Universal Music Group To Present Virtual Reality Concerts

There's no doubt that virtual reality will be a hot item this year, but so far most of the attention of VR content has been around games, and to a lesser extent, movies.

Universal Music Group (UMG) believes that VR extends to music as well, and has teamed with online radio giant iHeartMedia to create a series of of 4 virtual reality concerts in the upcoming year.

Indeed, VR and music seem like they're made for each other, especially when coupled with an immersive audio technology like binaural or 3D headphone surround. That said, UMG's shows are very much in the planning stage, and few firm details have been revealed except that the shows will be shot at the iHeartRadio Theater in Los Angeles later this year.

In addition to the 4 full-length shows, UMG will also shoot at least 6 short-form "experiences," presumably music videos, in VR throughout the year.

The first attempt at a VR showcase apparently will be the iHeartRadio Music Awards on April 3rd, but other events thought to be in contention include iHeartRadio's Country Festival, Summer Pool Part, Fiesta Latina, Music Festival and Jingle Ball Tour.

iHeartMedia is a perfect partner for UMG in that it has around 245 broadcast listeners and another 90 million online each month.

Although I predicted that virtual and augmented reality headsets would set Christmas on fire, it appears that projection was a little premature - but not by much. Look for VR to be the next killer app for both audio and picture this year.

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Should Artist Royalties Be Private?

There are so many things in life that are meant to be private yet turn up before the public. Executive salaries, artist contract riders, tax returns, rehab, criminal and medical histories are just some of what comes before our eager eyes on a daily basis. There's a school of thought that says that a celebrity's total life should be totally open to whatever scrutiny the public desires, since that's what the artist signed up for in the first place. Others believe that some things are sacred in their privacy, regardless of how popular you are.

One of these privacy battles is now being played out in the class action lawsuit against Universal Music Group over digital income. After the successful appeal by Eminem's production team against UMG in 2010 where the court agreed that a digital download was subject to a license fee rather than a royalty, other artists like Rob Zombie and the estate of Rick James were quick to sue UMG in order to gain the same advantage. After all, earning 50% of the license income from a download is far better than the 15 to 20% a royalty would generate.

The real problem comes from the fact that the attorneys in the matter want UMG to turn over the sales and royalty data from other artists not involved in the suit so they can have enough information to calculate the damages. UMG has balked, more from the standpoint of self-preservation rather than a defense of their artist's privacy rights. It's now up to a judge to decide.

The problem is that each artist has a slightly different contract, and of course, their sales are different, which makes you wonder just how useful the data would actually be even if turned over.

While various approximations of artist sales have always been around, the exact numbers have always been somewhat of a mystery, sometimes even to the artists themselves. While definitively determining that number might not be such a bad thing, having the terms of one's contract available to someone else's prying eyes can only open up a can of worms for all concerned. Sometimes things are better off left private.

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Unions On The Side Of EMI Sale To UMG?

Here's a head scratcher. Both SAG-AFTRA and the American Federation of Musicians (AFM) have endorsed Universal Music Group's planned purchase of EMI. UMG, if you recall, has been trying to purchase poor bankrupted EMI since the beginning of the year, but is running into some anti-trust sentiment both here and in the European Union. What this will ultimately mean is that we'll soon be down to 3 major labels from 4.

In an effort to sway the U.S. Federal Trade Commission, the AFM sent a letter to it's chairman Jon Leibowitz stating, "Sustaining the EMI legacy [by Universal] would appear to benefit AFM recording musicians." SAG-AFTRA stated, "For EMI to be left to further drift into oblivion, or for EMI to be acquired and sold off in pieces by capital investment speculators with no appreciation for, or commitment to, artists who fuel the recording industry, would ill serve the industry."

It seems to me that some old schoolers are just trying to keep some other old schoolers in their jobs just a little while longer. Here's why this strikes me so odd:

1) The AFM is really only for that thin strata of session musicians or musicians that play in an orchestra. It benefits the 1%, but in this case the 1% aren't actually the top earners. The days of the session musician doing 3 gigs a day are over (it's more like 3 a month now, if that), and the number of orchestras are shrinking. Why the AFM would think that keeping a company alive that never did give a rat's posterior about them in the first place is beyond me, and endorsing a company that would cut them off in a flash if a had a chance (and currently does anything to get around paying them, as they all do) is delusional. They actually think that by keeping the majors alive that it will mean more work for their members.

