Moses Avalon, Author at ALARM

Moses Supposes: NAMM Slam 2012 — Can 92,000 be wrong?

Moses Avalon is one of the nation’s leading music-business consultants and artists’-rights advocates and is the author of a top-selling music business reference, Confessions of a Record Producer. More of his articles can be found at www.mosesavalon.com.

Generally, NAMM is described by me as a 100,000-square-foot Guitar Center with about 70,000 people playing “Stairway to Heaven.”

Not this year. Aside from a record-breaking 92,000 attendees, NAMM has grown with the times, expanding from mere trade show to conference, power broker meet-‘n’-greet.

Moses Supposes: SOPA opera and the anti-music media bias

With piracy affecting all areas of commerce, why does it seem like only the music biz is whining? Well, because the mainstream media is only “reporting” about them and ignoring the massive extra-music industry support for SOPA. But why? Is SOPA really such a huge threat to media outlets’ revenue that they would sell out on a bill that is designed to keep themselves alive?

The other day I read a story about how the E-book trade is being rifled by piracy. The journalist postulated that the reason pirates have been ripping and burning E-books is because the public doesn’t want to pay the “high price” offered by Kindle, Nook, Kobo, etc. A reader posting in the comments section sympathized, hoping that the “fledgling” E-book trade would not be too badly hurt by piracy. Then a lawyer for a website that sells counterfeit designer handbags and is presently under indictment was quoted. He defended his client with intimations that the world is entitled to designer style without paying designer prices.

High prices causing piracy? Entitlement to quality goods and services? It all started to sound familiar. Where had I heard these defenses to theft before?

That’s it!! The music business! According to just about every paper and blogger, those bastards are charging $15 for one song. No, wait, it was $15 for 12-15 songs, but only one song is good, right? No, wait, it’s the record company’s greed that makes artists release only one good song on an album. Wait, I’m starting to get confused again, because someone smart once taught me that theft had little to do with the quality of content; people steal bad records too, right? (Britney Spears was one of the most illegally downloaded artists at one time.)

I thought theft was caused by a person not wanting to pay for something they perceive they have a need for, or a right to. Yeah, that rings true.

Now, can you imagine these same absurd arguments of “high price = theft” being printed about any other industry but music?

Moses Supposes: Goodbye, Edgar; We Hardly Knew Ya

Is the Bronfman exit the sign of great things to come in the record biz?

So Warner Music Group chairman Edgar Bronfman quit. Who cares? Well, I do, and so should you if you’re an artist or anyone who services one.

I never met Mr. Bronfman. The closest I came was to sit a table away from him at an awards function years ago, and here is the embarrassing part: I didn’t even know it was him.

Ed changed the music business, and though we could argue for another ten years as to whether he changed it for better or worse, the truth is that it’s now irrelevant, because it’s his departure and this particular time that has meaning. Now that the most significant (albeit not the largest) label, Warner, is in control and positioned to be the most influential distributor in the game, what is the Russian guy who bought it gonna do? He’s going to clean house as step one.

Ed didn’t just quit. He was fired. Not with a pink slip, but by the natural merger and acquisitions attrition of a golden parachute and planned obsolescence. If you didn’t see this coming, you’re not paying close enough attention to the recent music-biz math.

Moses Supposes: The big opt-out — Steve Jobs’ E-mail from the other side

I was not really affected by the death of Mr. Steve Jobs until the other day when I got an E-mail from him — about a week after he passed. Well, clearly it could not have been from him — he’s in an important meeting right now, I’m sure — but rather someone at Apple cleaning up his affairs.

As many might know, Steve did not believe in putting many layers between him and his customers. For several years well into his worldwide fame, anyone could E-mail him at steve@apple.com. And for about six years now, that addy and another that led to his inbox have been on my mailing list along with the other 14,000 (+/-) of you all.

It seems he’s carrying this policy of staying in touch, even in the after life.

