Tuesday, March 17, 2015

How Verve Records Got Gutted

Written by Ted Gioia -- The record label of Billie Holiday and Ella Fitzgerald just got swallowed by a hip-hop business… and no one even noticed!
The announcement could hardly have been hidden any better. Slipping the news into the second paragraph of a press release about a management change, Universal Music disclosed last week that most of the day-to-day responsibility for the once great Verve label has been absorbed by its hip-hop and pop operations. Interscope Geffen A&M, the home of Eminem and Lady Gaga, “is now responsible for Verve’s sales, marketing and film and TV licensing.”

What a strange turn of events! Interscope, founded in 1989 by Jimmy Iovine, first made its mark in the music world as the in-your-face label of gangsta rappers—although later corporate moves have broadened its catalog to include a range of pop and rock acts. Verve, in contrast, started out as a posh home for jazz stars who played the classic songs of George Gershwin, Irving Berlin, Cole Porter, and other craftsman tunesmiths of the Golden Age of America popular music. Even the most optimistic jazz fan must cringe at the prospects of a shotgun marriage between these different organizations with their contrasting traditions.

My sources tell me that the organizational shake-up took place quietly some weeks back. David Foster, head of Verve, is still in place, and can rely on newly-appointed general manager Mike Rittberg to help him maintain some independence for the label. But the rank and file of the Verve team have been dismissed. The sales and marketing push behind whatever remains of Verve’s jazz mission—if anything—will be handled by the same folks who are pushing Maroon 5 and Imagine Dragons. Anyone want to guess how much they care about jazz?

Oh, yes, in the fourth paragraph of the press release, we learn that Verve will “redevelop its brand in the coming year.” I think this is corporate speak for “we don’t quite know what we are doing.”

Frankly, I am not surprised at this turn of events. Norman Granz, who founded Verve Records in 1956, would be horrified by the recent history of his iconic label. Granz worked with most of the major jazz artists of the middle decades of the 20th century. At one time or another, Granz recorded Duke Ellington, Louis Armstrong, Charlie Parker, Dizzy Gillespie, Art Tatum, Stan Getz, Ella Fitzgerald, Billie Holiday, Count Basie, Oscar Peterson and dozens of other now legendary jazz figures.

What would Granz think of Verve’s Donny Osmond album “tracing the high and low points of both his professional and personal life”? Or the recent Barry Manilow album on Verve, which finds the pop crooner collaborating with a host of dead musicians? It’s a long path from Billie Holiday to Donny Osmond, and the trajectory is definitely downward.

Granz was a tenacious businessman, but he also knew that some things were more important than money. He fought against racial discrimination at every juncture, and refused to compromise in situations where others would have folded. He once confronted an armed policeman trying to plant drugs in Ella Fitzgerald’s dressing room. “I ought to kill you,” threatened the cop, who pointed a gun at the producer’s stomach. Granz responded, “Well, if you’re going to shoot me, I mean, shoot me.” Granz showed similar courage when insisting that a taxi driver operating a “whites only” vehicle give a ride to Fitzgerald, or tearing down the signs for white and black patrons at a jazz concert. Nat Hentoff has called Granz the '”the most stubborn and brusque man I have never known”—but only someone with such fierce determination could have overcome the obstacles facing a music impresario committed to civil rights in the ’40s and ’50s.

Verve would benefit today from someone with Granz’s vision and stubbornness. As I look back at Verve’s output in recent years, the most striking aspect is the lack of any consistent guiding principles. Some albums are better than others, but too many decisions seem driven by marketing concepts rather than a commitment to artistry. Even Diana Krall, one of the few high caliber jazz artists still affiliated with Verve, is presented in the crassest way. Her 2012 release, Glad Rag Doll, looked more like an excuse for a lingerie photo shoot than a jazz album. Her latest recording, Wallflower, has a few inspired musical moments, but the focus on tired top 40 pop material from a second-rate oldies playlist—“Alone Again (Naturally),” “Desperado,” “I’m Not in Love”—is cheesy in the extreme. Krall succeeds here despite the song choices; a lesser artist might have lost all credibility in jazz circles with an album of this sort.

