A common question that many potential clients pose is "How can I get my music out there and make a few bucks in the process."
As a publishing company for independent musicians, a major part of S&E Entertainment's job is distributing our clients' music through various channels to maximize exposure and income. The music industry refers to each of these channels as a "revenue stream." Notably, a "revenue stream" is not just limited to the distribution of music but can also include merchandising, licensing, and sponorshops.
The current distribution models:
Legacy Sales. This distribution channel consists of physical goods such as CDs, cassette tapes, and vinyl records. It is slightly strange to refer to CD sales as "legacy," but some reports put online music sales at 95% of the market share. Although most independent artists still sell mos tof their music face-to-face, it is a very small amount of total sales. Notably, in terms of dollars, CD sales still exceed digital downloads. The Beatles recent physical release shows the ability of the CD to still bring in money.
Digital Sales. Without a doubt, online sales of digital singles accounts for the majority of music today. Apple and iTunes own 2/3 of the market, with Amazon, eMusic, and a few other services offering MP3 sales to fans. The bottom-line: if you are not on iTunes, you are missing out on 2/3 of the people who might have bought a track.
On Demand Straming. Several websites offer this service to its visitors, wherein the website buys a license from the artists and then allows the visitors to listen to the music. Importantly, people cannot download the tracks, but it is free to listen or involves a small fee for premium services. Spotify is one of the main players in this type of distribution channel.
Paid Subscription. Through services like Rhapsody and Napster, consumers can pay a monthly subscription and either stream or download as much music as they want. In exchange, the service pays the artists a fraction of the consumer's subscription fee. Interestingly, Spotify has started a freemium business model in this distribution channel, but little information is available yet as to its success.
Internet Radio. A new royalty rate agreement set the standards for internet radio stations in the summer of 2009. Basically, the radio stations pay a licensing fee for each song and/or catalog that they play online and visitors tune in for free. Artists recoup a fraction of the licensing fee, usually through their performing rights association affiliation.
Friday, October 16, 2009
Tuesday, October 13, 2009
21st Century Business - Freemium Model
This blog will highlight some of the ideas and techniques that have worked for some bands in the music industry in the very recent past. My purpose is not to deride or encourage any one particular idea, but merely highlight what has worked for some and what may work for you. First - the freemium business model.
Generally, a business model is a framework or structure that a company establishes to place a value on its goods and services and then exchange those same goods and services for the established value from consumers. In short - a business model is a plan to sell your stuff to people that want to buy it.
The traditional business model in the music industry is selling recorded music on a medium that consumers can then listen to at home, and then supplement this product with related merchandise, live performances, and access to the artists. In the last 10 years the medium has shifted from physical goods like cassette tapes and CDs to a digital medium - MP3s and Apple's iTunes. While this shift has made music more accessible and portable, it is also more susceptible to theft and piracy. As a result, CD sales are steadily declining, record labels are going out of business or laying peole off (See WMG), and the overflowing well of money that fueled VH1's Behind the Music extravaganzas has run dry.
Under the freemium business model, a business offers its goods or services for free to the consumer. In exchange, tthe consumer provides contact information to the business (email address, phone number, etc.). The business then attempts to form a relationship with the consumer and offer a premium service for a fee.
Fred Wilson coined the term "freemium" in March 2006, saying:
"Give your service away for free, possibly ad supported but maybe not, acquire a lot of customers very efficiently through word of mouth, referral networks, organic search marketing, etc., then offer premium priced value added services or an enhanced version of your service to your customer base."
You can see the freemium model in use everyday at Pandora and it has been used with great success by Trent Reznor and Radiohead.
The freemium model is a great way for independent artists to gain a larger following and increase their exposure on a national stage. Give an MP3 away in exchange for an email address or hand out a lo-fi version of your latest EP at a major sporting event, with the promise that a higher quality version is available for a small charge at your website or on iTunes. Essentially, the freemium business model is all about giving something away today in hopes of getting something of greater value tomorrow from a consumer that will keep coming back.
Generally, a business model is a framework or structure that a company establishes to place a value on its goods and services and then exchange those same goods and services for the established value from consumers. In short - a business model is a plan to sell your stuff to people that want to buy it.
