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By: Eduardo Guilarte.

Why are so many artists broke

The mystifying extravagant language of music disseminates passions in a land the written word has never known.  Music fulfills two major human needs, the need for self-identity, and to be accepted, to belong.  Freud- “adopting the model of another is the psychological process of Self-Identity”. That T-shirt with “Rolling Stones,” is broadcasting “these are my values” does anyone out there feel the same?

Music identifies and defines our values. When music is sold, there’s a lot more being sold.  Your values are what is sold. Your musical selection makes you predictable.  Madison Avenue advertising was excited, with needs there are opportunities. Not much different than “sex sells.”  Well, music sells.

The merchants learned the art & science of anchoring. Take the Pepsi / Michael Jackson commercial.  Story says, that Pepsi offered Michael $15 million dollars for a commercial.  However, Michael set conditions.  He refused to tell people to drink Pepsi, wouldn’t hold the product in his hands, the product could not appear in the same frame as Michael.  Pepsi agreed to all the conditions.  Michael appeared performing, followed by series of fade in and out.  Michael never appeared in the same frame with Pepsi.  The commercial was a resounding success, shot with Michael Jackson performing, then a series of fades-in/out.

Technology is changing music

Technology is constantly changing industry and the world.  Look at taxis.  A New York taxi medallion was selling for $250,00 to $500,000, then Uber happened.  An application with a better formula.  Uber gave better security, women could work as drivers, no exchange of money, work the hours you choose, response time greatly reduced, and a great contributor to the reduction of unemployment.

Another example of technology at work are applications like Shazam, Sound hound, Hound, Spot search.  You hear a song playing and you want to know the name and artists.  Apart from giving you the information for free, what it is really doing is gathering data for the industry.  These apps are really telling the industry who and what is popular with the people.  It’s a guide to very current trends.

The dot com era revolutionized the music industry. In 1999, Shawn Fanning and Sean Parker, developed MP3 file sharing. Napster, with 80 million users taught a new way of consuming music. Universal, Warner and Sony who control 80% of western music were furious.  Lawsuits were filed, arguing copyright infringement and pirating. Although a 9^th circuit Federal judge blocked Napster, the door was now open.  Through that door entered Spotify, Apple Music, Tidal, Deezer, You Tube Music, Pandora, Google Music and others with music streaming services.

There has always been a music industry.  The 20^th century invention of the radio, television and record player redefined the industry.  Those inventions became the start of what we call today the music industry. A multi-billion-dollar industry. Commercializing music is very different from being a minstrel.  Two very different animals.

The world’s leading contemporary music institution, recommends that if you want to go into the music business, you take a year off and study the “business.”   ICE, Institute for Creative Entrepreneurship at the Berklee College of Music in Boston, MA, offers online or on campus programs to learn the business. Berklee College phone +1617 266-1400.

It’s an understatement when they say that “how the music industry works and how the money is distributed, is very hard to understand.”  Publications on the subject are:

1. All you need to know about the Music Business by Donald S Passman, top music attorney Harvard Law. Reputed to know his business but he doesn’t go into music streaming which is what happens now.
2. Music Money and Success by Jeffrey Brabec & Todd Brabec, twins, tracs the flow of money, using real examples. Not an easy read but it goes in depth.  Todd was executive VP for ASCAP for more than 30 years
3. Artist Management for the music business by Paul Allen, as the importance of labels diminishes, the manager’s role is more important.
4. Hit Men: Power Brokers and Fast Money Inside the Music Business by Fredaic Dannen, it has become the unofficial history of the pop music business. Journalist who investigated the behind-the-scenes activity of the major labels in the 70’s and 80’s.  Reporting excess, greed, ruthless practices, struggle for money and power and bitter rivalries between biggest labels at the height of the industry.  However, he is heavily criticked by former CBS head Walter Yetnikoff.

The first order of business is understanding the elements that go into making a song.  Author of the lyrics, composer of the music. A trademark is not a copyright.  Examples of what you can copyright are novels, poems, photographs, movies, lyrics to a song, musical compositions in the form of sheet music, sound recordings, paintings and more, like software code for a website or code for an application.

Once the work is created you acquire rights, often referred to as the bundle of rights. They are the right to:

1. To reproduce including phonorecords, physical or digital format
2. Prepare derivative works based on the original
3. Distribute and sell copies of the work, or rent, lease or transfer ownership.
4. To perform the work
5. To display
6. Audio transmission publicly or digital

These rights are yours regardless of filing a copyright.  However, you should copyright the song.   17 U.S. Code §106 is where you will find the copyright law that talks about the bundle of rights that the bill gives to copyright owners.  At www.Copyright.gov you can create an online account and register your song. A publisher promotes the song, gets it added to musical libraries, pitches it film, radio, television, etc.

Anyone who uses your work, including streaming, must pay mechanical royalties.  So, who will collect the royalties for you? Performance Rights Organizations/Societies are tasked with getting you your money.  ASCAP, BMI, PRS, SOUND EXCHANGE, Descarga.com, Kobalt Music are some of the PRO’s.

In the United States the government has predetermined mechanically the royalties.  Any artist can record your song under the law of “compulsory licenses.”  They must put the author on notice of intent and pay the royalties.  As an example Simon Diaz wrote and composed “Caballo Viejo.” Many artists recorded their own versions, like Roberto Torres, Celia Cruz, Ray Conniff, Ruben Blades, and Placido Domingo. Simon Diaz

The power of the major labels usually dictated who became a star and who got sent home. Not always though, we hear that Shakira auditioned for Sony and was told to go home, that she didn’t know how to sing.  They also passed on “The Beatles” losing an incredible fortune.  It was common for artists to throw themselves at the feet of the labels signing predatory contracts.

We hear of advance money being paid if the artist signed.  These were contracts that indicated 15% of the record sales to the artist and the other 85% to the label.  However, the contracts had clauses in which the artist sold the ownership copyrights, and agreed to pay many costs, which resulted in the 15% being reduced beyond zero, resulting in an artist in debt.

Historically Major Labels have had the funds to commercialize new talent and pay advances.  Yet, technology is again making changes and opening new doors to the artists. Artists are using Social Media to create a following for their music. Kobalt is the world’s leading independent music services company.  Founded by Swedish musician Willard Ahdritz, Founder & CEO who says that old model is on the way out.  Kobalt was ahead with its technology.  In 2017 it reported representing over 25,000 songwriters, 600 publishers, and 20,000 independent artists.  On average over 40% of the top 100 songs both in US and UK. Kobalt’s global technology platform is uniquely able to track and collect royalties for the billions of micro-payments per song in digital music today  [email protected]

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