Sony's Red Label Services Expands To The UK

Major labels have learned that many of their services are very valuable to smaller indie labels or directly by artists. Where once upon a time, if you wanted a label's distribution, promotion and marketing, you had to sign to the label, that's no longer required.

Labels now take advantage of their unique expertise and excess capacity by making these services available on an a la carte basis called "Label Services."

In other words, if you can afford to pay for radio promotion from Sony or Warner Music, they'll be happy to make those services available to you.

One of the biggest at this is Sony's Red Music, which has made major label distribution, and more recently, marketing available to indie labels everywhere. Now Red has expanded into the UK with its acquisition of Essential Music to form Red Essential.

Essential has recently worked records by The Prodigy, Marilyn Manson, Passenger and Lucinda Williams, among many others. Of course, one of the biggest acts to take advantage of label services was Macklemore and Ryan Lewis, which launched the concept to a new level, and later 50 Cent (check out the links for specific info).

Keep in mind that while using label services is a great idea, it's never free. You pay for everything if you're an indie regardless of your sales or engagement, and you pay for a portion of it even if you're signed to the label, only not up front.

The major labels have built marketing and distribution infrastructure over the last 50+ years that can't be matched by a startup or indie, so why not take advantage if it if you can?

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Sony Develops Real-Time Streaming Royalty Reports

In what may be a real breakthrough for artists, Sony Music has developed an app that shows exactly what their daily streaming royalty earnings are. The app also includes information about how these earnings impact their label advances as well.

Other features include other key information in real time, such as streaming volume across all platforms, airplay data, profiles by age, gender and location of listeners, and a heat map of areas of the world where the artist is currently popular. It also offers insight to the artist's popularity on social networks as well, including Facebook, Twitter and Instagram.

The app is only available to Sony artists in Sweden (where the app was developed) at the moment, but is expected to be rolled out to Sony artists globally later in the year.

This is a first for a major label, since it makes earnings a lot more transparent than in the past. Artist royalty statements have always been viewed with some suspicion as labels have traditionally used a variety of accounting tricks to limit the royalties owed, but the new Sony app gives at least some hope that this position may change in the future.

Although the Sony real-time app is a revolution for a major label, it's not the first of its kind. Kobalt has offered these features to artists and songwriters for some time.

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Patrick Mahoney From Manhead Merch On My Latest Inner Circle Podcast

If you're in the music business you've heard how increasingly important merchandise is to the revenue stream of an artist.

My guest on this week's Inner Circle Podcast is Patrick Mahoney of Manhead Merch, who's going to tell use about how merch licensing deals work, as well as what the hot merch is these days.

In the intro I'll discuss how Warner Music and Sony Music plan to give back at least some of the profits to their artists if and when Spotify goes public. I'll also give some tips for setting up that cool mastering compressor plugin that you probably have but were afraid to use.

Remember that you can find the podcast at BobbyOInnerCircle.com, or either on iTunes, Stitcher and now on Mixcloud and Google Play.

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As Always, Female Buyers Still Fuel Pop Music Sales

What do Adele, Taylor Swift, Ed Sheeran and Sam Smith have in common? Most of the buyers of their albums are female, according to an article by Hannah Karp in the Wall Street Journal based on data from a number of market research firms.

While this info is probably no surprise to music execs who’ve inherently known this for decades, the new-found ability to have a greater understanding of an artist’s fans syncs more with the conventional industry wisdom than previously thought.

Take Adele, for instance. First of all, she’s an artist that goes completely against the grain of what the music business currently considers a pop star. She’s a full-figured women who has a relatively small social media footprint and no bombastic big-production stage show, yet she’s been crushing sales records by doing it the old fashioned way - with great songs and performances.

If you look closely at the demographic profile of her fans though, the sales records begin to make perfect sense.

According to the article, a Nielsen study funded by Sony Music found that 62% of Adele’s fans are female, between the ages of 25 and 44 years old, and have children. In other words, they’re soccer moms. What’s more, a majority of them work in the health care industry, drink light beer and Aquafina water, and are 80% more likely than average to read Parents magazine, for whatever that’s worth. To take it a step further, 28% of her fans are in the 50+ age bracket, according to music consumer research company Music Watch. Read more on Forbes.