The traditional business model in the music industry is selling recorded music on a medium that consumers can then listen to at home, and then supplement this product with related merchandise, live performances, and access to the artists. In the last 10 years the medium has shifted from physical goods like cassette tapes and CDs to a digital medium - MP3s and Apple's iTunes. While this shift has made music more accessible and portable, it is also more susceptible to theft and piracy. As a result, CD sales are steadily declining, record labels are going out of business or laying peole off (See WMG), and the overflowing well of money that fueled VH1's Behind the Music extravaganzas has run dry.
Under the freemium business model, a business offers its goods or services for free to the consumer. In exchange, tthe consumer provides contact information to the business (email address, phone number, etc.). The business then attempts to form a relationship with the consumer and offer a premium service for a fee.
Fred Wilson coined the term "freemium" in March 2006, saying:
"Give your service away for free, possibly ad supported but maybe not, acquire a lot of customers very efficiently through word of mouth, referral networks, organic search marketing, etc., then offer premium priced value added services or an enhanced version of your service to your customer base."
You can see the freemium model in use everyday at Pandora and it has been used with great success by Trent Reznor and Radiohead.
The freemium model is a great way for independent artists to gain a larger following and increase their exposure on a national stage. Give an MP3 away in exchange for an email address or hand out a lo-fi version of your latest EP at a major sporting event, with the promise that a higher quality version is available for a small charge at your website or on iTunes. Essentially, the freemium business model is all about giving something away today in hopes of getting something of greater value tomorrow from a consumer that will keep coming back.
Monday, October 12, 2009
Copyrights - Joint Works
With A Little Help From My Friends
Great songs come from many places of inspiration, mixing and intertwining any number of themes and emotions. With the exception of the solo singer/songwriter, great songs come from bands with a story to tell. Often one band member will write lyrics about an event in his life, another musician will compose a guitar riff, and everyone else contributes with their own instruments or talents. Bit by bit, a song emerges from their individual efforts. You know the song becomes copyrighted as soon as it is written down and/or recorded, but who owns the copyright when everyone helps create it?
Luckily the U.S. Copyright laws anticipated this situation and defined a “joint work” as an artistic work created by two or more people with the intention that their independent contributions be merged into one complete work. The individual parts can be copyrighted by themselves, but they achieve the intended result when combined. The artists must also have the intent for their contributions to be merged together. This “joint work” rule works for music, drawings, and other artwork. Basically, this means when people work on something together, it is called a “joint work” and they all own a piece of the copyright for that work.
For example, the hypothetical St. Louis band Minotaur is releasing their debut album and need some artwork for the album cover. They contact a local artist, Jim, who agrees to create a design for the album; he asks his friend Jack to help. Jim and Jack split the responsibilities of the album artwork, and they create a masterpiece depicting Minotaur on stage. Most certainly, they both have created independent copyrighted works, with Jim drawing the band members and Jack drawing the adoring crowd. However, Jim and Jack had the necessary intent to join their works together to make a “joint work” for the album cover. Here is where things get tricky.
Jim and Jack own the copyright for the Minotaur album cover together as co-authors. Each of them has the full rights of a single author, i.e. they can perform, copy, reproduce, and license the artwork. The interesting part is neither needs the other co-authors permission to exercise his rights, so long as he properly accounts for any income received related to the work (more on this below). In this case, Jim can license the artwork to Minotaur without getting Jack’s permission. No matter how much Jack hates the band, he cannot stop them from using his joint work, since they got permission from his co-author Jim (assuming that Jim is giving Jack his fair share of the profits). Further complicating the situation, the copyright in a joint work is transferable, so one co-author can sell his part to a third party, or if he dies, the copyright passes to his heirs. Basically, this means you could be stuck in a situation where someone you do not know, and may not like, has permission to use your work. This situation also applies to music and is the reason a band can continue performing a song long after a member leaves the group.
The keys to using a joint work are that a fair accounting must be paid to all co-authors and the use is non-exclusive. In the example above, Jim must share any money he receives from Minotaur with Jack – 50/50. Further, he cannot completely give away the artwork, as he only owns a part of the joint work, which means he cannot give Minotaur an exclusive license to use the cover art, opening the door for Jack to license the exact same artwork to another band.
To ensure your rights are protected, you should have a written contract before creating something with another person. This includes writing a song, recording a track, or creating a logo. The agreement can address almost any issue, but at the very least should touch upon who owns the work, who has the right to use the copyrights associated with the work, who can license or transfer the work, and how profits from the work are divided. For bands, these are issues that can be included in your LLC Operating Agreement. Copyrights can be a very tricky area of the law, but are essential to protecting your rights in your work. Joint works and the rights of co-authors are more detailed and complicated this article can cover, but an entertainment attorney can assist you in navigating these issues and help you understand how to maximize the protections available to you and your art.
