Indie Labels: A Real Music Industry Career

by Susan Rabin,

MusicDish Network Sponsor

The music industry is in trouble. For some time now labels and publishers have been consolidating, downsizing, and signing fewer artists and songwriters. The struggles with piracy, illegal downloading, and catching up with new technologies continue. As a 19-year attorney who represents musical artists, songwriters, producers and others, I have well observed the frustration among my clients. The doors to the major labels and music publishers were never wide open. Now, there are even fewer doors to approach.

It’s time to reinvent the classic story of how to become a rock star: form your own record label. There are little more than a handful of major labels. There are thousands of independent labels (indies). You can start a label featuring only one artist (perhaps you), and distribute regionally. Sometimes, we refer to such a company as a “vanity label.”

If and when you would decide to sign other artists and seek some sort of distribution, you would shop your recordings to various distributors to find one who likes your product and believes it will sell. If you start moving product and getting reviews and a good reputation and build a track record, you may be able to persuade a major label to handle distribution on a national and even international level.

Your label could also partner up with a larger label in a joint release. Major labels often look to indies to locate new and edgy artists who are appealing to a particular demographic. They would check if the releases get a lot of play on college radio or on internet radio. The major may offer decent money to acquire your indie as one of the major’s own sub-affiliates.

Forming an independent record company requires certain steps and procedures. Many are similar to those you would take to form any other type of business. Start-up capital is a basic ingredient to get the business formed and to operate the company. Many musicians are in the dark as to whether a partnership, corporation, or other type is best for them. The answers depend on your budget, needs, your own business savvy and expertise, and the size and scope of your company. How many artists will you release? How many employees will you need? What office equipment and recording equipment must you acquire? Do you have assets that need to be protected from lawsuits?

A sole proprietorship is what you are now if you alone own and operate whatever music business activities you presently conduct. This form is fine if you know how to find talent as well as handle business matters such as licenses, applications, contracts, etc. You would need to apply for a city business license and file a fictitious business name in the county in which you operate your business.

A partnership might work best if you are strong in the creative area but need a partner who has more experience and skill in running a business. The city business license and fictitious name filing are again necessary, and a partnership agreement that spells out everyone’s rights and responsibilities is recommended. Profits and losses are generally split evenly, but your agreement can designate for you to be a majority owner, managing partner, or otherwise, particularly if you bring in initial funds or talent.

A corporation or limited liability company (LLC) costs more to set up and requires taxes to be paid to the State. These forms offer protection for your personal assets in the case of a lawsuit or other claim. In addition to a city business license, Articles of Incorporation and other documents must be filed with the Secretary of State, and the corporation or LLC must following certain practices to stay legit because someone who wishes to sue you personally might claim you set up your business as a corporation or LLC merely to hide behind the organization and avoid liability.

Before you spend a lot of money printing stationery, packaging and other promotional materials, you should check if your rights are solid in your business name. If you have been using the name for a long time, you have certain “common law” trademark rights in the name. More protection is available if you obtain a federal trademark registration. A first step would be to search a wide array of databases to determine that no similar business is using a similar name. The party using the name the longest normally has priority. A professional search and trademark application are somewhat costly. You can hunt by yourself by searching online through music industry directories, ASCAP, BMI, the Harry Fox Agency, the Patent and Trademark Office (PTO), the Copyright Office, the Yellow Pages for as many cities as possible, and wherever else you can explore. The name you use should be as different and unique as possible and not at all similar to other labels, music publishers, distributors, music marketing companies, etc. The PTO will not register a name that has a liklihood of confusion.

The independent label needs artists to record and release. If and when another artist is signed, an “Exclusive Artist Recording Agreement” would grant your label rights to record the artist’s performances and release records, subject to payment of royalties. Without the contract, the artist is the owner under Copyright Law of his or her performances. The agreement should include your company’s right to “shop” the recordings to a distributor or other label. I advise against promising to release whatever the artist records. Written agreements are essential to keep the artist from jumping ship after you have invested time and money in the artist’s career.

A “Producer Agreement” would secure the copyright in the Producer’s work on the recording. You would need to decide if you will grant the Producer some degree of creative control over the selection of songs, the studio, recording and mixing process, and general creative input. Producers can be hired for a flat fee or for royalty payments on a project basis.

Musicians, background vocalists, etc., who are hired only for the particular recording project, need to enter into a “Sideman Agreement” or “Service Release.” It is essential for your label to own the copyrights of their performances. Compensation in these situations can be a small flat fee rather than ongoing royalty payments, particularly until your company is financially strong. Flat fee payments also avoid the cost and time of future accountings.

Be sure your company registers the sound recordings with the U.S. Copyright Office (Copyright Form SR for sound recordings) and obtains “mechanical licenses” for any cover songs or samples on the recordings. Music (with or without lyrics) is registered on “Form PA,” for works of the performing arts. Forms and informative circulars can be downloaded at no charge from the federal government office’s website: www.loc.gov/copyright. I often recommend that my independent label clients acquire a publishing interest in their artists’ songs. Publishing income from uses of music (soundtracks, commercials, radio play, etc.), may be the major method of funding your recording expenses.

If you acquire some publishing rights, you need to set up a publishing company through one of the performing rights societies (ASCAP, BMI, SESAC). If your publishing activities grow, you may need to use a collection agency such as the Harry Fox Agency in New York, to issue “mechanical licenses” to other record companies who wish to use the songs you own or co-own. The Fox office would collect these royalties and pay them out to your client, who would account to the writers involved (and the co-publishers, if any).

The best way for your fledgling company to get noticed is through promotion and marketing. Easy to say, but costly to do. One must “create a buzz” to get the interest of major labels as well as consumers. Yes, there are expensive radio promoters. If your are less than typically commercial, they may not get much radio play even with the promoter’s push. Sometimes a retail promoter makes more sense. Some of my clients have sold well at specialty shops such as The Nature Company, Starbucks, Victoria’s Secret, etc. I do encourage your courting the program directors at college radio stations that look for unusual, less mainstream releases.

I assume those of you reading this article are of the computer generation. So perhaps you already know that the internet is a fertile ground for promotion and marketing of independent artists and labels. There are a number of online media companies whose sites actively help independent releases sell their recordings. You can send music tracks online to companies such as Yahoo! and the now fully legit Napster who will upload the music for users to check out. Yahoo! observes which music selections are getting accessed the most and then promotes the artist or label to attract even more users and potential record buyers. Napster does live online recording sessions.

Live performances can be set up at record stores that take your product on consignment. Some stores will work with you to place the product with a promotional display. Other places to perform and find new fans are shopping centers, colleges, universities, high schools, athletic events, restaurants, as well as the familiar nightclub venues. Local newspapers and underground publications are happy to hear about new creative ventures and should be contacted often. Press reviews will help sell product.

Be sure to have legal help and a CPA for the business formation and tax issues. Avoid potential conflicts when your artist or producer brings to you various musicians, producers and writers who are working on a project. Encourage the parties to seek independent counsel regarding all business and legal issues and agreements.

We all know there is much mediocre music out there, and that talent is not necessarily the critical factor for success. Continue to have confidence in your ambitions and creativity. I know most of you have the ability to develop a viable place in the music industry. Keep on truckin’!

Note: This article is not to be construed as legal advice and is written for information purposes only. If you have legal questions, seek the advice of an entertainment attorney.

Provided by the MusicDish Network. Copyright © Tag It 2005 - Republished with Permission

Share This

Indie Labels: A Real Music Industry Career

by Susan Rabin,

MusicDish Network Sponsor

The music industry is in trouble. For some time now labels and publishers have been consolidating, downsizing, and signing fewer artists and songwriters. The struggles with piracy, illegal downloading, and catching up with new technologies continue. As a 19-year attorney who represents musical artists, songwriters, producers and others, I have well observed the frustration among my clients. The doors to the major labels and music publishers were never wide open. Now, there are even fewer doors to approach.

It’s time to reinvent the classic story of how to become a rock star: form your own record label. There are little more than a handful of major labels. There are thousands of independent labels (indies). You can start a label featuring only one artist (perhaps you), and distribute regionally. Sometimes, we refer to such a company as a “vanity label.”

If and when you would decide to sign other artists and seek some sort of distribution, you would shop your recordings to various distributors to find one who likes your product and believes it will sell. If you start moving product and getting reviews and a good reputation and build a track record, you may be able to persuade a major label to handle distribution on a national and even international level.

Your label could also partner up with a larger label in a joint release. Major labels often look to indies to locate new and edgy artists who are appealing to a particular demographic. They would check if the releases get a lot of play on college radio or on internet radio. The major may offer decent money to acquire your indie as one of the major’s own sub-affiliates.