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Is Sony's Stake In Spotify Legal?

One of the things that most people don't know about Spotify is that it's partially owned by the three major labels. That was a required part of the licensing deal that Spotify had to acquiesce to  in order for the streaming music service to launch in the United States.

The major labels are obviously hoping for a windfall profit should Spotify ever be purchased by a larger entity (its valuation is north of $10 billion), and the worst part is that most of it would go to the company's bottom lines instead of to the artists that helped make it happen.

But one of the major labels, Sony Music, might be up against a legal foe that could change everything in its equity position with Spotify.

19 Recordings, the record label tied to the American Idol television show), has filed suit against Sony demanding fair-market royalty rates from the label regarding its position with Spotify.

Basically Sony received a block of advertising on Spotify's free tier that it could sell on the side, with the label pocketing the money. 19 Recordings, who's artists include Kelly Clarkson and Carrie Underwood, claims it wasn't receiving its rightful cut of that money.

While this might shock some in the business (especially artists), it's just some of the same shenanigans that record labels have been playing almost forever. Whether it's morally right or wrong, labels do their best to make the most money possible and will do whatever it takes to feed the bottom line. The artists are usually left with less than they deserve, but have little power to change things (unless of course you're name is Taylor Swift).

Should 19 Recordings win this lawsuit, however, it will start a chain reaction that could end up forcing the major labels out of the streaming business, and maybe even pay at least a slightly higher royalty to its artists for digital distribution. At least, that's the dream.

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Sony's Direct Deal With SiriusXM Could Be Bad For Musicians

Right now a lot of publishers are leaning towards doing direct deals with digital distributors rather than letting ASCAP or BMI (the performance rights organizations or PROs) take care of it as they traditionally have. The idea is that the data is easier than ever to collect since it's all digital, and the PROs can take a long time to pay and then take a piece of the revenue as well.

This might take a while to play out on the publishing side, but on the label side, Sony-owned distributor The Orchard is making a play to cut the middle man out of the picture by making a direct deal with SiriusXM. In what could be the first of many deals, this removes the collection agency Soundexchange from the revenue picture.

Remember that when it comes to digital airplay, there are actually 3 parties that get paid - the songwriter, the label, and the artist (the latter two don't get payed for traditional terrestrial broadcasts). Soundexchange is the designated PRO for collecting this revenue, but The Orchard will now bypass them.

On the surface this sounds great for artists in the it appears there will be 4.5% more money in their pockets (that's the fee that Soundexchange charges), but don't forget that this is a company owned by a record label and labels are especially good at finding ways to not pay the artist all the royalties they've earned. Also, this is just another way of recouping advances so the artists won't see any money at all in end.

Soundexchange has done a great job in collecting and distributing royalties in the past, and based on its track record to this point, seems to be much preferred to a label when it comes to paying artists. Only time will tell how this will work out. If you're not signed up with Soundexchange, you should do so now if your songs are being played online.


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Save Money Producing Your Album With A Tax Credit

Increasingly, music producers are looking for State tax credits before embarking on a project.

While this has been a big part of television and movie production for some time, music is now seeing the light in how cost-effective it could be to go somewhere besides Los Angeles and New York to make a new record. And since it's easier than ever to record just about anywhere, the tax credits now loom large for many a budget-minded producer.

Louisiana has been one of the leaders in music tax credits for some time, but recently Texas has jumped into the game. Tennessee fought runaway production by following with a big tax credit, and New York producers are currently lobbying legislators to pass a bill that will provide around $60 million in tax breaks each year to studios, artists, record companies and others involved in music creation.

That's not all, Georgia gives tax credits for up to 30% of the cost of making an album, and New Jersey recently gave Sony Music some $1.6 million in tax breaks to move 50 jobs there from New York City. And of course, Canada has long been a huge benefactor for the arts.

