Forget pop music, it's all about ringtones

Anytime Rick Carnes is out and hears a song played as someone's ringtone, well, it's like music to his ears.

Carnes, a songwriter for nearly three decades, laughs when he considers that his work is more valuable as a ringtone--just a few seconds of his music--than a full version of one of his songs downloaded from the Web.

"Where's the logic in that?" asks Carnes, president of the Songwriters Guild of America.

Until last October, music publishers were able to pocket 10 percent of the retail price for a song, according to Steve Gordon, a copyright attorney. This meant that for a $2.99 ringtone, the publisher could make 30 cents and typically split half with the songwriter.

But the labels are now threatening to choke off that extra income. Record companies claim songwriters and music publishers charge too much and want prices restricted to a rate of 9.1 cents per song.

The labels argue that they are entitled to the extra money because music publishers pay nothing of the large upfront costs associated with producing master recordings, according to Gordon.

Carnes, 57, who has written songs for Alabama, Reba McEntire and Dean Martin, said that all the songwriters want is to be allowed to negotiate the price of their music.

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What? You Want Me to PAY for This Coffee?!

A few days ago a friend sent me a link to a discussion on MusicBanter.com which had posted an article from The Detroit Free Press.

The article is about a gourmet coffee shop in Florida and it’s anger over ASCAP approaching them for payment for live, in-store performances. The shop has been asked to pay $400/year and the owners are angry. It always amazes me how some folks think… or don’t.

I posted a response and want you all to see the immediate reaction I received. The general public is so naïve in that they perceive a “right” to free music. These folks don’t seem to understand they couldn’t buy groceries if they weren’t employed by a business that sells a product or service.

I have a very good friend who’s a professional airline pilot. He’s definitely no dummy, yet he’s taken part in illegal peer-to-peer music swap sites for several years and no matter how many angles I use to describe to him that it’s stealing, he fails to get my point (of course if a stowaway were discovered on my friends airplane I suspect he’d be the first to become red-faced and toss them off).

People that would never load their grocery cart or buggy at Wal-Mart then walk out without paying are stealing on a regular basis. I suspect it’s often not actually a failure to understand, as much as knowing they won’t be caught. The only difference between those folks and shoplifters at Wal-Mart is tenacity.

Below is my post in regard to the Detroit Free Press article and the first response to that post:

“$400 per year is likely a great investment in their business. It's $1.10 per day. If performance of cover tunes causes customers to come in or 'hang-out' longer, how many coffees, teas, or muffins do you suppose they'll have to sell before they recoup that $1.10 investment and then reap the rewards of more sales?

Even if the other two performing rights organizations (ASCAP, BMI, SESAC are the only ones in the U.S., NOT the "three biggest") are paid the same amount, it's a total of $1200 for the entire year, equaling roughly $3.30 per day.

The article quotes the gourmet coffee shop owner as saying, "It makes me so angry"... "I feel like the greedy music industry..."

GREEDY?? Really? For wanting to be paid for use of a product?

Next time I travel through Florida I'll have to swing by their coffee shop, drink a cup of coffee, tea, or eat a muffin, then walk out without paying. Surely the GREEDY owners of the product won't expect me to pay for it.”

Four minutes later I received this response:

“What utter rubbish.

Could you imagine the state of the world if the publishing industry took the same example with books? Imagine schools having to pay money out to quote books , imagine libraries being closed down because of illegal sharing of free books.

The music industry is full of crooks & opportunists and don't let anyone tell you otherwise.”

Sadly, many share this perspective based on ignorance. So I answered by explaining that books are not different than music when it comes to paying for use. I explained that libraries and schools are permitted use of copyrighted material by way of “Fair Use” which is part of the U.S Copyright Act.

I explained that libraries have to purchase many of their books with our tax money, spending an average of 20-30% of their budget for materials, with around 85% of that funding coming from taxes and not donations. Based on this I suggested he should include book publishers in his description of "crooks and opportunists".