Forming an independent record company requires certain steps and procedures. Many are similar to those you would take to form any other type of business. Start-up capital is a basic ingredient to get the business formed and to operate the company. Many musicians are in the dark as to whether a partnership, corporation, or other type is best for them. The answers depend on your budget, needs, your own business savvy and expertise, and the size and scope of your company. How many artists will you release? How many employees will you need? What office equipment and recording equipment must you acquire? Do you have assets that need to be protected from lawsuits?

A sole proprietorship is what you are now if you alone own and operate whatever music business activities you presently conduct. This form is fine if you know how to find talent as well as handle business matters such as licenses, applications, contracts, etc. You would need to apply for a city business license and file a fictitious business name in the county in which you operate your business.

A partnership might work best if you are strong in the creative area but need a partner who has more experience and skill in running a business. The city business license and fictitious name filing are again necessary, and a partnership agreement that spells out everyone’s rights and responsibilities is recommended. Profits and losses are generally split evenly, but your agreement can designate for you to be a majority owner, managing partner, or otherwise, particularly if you bring in initial funds or talent.

A corporation or limited liability company (LLC) costs more to set up and requires taxes to be paid to the State. These forms offer protection for your personal assets in the case of a lawsuit or other claim. In addition to a city business license, Articles of Incorporation and other documents must be filed with the Secretary of State, and the corporation or LLC must following certain practices to stay legit because someone who wishes to sue you personally might claim you set up your business as a corporation or LLC merely to hide behind the organization and avoid liability.

Before you spend a lot of money printing stationery, packaging and other promotional materials, you should check if your rights are solid in your business name. If you have been using the name for a long time, you have certain “common law” trademark rights in the name. More protection is available if you obtain a federal trademark registration. A first step would be to search a wide array of databases to determine that no similar business is using a similar name. The party using the name the longest normally has priority. A professional search and trademark application are somewhat costly. You can hunt by yourself by searching online through music industry directories, ASCAP, BMI, the Harry Fox Agency, the Patent and Trademark Office (PTO), the Copyright Office, the Yellow Pages for as many cities as possible, and wherever else you can explore. The name you use should be as different and unique as possible and not at all similar to other labels, music publishers, distributors, music marketing companies, etc. The PTO will not register a name that has a liklihood of confusion.

The independent label needs artists to record and release. If and when another artist is signed, an “Exclusive Artist Recording Agreement” would grant your label rights to record the artist’s performances and release records, subject to payment of royalties. Without the contract, the artist is the owner under Copyright Law of his or her performances. The agreement should include your company’s right to “shop” the recordings to a distributor or other label. I advise against promising to release whatever the artist records. Written agreements are essential to keep the artist from jumping ship after you have invested time and money in the artist’s career.

A “Producer Agreement” would secure the copyright in the Producer’s work on the recording. You would need to decide if you will grant the Producer some degree of creative control over the selection of songs, the studio, recording and mixing process, and general creative input. Producers can be hired for a flat fee or for royalty payments on a project basis.

Musicians, background vocalists, etc., who are hired only for the particular recording project, need to enter into a “Sideman Agreement” or “Service Release.” It is essential for your label to own the copyrights of their performances. Compensation in these situations can be a small flat fee rather than ongoing royalty payments, particularly until your company is financially strong. Flat fee payments also avoid the cost and time of future accountings.

Be sure your company registers the sound recordings with the U.S. Copyright Office (Copyright Form SR for sound recordings) and obtains “mechanical licenses” for any cover songs or samples on the recordings. Music (with or without lyrics) is registered on “Form PA,” for works of the performing arts. Forms and informative circulars can be downloaded at no charge from the federal government office’s website: www.loc.gov/copyright. I often recommend that my independent label clients acquire a publishing interest in their artists’ songs. Publishing income from uses of music (soundtracks, commercials, radio play, etc.), may be the major method of funding your recording expenses.

If you acquire some publishing rights, you need to set up a publishing company through one of the performing rights societies (ASCAP, BMI, SESAC). If your publishing activities grow, you may need to use a collection agency such as the Harry Fox Agency in New York, to issue “mechanical licenses” to other record companies who wish to use the songs you own or co-own. The Fox office would collect these royalties and pay them out to your client, who would account to the writers involved (and the co-publishers, if any).

The best way for your fledgling company to get noticed is through promotion and marketing. Easy to say, but costly to do. One must “create a buzz” to get the interest of major labels as well as consumers. Yes, there are expensive radio promoters. If your are less than typically commercial, they may not get much radio play even with the promoter’s push. Sometimes a retail promoter makes more sense. Some of my clients have sold well at specialty shops such as The Nature Company, Starbucks, Victoria’s Secret, etc. I do encourage your courting the program directors at college radio stations that look for unusual, less mainstream releases.

I assume those of you reading this article are of the computer generation. So perhaps you already know that the internet is a fertile ground for promotion and marketing of independent artists and labels. There are a number of online media companies whose sites actively help independent releases sell their recordings. You can send music tracks online to companies such as Yahoo! and the now fully legit Napster who will upload the music for users to check out. Yahoo! observes which music selections are getting accessed the most and then promotes the artist or label to attract even more users and potential record buyers. Napster does live online recording sessions.

Live performances can be set up at record stores that take your product on consignment. Some stores will work with you to place the product with a promotional display. Other places to perform and find new fans are shopping centers, colleges, universities, high schools, athletic events, restaurants, as well as the familiar nightclub venues. Local newspapers and underground publications are happy to hear about new creative ventures and should be contacted often. Press reviews will help sell product.

Be sure to have legal help and a CPA for the business formation and tax issues. Avoid potential conflicts when your artist or producer brings to you various musicians, producers and writers who are working on a project. Encourage the parties to seek independent counsel regarding all business and legal issues and agreements.

We all know there is much mediocre music out there, and that talent is not necessarily the critical factor for success. Continue to have confidence in your ambitions and creativity. I know most of you have the ability to develop a viable place in the music industry. Keep on truckin’!

Note: This article is not to be construed as legal advice and is written for information purposes only. If you have legal questions, seek the advice of an entertainment attorney.

Provided by the MusicDish Network. Copyright © Tag It 2005 - Republished with Permission

Share This

by Susan Rabin,

MusicDish Network Sponsor

The music industry is in trouble. For some time now labels and publishers have been consolidating, downsizing, and signing fewer artists and songwriters. The struggles with piracy, illegal downloading, and catching up with new technologies continue. As a 19-year attorney who represents musical artists, songwriters, producers and others, I have well observed the frustration among my clients. The doors to the major labels and music publishers were never wide open. Now, there are even fewer doors to approach.

It’s time to reinvent the classic story of how to become a rock star: form your own record label. There are little more than a handful of major labels. There are thousands of independent labels (indies). You can start a label featuring only one artist (perhaps you), and distribute regionally. Sometimes, we refer to such a company as a “vanity label.”

If and when you would decide to sign other artists and seek some sort of distribution, you would shop your recordings to various distributors to find one who likes your product and believes it will sell. If you start moving product and getting reviews and a good reputation and build a track record, you may be able to persuade a major label to handle distribution on a national and even international level.

Your label could also partner up with a larger label in a joint release. Major labels often look to indies to locate new and edgy artists who are appealing to a particular demographic. They would check if the releases get a lot of play on college radio or on internet radio. The major may offer decent money to acquire your indie as one of the major’s own sub-affiliates.

Forming an independent record company requires certain steps and procedures. Many are similar to those you would take to form any other type of business. Start-up capital is a basic ingredient to get the business formed and to operate the company. Many musicians are in the dark as to whether a partnership, corporation, or other type is best for them. The answers depend on your budget, needs, your own business savvy and expertise, and the size and scope of your company. How many artists will you release? How many employees will you need? What office equipment and recording equipment must you acquire? Do you have assets that need to be protected from lawsuits?

A sole proprietorship is what you are now if you alone own and operate whatever music business activities you presently conduct. This form is fine if you know how to find talent as well as handle business matters such as licenses, applications, contracts, etc. You would need to apply for a city business license and file a fictitious business name in the county in which you operate your business.

A partnership might work best if you are strong in the creative area but need a partner who has more experience and skill in running a business. The city business license and fictitious name filing are again necessary, and a partnership agreement that spells out everyone’s rights and responsibilities is recommended. Profits and losses are generally split evenly, but your agreement can designate for you to be a majority owner, managing partner, or otherwise, particularly if you bring in initial funds or talent.

A corporation or limited liability company (LLC) costs more to set up and requires taxes to be paid to the State. These forms offer protection for your personal assets in the case of a lawsuit or other claim. In addition to a city business license, Articles of Incorporation and other documents must be filed with the Secretary of State, and the corporation or LLC must following certain practices to stay legit because someone who wishes to sue you personally might claim you set up your business as a corporation or LLC merely to hide behind the organization and avoid liability.