Most producers aren't aware of the current tax credit possibilities and most States are not very good at getting the word out, so you have to do some digging yourself. The first thing to do is look online to see if there's an entertainment or economic development commission like this one in Louisiana. There are a number of forms to fill out and the granting of the tax credits can take some time, so remember to plan as far in advance as you can.

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It's All About Song Skipping

Probably the holy grail of listening to music is the ability to skip a song when we get bored. It was pretty difficult with vinyl records, easier with CDs, and much easier with digital music. Of course, it's always been impossible with radio, but digital streaming brings us many possibilities.

One of the features siad to be in Apple's new iRadio music streaming service is the ability to skip songs, and apparently that's become a big problem for Sony Music. It's not that they're opposed to it, it's just that they'd like to get paid full rate even if a listener only played the song for a few seconds. Apple would naturally prefer pay a portion of the royalty using a formula that determines the royalty rate based on the amount of the song that's actually listened to.

Of course, whatever is hammered out with Sony will no doubt be applied to the deals with Universal Music and Warner Music Group as well, since it would be a shock if they didn't have a "favored nation" clause built into their agreements that would keep the compensation equal regardless of who got the best deal.

Yet another feature of iRadio is said to be the ability to rewind a song. As a listener, I love the thought of this feature since there are so many times that I'd love to repeat a section of a song to analyze it. The problem then becomes, how much is paid for each rewind and how is that rate determined.

It's funny how some things that we take for granted with music we own become an issue when it comes to streaming. That said, this is another reason why I think that much better days are ahead for songwriters and artists. The compensation may be small but the increased number of revenue streams should increase income substantially.

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YouTube Strips Labels Of 2 Billion Fake Views

Since the beginning of music on the Internet, people have been trying to game the system. Fake likes and views have been plaguing everyone from record labels to publicists to the media when trying to get a true gauge on exactly what kind of traffic an artist has. New artists want to crank up the Likes and views to get label interest and make fans think they're more widely appealing than they are. But record labels do the same thing, it turns out.

Recently YouTube slashed the accounts of Universal Music Group, Sony and RCA Records by more than 2 billion views in a move that was aimed at shutting down the illicit view count-building techniques used to manipulate some sites.

Universal took the biggest hit when more than a billion views were eliminated, while Sony lost 850 million. RCA dropped a mere 159 million. It appears that the labels have responded by eliminating most of the videos from their YouTube channels, as Universal now has only 5 videos on their channel and Sony has none. Of course they favor their own Vivo service anyway so they didn't lose their entire video exposure.

So who were the artists that suffered? The personal channels of Michael Jackson, Chris Brown, Beyonce and Avril Lavigne, as well as 500 other prominent channels were stripped of views in the last 30 days.

The next time you look at a video and it has millions of views, you may want to question how many of those are legit.

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Trent Reznor Returns To The Big Label Fold

While we're constantly inundated with opinions that the major labels are on their last legs, that's simply not the case. Though we may yet see another step in the evolution of the majors soon, there's always going to be a place for at least a few of them. Case in point, the return to the major label fold by the poster boy for DIY, Trent Reznor.

Reznor described the reason for his newly minted agreement with Sony Music recently with David Byrne:

"In the last tour, we're playing Prague, we're walking around and playing that night at Prague.  But I see flyers up for Radiohead playing the same place we're playing, but six months from now.  And I walk into the record shop, and there isn't a section that says Nine Inch Nails.  And there's no kind of presence that we're even there.   

And I start to realize, the last few years all we've done... you know Mr. Twitter Bigshot with my bunch of followers right, but it's preaching to that choir of people that are important, but it's that camp.  The world's become so fragmented, you can tune into what you like, and a lot of things don't break though that, or cross over. 

And we're literally putting our records out on our own, and not using the labels.  And I don't know what the cool record shop in Prague is, and I don't know the good blog that comes out of there that I can give some attention to.  And I don't really want to do that, but there's a part of me that can't stop, so I get obsessed and I start thinking about marketing and I think, 'there's other people I can hire that can market this stuff, but no one else can write the songs I can write.' 