2) I can't see why SAG-AFTRA would even care about what happens to a major label. It doesn't directly benefit their members, and since there's so little soundtrack business these days, what's the point? To think that breaking up EMI would hurt the industry is absurd. Sad, yes, that such a storied institution should die, but let's face it, they had ample chance to right the ship yet kept putting new holes in it instead of plugging up the old ones and building a better one.

3) Oh, maybe it's the publishing deals that the unions are worried about. You know what? There are plenty of big publishing entities still around and for the most part, they're doing just fine. Having EMI publishing disappear (which it won't, it's too valuable a brand and Sony is buying it anyway) wouldn't be the end of the world.

Look - major labels will always be around. If not the ones we have now, then some new ones will arise. There will always be a need for them as they serve a purpose in that they have the unique infrastructure that can turn a star into a superstar. But the music business is morphing, evolving, changing, transforming, reshaping - whatever you want to call it. The sooner we get some new entities who are responsive to our new Music 3.0 age (since the old wants don't want to change), the better off we'll all be, and the music business will be better for it as well. That's when we'll finally see some real growth in the business.

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UMG Does Their Own Takedowns

One of the hard things for most people to realize is that they don't automatically have the right to use a song in a video, even though it might be as simple as your six-year old singing "Happy Birthday" or a bunch of school kids singing "Rudolph The Red Nosed Raindeer" at the school Christmas play. The copyright to these songs are not public domain, therefore you have to pay their respective record labels and publishers for their use, regardless how trivial that use may seem.

But still millions of people put videos on YouTube every day of themselves lip singing to "Born This Way" or "Party Rock Anthem," but the publisher and/or record label has the legal right to ask YouTube to take these videos down. In fact, most record labels now have teams that do nothing but scour the Internet for just these sorts of copyright violations.

That said, YouTube is very good about complying with a takedown request, as evidenced by numerous videos that are here today and gone tomorrow. YouTube is not actually liable as long as they don't upload the videos themselves. If someone else does, they're in the clear.

Even though YouTube is very liberal with takedown requests, they seem to have given Universal Music Group unusual leeway by allowing them to directly remove any video that they don't like themselves. According to an article in techland.com, there's "an agreement between the company and YouTube that allows UMG to use a “Content Management System” that can remove or “file block” certain videos on the site if it finds them objectionable. The agreement in question is not public, meaning that no one outside of those companies knows exactly how long UMG’s reach within YouTube actually is."

Here's the scary part. Does UMG have the right to control what videos YouTube allows on the site, even if no copyright infringement is occurring? Does that mean it can block it's competition if it wants to? Does that mean it can take down a video even if it has nothing to do with UMG? What happens if it makes a mistake?

As an artist myself, I'm all for protecting copyright, but I find it disconcerting that a major label has this kind of power. YouTube is already very good about acting on any copyright violation request, and they do it fast (I've done it myself). But UMG's new powers can be deadly in the wrong hands.

There's more to this intrigue as UMG and the cloud site Megaupload continue in a battle over just this issue, so it will be interesting to see what the new year brings.

Happy Holidays everyone!

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Marvin Gaye's Facebook Campaign

If you ever had any doubts about the wisdom of promoting on Facebook, look no further than r&b singer Marvin Gaye. Even though he's been dead for almost 30 years, MG’s become a viral sensation right now. The reason?  Universal Motown, Marvin Gaye’s record label (which was pretty much gutted by parent UMG recently - but that's another story), recently launched a successful Facebook campaign to celebrate the 40th anniversary of his What’s Going On album where the campaign asks fans to post photos of “What’s going on” all over the world.

Fans have responded by loading photos, videos and even editorials, but more important, the campaign drew more fans that I think even Motown thought could happen. Gaye began with fewer than 300,000 fans at the beginning of the week but had increased to more than 940,000 by today. Gaye’s name even became a trending topic on Twitter.