Before you spend a lot of money printing stationery, packaging and other promotional materials, you should check if your rights are solid in your business name. If you have been using the name for a long time, you have certain “common law” trademark rights in the name. More protection is available if you obtain a federal trademark registration. A first step would be to search a wide array of databases to determine that no similar business is using a similar name. The party using the name the longest normally has priority. A professional search and trademark application are somewhat costly. You can hunt by yourself by searching online through music industry directories, ASCAP, BMI, the Harry Fox Agency, the Patent and Trademark Office (PTO), the Copyright Office, the Yellow Pages for as many cities as possible, and wherever else you can explore. The name you use should be as different and unique as possible and not at all similar to other labels, music publishers, distributors, music marketing companies, etc. The PTO will not register a name that has a liklihood of confusion.

The independent label needs artists to record and release. If and when another artist is signed, an “Exclusive Artist Recording Agreement” would grant your label rights to record the artist’s performances and release records, subject to payment of royalties. Without the contract, the artist is the owner under Copyright Law of his or her performances. The agreement should include your company’s right to “shop” the recordings to a distributor or other label. I advise against promising to release whatever the artist records. Written agreements are essential to keep the artist from jumping ship after you have invested time and money in the artist’s career.

A “Producer Agreement” would secure the copyright in the Producer’s work on the recording. You would need to decide if you will grant the Producer some degree of creative control over the selection of songs, the studio, recording and mixing process, and general creative input. Producers can be hired for a flat fee or for royalty payments on a project basis.

Musicians, background vocalists, etc., who are hired only for the particular recording project, need to enter into a “Sideman Agreement” or “Service Release.” It is essential for your label to own the copyrights of their performances. Compensation in these situations can be a small flat fee rather than ongoing royalty payments, particularly until your company is financially strong. Flat fee payments also avoid the cost and time of future accountings.

Be sure your company registers the sound recordings with the U.S. Copyright Office (Copyright Form SR for sound recordings) and obtains “mechanical licenses” for any cover songs or samples on the recordings. Music (with or without lyrics) is registered on “Form PA,” for works of the performing arts. Forms and informative circulars can be downloaded at no charge from the federal government office’s website: www.loc.gov/copyright. I often recommend that my independent label clients acquire a publishing interest in their artists’ songs. Publishing income from uses of music (soundtracks, commercials, radio play, etc.), may be the major method of funding your recording expenses.

If you acquire some publishing rights, you need to set up a publishing company through one of the performing rights societies (ASCAP, BMI, SESAC). If your publishing activities grow, you may need to use a collection agency such as the Harry Fox Agency in New York, to issue “mechanical licenses” to other record companies who wish to use the songs you own or co-own. The Fox office would collect these royalties and pay them out to your client, who would account to the writers involved (and the co-publishers, if any).

The best way for your fledgling company to get noticed is through promotion and marketing. Easy to say, but costly to do. One must “create a buzz” to get the interest of major labels as well as consumers. Yes, there are expensive radio promoters. If your are less than typically commercial, they may not get much radio play even with the promoter’s push. Sometimes a retail promoter makes more sense. Some of my clients have sold well at specialty shops such as The Nature Company, Starbucks, Victoria’s Secret, etc. I do encourage your courting the program directors at college radio stations that look for unusual, less mainstream releases.

I assume those of you reading this article are of the computer generation. So perhaps you already know that the internet is a fertile ground for promotion and marketing of independent artists and labels. There are a number of online media companies whose sites actively help independent releases sell their recordings. You can send music tracks online to companies such as Yahoo! and the now fully legit Napster who will upload the music for users to check out. Yahoo! observes which music selections are getting accessed the most and then promotes the artist or label to attract even more users and potential record buyers. Napster does live online recording sessions.

Live performances can be set up at record stores that take your product on consignment. Some stores will work with you to place the product with a promotional display. Other places to perform and find new fans are shopping centers, colleges, universities, high schools, athletic events, restaurants, as well as the familiar nightclub venues. Local newspapers and underground publications are happy to hear about new creative ventures and should be contacted often. Press reviews will help sell product.

Be sure to have legal help and a CPA for the business formation and tax issues. Avoid potential conflicts when your artist or producer brings to you various musicians, producers and writers who are working on a project. Encourage the parties to seek independent counsel regarding all business and legal issues and agreements.

We all know there is much mediocre music out there, and that talent is not necessarily the critical factor for success. Continue to have confidence in your ambitions and creativity. I know most of you have the ability to develop a viable place in the music industry. Keep on truckin’!

Note: This article is not to be construed as legal advice and is written for information purposes only. If you have legal questions, seek the advice of an entertainment attorney.

Provided by the MusicDish Network. Copyright © Tag It 2005 - Republished with Permission

Share This

by Susan Rabin,

MusicDish Network Sponsor

The music industry is in trouble. For some time now labels and publishers have been consolidating, downsizing, and signing fewer artists and songwriters. The struggles with piracy, illegal downloading, and catching up with new technologies continue. As a 19-year attorney who represents musical artists, songwriters, producers and others, I have well observed the frustration among my clients. The doors to the major labels and music publishers were never wide open. Now, there are even fewer doors to approach.

It’s time to reinvent the classic story of how to become a rock star: form your own record label. There are little more than a handful of major labels. There are thousands of independent labels (indies). You can start a label featuring only one artist (perhaps you), and distribute regionally. Sometimes, we refer to such a company as a “vanity label.”

If and when you would decide to sign other artists and seek some sort of distribution, you would shop your recordings to various distributors to find one who likes your product and believes it will sell. If you start moving product and getting reviews and a good reputation and build a track record, you may be able to persuade a major label to handle distribution on a national and even international level.

Your label could also partner up with a larger label in a joint release. Major labels often look to indies to locate new and edgy artists who are appealing to a particular demographic. They would check if the releases get a lot of play on college radio or on internet radio. The major may offer decent money to acquire your indie as one of the major’s own sub-affiliates.

Forming an independent record company requires certain steps and procedures. Many are similar to those you would take to form any other type of business. Start-up capital is a basic ingredient to get the business formed and to operate the company. Many musicians are in the dark as to whether a partnership, corporation, or other type is best for them. The answers depend on your budget, needs, your own business savvy and expertise, and the size and scope of your company. How many artists will you release? How many employees will you need? What office equipment and recording equipment must you acquire? Do you have assets that need to be protected from lawsuits?

A sole proprietorship is what you are now if you alone own and operate whatever music business activities you presently conduct. This form is fine if you know how to find talent as well as handle business matters such as licenses, applications, contracts, etc. You would need to apply for a city business license and file a fictitious business name in the county in which you operate your business.

A partnership might work best if you are strong in the creative area but need a partner who has more experience and skill in running a business. The city business license and fictitious name filing are again necessary, and a partnership agreement that spells out everyone’s rights and responsibilities is recommended. Profits and losses are generally split evenly, but your agreement can designate for you to be a majority owner, managing partner, or otherwise, particularly if you bring in initial funds or talent.

A corporation or limited liability company (LLC) costs more to set up and requires taxes to be paid to the State. These forms offer protection for your personal assets in the case of a lawsuit or other claim. In addition to a city business license, Articles of Incorporation and other documents must be filed with the Secretary of State, and the corporation or LLC must following certain practices to stay legit because someone who wishes to sue you personally might claim you set up your business as a corporation or LLC merely to hide behind the organization and avoid liability.

Before you spend a lot of money printing stationery, packaging and other promotional materials, you should check if your rights are solid in your business name. If you have been using the name for a long time, you have certain “common law” trademark rights in the name. More protection is available if you obtain a federal trademark registration. A first step would be to search a wide array of databases to determine that no similar business is using a similar name. The party using the name the longest normally has priority. A professional search and trademark application are somewhat costly. You can hunt by yourself by searching online through music industry directories, ASCAP, BMI, the Harry Fox Agency, the Patent and Trademark Office (PTO), the Copyright Office, the Yellow Pages for as many cities as possible, and wherever else you can explore. The name you use should be as different and unique as possible and not at all similar to other labels, music publishers, distributors, music marketing companies, etc. The PTO will not register a name that has a liklihood of confusion.

The independent label needs artists to record and release. If and when another artist is signed, an “Exclusive Artist Recording Agreement” would grant your label rights to record the artist’s performances and release records, subject to payment of royalties. Without the contract, the artist is the owner under Copyright Law of his or her performances. The agreement should include your company’s right to “shop” the recordings to a distributor or other label. I advise against promising to release whatever the artist records. Written agreements are essential to keep the artist from jumping ship after you have invested time and money in the artist’s career.

A “Producer Agreement” would secure the copyright in the Producer’s work on the recording. You would need to decide if you will grant the Producer some degree of creative control over the selection of songs, the studio, recording and mixing process, and general creative input. Producers can be hired for a flat fee or for royalty payments on a project basis.

