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The day after The All Night Party’s first licensing workshop, Digital Music News published this piece on how Synch Revenues Remain Under Serious Rate Pressure.  To summarize, buyers are paying less for rights to using existing recordings in commercial and creative contexts.  Much less.

The reasons cited by DMN for the decline are many.  First, the number of paying projects being produced has declined across the board, increasing the competition for what remains.  Alongside that decline, there’s been an increase in the supply of music due to lower barriers – today it’s cheaper and easier to make music.  Creatives and music buyers are leveraging new market mechanisms, like One Stops (PumpAudio, Rumblefish), to justify resetting budgets at ever-lower rates.  None of this is good news, and we’ve seen the same signs.  But as ANP’s entered the licensing arena, we’ve discovered that artists and bands collectively have the means to bend the curve in the other direction.

The One-Stops have opened the licensing market to pretty much everyone with a tune and copyrights.  Unfortunately they’re (rightfully) designed to appeal to creatives working existing markets – all the shadiness and opacity of those niches are baked in.  So pricing is always a mystery… the average artist has no way of knowing what to charge for a needledrop use versus a full-buy out, because customers are used to buying blind, and haggling over prices.  The flood of new artists and titles make the situation worse, thanks to the “man behind the curtain” mystery of rates.  As a result, newbies sell $20,000 licenses for $5000 or less every day, often bragging about their deals.

What is the value of a song?  In some sense, it’s whatever someone is willing to pay.  To a band who might earn less than $5000 profit selling 1000 CDs, a $5000 buy-out of a single track seems like a no-brainer windfall.  And if the band is quirky, unstable, or generally non-commercial in orientation taking the money may not be a bad thing, since these opportunities are increasingly rare (see above).  But charging too-little in an established market is short-sighted.  Each sub-par deal struck validates the new, lower rates.  Once market rates ratchet down, it’s nearly impossible to raise them again.  Further, if an advertiser truly wants to buy your quirky, non-commercial piece, it’s very likely to be perfect match for their picture, ad copy or script; unlike pure pop, whatever you’ve bottled is unique and clearly works for this client.  So your money is left on the table when you accept the low-ball offer; you would likely get more for the asking because, unlike bands, most buyers have some idea of fair market rates and are quite happy to offer less on the chance you’ll accept!

We see the challenge a little differently.  As usual, we’re focused on making the most of these new opportunities and see a relatively simple solution for the entire licensing market: Radical transparency.  The problems in licensing aren’t related to too many one-stops or too much information.  The problem is the mushroom-farming habits of the current players.  Licensing Agents, music directors and even the emerging one-stops believe they make more when no one knows what things cost.  In the 20th century, every deal was a customized one-time special, crafted to extract the most dollars possible from each unique client.  It was a benefit to be able to sell a track to Target for $100,000 then sell the same rights package again year to a cheeky startup for a bargain $10,000; as long as neither party knew what the other was paying, prices were whatever came out of the sellers pen or mouth on any given day.  In the 21st century, One-Stops turned this upside down.  By making it easier for big advertisers and creatives to reach artists directly, music buyers have effectively taken control.  Today, big advertisers pit bands against one another, making the apples fight the oranges in a steel-cage death match.  Most jobs start with a low-ball offer for a premium rights package; when the artist squeals, the advertiser rattles off an impressive list of bands willing to accept the offer, usually including some familiar, famous names.  The artist usually buckles at this point, swallowing their pride to avoid risking a deal that could pay for their next record.  When the smoke clears, market rates are a little lower.  But what would happen if the artists, like the buyers today, actually knew the score?

Where market rates were known and familiar low-ball offers fail.  Sure, you can walk into a gas station with a fat $20 bill and declare “I’ll give you $20 for 20 gallons of gas”, but you won’t find many takers because the station owners know their competitors won’t accept your ‘generous’ offer, so there’s no risk if they decline.  The current low rates only work because sellers are deliberately kept in the dark.  One-Stop prices are completely open to buyers with valid credit cards, while artists are kept apart from one another, always guessing.  A simple solution is apparent: open the drapes and let the sun shine in on rates!  Licensors must top pretending it’s so complicated, and begin defining the market before licensees define it for us.  Making prices transparent and clear will eventually stop the bleeding.

Obviously this isn’t good for everyone, and the biggest winners relying on 20th century tactics stand to lose the most.  Agents and managers of big stars who’ve flocked to licensing to replace lost retail music sales will not be happy with fair and open market rates, because they’ll be forced to explain why their product is worth more (yes, really) than songs from lesser-known artists.  That’s more work for the same, or slightly fewer dollars.  But over the long haul even those artists win, if transparency prevents a total collapse of the market.  What happened in 2009 can get much worse, very fast.

So what are fair market rates?  There are many variables, and it’s a bit more complicated than it sounds, so we can’t answer it either.  We think we have a clue, but the backwards offers we get these days have left us a little gun shy.  But it’s not difficult to define them as ranges, using an open, web-based reporting tool could objectively collect and report that data.  The trick would be populating it with realistic, verifiable data, from enough sources to accurately depict the market, and at the same time account for geographic differences… for instance music costs more in NYC than Nashville, while some remote markets are still able to command relatively high rates for composition work thanks to less competition.  It takes a village of agencies and sellers, willing to be open about former secrets, to bend this curve.