The great part of self-releasing has been controlling your own destiny.  Nobody having any approval.  Finishing a song at midnight and putting it out the next day.  Getting fans excited with no leak, because you have the only copy, and you uploaded it and you hit publish.  And wow, that's fun, it felt great particularly after a long career in the weirdness of labels. 

But to answer your question, it was to have a team of people that are better at that than I am, worldwide.  That felt like it was worth slicing the pie up, monetarily, but our main agenda of the moment was to make people aware of it in the right context versus a little more money we might or might not make.  And that's what it came down to, and so far, it's been pleasantly pleasant, actually having people that know what they're talking about and having a team, that's nice."

The above sounds more like Reznor was more tired of the DIY thing than anything else, and that's fair enough, but the fact of the matter is that the major labels are the only ones that have the infrastructure capable of either elevating an artist to, or maintaining superstardom. If an artist is going to break world-wide, that's still the way to go.

Now I don't want to come off as an apologist for the major labels because I'm far from it. I believe that until you're at a point in your career when you have some leverage, it's best to stay away from a label and do as much as you can yourself. Signing too early does an artist no good. But if you have a measure of success, that means that you can certainly be in a position for not only a better deal, but more attention from the label as well.

Not only that, after doing so much of the grunt work yourself, you're so much better at determining if the label is doing a good job or not, and helping them to do the best they can. It can be a win-win under the right circumstances.

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Major Label Death Predictions May Be Premature

Could everyone's predictions about the demise of the major record labels be premature? What we've heard over and over in the press (and sometimes on this blog) is that the major labels were floundering in red ink, about to go belly up any second. While revenue for the industry is less than half of what it was at it's peak, and profits did take a hit for a while, it appears that everyone has missed the point that the labels have been evolving with the business, and they're pretty healthy as a result.

Case in point - according to Billboard, in the first six months of 2012 Universal Music Group, Sony Music and Warner Music Group had together reported profits of $356 million. Yes, that's profits!

Now take into account that EMI doesn't disclose their finances at the moment because they're privately held by CitiBank (at least until the sale to Universal is finalized), and the CEO of BMG Rights Management has said that their profit would be over 250 million Euros this year (about $325 million), and you can see that no one inside the big music corps are worried about their bonuses.

Then the fact that we're heading into the strongest buying season of the year makes analysts think that the major labels will make over $1 billion in profits in total for 2012.

Here's the fact as it stands today - DIY is great for any artist that's either starting out to even a star level, but if you want to break into superstardom, you still need a major. They're the only ones with the infrastructure to take an artist to those heights, at least at the moment.

That said, the more you DIY and the stronger your audience, the greater your bargaining power is. It's almost like there's no middle ground these days when it comes to making a major label deal. Either you're completely at their mercy with a 360 deal or you have all the leverage because you've built an audience without them.

Whatever the case, the major labels are not going away any time soon. Now if only we had a new crop of indies.

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Songwriters Finally To Be Paid On Videos

Ever wonder how much a songwriter makes from a video that has 100+ million views on Vevo? You'd think it's would be a small fortune, but the answer is actually zero. That may be changing as of yesterday as Universal Music Group signed a deal with the National Music Publishers Group to finally pay royalties to both songwriters and publishers going forward.

Vevo is owned by Universal, Sony Music and Abu Dhabi Media and takes in about $150 million a year in ad revenue, none of which was passed along to songwriters or publishers. With the new agreement, Universal agrees to not only some retroactive compensation, but also to provide a royalty for other UMG offerings like ringtones, dual discs, multi-session audio and locked content products.

There are two things interesting here. First, only UMG is parcel to the agreement. Sony has not signed on. And the agreement specifies that UMG admits no wrongdoing, which stifles and lawsuits on this going forward.

That's one small step for songwriters. Let's see if another happens soon.

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Help support this blog. Any purchases made through our Amazon links help support this website with no cost to you.

You should follow me on Twitter for daily news and updates on production and the music business.