Musicians, background vocalists, etc., who are hired only for the particular recording project, need to enter into a “Sideman Agreement” or “Service Release.” It is essential for your label to own the copyrights of their performances. Compensation in these situations can be a small flat fee rather than ongoing royalty payments, particularly until your company is financially strong. Flat fee payments also avoid the cost and time of future accountings.

Be sure your company registers the sound recordings with the U.S. Copyright Office (Copyright Form SR for sound recordings) and obtains “mechanical licenses” for any cover songs or samples on the recordings. Music (with or without lyrics) is registered on “Form PA,” for works of the performing arts. Forms and informative circulars can be downloaded at no charge from the federal government office’s website: www.loc.gov/copyright. I often recommend that my independent label clients acquire a publishing interest in their artists’ songs. Publishing income from uses of music (soundtracks, commercials, radio play, etc.), may be the major method of funding your recording expenses.

If you acquire some publishing rights, you need to set up a publishing company through one of the performing rights societies (ASCAP, BMI, SESAC). If your publishing activities grow, you may need to use a collection agency such as the Harry Fox Agency in New York, to issue “mechanical licenses” to other record companies who wish to use the songs you own or co-own. The Fox office would collect these royalties and pay them out to your client, who would account to the writers involved (and the co-publishers, if any).

The best way for your fledgling company to get noticed is through promotion and marketing. Easy to say, but costly to do. One must “create a buzz” to get the interest of major labels as well as consumers. Yes, there are expensive radio promoters. If your are less than typically commercial, they may not get much radio play even with the promoter’s push. Sometimes a retail promoter makes more sense. Some of my clients have sold well at specialty shops such as The Nature Company, Starbucks, Victoria’s Secret, etc. I do encourage your courting the program directors at college radio stations that look for unusual, less mainstream releases.

I assume those of you reading this article are of the computer generation. So perhaps you already know that the internet is a fertile ground for promotion and marketing of independent artists and labels. There are a number of online media companies whose sites actively help independent releases sell their recordings. You can send music tracks online to companies such as Yahoo! and the now fully legit Napster who will upload the music for users to check out. Yahoo! observes which music selections are getting accessed the most and then promotes the artist or label to attract even more users and potential record buyers. Napster does live online recording sessions.

Live performances can be set up at record stores that take your product on consignment. Some stores will work with you to place the product with a promotional display. Other places to perform and find new fans are shopping centers, colleges, universities, high schools, athletic events, restaurants, as well as the familiar nightclub venues. Local newspapers and underground publications are happy to hear about new creative ventures and should be contacted often. Press reviews will help sell product.

Be sure to have legal help and a CPA for the business formation and tax issues. Avoid potential conflicts when your artist or producer brings to you various musicians, producers and writers who are working on a project. Encourage the parties to seek independent counsel regarding all business and legal issues and agreements.

We all know there is much mediocre music out there, and that talent is not necessarily the critical factor for success. Continue to have confidence in your ambitions and creativity. I know most of you have the ability to develop a viable place in the music industry. Keep on truckin’!

Note: This article is not to be construed as legal advice and is written for information purposes only. If you have legal questions, seek the advice of an entertainment attorney.

Provided by the MusicDish Network. Copyright © Tag It 2005 - Republished with Permission

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by Susan Rabin,

MusicDish Network Sponsor

The music industry is in trouble. For some time now labels and publishers have been consolidating, downsizing, and signing fewer artists and songwriters. The struggles with piracy, illegal downloading, and catching up with new technologies continue. As a 19-year attorney who represents musical artists, songwriters, producers and others, I have well observed the frustration among my clients. The doors to the major labels and music publishers were never wide open. Now, there are even fewer doors to approach.

It’s time to reinvent the classic story of how to become a rock star: form your own record label. There are little more than a handful of major labels. There are thousands of independent labels (indies). You can start a label featuring only one artist (perhaps you), and distribute regionally. Sometimes, we refer to such a company as a “vanity label.”

If and when you would decide to sign other artists and seek some sort of distribution, you would shop your recordings to various distributors to find one who likes your product and believes it will sell. If you start moving product and getting reviews and a good reputation and build a track record, you may be able to persuade a major label to handle distribution on a national and even international level.

Your label could also partner up with a larger label in a joint release. Major labels often look to indies to locate new and edgy artists who are appealing to a particular demographic. They would check if the releases get a lot of play on college radio or on internet radio. The major may offer decent money to acquire your indie as one of the major’s own sub-affiliates.

Forming an independent record company requires certain steps and procedures. Many are similar to those you would take to form any other type of business. Start-up capital is a basic ingredient to get the business formed and to operate the company. Many musicians are in the dark as to whether a partnership, corporation, or other type is best for them. The answers depend on your budget, needs, your own business savvy and expertise, and the size and scope of your company. How many artists will you release? How many employees will you need? What office equipment and recording equipment must you acquire? Do you have assets that need to be protected from lawsuits?

A sole proprietorship is what you are now if you alone own and operate whatever music business activities you presently conduct. This form is fine if you know how to find talent as well as handle business matters such as licenses, applications, contracts, etc. You would need to apply for a city business license and file a fictitious business name in the county in which you operate your business.

A partnership might work best if you are strong in the creative area but need a partner who has more experience and skill in running a business. The city business license and fictitious name filing are again necessary, and a partnership agreement that spells out everyone’s rights and responsibilities is recommended. Profits and losses are generally split evenly, but your agreement can designate for you to be a majority owner, managing partner, or otherwise, particularly if you bring in initial funds or talent.

A corporation or limited liability company (LLC) costs more to set up and requires taxes to be paid to the State. These forms offer protection for your personal assets in the case of a lawsuit or other claim. In addition to a city business license, Articles of Incorporation and other documents must be filed with the Secretary of State, and the corporation or LLC must following certain practices to stay legit because someone who wishes to sue you personally might claim you set up your business as a corporation or LLC merely to hide behind the organization and avoid liability.

Before you spend a lot of money printing stationery, packaging and other promotional materials, you should check if your rights are solid in your business name. If you have been using the name for a long time, you have certain “common law” trademark rights in the name. More protection is available if you obtain a federal trademark registration. A first step would be to search a wide array of databases to determine that no similar business is using a similar name. The party using the name the longest normally has priority. A professional search and trademark application are somewhat costly. You can hunt by yourself by searching online through music industry directories, ASCAP, BMI, the Harry Fox Agency, the Patent and Trademark Office (PTO), the Copyright Office, the Yellow Pages for as many cities as possible, and wherever else you can explore. The name you use should be as different and unique as possible and not at all similar to other labels, music publishers, distributors, music marketing companies, etc. The PTO will not register a name that has a liklihood of confusion.

The independent label needs artists to record and release. If and when another artist is signed, an “Exclusive Artist Recording Agreement” would grant your label rights to record the artist’s performances and release records, subject to payment of royalties. Without the contract, the artist is the owner under Copyright Law of his or her performances. The agreement should include your company’s right to “shop” the recordings to a distributor or other label. I advise against promising to release whatever the artist records. Written agreements are essential to keep the artist from jumping ship after you have invested time and money in the artist’s career.

A “Producer Agreement” would secure the copyright in the Producer’s work on the recording. You would need to decide if you will grant the Producer some degree of creative control over the selection of songs, the studio, recording and mixing process, and general creative input. Producers can be hired for a flat fee or for royalty payments on a project basis.

Musicians, background vocalists, etc., who are hired only for the particular recording project, need to enter into a “Sideman Agreement” or “Service Release.” It is essential for your label to own the copyrights of their performances. Compensation in these situations can be a small flat fee rather than ongoing royalty payments, particularly until your company is financially strong. Flat fee payments also avoid the cost and time of future accountings.

Be sure your company registers the sound recordings with the U.S. Copyright Office (Copyright Form SR for sound recordings) and obtains “mechanical licenses” for any cover songs or samples on the recordings. Music (with or without lyrics) is registered on “Form PA,” for works of the performing arts. Forms and informative circulars can be downloaded at no charge from the federal government office’s website: www.loc.gov/copyright. I often recommend that my independent label clients acquire a publishing interest in their artists’ songs. Publishing income from uses of music (soundtracks, commercials, radio play, etc.), may be the major method of funding your recording expenses.

If you acquire some publishing rights, you need to set up a publishing company through one of the performing rights societies (ASCAP, BMI, SESAC). If your publishing activities grow, you may need to use a collection agency such as the Harry Fox Agency in New York, to issue “mechanical licenses” to other record companies who wish to use the songs you own or co-own. The Fox office would collect these royalties and pay them out to your client, who would account to the writers involved (and the co-publishers, if any).