How could Universal fix Verve? Perhaps they should look back to the steps Norman Granz took to revitalize Ella Fitzgerald’s career in the ’50s—the greatest success story in the history of the Verve label. While under contract to Decca (ironically, now part of the Universal Music empire that controls Verve), she was prodded into recording embarrassing songs such as “Santa Claus Got Stuck in My Chimney” and “Little Man in a Flying Saucer.” But when Granz brought her on board the new Verve label, he packaged and promoted her as the leading jazz interpreter of classic American songs. The resulting “Songbook” albums—featuring the music of George Gershwin, Cole Porter, Duke Ellington and others composers of the highest caliber—still serve as the foundation of Verve’s catalog and reputation.

That kind of commitment to quality is still the best recipe for long-term success in the jazz field. Throw out the gimmicks. Forget about clever press releases. Instead, back the finest talent and give them a platform to make the best music possible. If Universal Music wants to see how this is done, they should check out the jazz offerings from ECM, Nonesuch, and other labels that have flourished, even during tough times, with a commitment to artistry that starts at the top of the organization.

Or, if that is too much to ask from the new team at Interscope, perhaps the best thing for all parties would be to find a new owner for this historic label. Maybe with a different boss, Verve could once again live up to promise embodied by its name.

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The music industry just made a important change that no one is talking about

Written by Bryan Logan -- In the US, we get new music on Tuesdays. France and the United Kingdom get theirs on Monday. It's Friday in Germany.

Starting this summer, all new album and single releases will drop on the same day, worldwide.


That's the result of discussions that have gone on for months at the International Federation of the Phonographic Industry (IFPI). The change was officially announced Feb. 26.

The IFPI is a Switzerland-based nonprofit that oversees the music industry, representing 1,300 record labels in 63 markets across 57 countries.

The origin of the old, incremental music-release day is fairly simple in the US. NPR explained in 2010 that the Tuesday release gave music distributors time to "shuttle stock out to stores over the weekend and on Mondays."

Even though the change applies to all forms of music (digital and otherwise), it seems to be somewhat divorced from the concept of shipping physical merchandise, since few people buy CDs anymore.

The motivation here is two-fold:

  • By doing this, the industry expects to cut the risk of piracy. With less time between when you can download your favorite artist's new album in the US and when people elsewhere can do the same, there's also less time for songs to end up in places where they can be shared illegally.
  • The IFPI says the global release date would also "benefit artists who want to harness social media to promote their new music."

Some industry execs are, unsurprisingly, less worried about those points and more concerned about how the change will affect profit margins. Kim Bayley with the Entertainment Retailers Association told Billboard in October, "The only justification for a Friday release date would be if it resulted in a net increase in sales."

Billboard counterpointed that with this: "Sales weren't central to the IFPI's justifications for the move, though combating piracy could be considered the same thing."

Fans of Beyoncé might remember December 2013, when she released a new album, "Beyoncé," unannounced on iTunes. No marketing or promotion was done beforehand.

The album quickly grabbed the No. 1 spot on the Billboard 200 and sold nearly 830,000 digital copies in its first three days. It became iTunes' fastest-selling record, ever.

It's interesting to note the album was released at midnight on a Friday, so those hundreds of thousands of copies were sold through the weekend, before the CDs were made available in stores. In fact, the physical album was held back until a week later, which upset some major brick-and-mortar retailers.

By aligning the worldwide music ecosystem to one designated day for new releases, the recording industry at large is taking steps to streamline global distribution, while also helping artists use the power of social and digital to bridge the divide between their fans, near and far.

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Can the Digital Music problem be solved? Kobalt thinks so and has the funds to prove it!

