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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.

English · Tips

The Greatest Lie Told This Generation

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Article by Allen L. Johnston 

As I travel from city to city, country to country having speaking engagements at schools, universities and on conference & seminar panels, I have found that the current generation has one great misconception.

THE GAME IS TO BE SOLD AND NOT TOLD!

One popular school of thought is that the information on this industry is so valuable that it should be expensive to obtain.  This is a position easily taken by the many” seminar hustlers”, conference organizers and independent business owners with questionable practices who make a living on selling access.

These very same people now have a generation believing that the entire entertainment industry is built on service organizations & companies that care less about your project and more for your continuous monetary payment.  Their goal is to get you into a contract where you are paying for services that have little or no effect upon your career.

I want to tell you today about some changes that have occurred without notice within the music business.

  1. RELEASE DATE – Once upon a time this was a cherished word ultimately meaning that a date had been planned when your music would be released to the stores for sale. To make this happen there would be thousands of dollars spent in marketing plans, sales programs, advertising and salaries.  Tour expenses had been approved and the artist probably al ready had a major budget video shot with airplay and TV advertising run.

Today the Internet has made the term Release Date virtually disappear by offering direct access to the consumer.  Most independent artists are trying to get as many songs as possible in front of as many people as possible so they can start selling themselves doing shows, merchandise and anything else that can make them a living.  Sales programs have been regulated to the major 4 stores, Wal-Mart, K-Mart, Target & Best Buy and this doesn’t even take into consideration iTunes and the Internet.

  1. INDEPENDENT PROMOTER – This is a real lost to many within the recording industry.  Here were the Kings & Queens of the record business.  The people actually dealing directly with the radio station personnel and making the deals that would get records played, promoted on-air and eventually place the artist in the market doing a show.  A good record promoter could command a 6 figure salary for themselves and a 7 figure budget for the promotion of the product.  These were the Knights Templar of the recording business not only bringing airplay home to the major labels, but also being able to rectify problems between artists, labels and radio.

Consolidation, National & Regional consultants, corporate advertising and governmental politics made this job start to dry up.  Add onto that the unscrupulous individuals that take your money promise you a group of stations or an individual radio station and then find reasons to say that you are at fault for making the song NOT get played. The Independent promoter is now history totally ineffective at creating radio spins on any major chain of radio stations.

  1. RECORD POOL –Pools were created to receive music FREE from the record labels and charge the DJ’s to have access to the music.  As part of the service of being the mediator from streets to corporate the record pool had each one of its members give written feedback on every song that they attained.  For this the pool directors were treated royally by the record labels, given trips, free admission to conferences, and other perks.

This phrase has not disappeared but only morphed into something entirely different than its original context.   Now record pools charge the RECORD COMPANIES to place their music within the clubs of the specific membership.  Record pool directors and upper echelon pool personnel have become quasi-Independent promoters and are charging enormous fees to place music on radio mix shows and occasionally on the air for a limited time. (Make it or Break it)  This is really a travesty for many of these people have no business acumen, formal training or scruples.

  1. CHARTS – A sacred word among major label executives and a magical word for independent record companies.  Being on the charts meant that you were popular, making spectacular sales and probably had a record that was destined to give the artist the ability to perform in regional and national tours.  The bible of the Industry was Billboard with R&R running a close 2nd.

Chart position today is a farce at best, not signifying massive sales.  For example this week’s #1 album in the country sold 166,000 a far cry from the weekly sales of over 600,000 common just a few years ago.  The #5 record on the Billboard Top 200 albums chart only sold 55,000 and has a grand total of 551,749 for 18 weeks’ worth of sales.  I don’t even know anyone outside of a major company that evens subscribes to any of the trade magazines.  But even more critical is the concept that new artists still believe that if you are on the charts than you will get some type of preferential treatment within the entertainment industry.  There are now Chart Promoters that will take your money and promise you position on a major record chart, even though you don’t deserve anything.  Please don’t think that your record is the only “hyped” record on the charts and this helps make the charts useless

The other school of thought remains rooted with tradition and history claiming the industry information should be free so that our offspring’s can learn faster with greater knowledge and less mistakes.