Of course, just like my friend he didn’t get it; and I’ll still be expected for some strange reason to pay for my next cup of joe at my favorite coffee house tomorrow.

Prince's Experiment With Free CDs Raises a Ruckus

The artist Prince caused a huge stir in the music industry a few days ago when 2.9 million copies of his new CD Planet Earth were bundled with Sunday copies of the UK newspaper The Mail. There was a furious backlash from the music industry -- including his own label, Sony BMG -- at this act of heresy of giving music away free. But it will probably pay off for Prince in the long run. To begin with, The Mail paid him a reported $500,000 for this venture.

Prince's overall logic? Well, his last CD sold only 80,000 copies in the UK. As a so-called heritage artist (meaning one who's been around a while and doesn't sell millions of CDs anymore), he figures since his main income derives from selling concert tickets and merchandise, including sales of his previous CDs, it makes sense to try to attract new listeners and expand his fan base. And offering free music may be the best way to do that. And the UK has been way ahead with that. For years, British music magazines such as Mojo and Q have done that with sampler CDs inserted in their magazines, and the Oxford American does that here at home.

If the music industry had gotten out in front of paid music downloads in a timely fashion, the industry wouldn't be in the pickle it now finds itself in. As it is, the only viable solution for the downloading issue came from a music industry outsider -- Apple's Steve Jobs with his iTunes and iPod. As CD sales continue to plummet, there are few options left for the music business...

Read entire article here.

The Record Industry's Decline

In my 3-part series, "It’s a New World", we looked at how record companies are solving (actually not) their problem of cliff-diving record sales and the further diversification into the music publishing arena being the “answer” for many. We also looked at a couple of new models being tried in the music business.

Below is part of an article from Rolling Stone which discusses the tough times record labels are facing.

…"How is it that the people that make the product of music are going bankrupt, while the use of the product is skyrocketing?" asks the Firm's Kwatinetz. "The model is wrong."

Kwatinetz sees other, leaner kinds of companies -- from management firms like his own, which now doubles as a record label, to outsiders such as Starbucks -- stepping in. Paul McCartney recently abandoned his longtime relationship with EMI Records to sign with Starbucks' fledgling Hear Music. Video-game giant Electronic Arts also started a label, exploiting the promotional value of its games, and the newly revived CBS Records will sell music featured in CBS TV shows.

Licensing music to video games, movies, TV shows and online subscription services is becoming an increasing source of revenue. "We expect to be a brand licensing organization," says Cohen of Warner, which in May started a new division, Den of Thieves, devoted to producing TV shows and other video content from its music properties. And the record companies are looking to increase their takes in the booming music publishing business, which collects songwriting royalties from radio play and other sources. The performance-rights organization ASCAP reported a record $785 million in revenue in 2006, a five percent increase from 2005. Revenues are up "across the board," according to Martin Bandier, CEO of Sony/ATV Music Publishing, which controls the Beatles' publishing. "Music publishing will become a more important part of the business," he says. "If I worked for a record company, I'd be pulling my hair out. The recorded-music business is in total confusion, looking for a way out."

You can read the entire article here.

It’s a New World (Part 3 of 3) Quick Robin, to the Starbuck-mobile!

(read this 3-part series)

That’s right, Starbucks to the rescue. Well, at least that’s what a Beatle is thinking as he looks to the Starbuck super-hero to save the day. Paul McCartney released his new album last week (June 5) through an arrangement with Starbucks. Yes, the coffeehouse Starbucks.

Releasing projects through non-traditional retail outlets is growing in popularity among artists experiencing difficulty gaining the exposure they desire. Last month Merle Haggard released his new CD exclusively through Cracker Barrel. Exclusive Cracker Barrel releases have also come from Charlie Daniels, Alison Krauss, and others.