Written by David Marini -- New York City’s Kobalt Music has managed to raise a total of $126 million dollars, thanks to the recently acquired $60 million from Google Ventures and Michael Dell’s MSD Capital. Wait there’s more, a further $153 million the company raised to finance a second part of its business; buying part or all of an artists’ rights to help collect royalties on their behalf. Kobalt developed a proprietary technology that figures out how to allocate all the royalties due musicians at a much greater speed than is customary. This is a big deal since musicians have had to wait a great deal of time, we’re talking years for payments. Just think of all the digital platforms capable of playing music.

Since the inception of digital music, the industry has been calamitous about how artist are paid and how much. With Kobalt’s algorithms keeping track, the process has become much more efficient. The CEO, Willard Ahdritz says the funding will be used “to scale the organization, double the tech team to increase our speed”. Ahdritz also explains the publishing side of the business is profitable. Overall, the company has been growing revenues at a rate of 40% annually for the last four years, and is projecting gross annual revenues of $260 million for the end of June 2015.

This is a critical time for the digital music industry especially since streaming has become more popular than downloading. Kobalt has created a sophisticated big data dashboard that allows you to see the number of plays across a slew of outlets like YouTube, Spotify, Soundcloud, thanks to their tagging system. Thereby letting the artist know how much they are owed. Kobalt says more than 8,000 songwriters and over 500 publishing companies use its platform today. Currently they are covering about 400 million people and would like to get that number up to 1.5 billion in 6 months. Bill Maris, of Google Ventures, in a statement. “The company’s solid execution over the past decade coupled with Willard’s unwavering passion and commitment made this an attractive investment for us. Kobalt’s commitment to trust, transparency and technology has positioned it as one of the most innovative brands in media today.” Dell Inc. has been providing the technology for Kobalt this whole time, so it just made sense for MSD Capital to jump on board. Just to let all you reading know back in 2013, Kobalt was valued at $250 million. So perhaps with all that money flowing through the arteries at Kobalt, submitting a resume, might not hurt.

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Is Music Streaming Destined to Disservice Artists?

Written by Michelle Castillo -- Pharrell's "Happy" was the song of 2014, topping the charts in the U.S. and two dozen other countries, selling 6.45 million copies and winning a slew of accolades, including a Grammy Award and the inaugural Grand Clio Music Award.

It was also in heavy rotation on the digital radio platform Pandora, streaming 43 million times in the first quarter alone. Despite all that, Sony/ATV Music Publishing says it received just $2,700 from Pandora for plays of the tune during that period, which it split with writer Pharrell Williams.

"Streaming services are going to be the major method in the way music is accessed. I don't think enough money trickles down to the songwriters," says Sony/ATV CEO Marty Bandier.

Pandora argues that its model is justified. "We want to be an indispensable partner to music makers, and that involves paying a tremendous amount in royalties," explains CEO Brian McAndrews. (Last week, The New York Post reported that Spotify—the second largest streaming site after Pandora, with 60 million users—projects that it will pay top record label Universal Music Group $1 billion in royalties over the next two years.)

Streaming music was supposed to be the savior of the record business, putting the brakes on piracy while mining new ground for revenue. Meanwhile, brand marketers have viewed it as a means of connecting with the younger consumers they crave. As Nathaniel Perez, global head of social for digital agency SapientNitro, which has used Pandora's geotargeted data for its clients, points out, "Uber doesn't have the same opportunity. Sessions are short and usually about functionality. Music is interesting. It provides this opportunity for advertising to be a second screen."

But streaming sites lately are facing a battle at every turn, with artists, labels, publishers and industry groups speaking out against the unfairness of their payment models.

No less than America's reigning musical princess, Taylor Swift, went so far as to yank her latest album, 1989, off Spotify. The backlash has led some, including marketers who have come to rely on them, to wonder: Despite all their promise, are music streaming services in as much trouble as the record business they were meant to give new life to? Or are these merely the growing pains of an emerging medium?