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Sony Caves To Artists In Class Action Suit

If you've read this blog much, you know that I've been keeping you up to date on the Eminem v. Universal lawsuit all the way along. The suit, which was eventually won by Eminem's production company FBT, was significant because it changed the way the music industry values a digital download.

The record labels considered a download sale to be just like a CD sale and therefore subject to the same royalty rate, which could be anywhere from 12 to 20 percent. FBT contended that a download was in fact, NOT a sale, and really was a license, which was subject to a much higher royalty rate of 50%. When HBC/Eminem won, it was predicted that there'd be a flood of classic artists suing their record labels. Sure enough, that's what happened, with a number of acts including The Allman Brothers, Cheap Trick and The Youngbloods filing a class-action suit right away.

Now it's been reported that Sony Music has filed a motion to settle with these acts, paying around $8 million and raising the royalty rate 3% in most cases, and 4.7% in the case of The Youngbloods. If this is approved, artists who have had at least 28,500 downloads on iTunes will be eligible. Ironically, many acts are choosing not to settle or be part of this action, preferring to file their own suit to get an even better deal.

This might seem like a win for the artists, but consider this. 8 million bucks is a drop in the bucket to a major label, and raising the royalty rate isn't that great either. The digital download cat has been out of the bag for sometime, which means that there won't be that many download sales forthcoming, and the next music distribution frontier is subscription, which pays even worse.

Yes, this seems like a victory, but at the end of the day the artists only received what will amount to a little bump. This isn't the only suit that's ongoing however, and it will be interesting to see if any of the others have endings along these same lines.

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Help support this blog. Any purchases made through our Amazon links help support this website with no cost to you.

You should follow me on Twitter for daily news and updates on production and the music business.

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The Big 4 Become The Big 3...Maybe

Citibank finally found a buyer for EMI and it wasn't Warner Bros, like everyone expected. The venerable company was sold to two companies, in fact - Universal Music and Sony Music. Universal bought the recorded music assets (basically the record company) for $1.9 billion, while Sony purchased the much more lucrative publishing assets for $2.2 billion.

But before the ink is dry on the agreements there's trouble brewing for this deal. European regulators (who are much more aggressive than their American counterparts) have already signaled that they will do whatever they can to block the deal, believing that Universal is already too big and adding another huge piece of the music industry will be just way too much of a monopoly.

The interesting part of the deal is that Sony didn't supply all the money and instead used a network of partners that include an Abu Dhabi investment fund, Blackstone, Guggenheim Partners, UBS Investment Bank and several others. Sony will manage the business under its Sony ATV publishing business, which already owns or administers the publishing rights to 750,000 songs, including The Beatles catalog. What they would gain from EMI is a catalog that contains 1.4 million titles including standards like "Over the Rainbow," and Singing in the Rain."

So let's say that the deal does eventually go through. What are the potential ramifications for the musician and consumer? Like with all purchases of this type, there is some good along with some bad, so here are a few things just off the top of my head.

• Universal becomes far bigger than the next biggest major, which is Sony. They'll be able to dictate to the rest of the business because of their sheer size, for better or worse.

• A new digital music company will find it easier to get licenses because there will be one fewer major to deal with.

• Artists will have one less label to go to if they wish to be on a major.

• What's going to happen to the legendary Abbey Road studios and Capitol building and studios? Will they be sold or run differently? I don't know about you, but this scares me the most.

• How much is it going to sting the UK business community that their only major record label (EMI) was purchased by a French company (Vivendi, which owns Universal)?

While many will decry this sale, there are those artists that applaud it. Mick Jagger, whose dislike of former EMI owner Guy Hands is well-known, said that he "particularly welcomed" the new owners.
"This is a very positive development and I particularly welcome the fact that EMI will once again be owned by people who really do have music in their blood," he said in a Guardian article.

Now the rest of us can just sit back and wait to see if the deal actually happens.

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You should follow me on Twitter for daily news and updates on production and the music business.

Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.

Help support this blog. Any purchases made through our Amazon links help support this website with no cost to you.