 242 International Issues: One-Stop Shopping 242 What Is To Be Done? 243
Chapter 18 Internet Entrepreneurship 246 Competing with the Big Boys 246 Artist, Songwriter, Performer--And E-Commerce Expert? 247 Making a Living 248 Stealing and Protecting Against It 249 Do's and Don'ts of Internet Entrepreneurship 250 Manufacturing and Distribution 251 Which People Should Do It Themselves? 252 A Word of Warning--And Encouragement 253
Chapter 19 Urban Music: Hip-Hop 254 Roots 254 The Milieu 254 Urban Music: The Producer's Cosmos 256 Different Strokes for Hip-Hop Folks 256 Hip-Hop and Pop Culture 260 Business Management and the Management of Business 261 The Changing Image 262 Contractual Issues from the Hip-Hop World 262 The Rap Coalition: Self-Help Exemplified 263 Hip Hop Rules 264
Chapter 20 Classical Music 265 A Little History 265 Demise or Rejuvenation? 266 An Essential for Success: Spirituality 268 New Life for an Old Genre 270 The Internet: Is It the Answer? 272 The Role of Record Companies 274 The Composer-Artist: Special Considerations 277 Classical Management 278 Presenting the Singer 281 Music Education 282
There are enough agents, accountants, attorneys, managers, and music publishers, not tomention friends and family, who are more thanwilling —for love or money —to advise young artists (musicians, singers, and songngwriters) inthe pursuit of their careers.Most of this advice is well-intentioned—andit may even be timely and helpful. However, itmay also be irrelevant to a particular individual's circumstances. The reasons for this are manifold.
Not the least of the problems in offering advice to young artists is the fact that they customarily have limited knowledge of the music industry. Unlike participants in other industries, the major players in industries in the area of intellectual property (music, theater, film, and television) often enter the business with neither a clear understanding of its workings or history nor means to obtain the information which would convey such knowledge to them.
According to recent statistics the intellectual property enterprises in the United States contribute more to the gross national product than the airplane industry, more than the automobile industry and, yes, even more than the agriculture industry. Yet the very people who comprise the heart and soul of these companies do not usually know a break-even point from a producer point, a royalty from a Prince, or a mechanical license from a synchronization license—in short, they don't know their business. In the course of writing this book, I have discussed various chapters with senior executives in different departments of major music business companies. At the end of the discussion, all of them told me, in so many words, "You know, I learned a thing or two today." This is not to criticize them. As an attorney who has practiced in the music industry for more than 30 years, I learned long ago that it is the rare manager or music industry executive who has the requisite background to function in the industry at an optimal level, unlike, say, their peers who chose to work in the financial or real estate worlds, who are highly trained in their fields. Yet it is these managers and excutives who are ultimately responsible for making the decisions that will make or break their businesses.
The music industry executive's strength is enhanced only when the company he or she joins has an established and tested management training program. Although the institutions that form the music publishing and recording industry today are very well set up for precisely this kind of training, it is unlikely that these companies will also give the fledgling executive the information which I am seeking to impart in this book. For the personal manager and business manager in whose hands the artist and the record and publishing companies place their trust, this book is intended to provide not just informational data, but also a perspective that will help them to become more aware of the parts of the business which no one will teach them, but which they must nonetheless understand if they are to perform their functions effectively.
Ironically, when it comes to artists, it is widely accepted that really creative people will not know their business. After all, aren't they living in the realm of the idea—the eigenvelt—the world that is interesting precisely because it is not the mitvelt—the shared world, the concrete, tangible world that can be objectively evaluated? The late Northrup Frye, one of the twentieth century's pre-eminent English scholars and literary critics, and a noted commentator on Canadian society and culture, gave an acclaimed series of lectures at the University of Toronto several decades ago. In these lectures, published as The Educated Imagination, Frye spoke of the uniqueness of creative people—how creative people see things that "aren't there." What more appropriate an image for artists? What more dangerous a situation for the creative forces of the music business? Just as the script is the "currency" of the motion picture business, the creator—the writer, artist, producer, mixer—is the currency of the music business. And how can this creator—a living, breathing human being from whom the art emanates—function effectively in the world? Those who live in the imagination cannot be expected to have either the patience or the time to attain the knowledge and experience to rule their own destiny. We are all familiar with the saying "the lawyer who represents himself has a fool for a client." How much more troublesome is the vision of artists who drift through life without an understanding of their business—the customs, traditions, contractual norms, and laws of the very industry which would not even exist but for them and their artistic contributions?
Remarkably, we are talking not just about fledgling musicians, singers, and songwriters. Many of those who have topped the charts for a generation are no more sophisticated than the novice when it comes to the business intricacies that will, when all is said and done, determine their financial outcomes. Equally remarkable is the fact that their representatives—the executives at their record labels and publishing companies; personal and business managers charged with fiduciary responsibilities toward their clients; attorneys in whose trust they place their careers; investors and others from the financial arena who follow the industry from Wall Street to the Times building—are often just as unsophisticated and unaware.