Granted, MG has a legion of built-in fans, but the fact was that they were mobilized and made aware of the new release thanks to the social media campaign. The lesson? Don't take social media promotion lightly. It's been shown to work and work well time and time again.

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The Serious Ramifications Of The Eminem Lawsuit

As stated in the last couple posts about this subject, the Eminem win in court over Universal Music Group (UMG) would have some serious ramifications on the major labels at some point. It looks that point is now.

To catch you up, Eminem's production company sued UMG over how the royalties were computed for digital music. They suit hinged on whether a download is a treated like a record royalty or license agreement. The difference is that in a record deal, the record label manufacturers the product (CDs) and pays the artist a royalty of anywhere between 12 and 20% of the wholesale price. In a licensing deal, the record label provides the licensee (such as a distributor in another country producing CDs) with a master, and they in turn manufacture the product. The record label and the artist split the proceeds from the license deal 50/50.

Since in the case of digital downloads, a label doesn't actually manufacture anything and provides the user with a master, it sure looks like a license and the court agreed.

UMG originally won the case but lost the appeal, meaning that the court agreed that a download is really a license rather than a sale, awarding FBT (Eminem's production company) the right to collect a lot more money, reportedly as much as $30 million. The irony is that Eminem declined to be part of the lawsuit so as not to make waves with UMG, so he might not see an extra dime.

As predicted, more classic artists are coming forward to sue UMG. First came the estate of Rick James, then last week Rob Zombie, White Zombie, Whitesnake and Dave Mason filed a class-action suit against UMG in the United States District Court in San Francisco.

Supposedly a number of attorneys for other UMG classic acts are preparing lawsuits as well. As predicted, this will change the music industry in that the major labels don't have enough money as it is, and they'll all be in serious trouble if big payouts are necessary. That said, some artists are afraid to engage in a battle with a major label, especially if they depend upon royalties from their catalog. There's enough accounting shenanigans that goes on with labels already, and many artists are wary about giving them an excuse for more.

A suit by artists signed after about 2003 won't happen however, since the labels put language in the all contracts from that time on that clearly specifies that a digital download is a sale.

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The Court Decision That May Change The Music Business

There's just been a decision by the United States Supreme Court that may have major financial implications on the major record labels that could very well push some of them over the edge into insolvency. I've been reporting on the legal battle between Universal Music Group (UMG) and Eminem's FBT Productions for a couple of years, and it now looks like the case has finally been decided in Eminem's favor. Here's the gist of the decision and why it's important.

FBT brought the suit against UMG stating that a download sale shouldn't be treated like it is in a normal record agreement, but as part of a license deal. The difference is that in a record deal, the record label manufacturers the product (CDs) and pays the artist a royalty of anywhere between 12 and 20% of the wholesale price. In a licensing deal, the record label provides the licensee (such as a distributor in another country producing CDs) with a master, and they in turn manufacture the product. The record label and the artist split the proceeds from the license deal 50/50.

FBT contended that since UMG was only providing a master to an online distributor like iTunes or Amazon, and the distributor was manufacturing the product (in this case making a copy of a digital music file), all online sales are in fact license deals and should be paid as such - at a 50% rate instead of 12% in FBT's case.

You can see the financial implications here. If FBT won, not only would UMG owe them a ton of money, but every other artist at every other label would then sue for more money using the case as a precedent. The entire major label economy would be rocked!

UMG won the first round of the case, but FBT appealed and had the ruling overturned. Then UMG essentially appealed the appeal and took the case to the US Supreme Court for a ruling. The Supreme's refused to hear the case though, and sent it back to the 9th Circuit Court of Appeals to determine the damages.

There's some speculation that this is at least a $50 million decision for Eminem and FBT, and every other major artist will now go back to their record labels with their palms open wide. Lady Gaga and newer artist's will not have this ability however, as labels have since tightened up their contract language regarding downloads, but anyone with an older agreement can probably expect some dough.

The reactions from the industry over the next week or so should be very interesting.

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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.

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