The best way for your fledgling company to get noticed is through promotion and marketing. Easy to say, but costly to do. One must “create a buzz” to get the interest of major labels as well as consumers. Yes, there are expensive radio promoters. If your are less than typically commercial, they may not get much radio play even with the promoter’s push. Sometimes a retail promoter makes more sense. Some of my clients have sold well at specialty shops such as The Nature Company, Starbucks, Victoria’s Secret, etc. I do encourage your courting the program directors at college radio stations that look for unusual, less mainstream releases.

I assume those of you reading this article are of the computer generation. So perhaps you already know that the internet is a fertile ground for promotion and marketing of independent artists and labels. There are a number of online media companies whose sites actively help independent releases sell their recordings. You can send music tracks online to companies such as Yahoo! and the now fully legit Napster who will upload the music for users to check out. Yahoo! observes which music selections are getting accessed the most and then promotes the artist or label to attract even more users and potential record buyers. Napster does live online recording sessions.

Live performances can be set up at record stores that take your product on consignment. Some stores will work with you to place the product with a promotional display. Other places to perform and find new fans are shopping centers, colleges, universities, high schools, athletic events, restaurants, as well as the familiar nightclub venues. Local newspapers and underground publications are happy to hear about new creative ventures and should be contacted often. Press reviews will help sell product.

Be sure to have legal help and a CPA for the business formation and tax issues. Avoid potential conflicts when your artist or producer brings to you various musicians, producers and writers who are working on a project. Encourage the parties to seek independent counsel regarding all business and legal issues and agreements.

We all know there is much mediocre music out there, and that talent is not necessarily the critical factor for success. Continue to have confidence in your ambitions and creativity. I know most of you have the ability to develop a viable place in the music industry. Keep on truckin’!

Note: This article is not to be construed as legal advice and is written for information purposes only. If you have legal questions, seek the advice of an entertainment attorney.

Provided by the MusicDish Network. Copyright © Tag It 2005 - Republished with Permission

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Indie Labels: A Real Music Industry Career

by Susan Rabin,

MusicDish Network Sponsor

The music industry is in trouble. For some time now labels and publishers have been consolidating, downsizing, and signing fewer artists and songwriters. The struggles with piracy, illegal downloading, and catching up with new technologies continue. As a 19-year attorney who represents musical artists, songwriters, producers and others, I have well observed the frustration among my clients. The doors to the major labels and music publishers were never wide open. Now, there are even fewer doors to approach.

It’s time to reinvent the classic story of how to become a rock star: form your own record label. There are little more than a handful of major labels. There are thousands of independent labels (indies). You can start a label featuring only one artist (perhaps you), and distribute regionally. Sometimes, we refer to such a company as a  "vanity label."

If and when you would decide to sign other artists and seek some sort of distribution, you would shop your recordings to various distributors to find one who likes your product and believes it will sell. If you start moving product and getting reviews and a good reputation and build a track record, you may be able to persuade a major label to handle distribution on a national and even international level.

Your label could also partner up with a larger label in a joint release. Major labels often look to indies to locate new and edgy artists who are appealing to a particular demographic. They would check if the releases get a lot of play on college radio or on internet radio. The major may offer decent money to acquire your indie as one of the major’s own sub-affiliates.

Forming an independent record company requires certain steps and procedures. Many are similar to those you would take to form any other type of business. Start-up capital is a basic ingredient to get the business formed and to operate the company. Many musicians are in the dark as to whether a partnership, corporation, or other type is best for them. The answers depend on your budget, needs, your own business savvy and expertise, and the size and scope of your company. How many artists will you release?  How many employees will you need?  What office equipment and recording equipment must you acquire?  Do you have assets that need to be protected from lawsuits? 

A sole proprietorship is what you are now if you alone own and operate whatever music business activities you presently conduct. This form is fine if you know how to find talent as well as handle business matters such as licenses, applications, contracts, etc. You would need to apply for a city business license and file a fictitious business name in the county in which you operate your business.

A partnership might work best if you are strong in the creative area but need a partner who has more experience and skill in running a business. The city business license and fictitious name filing are again necessary, and a partnership agreement that spells out everyone’s rights and responsibilities is recommended. Profits and losses are generally split evenly, but your agreement can designate for you to be a majority owner, managing partner, or otherwise, particularly if you bring in initial funds or talent.

A corporation or limited liability company (LLC) costs more to set up and requires taxes to be paid to the State. These forms offer protection for your personal assets in the case of a lawsuit or other claim. In addition to a city business license, Articles of Incorporation and other documents must be filed with the Secretary of State, and the corporation or LLC must following certain practices to stay legit because someone who wishes to sue you personally might claim you set up your business as a corporation or LLC merely to hide behind the organization and avoid liability.

Before you spend a lot of money printing stationery, packaging and other promotional materials, you should check if your rights are solid in your business name. If you have been using the name for a long time, you have certain "common law" trademark rights in the name. More protection is available if you obtain a federal trademark registration. A first step would be to search a wide array of databases to determine that no similar business is using a similar name. The party using the name the longest normally has priority. A professional search and trademark application are somewhat costly. You can hunt by yourself by searching online through music industry directories, ASCAP, BMI, the Harry Fox Agency, the Patent and Trademark Office (PTO), the Copyright Office, the Yellow Pages for as many cities as possible, and wherever else you can explore. The name you use should be as different and unique as possible and not at all similar to other labels, music publishers, distributors, music marketing companies, etc. The PTO will not register a name that has a liklihood of confusion. 

The independent label needs artists to record and release. If and when another artist is signed, an "Exclusive Artist Recording Agreement" would grant your label rights to record the artist’s performances and release records, subject to payment of royalties. Without the contract, the artist is the owner under Copyright Law of his or her performances. The agreement should include your company’s right to "shop" the recordings to a distributor or other label. I advise against promising to release whatever the artist records. Written agreements are essential to keep the artist from jumping ship after you have invested time and money in the artist’s career.

A "Producer Agreement" would secure the copyright in the Producer’s work on the recording. You would need to decide if you will grant the Producer some degree of creative control over the selection of songs, the studio, recording and mixing process, and general creative input. Producers can be hired for a flat fee or for royalty payments on a project basis.

Musicians, background vocalists, etc., who are hired only for the particular recording project, need to enter into a "Sideman Agreement" or "Service Release."  It is essential for your label to own the copyrights of their performances. Compensation in these situations can be a small flat fee rather than ongoing royalty payments, particularly until your company is financially strong. Flat fee payments also avoid the cost and time of future accountings.

Be sure your company registers the sound recordings with the U.S. Copyright Office (Copyright Form SR for sound recordings) and obtains "mechanical licenses" for any cover songs or samples on the recordings. Music (with or without lyrics) is registered on "Form PA," for works of the performing arts. Forms and informative circulars can be downloaded at no charge from the federal government office’s website: www.loc.gov/copyright. I often recommend that my independent label clients acquire a publishing interest in their artists’ songs. Publishing income from uses of music (soundtracks, commercials, radio play, etc.), may be the major method of funding your recording expenses.

If you acquire some publishing rights, you need to set up a publishing company through one of the performing rights societies (ASCAP, BMI, SESAC). If your publishing activities grow, you may need to use a collection agency such as the Harry Fox Agency in New York, to issue "mechanical licenses" to other record companies who wish to use the songs you own or co-own. The Fox office would collect these royalties and pay them out to your client, who would account to the writers involved (and the co-publishers, if any).

The best way for your fledgling company to get noticed is through promotion and marketing. Easy to say, but costly to do. One must "create a buzz" to get the interest of major labels as well as consumers. Yes, there are expensive radio promoters. If your are less than typically commercial, they may not get much radio play even with the promoter’s push. Sometimes a retail promoter makes more sense. Some of my clients have sold well at specialty shops such as The Nature Company, Starbucks, Victoria’s Secret, etc. I do encourage your courting the program directors at college radio stations that look for unusual, less mainstream releases.

I assume those of you reading this article are of the computer generation. So perhaps you already know that the internet is a fertile ground for promotion and marketing of independent artists and labels. There are a number of online media companies whose sites actively help independent releases sell their recordings. You can send music tracks online to companies such as Yahoo! and the now fully legit Napster who will upload the music for users to check out. Yahoo! observes which music selections are getting accessed the most and then promotes the artist or label to attract even more users and potential record buyers. Napster does live online recording sessions.

Live performances can be set up at record stores that take your product on consignment. Some stores will work with you to place the product with a promotional display. Other places to perform and find new fans are shopping centers, colleges, universities, high schools, athletic events, restaurants, as well as the familiar nightclub venues. Local newspapers and underground publications are happy to hear about new creative ventures and should be contacted often. Press reviews will help sell product.

Be sure to have legal help and a CPA for the business formation and tax issues. Avoid potential conflicts when your artist or producer brings to you various musicians, producers and writers who are working on a project. Encourage the parties to seek independent counsel regarding all business and legal issues and agreements.