How the Stream Became a Flood

Pandora launched in January 2000 as a way to create customized digital radio stations based on the user's preferences. Listeners can enjoy an advertising-supported free version or Pandora One, an ad-free service that allows users to skip tracks more often, as well as other features, for $4.99 a month. The streaming platform brought in $920.8 million in revenue in 2014, a 44 percent increase year over year. Advertising alone accounted for $732.3 million of that.

Then came on-demand services like Spotify, which started in 2006 as a way to combat illegal downloads, notes its chief content officer Ken Parks. Spotify's $9.99 per month, ad-free version allows users to listen to anything on any platform, and a free ad-supported option offers unlimited play on desktop and shuffle mode on mobile.

Both Pandora and Spotify tout their algorithms as a way to increase discovery of new artists—a method of sampling that the record labels have come to rely on in marketing their acts. "Even if you wanted to explore the world of music from your chair, it was virtually impossible to sample genres that you had never been exposed to and records that you might have heard about but didn't have any way to access to try before you buy," Parks explains.

The commodity the streaming services offer the music industry and advertisers is, of course, data. By tracking users, the services can gather valuable detail on consumer behavior. (See this week's Data Points for consumer perceptions of streaming services.) Pandora leverages that information for marketing partnerships; it also allows artists and managers to access the stats for their own use through a service called Pandora AMP.

Pandora worked with Lexus last September to create a series of free concerts in Southern California using listener behavior to select acts that would resonate most with the automaker's millennial target. (Magic! and Nico & Vinz were among the artists picked to perform.)

Products of the streaming services have featured some innovative tactics for marketers. Pandora Sponsored Listening, for example, lets users skip streaming ads for an hour at a time if they first watch a video ad for Sony PlayStation or Fox Television. Similarly, last September, Spotify unveiled branded video ads from Ford, McDonald's, Coca-Cola, Target, Wells Fargo and NBCUniversal, which users could view in exchange for 30 minutes of ad-free play. At this year's South by Southwest, Spotify worked with SoulCycle to appeal to fitness buffs who also enjoy the tunes heard in those trendy spin classes.

Streaming's Benefits Go Beyond the Payout

For Stefan Kendal Gordy, better known as Redfoo from electronic pop-duo LMFAO (and an upcoming contestant on ABC's Dancing With the Stars), data from streaming services has been invaluable, even going so far as helping him decide to tour in Australia, where LMFAO's hit single from 2011, "Party Rock Anthem," was especially popular. Redfoo is in a better position than most artists when it comes to the economics of streaming music. He publishes his own music and owns his master recordings, allowing him to derive revenue as both a publisher and a label. (That industry savvy might have something to do with the fact that his father is Berry Gordy Jr., the legendary founder of Motown Records.)

In a universe of industry forces waging war against the streaming giants, Redfoo remains a defender, arguing that these services give his music a wider audience. Along the way, he generates revenue, exposure and lucrative deals with marketers to boot. For example, Redfoo licensed "Party Rock Anthem" to automaker Kia for those instantly classic ads from agency David&Goliath featuring dancing hamsters. (Kia has also licensed tunes from Maroon 5, Lady Gaga, Calvin Harris and others for the hamster ads.)

As Redfoo explains, "The top of the Spotify charts doesn't just mean direct money. It's publicity you get from being known for that song. You get written about more, then your touring goes up, then you get the sponsorships."

It's not that the services are trying to get away with paying through statistics, though. Streaming sites, under federal law, are required to pay royalties to both the songwriter and the performer. Radio stations, meanwhile, only have to pay songwriters. While that difference might not seem so controversial for Spotify and its on-demand model, Pandora argues that setup is unfair, considering its radio-like format.

Streaming services insist that their models allow for artists who wouldn't have had their tracks played on the radio or sold albums to secure some revenue. Last December alone, Pandora facilitated a whopping 1.82 billion hours of streams. "We play about 125,000 artists in a month, and terrestrial radio plays a fraction of that," McAndrews points out. "We're not only promoting songs in general, we're promoting many songs for sales that would get no exposure. That's a tremendous amount of incremental revenue for artists."