The actual cost of information sharing is getting lower and lower all of the time.  Years ago you would have to find a conference or seminar to attend, pay your expenses, pay admission and then research the people that you wanted to meet just so you could sit with them and hear “first hand” the knowledge you desired.  Follow up phone calls, mailings, and physical trips kept you up to date and in tune with the industry.  Today all you have to do is pick up an electronic device, surf the web and immediately acquire information, contacts, knowledge and opportunities.

Information is readily available in many different countries and languages, what this generation seems to fail to recognize is the WISDOM to know right from wrong and the ability to interpret the information for their betterment.  Because you want someone to hear your music, pay you money, make you a career and all you do is perform, is the primary reason you are destined for failure.  Creating a true business environment that includes a plan for growth using multiple revenue streams is a path to long life.

Today I am telling you that this business model has changed entirely.

People are interacting with one another at an alarming rate, passing information, audio, video and business files around without any funds being transferred globally.  The ability to reach your customer directly is causing a new business model and governments plus private industry are adapting rapidly while many in the public sector continue the 1980’s practices.

Russia is now scanning, cataloguing and placing ALL of the books found in their library system online.  This is not only Russian literature, but English, French, German and more.  Africa, India, China and other third world countries within a few years will have major penetration on the World Wide Web allowing access to their collective banks of information and knowledge.  Effectively this will mean that the world’s knowledge will be OPEN to anyone that has an Internet connection for FREE.

We once knew that you had to have a distributor to sell your products.  We put up with paying distributors to ship, house, and even communicate with our companies.  We signed contracts with distributors allowing them to make advance money from our projects if they became a hit and were “picked up” by major labels.  This was what we accepted and allowed as normal business operation.

The world’s largest distributor of audio & video projects today is FACEBOOK.

In years past creativity was extraordinary, each individual writer, musician, singer, dancer, film maker, painter, designer and more worked on their craft and fashioned their distinctive individual style. A few collaborations were developed but for the majority of the entertainment products these collaborations were small (2-3person) units.

The majority of today’s creativity comes from the ability to hear, see and read ideas from other people globally.  We originally called it “sampling” or “biting” but now it is the way of education world wide. Most of what I write about comes from ideas already circulating on the web.  Being an avid reader I am in tune with many different people from different countries all speaking the same inferences.   We have become “people of the screen” and millions of followers are looking at their screens daily.  In todays market if you do not have a website, can be Google and have a positive social media score than you are not to be trusted or to do business with.  This is not my call, but the direction that society has taken.  If you see a person online with negative Google comments concerning their business or service, with no visible web presence or with dislikes (thumbs down) on their Facebook account you leave them alone.  The public has the power to make or unmake anyone just on the “thumbs up” rule.

The concept of Piracy has now changed into a new concept called Motivation meeting Opportunity.  If I have a copy of your movie and you decide that only the people that pay you should see it, then I now have an audience (MOTIVATION) that wants your product and since I have it available (OPPORTUNITY) I can send it to them for FREE.  A few readers just got mad, but this is file sharing at its lowest level and millions of people are doing it daily.  There is now an entire generation of teens and young adults that will always believe the Internet is the source of FREE information, video and music.

For years the idea of copyrights has bothered me, I know that it is an archaic regulation. I have only seen it work when you have money and power to use it   . I have watched the major labels, publishers, performing rights organizations and other groups make BILLIONS of dollars, Euros, yen, pounds, marks or whatever your countries currency is called based on copyright infringement regulations. Very few original songwriters or original publishers make a portion of the huge profit being generated by copyrights.  The Internet is changing the entire structure of copyright law worldwide, causing problems and many different fixes.

The new school of thought expands of the concept of “User Licenses” instead of mandatory copyright rules that the public ignores.  A user license is an agreement between the purchaser and the licensor for the right to use the product.  This makes so much more sense when dealing with the Internet and the download and uploading of files.  In particular the End User Licensing Agreement (EULA) is becoming more and more popular among originators of entertainment products worldwide.

Today’s business needs open communication between users for the flow of information to travel while the concept of keeping the information until you get paid is DEAD.  Many of you will continue to think in this antiquated way, as for me I’m opening up my business to interested people for FREE.  My open hand will receive more than your closed fist every day.  I never said that I won’t get paid, but I won’t wait to exchange information, files and business acumen on a perceived payday.