We all know there is much mediocre music out there, and that talent is not necessarily the critical factor for success. Continue to have confidence in your ambitions and creativity. I know most of you have the ability to develop a viable place in the music industry. Keep on truckin’!

Note: This article is not to be construed as legal advice and is written for information purposes only. If you have legal questions, seek the advice of an entertainment attorney.

Provided by the MusicDish Network. Copyright © Tag It 2005 - Republished with Permission

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The NME has been around forever it seems and it still deserves a read these days but the environment that it exists in now is far changed from the glory days of 1978-85 according to Fraternising with the NME, another cool find from Barbara Flaska. A good read.
Later.

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Classic Rock Revisited founder Jeb Wright has put together an absolutely classic list of the "Top 10 Songs That Killed Arena Rock." An absolute scream but hey! I like "New World Man." (via The Day in Rock). Here is the list. Check out the site for the reasons they were chosen:

10. ‘Beth’ - KISS
09. ‘Open Arms’ - JOURNEY
08. ‘Babe’ - STYX
07. ‘Keep The Fire Burning’ - REO SPEEDWAGON
06. ‘Waiting For A Girl Like You’ - Foreigner
05. ‘New World Man’ - RUSH
04. Velcro Fly - ZZ TOP
03. ‘Another One Bites The Dust’ - QUEEN
02. ‘Amanda’ - BOSTON
01. Mr. Roboto - STYX

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That bastion of rock and roll journalism, USA Today has determined that it is Pearl Jam that is the greatest American band of all time according to a reader poll conducted by one Whitney Matheson in her "Pop Candy" column. Now I’m not going to argue about this since it’s too hot to argue but I can certainly say without question that Journey, Van Halen (love the DLR-era), Queensryche, KISS (do I have to spell it in capitals?) and Bon Jovi should certainly not be on the list. Hey, I have enjoyed "Wheel in the Sky" and "Livin’ on a Prayer" as much as the next drunkin’ slob but that in my mind does not in any way consititute "greatest American band." Of course, these are the readers of USA Today so I shouldn’t be too surprised. Run the same poll at Harp or Magnet and I suspect the list would be vastly different (with The Ramones, Replacements and R.E.M. probably more prominent) so I shouldn’t be too harsh. What do you think? Who is the greatest American band ever? Enquiring minds wanna know!
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It’s been awhile so just a quick note that the Black Rebel Motorcycle Club will be hitting the road this fall. Tour dates are as follows:

09/12 - Great American Music Hall - San Francisco, Ca

09/13 - Doug Fir - Portland, Or.

09/14 - Neumos - Seattle, Wa

09/16 - Club Sound - Salt Lake City, Ut

09/17 - Bluebird Theatre - Denver, Co

09/19 - Fine Line Music Café - Minneapolis, Mn

09/20 - Metro - Chicago, Il

09/21 - St. Andrew’s Hall - Detroit, Mich

09/22 - Newport - Columbus, Oh

09/24 - Phoenix - Toronto, Canada

09/26 - Irving Plaza - New York, NY

09/27 - Paradise - Boston, Ma

09/28 - 9:30 Club - Washington, D.C.

09/30 - The Loft - Atlanta, Ga

10/02 - The Parish - Austin, Tx

10/03 - Meridian - Houston, Tx

10/04 - Trees - Dallas, Tx

10/06 - Clubhouse - Phoenix, Tx

10/07 - Brick By Brick - San Diego, Ca

10/08 - Henry Fonda Theatre - Los Angeles, Ca

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If you are planning on being in London this summer and are looking for something else to do, check out the Rock ‘n’ Roll photography exhibition at the Boogaloo (next to the Highgate tube station). Described as "an exhibition of iconic imagery from the new breed of music photographers" it runs from 21st July, 2005 until August 31st, 2005. One of the photographers taking part in the exhibit is the very talented UK phtographer Jenny Potter who I am excited to announce will be the featured photographer in the first ever Rock and Roll Report virtual rock and roll photography exhibit debuting early this Fall. Keep your eyes peeled for further details and get ready to enjoy the show as The Rock and Roll Report expands its ever discerning eye to rock and roll talent in every form of media. It should kick of the Fall in style.
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Well I have been quiet about my volunteering at local community radio station CKUT but that is mainly because I haven’t been as active as I would like with a new day job and all that boring life stuff taking all my time but I did make sure I attended the station’s volunteer training sessions held over the Father’s Day weekend last month. If you are at all interested in radio or starting your own podcast, your local community radio station is a great place to start. Over 2 days we learned everything from voice techniques, putting together a music-based radio show, editing audio with Audacity, interviewing tips, Internet distribution and more and on top of that they fed us! All of this in a relaxed and funky atmosphere that made you want to stick around and learn more. Check with your local station and find out when they are running their training sessions and get involved. I myself will be able to put some these techniques to the test on July 25th, 2005 from 8:00 PM until 10:00 PM when I fill in on Underground Sounds, a show featuring the latest local and Canada-wide indie rock music that has come into the station. If you are in the mood for a combination of cool music and total ineptitude behind the mic then by all means tune in on the 25th for who knows, by the 26th they might want to keep me as far away from a radio mic as possible!
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Sales And Marketing Trends In The Music Industry

The Decline Of Record Sales Revenues

by Katherina Sutter,

MusicDish Network Sponsor

Why talk about the music industry’s options dealing with new technologies? Since the music industry has gone through major changes in the recent years, it is important to know, which of their strategies have proved successful and which have not. In these years of major changes, the sales revenues of record companies have rapidly and steadily declined. According to the International Federation of the Phonographic Industry (IFPI), the worldwide record sales revenues were US $10 Billion less in 2003 than 8 years earlier. In the USA the record revenues have declined more than 10% since 2000.

The reasons for the decline in record sales revenues are disputed. Some studies conducted by record industry associations conclude that the increased distribution of unauthorized music copies  is the main reason for the recent decline of the sales revenues of authorized music copies (IFPI c).

Oberholzer and Strumpf contradict the above mentioned thesis in their study on the effects of file sharing. They state that the sharing of music files via the internet (which produces a major part of the unauthorized copies (IFPI d) has no influence upon record sales revenues (Oberholzer; Strumpf).

The fight against unauthorized music copies

One of the strategies of the record companies to counter the decline of revenues was to fight unauthorized music copies. In this study, the actions taken against unauthorized music copying as well as their outcome during the years 2000-2004 are described.

Legislation: The legal warrant for the battle against unauthorized music copies in the USA has been defined in the ³Digital Millennium Copyright Act² (DMCA). It forbids the cracking of copyright protection devices for example (The UCLA Online Institute for Cyberspace Law and Policy). The DMCA is also the basis for lawsuits of the Record Industry Association of America (RIAA) against users that offer unauthorized copies through a file sharing system and for damage claims.  Thus a legal basis for the fight of unauthorized copying in the USA has been established.

Yet, there is a grey zone about what is allowed and what is not, since laws can be expected to change rather quickly in the area of new technologies. In addition the DMCA has acquired a lot of counter activities. For example there has emerged an organization that wants to reestablish complete rights to make private copies of audio software (Röttgers; Krempl). The attempts to overthrow the new copyright law and reestablish the former rules have created insecurity among consumers about future laws and their enforcement. Lobbying to support the DMCA and similar legislation imposes costs on the recording industry.    

Lawsuits: According to the current laws, record companies can sue copyright violators and software producers that support copyright infringement. In reality, record companies are not always successful suing software companies and not very effective stemming the tide of copyright violators. For example, lawsuits against the company that holds the rights of and markets the file sharing software Kazaa have not been successful; Kazaa was declared legal by the Dutch Supreme Court (Michaelson; Bernhard). Only a very small percentage of the total number of copyright violators can be sued, because there are simply too many and the process too costly. In 2003, there were up to 60 Million file sharers using the Kazaa network.   The small probability of being sued inhibits the effectiveness of lawsuits against file sharers. There are various file sharing systems increasingly used for illegal purposes with a growing number of users, e.g. Bit Torrent for videos.

Copyright protection devices: Copyright protection devices integrated into CDs and music files could be an effective protection against copyright infringement, but this is offset by the constant developments of cracking devices sold by IT companies (np/mh; Bundesverband fuer phonographische Wirtschaft e.V.). Thus an expensive condition for the success of copyright protection devices is their constant enhancement concurrent with the enhancement of cracking devices.

Moral appeals: Moral appeals seek to keep people from making unauthorized copies by changing their attitude towards unauthorized copying. Record Industry organizations try to provoke a bad conscience (Hainmüller), citing popular stars saying that illegal copying is a bad thing. ³t.A.t.U² was cited saying ³Please don’t steal our music, if you’re really smart guys² (promusic.org). These and similar statements of pop stars hardly cause pity or a bad conscience, since the relatively high income of pop stars is well known to their audience. The pop stars also contradict each other on this issue. Robby Williams for example, in fact, encouraged his fans in a public speech to infringe his copyright (Schieb).