And yet, Redfoo's endorsement notwithstanding, the struggle between the streaming sites and the music business continues to rage on.

On March 10, the two largest performance rights organizations (PROs), Broadcast Music Inc. (BMI) and the American Society of Composers, Authors and Publishers (ASCAP), along with reps from Pandora and other factions of the radio, broadcast and music publishing industries, began testifying before the Senate about the issue of digital music licensing. Only weeks before, BMI and Pandora faced off in federal court in New York. BMI argues that Pandora should pay 2.5 percent of its total revenue to its writer/composer/publisher members, while Pandora is fighting to keep it at 1.75 percent. "We want Pandora to succeed," says BMI CEO Mike O'Neill. "We just want it to be fair to our songwriters."

'Horrifically Out of Balance'

The problem with streaming services, as ASCAP and BMI see it, is that by design they allow for an almost infinite number of radio stations or on-demand plays.

ASCAP president and legendary songwriter and producer Paul Williams, who has worked with everyone from The Carpenters to Daft Punk in his decades-long career, points out that his organization oversaw 250 billion performances for its more than 525,000 songwriter, publisher and composer members in 2013. That number doubled to 500 billion in 2014, and he expects it to hit 1 trillion this year.

While it's true the group collected record revenue in 2014—a little more than $1 billion—Williams argues that it's still less payment per spin because ASCAP gets paid as a percentage of total revenue. (Last August, ASCAP appealed a court decision that set its share at 1.85 percent of Pandora's revenue.) "How have we arrived that things are so horrifically out of balance?" Williams wonders.

BMI's O'Neill faults the streaming services for using musicians' works, especially those of songwriters, to build their businesses without properly compensating the creators. Specifically, he points to Pandora, the largest user of BMI's catalog, as the principal offender. "I think the Internet will eventually have the inflection point of [terrestrial radio]," he says. "The problem is, songwriters shouldn't finance Pandora until that inflection point."

Then there's Spotify, whose on-demand setup comes with its own headaches. Spotify doles out significantly more to music licensors than Pandora because it pays based on factors including number of streams on the service, meaning its payouts equate to about 70 percent of its revenue. It is also required to pay songwriters twice: The typical rate to the PROs and what is called a "streaming mechanical royalty" sent directly to publishers and songwriters. In total, the company reports, it has paid out more than $2 billion to artists, with industry estimates putting the figure at around $1.43 billion last year alone. That works out to $6,000 to $8,000 per 1 million spins.

But Daryl P. Friedman, chief advocacy and industry relations officer of the National Academy of Recording Arts and Sciences (NARAS), points out that while the revenue generated from Spotify's paid subscriber base can in fact be substantial, artists receive just a portion of the still-small advertising business generated by the free model. With 45 million users out of a total 60 million not paying, he argues, the revenue from the free side simply doesn't add up to enough.

Sony/ATV's Bandier notes that Taylor Swift would have kept her music on Spotify had she been able to limit it to the paid product; unfortunately, she was forced to put it on both. "The amount of money made on the free model is minimal," the exec explains. "The same applies to all of these subscription services. Free is not good. You don't write for free. You create intellectual property."

Warner Bros. Records svp of sales Amy Zaret says the company is often surprised how many paid Spotify subscribers are listening to its tracks versus free users, sometimes reaching a 50-50 balance. Zaret has seen up to 3 million global streams for under-the-radar artists who would not have had the clout to get on traditional radio. And yet, free simply isn't financially viable, she argues. "Based on the free model, the payouts we're getting on streaming is so small," she says. "The problem that we're running into is Spotify is just not converting users to the paid version quick enough."

(Executives from Universal Music Group and Sony Music Entertainment declined to be interviewed for this story.)