Matthew Nagel is an entertainment attorney at Wuestling & James in St. Louis, Missouri and an adjunct professor at Fontbonne University and Washington University School of Law. If you have questions, you can reach him at Nagel@wuestlingandjames.com.
* This article is primarily educational and does not purport to constitute legal advice. No attorney-client relationship is created between the author and any reader of this article. If you have legal concerns or questions be sure to consult with an attorney licensed to practice in your jurisdiction.
Great songs come from many places of inspiration, mixing and intertwining any number of themes and emotions. With the exception of the solo singer/songwriter, great songs come from bands with a story to tell. Often one band member will write lyrics about an event in his life, another musician will compose a guitar riff, and everyone else contributes with their own instruments or talents. Bit by bit, a song emerges from their individual efforts. You know the song becomes copyrighted as soon as it is written down and/or recorded, but who owns the copyright when everyone helps create it?
Luckily the U.S. Copyright laws anticipated this situation and defined a “joint work” as an artistic work created by two or more people with the intention that their independent contributions be merged into one complete work. The individual parts can be copyrighted by themselves, but they achieve the intended result when combined. The artists must also have the intent for their contributions to be merged together. This “joint work” rule works for music, drawings, and other artwork. Basically, this means when people work on something together, it is called a “joint work” and they all own a piece of the copyright for that work.
For example, the hypothetical St. Louis band Minotaur is releasing their debut album and need some artwork for the album cover. They contact a local artist, Jim, who agrees to create a design for the album; he asks his friend Jack to help. Jim and Jack split the responsibilities of the album artwork, and they create a masterpiece depicting Minotaur on stage. Most certainly, they both have created independent copyrighted works, with Jim drawing the band members and Jack drawing the adoring crowd. However, Jim and Jack had the necessary intent to join their works together to make a “joint work” for the album cover. Here is where things get tricky.
Jim and Jack own the copyright for the Minotaur album cover together as co-authors. Each of them has the full rights of a single author, i.e. they can perform, copy, reproduce, and license the artwork. The interesting part is neither needs the other co-authors permission to exercise his rights, so long as he properly accounts for any income received related to the work (more on this below). In this case, Jim can license the artwork to Minotaur without getting Jack’s permission. No matter how much Jack hates the band, he cannot stop them from using his joint work, since they got permission from his co-author Jim (assuming that Jim is giving Jack his fair share of the profits). Further complicating the situation, the copyright in a joint work is transferable, so one co-author can sell his part to a third party, or if he dies, the copyright passes to his heirs. Basically, this means you could be stuck in a situation where someone you do not know, and may not like, has permission to use your work. This situation also applies to music and is the reason a band can continue performing a song long after a member leaves the group.
The keys to using a joint work are that a fair accounting must be paid to all co-authors and the use is non-exclusive. In the example above, Jim must share any money he receives from Minotaur with Jack – 50/50. Further, he cannot completely give away the artwork, as he only owns a part of the joint work, which means he cannot give Minotaur an exclusive license to use the cover art, opening the door for Jack to license the exact same artwork to another band.
To ensure your rights are protected, you should have a written contract before creating something with another person. This includes writing a song, recording a track, or creating a logo. The agreement can address almost any issue, but at the very least should touch upon who owns the work, who has the right to use the copyrights associated with the work, who can license or transfer the work, and how profits from the work are divided. For bands, these are issues that can be included in your LLC Operating Agreement. Copyrights can be a very tricky area of the law, but are essential to protecting your rights in your work. Joint works and the rights of co-authors are more detailed and complicated this article can cover, but an entertainment attorney can assist you in navigating these issues and help you understand how to maximize the protections available to you and your art.
Matthew Nagel is an entertainment attorney at Wuestling & James in St. Louis, Missouri and an adjunct professor at Fontbonne University and Washington University School of Law. If you have questions, you can reach him at Nagel@wuestlingandjames.com.
* This article is primarily educational and does not purport to constitute legal advice. No attorney-client relationship is created between the author and any reader of this article. If you have legal concerns or questions be sure to consult with an attorney licensed to practice in your jurisdiction.
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