Ultimately, all of the creative people who form the heart of the music industry must depend on a network of advisors in whom they need to place their trust. Nothing could possibly constitute more of a gift to artists than a competent, hard-working, intelligent, aware, trustworthy representative. And, despite the fact that too many artists' advisers are ill-informed, others—managers, attorneys, accountants, and agents—have dedicated their lives to further the artistic careers of their clients. Attorneys and accountants customarily work for agreed-upon fees. Managers and agents work for a percentage of the artists' income; in essence, they work for nothing until the day comes—if is ever does come—when the economic potential of the people they represent is realized. At their best, these people can make a difference profound enough to encourage artists and help them bring to fruition and to the world's attention the results of their creations. For many—and I include myself here—that is enough compensation for the tribulations experienced in the course of practicing our professions.
I have sought, in this book, to highlight the most treacherous pitfalls faced by both creators and their representatives and have pointed out some of the most egregious examples of the ways in which artists can be affected by customs and practices to which the industry universally adheres. It is neither my intent to alarm the artist, nor to depict the industry or its principals as selfish, overreaching ogres. On the contrary, as the music industry has become more sophisticated, it has come to terms with certain realities—financial and artistic—that have resulted in more thoughtful and fair practices than existed during the heyday of "Tin Pan Alley" more than fifty years ago. Nevertheless, I feel that the more one exposes the conundrums that face artists, the more likely it Is that they will be dealt with reasonably.
The evolution of the music industry as an institution is no less a process than the evolution of any other business or political entity. In the present environment of technological advance, with the need for the artistic community to adjust to the manifold changes occurring both in the creation and the delivery of music, there is more reason than ever before to examine the underpinnings of our industry so that we can better fine-tune our business relationships to take advantage of the promises of the future.
What They'll Never Tell You is divided into twenty chapters, which identify and explore many of the most important issues that impact the musician, singer, and songwriter, and therefore the producer, the personal and business managers, the accountant and the attorney, and every level of music company executive. Some deal with fairly intricate issues; some are rather more accessible. None, to my knowledge, are addressed sufficiently in the principal books on the subject of educating the reader on the ins and outs of the music business. This book, however, takes some of the general premises of other worthwhile books about the field into a realm which is at once more practical and more vocational. I have tried to find a common ground between the academic and the elementary. Much of the methodology of the professionals in the music business, as well as of the business entities themselves, is justified (or rationalized) by years of experience, litigation, and both psychological and financial reinforcement. I have written this book on the theory that more knowledge is better than less, and a greater awareness on the part of both the representatives of talent and those who exploit it is advantageous toward promoting a successful marriage between artists and companies. I hope the information will be received as another layer of wisdom over that which already exists in significant amounts among the top professionals in the field.
Record companies, producers, or music publishers need not be concerned that all of their secrets are now out, nor should attorneys and accountants fear that their jobs will be rendered unnecessary by this book. Record company personnel may feel that I have given away too many secrets, and my peers in the legal and accounting professions may feel that I have given away for free what they charge fees for. To them I respond, like a retailer who believes the best customers are educated consumers, that educated artists, producers, personal and business managers, agents, A&R people, attorneys, and accountants will be better served and will better serve each other than the ones who have chosen, or who have been forced, to live in ignorance, or worse, in a daydream.
It is not enough to know the things you think you need to know about the music industry. Those who live within it—whether at the artistic or the business pole or somewhere in between—must know more. They must know what they never knew or did (and do) not even think they want to know. They must know the difference between surface and substance; between truth and lie; between reality and myth. Only then can they prosper within their industry while taking genuine pleasure in their contribution to the culture that sustains them and the rest of our world.
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292 pages What They'll Never Tell You about the Music Business reveals what most savvy music executives already know-and hope that readers never find out! This insider guide discloses the hidden dynamics and often unfortunate consequences of what really happens when a deal is prepared, contracts are signed, and promises are made-and alerts musicians, attorneys, songwriters, and anyone else interested in the music business to the potent dangers lurking beneath the surface of this incredibly competitive industry. Twenty chapters cover virtually every aspect of the music industry, including recording agreements, record royalties, artistic management, music publishing, music marketing and promotion, merchandising, copyright infringement, and the international music business scene. What's more, the information in this invaluable reference is all explained clearly and concisely with no legal jargon. For anyone involved in the music business, here is your source of inside information!
Фрагмент из книги
HOW THE ROYALTY PIE IS SLICED AND WHO GETS THE PIECES.
The parameters that I have chosen for the following scenario are but one of many combinations that can describe a royalty structure. (For example, I have assumed that the producer of the record in my illustration is an independent producer and not either the artist or a producer employed on the staff of the record company.) Suppose the suggested retail selling price of a CD is $16.98, and the record company agrees by contract to pay you a royalty of 12% of the suggested retail selling price of the CD (12% or even 13% rates are the current going royalty rates for new artists). Not bad, you think: about $2.04 per copy. If you sell a mere 25,000 copies ($50,940), you're on the way to financial glory. (And that doesn't even take into account the publishing royalties, the mer¬chandising, the touring.) Right? Wrong! (As you will soon see, this royalty is more than likely to be closer to $0.80 than $2.04—partially because the independent producer's royalty must be cut out of the 12% or 13%, leaving the artist with only 9% or 10% of the total.) In fact, you won't see $50,940 for a long, long time, if ever.
In the following sections, I will introduce you to the myriad items, in addition to advances, routinely deducted before an artist starts getting any royalties. Prices other then the suggested retail list price—for example, the published wholesale price or the ever more-popular published price to dealers (PPD)—can be used as the royalty base (see the table on page 25 for a comparison of retail and PPD calculations for an $18.98
CD) but the examples in this chapter apply to the suggested retail selling price.