Maynard James Keenan, who fronts the progressive rock bands Tool, A Perfect Circle and Puscifer, insists that he is not anti-digital music—but he admits that if he knew how little revenue he was going to get from Spotify, he probably wouldn't have checked the box to put his tracks on the service.

"The only industry that remains is something that's attached to literally commercials," he says. "The main industry is gone. I'm going to make money because I can tour. I had projects that were around when there was an industry. For young, up-and-coming bands, it's a harder struggle."

Fight It Out, or Ride It Out?

There may be a glimmer of hope as more streaming services enter the market and greater competition emerges. Viacom music brand sales vp Paul Kelly is optimistic that once players like Apple and Google get streaming services up and running, their sheer size and distribution power will encourage (or pressure) all players to increase their payouts in order to secure deals. "As these services grow, they'll give a clearer picture of which platforms are more valuable," he explains. "Artists can be more selective about the distribution of their crafts."

Then again, it could also backfire. Billboard recently reported that the record companies talked Apple out of lowering its potential subscription rate to $7.99, which the company wanted in order to compete with Spotify—and which would also have meant less revenue for Apple, and lesser payouts to the labels and artists.

For now, the music industry has no choice but to ride it out—or take Keenan's route and find an alternative source of revenue in the meantime. "The wine business is doing great," boasts the musician, who owns Merkin Vineyards and Caduceus Cellars in Arizona. "You can't download my wine."

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Monday, March 16, 2015

SoundExchange, NPR and the Corporation for Public Broadcasting Agree On Webcasting Royalty Rates

SoundExchange today announced it has reached a settlement agreement with NPR and the Corporation for Public Broadcasting (CPB) on royalty rates for the next five years for webcasting by public radio stations.

"We always prefer negotiated solutions with digital services, provided that they ensure appropriate payment to artists and rights holders. We are pleased that we have again reached an agreement with NPR and CPB. This agreement recognizes the unique circumstances and missions of these organizations, and compensates the creators of the music used in their programing," said Michael Huppe, president and chief executive officer, SoundExchange.

"The Corporation for Public Broadcasting is pleased that we, together with NPR and SoundExchange have reached an agreement on Internet streaming of sound recordings by public radio stations funded by CPB that recognizes the unique nature of public radio and the vital service it provides to the American people," said Pat Harrison, president and CEO, CPB.

"We are pleased to again collaborate with SoundExchange to come up with a framework for royalties that provides artists and rights holders with fair compensation while recognizing public radio's distinctive public service and nonprofit operating model," said NPR CEO Jarl Mohn. "The agreement is a testament to public radio's significant contributions to musicians, artists, audiences and cultural programming in today's dynamic music environment."

This is SoundExchange's second settlement agreement in five months with noncommercial webcasters. In October 2014, SoundExchange reached an agreement with College Broadcasters Inc., which represents college media outlets. The agreement ensures that noncommercial webcasters at colleges and other educational institutions will continue to have a consistent royalty framework and that the artists and rights holders who recorded the music that educational webcasters play are compensated.

The settlements, if adopted by the Copyright Royalty Board, will be in effect for the years 2016-2020.

About SoundExchange
SoundExchange is the non-profit performance rights organization representing the entire recorded music industry. The organization collects statutory royalties on behalf of recording artists and master rights owners for the use of their content from satellite radio, Internet radio, cable TV music channels and other services that stream sound recordings. The Copyright Royalty Board, created by Congress, has entrusted SoundExchange as the only entity in the United States to collect and distribute these digital performance royalties from more than 2,500 services. SoundExchange has paid out more than $2 billion in royalties since its inception. For more information, visit www.SoundExchange.com or www.facebook.com/soundexchange.

About CPB
The Corporation for Public Broadcasting (CPB), a private, nonprofit corporation created by Congress in 1967, is the steward of the federal government's investment in public broadcasting. It helps support the operations of more than 1,400 locally-owned and -operated public television and radio stations nationwide, and is the largest single source of funding for research, technology, and program development for public radio, television and related online services. For more information, visit www.cpb.org.