Legal supply of downloadable music: The recording and IT industry have developed their own online sources of music files in the recent years. The licensed supply should permit these industries to profit from the growth of the music market. It also should suppress unauthorized file sharing. However, the persistence of file sharing software shows that the latter goal has not been reached.

All in all, a complete protection of the property rights of music is only possible at prohibitive costs. Hence, it is unlikely, that the worldwide record sales volumes of 1995 and 1996 can be fully recovered just by the above mentioned legal efforts, technological copy protection, moral appeals and licit supply of downloadable music. The development of different strategies appears warranted.

Diversification as a strategy to overcome losses due to shrinking record sales revenues:  An alternate strategy, which in the past few years has been pursued by companies in the entertainment sector, is diversification. Record companies have been in the publishing market for quite a while (Gould). More recently many of them added the merchandise and concert business to the scope of their activities (Kurp). By moving in these industries, record companies have turned into music marketing companies. Media corporations in turn acquired such music marketing companies or their divisions (Bertelsmann AG, a) and pop musicians have set up their own diversified music marketing companies.

A model of the music market: Record companies traditionally could be categorized as the interface between the musician on one side, and media companies and record distributors or retailers on the other side. Lately, many have added merchandise production, concert promotion and artist management to their business, i.e. their buyers’ scope has expanded and includes among others merchandise retailers or distributors and concert locations in addition to record stores/distributors and media companies.

Record companies have turned into music marketing companies, entering the merchandise and concert market and the artist management business.  Gold: First stage of production.  Blue: Second stage of production.  Pink: Distribution. Arrow: Targets of diversification.

Essentially, all different ways of offering the artist’s content, from records to TV and radio shows, can be seen as different products of the same trademark. Records are only one of many ways of offering essentially the same content.

The recent development of music market segments:  Why diversify? The recording segment of the music market has become much more competitive and unattractive due to the shrinking of the recorded music market. At the same time the merchandise and the concert segments have grown. The growth of sales revenues of the merchandise market and the concert market clearly serves as an indicator of the attractiveness of these markets.

There are few publicly accessible sources for sales revenues of music merchandise and concerts, and those that exist neither contain specific amounts for worldwide music merchandize sales nor the worldwide concert revenues. What is published are two years of general worldwide merchandise sales revenues, a forecast of their development, three years of worldwide concert revenues of US artists, and a forecast of their development.

The International Licensing Industry and Merchandisers Association (LIMA), the Yale School of Management and the Harvard Business School have published the data on licensing revenues, used in this study. The data was generated in a survey on licensors and licensing agencies (LIMA a). The US magazine ³Billboard² has provided data on the worldwide concert revenues of US rock and pop artists. This data has been collected from concert promoters. The reporting of the concert promoters was voluntary, so the numbers were not complete and not comparable over time (Allen a).

In 2003, the president of LIMA forecasted growth of the international market for licenses (LIMA a). The total licensing revenues in the US have grown 4% between 2001 and 2002 (LIMA b). Also the licensing revenues on the music market have grown 1.7% in that time span (LIMA a; Gottlieb). The worldwide concert audience of US artists has grown US$ 32 Million to US$ 39 Million between the years 2001 and 2003 in spite of rising ticket prices. The growth was especially high in 2003 with rounded 6.91 Million additional visitors (Allen b). According to industry analysts, this growth is part of a positive trend in the concert industry (Allen a).

With respect to the above mentioned figures, unauthorized copies should not be considered entirely from a negative perspective. First of all, the new ways to acquire music for free, by file sharing and CD burning, stimulated recorded music consumption. In Germany for example, the total consumption of recorded music grew steadily while the total record sales revenues declined. (Fig. 6). Future growth of the amount of unauthorized copies as well as of total music consumption is probable.

Second the growth of music consumption can have a positive effect upon the revenues of music market segments. Although in Germany, unauthorized copies have risen 25%, licensing revenues did not shrink. They even rose 1%, and future growth is predicted (LIMA a; LIMA b; IFPI d). Unauthorized copies do not seem to be significantly correlated with licensing revenues.

Intuition would suggest that the increased distribution and consumption of recorded music of a specific musician, no matter if authorized or unauthorized, augments the popularity of that specific artist. Increased popularity leads to increased sales of the artist’s licensed goods.

This applies to concerts, as well. According to the Billboard’s analysis of the concert industry, the concert revenues will grow. Thus, concert revenues do not seem to be negatively, but rather positively correlated to unauthorized copying of recorded music. A positive correlation between the level of concert revenues and the amount of unauthorized copies also makes sense for the following reason: You would rather attend the concert of your favorite artist than of an artist that you do not know at all. In case you developed your preference for the artist by copying their music, you attended their concert as a consequence of unauthorized copying activity. When people as a result of growing music consumption increase the number of musicians they know, this can also have a positive impact on the size of the concert audience.

Summarizing, unauthorized copies neither have negative effects on concert nor on merchandising revenues. Unauthorized copies of merchandise do not appear to cause as big of a problem as unauthorized copies of sound recordings do. Concerts, in turn, can not be copied at all. Consequently, the concert and merchandise industry is not significantly threatened by any kind of unauthorized copies.

The lack of significant unauthorized copying activities and the current and predicted market growth (Sperlich, 33) make the merchandise and concert markets attractive, compared to the record market.

Pro diversification arguments from an organizational perspective: Interdependencies between the marketing activities of record companies, concert promoters and licensing agencies are a reason to organize all of them in the same company. A general rule, pronounced by Picot, Dietl and Frank (Picot, Dietl , Franck, 73ff), is that interdependent processes should be organized in the same organizational unit, since the necessary conveyance of knowledge between them causes transaction costs (Johnson). This general rule is transferable to the conveyance of information between companies.

Usually the artist’s manager and publicist, record company, concert promoter, licensing agent and eventually film producers participate in marketing and especially advertising activities for the artist. There are interdependencies between these activities, which make their integration in one company a less costly solution in terms of transaction costs caused by knowledge transfer.

External effects are a similar reason for integration of new functions into a company, i.e. diversification. If the artist’s management is employed by the integrated music marketing company, the management can be obligated to preferably use internal record producers, concert promoters and licensing agents. As a consequence the positive external effects of the advertising activities of concert promoters, licensing agents and record companies work within the company.

An example of a successful, diversified entertainment company: An extreme case of diversification in the entertainment business is the integration of a music marketing companies into a media corporation. In the example of the Bertelsmann Group this has proven to be successful: The project of the German Idol Show DSDS, organized exclusively by the Bertelsmann group and there affiliated firms, such as BMG and RTL, has been of benefit for all companies that have participated in the project. All aspects of the production and marketing of performances and products related to the DSDS-pop musicians and their name ( i.e. trade mark) have been organized by the Bertelsmann group. The transmitting TV channel RTL, owned by Bertelsmann, reached 50% of their main target audience and gained subsequently high advertising revenues (Bertelsmann AG, b, 23; Kruse). The Bertelsmann-owned record company BMG produced No.1 hits and gained a bigger market share on the German market  (ola/ct; dpa; Finkenwirth). The concert revenues and the merchandising revenues were also marketed by companies held by the Bertelsmann Group (Kurp; MMC Productions GmbH).      

With the transformation of record companies into music marketing companies and sometimes their integration into media corporations, unauthorized copies and the subsequent loss of record sales revenues is not a major issue anymore, since a major part of the revenues generated by one artist often comes from different sources and growing markets, unaffected by unauthorized copies.

Provided by the MusicDish Network. Copyright © Tag It 2005 - Republished with Permission

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Sales And Marketing Trends In The Music Industry

The Decline Of Record Sales Revenues

by Katherina Sutter,

MusicDish Network Sponsor

Why talk about the music industry’s options dealing with new technologies? Since the music industry has gone through major changes in the recent years, it is important to know, which of their strategies have proved successful and which have not. In these years of major changes, the sales revenues of record companies have rapidly and steadily declined. According to the International Federation of the Phonographic Industry (IFPI), the worldwide record sales revenues were US $10 Billion less in 2003 than 8 years earlier. In the USA the record revenues have declined more than 10% since 2000.

The reasons for the decline in record sales revenues are disputed. Some studies conducted by record industry associations conclude that the increased distribution of unauthorized music copies  is the main reason for the recent decline of the sales revenues of authorized music copies (IFPI c).

Oberholzer and Strumpf contradict the above mentioned thesis in their study on the effects of file sharing. They state that the sharing of music files via the internet (which produces a major part of the unauthorized copies (IFPI d) has no influence upon record sales revenues (Oberholzer; Strumpf).