Moses Supposes: “Termination of masters” — bringing new life to classic recordings or helping us lose them forever?

Many artists claim that, given the opportunity, they would take back their recordings from their money-grubbing labels. Well, hundreds of acts will get that chance soon. Recently, the subject of “reversion of masters” surfaced in the New York Times. But when push comes to shove, many artists might opt to keep their hit recordings right where they are.

This excerpt is based on a chapter from the latest book by industry expert Moses Avalon, 100 Answers to 50 Questions on the Music Business.

While many in the music space have known about the coming copyright Armageddon (known as “reversion” / “termination of master rights”) for several years, most artists still have no idea exactly what it means for them and what they can do about it. Though the idea of artists taking back their classic recordings might seem great, given that many feel mistreated by their labels, my bet is that the “devil you know is better than the devil you don’t” philosophy will prevail when the time comes. Here’s why, and a brief guide to help with this decision.

First, what is reversion?

The Copyright Act states that after 35 years, the license or transfer of a work to a publisher (or label) can “terminate” and revert back to the original author. Under that law, artists who recorded material after January 1, 1978 are eligible to reclaim their masters in the year 2013. If the copyrights were created/transferred in 1979, then they are eligible for reversion in 2014; if created in 1980, they are eligible in 2015; etc.

Sounds simple, but for those that recorded/released prior to 1978, things get a bit more complicated. Copyright law has changed several times from 1972 to the present, resulting in several important exceptions to the “termination of masters” provision. For example, because of the change in law that occurred in 1978, artists whose recordings were registered between 1972 and 1978 will need to wait 56 years before they can reclaim their masters; and artists whose masters were recorded before 1972 can never reclaim their masters, because — believe it or not — no sound-recording copyright existed before 1972.

To make matters even more confusing, the window to submit a “termination of master” claim varies in length for each of the zones listed above. Ugh!

With so many variances in the law, we really need a computer to keep track of what masters will become available (isn’t there an app for that?) — especially when one considers that the albums immediately affected are some of pop music’s most successful recordings.

Moses Supposes: Major labels brace themselves for loss of their most popular catalog in 2013

The Mayan calendar claims that the world will come to an abrupt end in 2012. We have all heard the hype and suffered through the movies. But even if that prediction falls flat, the pop-music business may still experience its own armageddon shortly thereafter. Are these just the ravings of another music-industry expert flying off the rails? Let’s see.

In 2013, many classic recordings are scheduled to slip out of the control of their major labels. No, I’m not referring to odd recordings that no one actually collects. This list of records includes some of the top-selling albums of all time (abbreviated list below)!

Even though music-business insiders have been dreading this for years, the New York Times finally decided that it was a newsworthy enough subject and published a piece a few weeks ago about this issue (called “termination of masters”). Unfortunately, the reporter they assigned seemed to a have limited understanding of how the music business really works, as well as of copyright in general. In his article, he kept interchanging the word “songs” with “master recordings,” which littered his post with inaccurate statements like, “artists can claim their songs in 2013.”

Though this New York Times piece may be new info to outsiders, it is a subject that has long been on the minds of those concerned with the recording industry and artist rights. I reported about the subject in a 2008 Moses Supposes article. Here’s the reprint for your perusal:

Mayan meltdown at majors

The hot topic for the American Bar Association conference in 2008 was “termination of masters,” a little raison d’etre in the copyright act that supposedly levels the playing field for authors who are often at a disadvantage to the big, bad publisher (or record company, in this case). The copyright act states that after 35 years, the license or transfer of a work must “terminate” and revert back to the original author.

Moses Supposes: Why you should think twice before joining ASCAP or BMI, part III: Who pays more?

In Part I of this three-part series, I addressed the key question: Should you bother to join either PRO? Part II dealt with the fallacy of ASCAP and BMI’s self-postulated “nonprofit” status BS and the PR they spread at trade shows as to why this makes them better than SESAC. Here in Part III, we’re getting to the bottom line: Who pays more?