If you sell music and are ready to think outside the box, we should talk – together a few of us could change the future of our industry for the better.  Transparency is scary and radically different, but clearly a path forward.

If you’re releasing a record soon, you can’t beat our current mastering specials: Free Tunecore Digital Distribution or Download Cards (pick one, your choice!).

We don’t believe in “one-size-fits-all”, even for promotions, and our specials leave it up to the artist.  As it should be!

Of course it only matters if you want to master your record with us.  We realize you have choices there too, so again, we make it easy: We’ll master a track free, and send you a download link to check it out when we’re done.

Check in with ANP Mastering Engineer Dave Davis and make your choice.  In February, there are no bad options for mastering at The All Night Party!

BBC News reports Pharrell Williams urged new acts to chase ad agencies at the last MIDEM conference.  We take no issue with Mr. Williams’ strategy, in fact we agree almost entirely with his points.  But we strongly suggest artists discard his suggested tactics as bad advice.

We agree that the advertising market is a great place for today’s musical artists to earn a fair living for hard work.  While it’s far from a “blue sky market”, and already clogged with providers and operators at every level, there are unique opportunities for original music artists.  Pharrell Williams was on target with where to start: ”I would probably build a site, a home for my music, a destination where people could come and see me and what I do and what I’m thinking about.”  Perfect!  We couldn’t have said it any better.

But he immediately goes off the rails when he continues: “And then I’d probably assemble a team of kids that would go and bug the hell out of advertising agencies and marketing companies to use my music.”  Terrible advice.  If you are Pharrell Williams, working in a major-label band like N.E.R.D. you might have enough fans and clout to get away with this.  If you’re a local or regional band, this is the express train to a black-list, reserved for hacks and desperate losers.

It gets stranger when he adds, “But what a kid has that everyone else has is that same ability to market yourself and get yourself out there.”  This makes no sense, even to the casual observer.  Sure, there are viral stars, like the Numa Numa kid, but that path is too random to fix – fans were equally likely to encounter a LOLcat or crazy wedding dance.  Susan Boyle started with a mainstream media boost, not a great plan of her own.  There are a few scattered examples of successful viral campaigns by individuals, but they’re the exception, not a norm or even repeatable phenomenon.  Mr. Williams may believe the statement above, and his intentions are clearly positive, but he’s factually wrong.  A kid, along with everyone else, has very little ability to market themselves out here, minus a lot of luck and/or money.

Even though you can’t do it all yourself, and pointing flash-mobs at ad agencies is pointless, musical artists can still participate in the licensing market.  Actively putting music before decision makers inside agencies is indeed required, but spamming agencies and advertisers is never welcome.  You need partners who are already getting calls to place music in licensed settings.  One-Stops like Getty’s PumpAudio, and YouLicense, occupy the bottom rung of this ladder, and get you in the door.  Music supervisors, editors and specialists are frequently hired to do searches, and clear licenses, so these are better targets for a band or it’s management to climb a step higher.  Modern labels have relationships with these folks, and often pitch work actively, keeping your profile high.  Finally, newcomers like The All Night Party are already getting calls for great, original music placements by positioning ourselves in that market.

It’s not a lost cause or even particularly hard.  Licensing deals are very organic: music works against a picture or in a campaign or not, and selection criteria are more objective than label signings (advertisers can’t afford bad decisions).  More important, we’re discovering bands offer unique benefits to advertisers that other players simply can’t match.  It’s easier to commission compositions that are based on known starting points, and existing songs can be legally and liberally “borrowed” from.  Bands don’t necessarily require session players to flesh out a piece, saving time, simplifying production, and controlling budgets.  These are easy sells!

So the market is really there, as Mr. Williams suggests.  It’s a good direction for many artists, willing and able to play the game.  Just forget the tactics and find a better way to get your music on the field.  And if you need help, you know where we are…

Nielsen Soundscan reports that 2009 U.S. Music Purchases up 2.1% over 2008 as Music Sales Exceed 1.5 Billion for Second Consecutive Year. This news bears repeating, in light of the music industry’s constant, deafening whine: Total music purchases have in fact increased each year since 2005! For the record, 1.01 billion music purchases were made in 2005, 1.2 billion in 2006, 1.4 billion in 2007, and 1.5 billion last year, as noted above. While it’s possible poorly managed large companies, willing to overspend for talent, overpay executives, and ignore market realities could lose money on growing sales, it’s impossible to feel truly sorry for them.

The report has plenty more good news, especially for small labels and savvy artists. First digital downloads continue to grow, providing a direct path to revenue open to all. Better yet, albums represent an increasingly large portion of those sales, versus singles, growing 16% to reach a new peak of 20% of all downloads! These trends only accelerated in the fourth quarter of a recession year, suggesting a positive future. Indeed, hits are happening in the digital space, at levels previously reserved for physical CDs: Black Eyed Peas, Lady Gaga and Flo Rida all had singles that sold to quadruple-platinum levels (more than 4 million sales each)!