The fight against unauthorized music copies

One of the strategies of the record companies to counter the decline of revenues was to fight unauthorized music copies. In this study, the actions taken against unauthorized music copying as well as their outcome during the years 2000-2004 are described.

Legislation: The legal warrant for the battle against unauthorized music copies in the USA has been defined in the ³Digital Millennium Copyright Act² (DMCA). It forbids the cracking of copyright protection devices for example (The UCLA Online Institute for Cyberspace Law and Policy). The DMCA is also the basis for lawsuits of the Record Industry Association of America (RIAA) against users that offer unauthorized copies through a file sharing system and for damage claims.  Thus a legal basis for the fight of unauthorized copying in the USA has been established.

Yet, there is a grey zone about what is allowed and what is not, since laws can be expected to change rather quickly in the area of new technologies. In addition the DMCA has acquired a lot of counter activities. For example there has emerged an organization that wants to reestablish complete rights to make private copies of audio software (Röttgers; Krempl). The attempts to overthrow the new copyright law and reestablish the former rules have created insecurity among consumers about future laws and their enforcement. Lobbying to support the DMCA and similar legislation imposes costs on the recording industry.    

Lawsuits: According to the current laws, record companies can sue copyright violators and software producers that support copyright infringement. In reality, record companies are not always successful suing software companies and not very effective stemming the tide of copyright violators. For example, lawsuits against the company that holds the rights of and markets the file sharing software Kazaa have not been successful; Kazaa was declared legal by the Dutch Supreme Court (Michaelson; Bernhard). Only a very small percentage of the total number of copyright violators can be sued, because there are simply too many and the process too costly. In 2003, there were up to 60 Million file sharers using the Kazaa network.   The small probability of being sued inhibits the effectiveness of lawsuits against file sharers. There are various file sharing systems increasingly used for illegal purposes with a growing number of users, e.g. Bit Torrent for videos.

Copyright protection devices: Copyright protection devices integrated into CDs and music files could be an effective protection against copyright infringement, but this is offset by the constant developments of cracking devices sold by IT companies (np/mh; Bundesverband fuer phonographische Wirtschaft e.V.). Thus an expensive condition for the success of copyright protection devices is their constant enhancement concurrent with the enhancement of cracking devices.

Moral appeals: Moral appeals seek to keep people from making unauthorized copies by changing their attitude towards unauthorized copying. Record Industry organizations try to provoke a bad conscience (Hainmüller), citing popular stars saying that illegal copying is a bad thing. ³t.A.t.U² was cited saying ³Please don’t steal our music, if you’re really smart guys² (promusic.org). These and similar statements of pop stars hardly cause pity or a bad conscience, since the relatively high income of pop stars is well known to their audience. The pop stars also contradict each other on this issue. Robby Williams for example, in fact, encouraged his fans in a public speech to infringe his copyright (Schieb).

Legal supply of downloadable music: The recording and IT industry have developed their own online sources of music files in the recent years. The licensed supply should permit these industries to profit from the growth of the music market. It also should suppress unauthorized file sharing. However, the persistence of file sharing software shows that the latter goal has not been reached.

All in all, a complete protection of the property rights of music is only possible at prohibitive costs. Hence, it is unlikely, that the worldwide record sales volumes of 1995 and 1996 can be fully recovered just by the above mentioned legal efforts, technological copy protection, moral appeals and licit supply of downloadable music. The development of different strategies appears warranted.

Diversification as a strategy to overcome losses due to shrinking record sales revenues:  An alternate strategy, which in the past few years has been pursued by companies in the entertainment sector, is diversification. Record companies have been in the publishing market for quite a while (Gould). More recently many of them added the merchandise and concert business to the scope of their activities (Kurp). By moving in these industries, record companies have turned into music marketing companies. Media corporations in turn acquired such music marketing companies or their divisions (Bertelsmann AG, a) and pop musicians have set up their own diversified music marketing companies.

A model of the music market: Record companies traditionally could be categorized as the interface between the musician on one side, and media companies and record distributors or retailers on the other side. Lately, many have added merchandise production, concert promotion and artist management to their business, i.e. their buyers’ scope has expanded and includes among others merchandise retailers or distributors and concert locations in addition to record stores/distributors and media companies.

Record companies have turned into music marketing companies, entering the merchandise and concert market and the artist management business.  Gold: First stage of production.  Blue: Second stage of production.  Pink: Distribution. Arrow: Targets of diversification.

Essentially, all different ways of offering the artist’s content, from records to TV and radio shows, can be seen as different products of the same trademark. Records are only one of many ways of offering essentially the same content.

The recent development of music market segments:  Why diversify? The recording segment of the music market has become much more competitive and unattractive due to the shrinking of the recorded music market. At the same time the merchandise and the concert segments have grown. The growth of sales revenues of the merchandise market and the concert market clearly serves as an indicator of the attractiveness of these markets.

There are few publicly accessible sources for sales revenues of music merchandise and concerts, and those that exist neither contain specific amounts for worldwide music merchandize sales nor the worldwide concert revenues. What is published are two years of general worldwide merchandise sales revenues, a forecast of their development, three years of worldwide concert revenues of US artists, and a forecast of their development.

The International Licensing Industry and Merchandisers Association (LIMA), the Yale School of Management and the Harvard Business School have published the data on licensing revenues, used in this study. The data was generated in a survey on licensors and licensing agencies (LIMA a). The US magazine ³Billboard² has provided data on the worldwide concert revenues of US rock and pop artists. This data has been collected from concert promoters. The reporting of the concert promoters was voluntary, so the numbers were not complete and not comparable over time (Allen a).

In 2003, the president of LIMA forecasted growth of the international market for licenses (LIMA a). The total licensing revenues in the US have grown 4% between 2001 and 2002 (LIMA b). Also the licensing revenues on the music market have grown 1.7% in that time span (LIMA a; Gottlieb). The worldwide concert audience of US artists has grown US$ 32 Million to US$ 39 Million between the years 2001 and 2003 in spite of rising ticket prices. The growth was especially high in 2003 with rounded 6.91 Million additional visitors (Allen b). According to industry analysts, this growth is part of a positive trend in the concert industry (Allen a).

With respect to the above mentioned figures, unauthorized copies should not be considered entirely from a negative perspective. First of all, the new ways to acquire music for free, by file sharing and CD burning, stimulated recorded music consumption. In Germany for example, the total consumption of recorded music grew steadily while the total record sales revenues declined. (Fig. 6). Future growth of the amount of unauthorized copies as well as of total music consumption is probable.

Second the growth of music consumption can have a positive effect upon the revenues of music market segments. Although in Germany, unauthorized copies have risen 25%, licensing revenues did not shrink. They even rose 1%, and future growth is predicted (LIMA a; LIMA b; IFPI d). Unauthorized copies do not seem to be significantly correlated with licensing revenues.

Intuition would suggest that the increased distribution and consumption of recorded music of a specific musician, no matter if authorized or unauthorized, augments the popularity of that specific artist. Increased popularity leads to increased sales of the artist’s licensed goods.

This applies to concerts, as well. According to the Billboard’s analysis of the concert industry, the concert revenues will grow. Thus, concert revenues do not seem to be negatively, but rather positively correlated to unauthorized copying of recorded music. A positive correlation between the level of concert revenues and the amount of unauthorized copies also makes sense for the following reason: You would rather attend the concert of your favorite artist than of an artist that you do not know at all. In case you developed your preference for the artist by copying their music, you attended their concert as a consequence of unauthorized copying activity. When people as a result of growing music consumption increase the number of musicians they know, this can also have a positive impact on the size of the concert audience.

Summarizing, unauthorized copies neither have negative effects on concert nor on merchandising revenues. Unauthorized copies of merchandise do not appear to cause as big of a problem as unauthorized copies of sound recordings do. Concerts, in turn, can not be copied at all. Consequently, the concert and merchandise industry is not significantly threatened by any kind of unauthorized copies.

The lack of significant unauthorized copying activities and the current and predicted market growth (Sperlich, 33) make the merchandise and concert markets attractive, compared to the record market.

Pro diversification arguments from an organizational perspective: Interdependencies between the marketing activities of record companies, concert promoters and licensing agencies are a reason to organize all of them in the same company. A general rule, pronounced by Picot, Dietl and Frank (Picot, Dietl , Franck, 73ff), is that interdependent processes should be organized in the same organizational unit, since the necessary conveyance of knowledge between them causes transaction costs (Johnson). This general rule is transferable to the conveyance of information between companies.

Usually the artist’s manager and publicist, record company, concert promoter, licensing agent and eventually film producers participate in marketing and especially advertising activities for the artist. There are interdependencies between these activities, which make their integration in one company a less costly solution in terms of transaction costs caused by knowled