But first…

Let me start by making one thing perfectly clear: Even though this entire three-part series has been about vetting the sales pitches, organizational structures, and payment methods of the two main US-based performing-rights organizations (PROs), ASCAP and BMI, the economic viability of the writers of popular music would be endangered, and the music business in general would suffer, without them.

The PROs, aside from collecting money for writers and publishers, also support the music community by giving grants to charities and helping writers get loans and receive healthcare benefits. They also go to great lengths to ensure that writers get paid their share of royalties, even if a writer is un-recouped with his or her publisher. These services have an important impact on our community and deserve recognition and consideration. But you can read more about these good deeds on their websites (here and here).

Here’s what you wont read…

Who pays more?

When it comes to up-front money, BMI has been known, on rare occasions, to offer non-recoupable advances (called “guarantees”) to superstars, whereas ASCAP is emphatic that it will not ever give advances, because it claims that its internal policies won’t allow it. However, it is no secret that it has, in fact, given recoupable advances in the multiple millions of dollars to several of its superstar writers.

So on the advance side of the argument, BMI wins, hands down.

The case for who pays more when it comes to dispersants, however, is where it gets amusing. Reps from both PROs make the claim that they pay the same as the other. However, this is about as truthy as the public policies regarding advances. There are myriad songwriting teams where each member was signed to a different PRO, yet their checks for the same song in the same pay period were very different. The fact that this happens with some degree of frequency begs the question: How can any discrepancies occur between them if they are, as commonly referred to, like Coke and Pepsi, and function identically?

There are two factors that help explain the why their payments can be so different:

1. How much does the PRO actually spend to collect your money?

2. What method does the PRO use to calculate what it owes you?

We covered the first point in the first two parts of our series (part I / part II), so let’s look at the second point listed above. To do that, we have to look at the PROs’ “pooling system.”

Moses Supposes: Why you should think twice before joining ASCAP, BMI, or SESAC (Part II)

In part I of our three-part series, “Why You Should Think Twice Before Joining ASCAP or BMI, or SESAC,” we covered the basics of why you might be better off waiting to join one of the PROs. In part II, we are going to examine the widely held belief that these performing-rights organizations are “nonprofit” entities, and how this fallacy affects the way that they both operate. And while we’re un-spinning that, we’ll learn a thing or two about actual nonprofits that might surprise you.

On any music-business panel where the PROs have a presence, this question always comes up: “Why should I join ASCAP/BMI instead of SESAC?” Reps from both ASCAP and BMI will robotically respond, “Because unlike SESAC, we’re a nonprofit organization.”

Is that true? If so, does being a nonprofit mean that you, as member, will get more cash? What if it was all a lie? All of it. Would that lie make you leery of other claims that ASCAP and BMI make about your benefits?

It’s not too hard to figure out why someone would claim to be a nonprofit; when people think of nonprofits, the word “charity” is usually not far behind. It also fosters the image of employees flying coach, eating bag lunches, and working tirelessly at a thankless job.

But, in truth, ASCAP and BMI are among the richest entities in the music business.

What exactly is a “nonprofit”?

From the IRS’ point of view, “nonprofit status” means one main thing: after you pay all of your expenses, any remaining money must be paid out to your members or your cause, thus leaving no “profit” left to distribute to stock holders — or anyone, really. This is true, even if you have 99 cents worth of expenses on every dollar that you make and give only a penny to your cause. The caveat being that it must be 99 cents worth of “legitimate and necessary expenses.”

ASCAP claims to have the highest cost/payout ratio (called a “cost/benefit ratio”) of any PRO in the world — 13.5 percent — meaning that 86.5 cents of every dollar that it collects goes to its members. BMI claims on its website that its overhead is only 15 percent, meaning that 85 percent goes towards its members.These are acceptable percentages, comparable to any legitimate, tax-exempt nonprofit charity. Save the Children, which pipelines donations to underdeveloped nations, has a similar cost/payout ratio, so it’s no surprise that the PROs would emulate that type of organization.