While the Zeros are considered a “lost decade” in many industries, it was a rebirth for the music business. We’ve crossed a threshold, selling nearly twice as many albums online as physical CDs. Album sales are moving away from traditional retail, to non-traditional venues. It’s remarkable to note given the numbers above that non-traditional music outlets represent most of that growth in albums versus singles, adding 11% over their 2008 sales, ultimately accounting for nearly 30% of total album sales in 2009.

The corner has been turned. It’s morning in the music industry!

This week composer Glenn Branca sent up a plaintive wail, mourning the passing of his era in his NYTimes.com Opinionator blogpost, The End of Music.  The piece is incoherent: it’s unclear whether Branca believes there is no novelty in modern music or that he lives in a unipolar, mass-market society.  What’s notable though is how wrong the author is about everything!  What comes through loud and clear is how alienated, angry and confused it’s author has become in this young century.

At the outset, Mr. Branca starts from the assumption that his favored institutional venue, the orchestra, is a necessary, valued and valid medium for the creation of novel sounds and music.  To be sure they are a normative standard, and foundation for many kinds of adaptation and reuse (as bed sound for the Muzak and network TV shows he later mentions derisively), but it’s oxymoronic to consider any classicized, baroque format in a discussion of a future that values fresh ideas and innovation.  As era’s mature, they’re absorbed by their children.  Rock energized musical poles of Jazz, Blues and Folk as they “classicized” with new modes of sound and rhythm.  Punk and New Wave announced that Rock too had become a broad cliche.  Post Modern music has re-embraced all the aforementioned genres as valid, while recontextualized them through production – Today thanks to multichannel delivery (surround) and home recording capabilities,  the sound itself is becoming tangible.  New recordings are made to sound more like performances, taking place in idealized spaces, as compared to 70s Classic Rock recordings that were more purely abstract constructs.  Times necessarily mirror their tools in all technologies.  Music is no exception.

So, when Mr. Branca concludes there have been no advances in the quality of music, one has to ask: which qualities?  Arrangement has certainly been affected by technologies like iPods and home theater.  So have tones/timbres, by way of sounds: we think texturally.  Today’s producer may hire a horn section, play the section’s parts on a synth or a sampler or both, or find the part on a classic record, and scratch it in from a turntable.  Thanks to technology (social and musical), the choice has little to do with budget (it’s easy to find willing players with tools on Facebook or MySpace), but instead, is all about which texture is right for the song.  The very nature of this decision undermines Mr. Branca’s apparent point. Anyone with an internet connection has access to a wider variety of music in every genre, including many we’ve surely never heard!

The tone is cliche.  Glenn Branca’s a grumpy old man, chasing those damn kids off his lawn by complaining that “people don’t want to hear anything new”, while complaining about the commercial gigs that pay working musicians and composers.  His complaint is culturally tone-deaf: today ads for Apple, VW and hip brands break more new artists than radio playlists, usually relying new sounds to sell consumer goods.  Old guys often miss what’s going on around them as their hearing declines – is it just that Glenn Branca doesn’t like younger artists (who haven’t trained at Conservatory) taking work from his generation?

His biggest error is in characterizing music as becoming homogenized.  Where does Mr. Branca live?  In my world there’s been such an explosion in content of all kinds that my time to discover it is the biggest limitation, not money, quality or variety!  Maybe he’s suffering from Alzheimer’s, and thinks this is 1980?  There are far more genres of music, and in my job (designing music products, and connecting fans to bands) the best products are unique, cool and exclusive.  The era of mass marketing and production ended a long time ago.  This is the age of micro-marketing and mass-customization.

With the CEAs still fresh in my mind, let me refute Glenn Branca with hard acts.  Local clean-sweeping heroes, The Seedy Seeds spring immediately to mind, as a genre-busting young band that appeals in new ways, not immediately derivative but clearly attached to an emerging “sound” of this area.  On the Electronic pole of that sound bands like Bad Veins, Eat Sugar, Hungry Lucy, and most recently You, You’re Awesome are turning heads by being a little different than the rest of their now-familiar genre.  On the roots and Americana end of our spectrum we have an embarrassment of riches… From our Sundresses to Jake Speed and the Freddies, from Wonky Tonk to Over the Rhine, there’s a lot of new, unique sounds here.  Midpoint Music Festival annually proves that tens of thousands of fans really want to hear them.

I’ve grown pretty used to music industry execs spewing nonsense like this.  But it’s sad to see a smart, respected, and successful composer blogging mindlessly.  This piece is truly embarrassing to the Times and Mr. Branca: setting aside the rambling, disconnected structure (lacking any thesis, support or summary of points), he’s wrong about pretty much everything.  By the time he asserts that “the new music is just the old music again” (a point that was more true in 1990 than today), his pained confusion has become nothing more than the distracting whine of a sad, angry old man.