NPR is the leading provider of non-commercial news and entertainment programming in the U.S. More than 27 million people listen to NPR programs each week via 800+ radio stations throughout the country. In partnership with Member Stations, NPR strives to create a more informed public - one challenged and invigorated by a deeper understanding and appreciation of events, ideas, and cultures. As a digital innovator, and a leader in the public media community, NPR assures that the unique mission of nonprofit public media is not only preserved, but grows.

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Will The Apple Watch Give A Boost To The Music Industry?

Written by Bobby Owsinski -- The tech world is abuzz today with the official unveiling of the Apple AAPL +0.8% Watch, but the music business can look upon it as a possible boon as well. The Apple Watch, which can be considered either a utilitarian or luxury item, appears to do many things well, and by the looks of it, music is one of them.

The music business has always produced plenty of music that customers want, but it’s been new delivery methods that have led to increased sales. The industry has historically turned on a dime with new technology that offers greater convenience.

For example, in the late 1800s, there was a healthy business built around sheet music and piano rolls, but when the Victrola was introduced in 1901, music lovers discovered a new portability along with the ability to hear their favorite artist any time they wanted. That’s when the music industry as we know it today was born.

Those original records were made of shellac, which were very brittle and prone to breakage, but the industry once again experienced a bump in revenue when the vinyl record was introduced. Vinyl was thinner, lighter and didn’t break as easily. Convenience won again.

The 1960s saw the introduction of the 8-track cartridge and then the cassette, which meant that portability was again improved. Of course when the CD was introduced in the 1983, its random access was yet another big step in convenience, as the user no longer had to fast forward and rewind the tape to get to the desired song.

Digital music debuted in 1995 with the MP3, which took portability to another level, while streaming now has become the ultimate in convenience as you can access millions of songs anytime and anywhere.

While the world continues to discover the convenience of streaming music, the Apple Watch comes at the perfect time, with the ability to make streaming even easier than it already is.

Until now you had to access the songs that you wanted via your phone or your desktop. While more convenient than what came before, it still requires that you use at least one of your hands plus your full attention to access the song that you want.

With the Apple Watch, this can be done with the flick of a finger or a voice command, which means faster and easier song access, which is yet another step up on the convenience ladder.

As history shows us, anything that makes accessing music easier has proven to be a boon to the music industry. The Apple Watch will go hand in hand with the industry’s continued shift to streaming delivery. It offers enough features to make millions of people want to buy one without it having to be a fashion accessory (although it clearly can be that as well), and it’s only a matter of time until its users discover the ease at which they can access the music they love.

While artists continue to complain about the low royalties received from streaming services (which requires a post all by itself), anything that makes the pie larger can only be good for everyone involved in the business. The Apple Watch could go a long way to making that happen.

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Jay Z Agrees to Pay 50% of Royalties Due to Copyright Infringement

Written by Nina Ulloa -- Pharrell and Robin Thicke aren’t the only artists being forced to pay up for copyright infringement...

According to the Daily Mail, Jay Z has agreed to pay 50 percent of royalties from the song "Versus" to jazz artist Bruno Spoerri. Last year Spoerri said that Jay Z copied his song without seeking permission. Jay Z initially denied the accusation, but recently changed his tune.
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Spoerri says that if Jay Z had just asked in the first place it "would have been relatively cheap."

Comparison A...

Comparison B...

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'Blurred Lines' Verdict: How It Started, Why It Backfired on Robin Thicke and Why Songwriters Should Be Nervous

Written by Ed Christman -- Most civil lawsuits, some say 90 percent of them, are settled before they ever go to trial. The same holds true for copyright infringement lawsuits, say music industry lawyers. Most infringement cases are settled before they go to trial.

Lots of writers of hit songs get approached by people who claim infringement under the hopes that the songwriter will choose to make some kind of settlement offer so that they will go away.