ASCAP and BMI both claim that after covering their necessary expenses, they pay out all remaining money to their members, leaving no “profit” at the end of each year. But what do the PROs consider “necessary” to spend your money on? A few facts:

– The CEOs of both ASCAP and BMI receive annual compensation well into the low seven-figures. Executives are paid quite well too.

– Both have offices in prime real estate in Manhattan and Los Angeles, where cumulative rent approaches millions of dollars per year.

– Both throw lavish and expensive parties designed to rally new members and give away huge cash awards.

– Everything listed above costs each PRO about $100,000,000 per year in “expenses.”

Big parties? Huge salaries? Fancy offices? A hundred million bucks a year in overhead? Does this sound like a charity or any nonprofit that you are familiar with? Are any of these expenses truly “necessary” to collect performance fees that are due them by law?

Moses Supposes: Why you should think twice before joining ASCAP, BMI, or SESAC (Part I)

It’s one of the top-10 questions that I’m asked: ASCAP, BMI, or SESAC — which one should I join? Here’s a rock-‘n’-roll answer: How about none of them? At least not right away.

All of these competing performing-rights organizations (PROs) spend a great deal of their members’ money selling “belonging,” as if there is an immediate benefit to membership, like collecting money that they have been holding for you. But experience indicates that you’d be better off waiting to sign with any of them. Wonder why? Here’s the truth about PROs in this three-part series taken from Moses Avalon’s latest book, 100 Answers to 50 Questions on the Music Business.

ASCAP (American Society of Composers, Authors, and Publishers) and BMI (Broadcast Music, Inc.) — often called the “Coke and Pepsi” of performing-rights organizations — will both tell you that it is irrational not to join one of their organizations. They collect the bulk of all the performance royalties in the US, and will assure you that you cannot get your share unless you are a member.

In their pitch, they will make it sound as if your music is already out there earning money, and the PRO is just holding it for you, like a bank, waiting for your application. But the truth is that unless you write a hit song or a soundtrack for a TV show like The Simpsons, you are unlikely to see any significant royalties, even if you are a member.

That said, the real question is not whether to join, or which one to join, but rather when the right time to join either ASCAP or BMI is. (SESAC is by invitation, and so the pros and cons outlined here are not really applicable.)

Many people who are new to the industry think that they should sign with one or the other as soon as they can. The lavish events that both ASCAP and BMI host make one think that joining means there is an immediate chance to collect money. This is not true. Even if you are a member, you only get paid if:

1. There is money to collect for your musical works, and more importantly…

2. You meet their requirements to receive money after you join.

Moses Supposes: The “Vegas” Odds of Success on a Major Label

It is a known fact that many acts get stuck in limbo once signed to a major record label, neither being released nor advanced to the next level. How many of the acts that majors sign ever actually get released or make a second album? Does staying indie increase the odds of commercial success or keep them about the same? The following answers, from the new tell-all book, 100 Answers to 50 Questions on the Music Business, by music business veteran Moses Avalon, are real eye-openers.

In Las Vegas, the odds to each game are readily available: roulette, 33:1; blackjack, 1.5:1 (if played optimally); craps, anywhere from 2:1 to 9:1. But what about the chances of getting signed and having a successful career recording albums? Sure, there are a lot of factors — like talent — but what about the raw odds? The “Vegas” odds?

I did some research and was intrigued to find that there are no published stats on this. Here, perhaps for the first time, are the Vegas odds of going major verses staying indie. (Update: While tweaking this piece, a new article came out on Music Think Tank with more data on this subject.)

*Note: All math equations are noted by a number in parentheses (#), and the equation is at the bottom of the post. I do this to maintain the narrative flow. (Also, I hate math.)

