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Music Industry Changes

Allen_20JohnstonArticle by Allen Johnston

Today’s music business is heading rapidly toward entertainment industry structural changes, the laws and regulations we use for our everyday business are morphing into a totally new set.  Greater interest in direct digital licensing among publishers, efforts to establish Pan-European licensing and the creation of a global repertoire database are reshaping the landscape being navigated by Writers, Publishers and  Performing Rights Organizations (ASCAP, BMI, SESAC, etc…) worldwide

Outlets, businesses, independent labels and some major labels are not renewing their digital agreements with the performing Rights Organizations (ASCAP, BMI, SESAC, etc…)  A number of large digital music users, including Clear Channel, Entercom and Sirius XM, have negotiated direct licenses with various music labels in an effort to lower the rates that these services pay for music royalties. Future changes in the entertainment industry will include PRO (Performing Rights Organizations) having smaller revenue bases and possibly charging higher percentage rates or even dedicated service charges.

For in-store business music services (also called background music services, or business establishment services), one of the largest companies negotiated a direct deal with one of the largest music publishers – and the negotiated prices eventually were found by rate courts to be the best evidence of the market price, which were used to set the price that ALL players in the market pay to ASCAP and BMI.

We once thought that Regardless of what happens in the digital market, PROs will always have general performance licensing to fall back on because monitoring song plays at bars, clubs and stores requires boots on the ground to track.  Technology is changing that concept by monitoring on line streaming events, “live” and recorded shows and the design of tracking software for cloud storage of music & video files.

New online services now enable the music industry to do business (as never before) by providing the searching, previewing,  license pricing, contracts, invoices and download access needed to foster efficient, professional relationships between the music creators and the industry people needing to license their tracks for an unlimited variety of commercial media projects.

The new music industry has been ushered in with a swift change of leadership and direction.  Many foolish people still hold on to ancient concepts and believe that the Black radio & record community will revive itself.  This is NOT going to happen, for everything must change.  My generation made the music industry an industry of “smoke & mirrors” where companies and individuals were paying thousands of dollars just to tell a LIE about their music.  The reasoning was that a major label would pick them up, pay them and make them a star.  Technology, even though still used to perpetuate LIES, has made several common place entertainment entities completely worthless.

RETAIL PROMOTION – Hiring people that would make sure that your song got Sound Scan reports every week and assist you in “hyping” the charts.  No longer is it necessary for there are no independent records on the charts to be hyped.

RETAIL TRACKING – Seems like there is no one who really cares about where your record is physically or digitally located and what it is doing on a weekly basis.  So there’s no one left who calls retail on a regular rotation.

RADIO PROMOTION – The KING of hype games is still being played but on a much larger, more expensive level.  Today you can pay a promoter $25,000 to $65,000 just to get spins at night, during mix shows and on weekends.  This can get you into the Billboard charts, however you haven’t sold any music and you still have to spend money to have your artist work promotional dates.   For $80,000 – $250,000 you can have your music placed on air (depending on the stations format), BDS (Broadcast Data Service) reported and eventually Billboard charted.  However since NONE of this promotion is truthful you still have to find another way to sell physical and digital product to the masses.

RADIO TRACKING – This was a given job for hundreds of label secretaries and interns, now there are no lists of songs for the station to give out, no one within the station who even makes a decision on music or relationships between the caller and the station.  Independently owned music is not even being played on terrestrial radio under any format except non-commercial.

VIDEO PROMOTION – Who tracks your video plays, has the relationship with the major video television companies or even owns a list of the available television programs to send your video to?  Of course there is You Tube and multiple online outlets, but who knows that your video is on You Tube?

RECORD POOLS – When DJ’s were playing records, then you needed someone who knew the most popular club DJ’s and could get your music to them PLUS get feedback on your tune.  The advent of MP3 technology coupled with the shady, money hungry actions of Record Pool Directors has made this type of company totally unreliable and unnecessary.   The reasoning behind even having a Record Pool was to give unbiased feedback directly from the “end user” (audience), today your feedback is coming from Facebook, Twitter, Reverb Nation, You Tube, etc..

INDEPENDENT RETAIL STORES – Sure there are still a few stores left in certain neighborhoods around the United States, the biggest transformation is that they are selling music as a sideline.  Their front line business is clothing, drug paraphernalia, household accessories or hair care products.  An extremely few specialty stores are making Sound Scan reports, but most of those can be bought and have no honest relevancy.

BILLBOARD – The Billboard charts were once used as a list for the record retailer to purchase from.  Customers would come in, look over the list, normally posted on a wall or bin, and make their purchases. As a record label you had to chart your record to justify sales, improve airplay and get wholesalers to pay you what they already owed you.  It truly was the bible of the music industry.  No longer is it necessary to “climb” the charts to become a musical success.  The “bible of the industry” has become the “comic book” of the major labels.

INDEPENDENT DISTRIBUTORS – These are the wholesalers that operate as middlemen between the label and the retailer.  Because the chain system (Best But, Target, K-Mart, etc…) now controls the majority of sales of recorded music, these distributors have a much tighter and smaller inventory and some malicious games for the label.  As a label you must pay for distributors’ promotion, marketing, place and positioning within stores, special programs and if your product sits on the wholesalers’ floor more than 30 days you pay for storage.

ONESTOP – a smaller wholesaler that has almost disappeared from the industry landscape, while most were specialty record orientated there inventory was never large. The majority went out of business based on outstanding debts coupled with mobile music trading, purchasing, streaming and video.

I am truly glad for the change that has over taken the music industry.  Today you can own your music completely and sell directly to the consumer without any middlemen.  By the way, for all you old timers that wishes for the good old lying, hyping and buying reports days to come back.  Keep dreaming.

6 thoughts on “Music Industry Changes

  1. Nice overview of current state of the industry. I also agree with you optymistic direct marketing conclusion.
    New era will start and global music store will gain the walls when billion plus users of Shazam and other music ID services will b converted to buy-only mode. Today Shazam and friends plonder the Music House and keep the music in the open. The only hope is in
    Instant Discovery Moment Monetization powered by over billion users of currently wild and lost music ID services.

  2. Hi !
    Thanks a lot for that optimistic article. Fresh and clear. Got a question though, you talked about ” the creation of a global repertoire database”. Could it be possible to have a link to some information about that ?

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