Starbucks, in partnership with Concord Records, is marketing McCartney’s album “Memory Almost Full” through music retail shops and, importantly, through the many thousands of Starbucks playing cuts from the album in its coffee shops. On the day of release the plan was to play the album repeatedly. (I presume they did but then I don’t patronize Starbucks. I have no issue with them, just don’t like the coffee.)

McCartney also released his first video from the album… on YouTube.

So what’s this alteration of the music distribution model have to do with illegal downloading, the subject I began this series with? Nothing, unless you consider impulse CD purchases at Starbucks to be a serious contender to the problem. No, McCartney and others have a taller beast to slay than illegal downloading of their new projects. It’s the closed door of radio, which of course is the best way to make the public aware that a new album is even available in the first place, illegal or otherwise. Yet, McCartney has found a way to be heard by thousands upon thousands with the CD available for purchase within a few steps of the listener sipping his favorite cup of joe.

As Sir Paul put it when announcing his Starbucks deal, “it’s a new world.”

(read this 3-part series)

It’s a New World (Part 2 of 3) Free Music… and everyone gets paid

In part one of this series (see May 31 post) we looked at how record companies are solving (actually not) their problem of cliff-diving record sales and the further diversification into the music publishing arena being the “answer” for many.

But there are some creative minds working on a new music distribution model.

In one model that’s soon to be launched, the source of royalties will be derived from new pockets. Royalties, traditionally coming from the consumer’s pocket, will now come from the pockets of advertisers when music is obtained at We7. That’s the plan behind the company which boasts Peter Gabriel as one of its founders.

Rather than fight the losing battle of illegal free downloading, the idea is to give everyone what they want and let target-advertising pick up the tab.

With We7 users tell a little about themselves so advertisements will be relevant to them. A 10-second advertisement, tailored to the downloader’s profile, precedes the song. After a month tracks are available without ads. Because downloads are funded through advertisers We7 will “deliver free, legal and safe music, video and other digital entertainment to everyone who wants to download it”.

Users get free entertainment, advertisers pay for targeted potential customers, and songwriters, artists, record labels, etc. get paid.

The We7 site explains its concept this way. “What people dislike most about advertising is receiving badly targeted messages that bear no relevance to them and disrupt their listening pleasure.

And that's where We7 is revolutionary. Because the way artists are paid is funded by downloaders who have agreed to receive advertising messages that they know will appeal to their declared interests and lifestyle.

It's this unique way of advertising that enables our downloads to be free, ensures artists are paid and provides downloaders with messages about the products and services they really want.”

In the next of this 3 part series we’ll look at another creative solution being used by some folks I think you’ve heard of.


Till then, keep writing!

It’s a New World (Part 1 of 3) Movers and Shakers Get Shook

As if you didn’t know, amidst plummeting CD sales (a more than 20% decline this year) a new model for the distribution of music is in the process of “finding itself”. What you may not know is that the new model is looking in some creative places for its new self.

Whatever the new model proves to ultimately be, it stands to have an impact on songwriters. That’s because with CD sales down and no recovery in site, the movers and shakers in the business of selling records (record companies) are looking to diversify. And the most lucrative, steady stream of income in this business is music publishing.

While all the major players already have a hand in the publishing pot, it looks as though they’ll be sticking the other hand in too. With the multiple sources of revenue that music publishing provides including the largest prize, performance income, record companies hope to raise the sinking ship and steady the flow of revenue.

So how’s that impact you, the songwriter? Mainly through less spots available on recording projects as the number of inside cuts will undoubtedly grow.

With the majority of music obtained last year coming from free sources, it’s clear the industry severely underestimated the potential problem early on that technology would lay at its door. And they’re moving like a snail towards creating a solution, if they’re working on one at all. They simply look to diversify.

But there remain some creative thinkers around, and (surprise!) they’re not record company executives.

In the next of this 3 part series we’ll look at one of the creative solutions in the works.


Till then, keep writing!