Getting Signed

According to my sources at the various major labels, each year, approximately 43,000 demos are sent to the 35 major labels. (Up from about 30,000 10 years ago.) I consider these 35 labels “major,” as they are directly connected to the four major US distributors or their affiliates. Out of those 43,000 demo submissions, a total of about 30 (down from about 150 in the early 2000s) get that rare multi-album deal of yesteryear, which includes a large advance and all the perks. But if you count all the demo, development, P&D, and various forms of 360 and licensing deals, it adds up to about 1,000 new deals each year. It’s not an even split. Between Universal, Warner, Sony/BMG, and EMI, it can get pretty lopsided, with about 500 deals parsed throughout the massive family of Universal labels alone.

So the Vegas odds of even getting signed to one label, if you submit your demo to all four major labels, is about 1:42. Just a little bit worse than playing double-zero on the roulette wheel. But now, let’s drill down.

Moses Supposes: How can artists collect foreign-radio income right now?

You have money sitting in bank accounts in European and Canadian rights organizations. Why are you not trying to get it? The following is a sample chapter/excerpt from the revolutionary tell-all book by music business veteran Moses Avalon called 100 Answers to 50 Questions on the Music Business. Enjoy.

What money? My money is in a foreign bank? Oh yeah — a lot of it. In fact, though you could wait years for royalty checks from US labels, there are foreign agencies (and yes, Canada is a foreign country) that have cash for you now, if you know how to get it.

Unlike the US, just about every other country pays both the record company and the artist when their recording is played on radio and TV. In the US, we only pay the songwriters. (This will change when we are able to pass the Performing Rights Act. But in the meantime…) The key to getting this sound-recording money comes in understanding a term called “Neighboring Rights.” As the term implies, this is money for rights that neighboring countries owe to authors of phonorecords and is collected by Neighboring Rights Organizations (NROs). They are like ASCAP, BMI, and SESAC, except they collect money for the sound recording instead of the composition.

So if a German artist has records playing on French radio, the French NRO collects the money from the French radio stations and pays the German NRO the performance fees. The German NRO then pays the artist/label in their territory.

These warm and friendly rights are a creation of an international treaty called the Rome Convention, which was adopted in 1961. It protects artists and producers of sound recordings against unauthorized reproduction. It also covers certain “secondary uses” of music recordings, such as broadcasting.

This simply means that it creates a revenue stream that must be paid to the producers, labels, and artists of sound recordings when they are played on the radio. Sounds great, right? How come I haven’t heard of this, and where can I get some? Well, there’s just one problem. Two actually. 1) The US hasn’t passed the Performing Rights Act yet, so we still don’t pay artists like the rest of the world, and 2) The real depressing news…the US didn’t opt into the Rome Convention.

Moses Supposes: Why your music career needs a music-business plan

You’ve heard it before: “It takes money to make money.” But getting start-up capital requires more than just talent. It means learning to communicate with investors. A business plan is a basic requirement. Sadly, the daunting task of creating one keeps many musicians from their well-deserved success. How can artists, who are not known for their business acumen, get past this major hurdle without blowing their start-up budget or feeling like corporate beggars? Here’s how.

The following is a sample chapter/excerpt from the revolutionary tell-all book by music business veteran, Moses Avalon, called 100 Answers to 50 Questions on the Music Business. Enjoy.

I’ve heard it over and over again from my younger clients: “Do I really need a business plan?” Simple answer, yes, you do…and yes, I know this sucks. This is the part where they start bargaining with themselves: “Why do I have to write this down — isn’t it obvious how we intend to make money?” Another simple answer: no, not to your would-be investors. Their exposure to the music business is probably the mainstream press, who tells them the industry is crumbling.

Over the past few years, even major labels have had to justify costs and income projections to their stockholders with written business plans. So why shouldn’t you?

You have a great product (your music), but you need to think of your act just as any other start-up business. With banks failing and our economy in a state of trauma, your potential investors are scared out of their minds about what to do with their money. If they are even considering investing in a musical group, then they are brave. You need to make them comfortable.