Songwriters tend to ignore frivolous infringement claims because they know it's costly for those claiming infringement to mount a lawsuit. But if you are the author of a huge hit song with large revenues coming your way --and some similarities exist between the songs -- you may decide to settle rather than run the risk that of an unpredictable jury trial. Yet the "Blurred Lines" co-writers, Pharrell Williams and Robin Thicke (but not third co-writer Clifford "T.I." Harris) started the proceedings that led to the trial. The "Blurred Line" co-writers sued Marvin Gaye's family, seeking declaratory relief from a judge that their song was non-infringing on the Gaye Song, "Got To Give It Up."

What lit the fuse that started the lawsuit?

"Pharrell is a very accomplished songwriter producer and he doesn't want his reputation tarnished as an infringer, which is probably why he sued," says one industry executive. "Thicke's and Williams integrity were being called into question."

Another reason for the pre-emptive move: the "Blurred" songwriters probably wanted the venue to be in Los Angeles, says Manatt, Phelps & Phillips' entertainment & media litigation practice co-chair Robert Jacobs. The move could have been precedent setting if Thicke and Williams had prevailed, he adds, then other songwriters and lawyers may have started using the pre-emptive lawsuit as a strategy to push back on spurious claims.

While Harvey Geller, with the Los Angeles law firm of Gradstein & Marzano, agreed it was interesting approach, he still questioned the strategy. "If they want to settle and you instead sue, you are guaranteeing yourself a long and nasty legal battle. It was a really odd procedural maneuver. When you sue somebody, the one thing you can practically guarantee is you will get a cross complaint."

Can jurors in an infringement trial understand copyright law and music theory?

"Anytime you go to a jury, you are taking a crap shoot of what they will understand and get out of the testimony," says the music publishing executive. "You could have the musicologist testify for hours and hours, and at the end no one will know which way is up." Besides adds Atlas Music Group ceo Rich Stumpf, "When you talk to the musicologists and you ask them for an opinion, it all seems to be subjective."

But can't the jury just listen to the music and make up their own mind if one song borrows from the other?

Usually, but in this case the Judge ruled that the Gaye family couldn't play the songs at trial. "The Gaye family was limited to what was filed with the copyright office, and that was a lead sheet," says the music publishing executive. But Larry Iser, Managing Partner of Kinsella Weitzman Iser Kump & Aldisert, opined out that once the judge ruled against the songs being played "even the Gaye expert struggled to find elements in common in the lead sheets of the two songs. The two songs share more of a genre, style and feel than a note by note copy."

Yet, at the end of the trial, the lawyers for Thicke and Williams played excerpts of the two songs for the jury. Could that have been a factor in the jury's decision, wonders the music publishing executive.

How do publishers and record labels protect themselves in these types of situations?

"When publishers cut deals with songwriters, every song comes with a warranty that indemnifies the publisher," says Atlas Music's Stumpf, who says even with that, if the song sounds like some other song, usually the publisher will go back to the writer and ask about the two songs. Still, "the publishers make songwriters sign that the song is an original work and what proportion of the song they created and that is what the publisher relies on. If there is a successful infringement lawsuit against your writer's song, the publisher could say 'we relied on you so you owe us,' but most publishers wouldn't do that. But when you have a case like this with this amount of money at stake, it reminds you that you have to be careful."

In fact, in cases with this kind of money, the publisher may very well expect the songwriters to write a check to the publisher, if they had to give up their share of the songs' revenue. "Most of the time, the artist and songwriters doesn't have the money to pay back the publishers, so it's more likely they negotiate some kind of business resolution," says Gradstein's Geller.

How will the jury's decision that Blurred Lines infringes on "Got To Give It Up" impact songwriting and infringement lawsuits?

Up until now, the music industry thought you can't copyright a vibe, feeling or a genre," says a music publishing executive. "Infrigement has to be based on some element that is copyrightable." But does the "Blurred Line" decision now change the ballgame, some wonder.

But now that the jury ruled against Thicke and Williams, it may inspire other lawyers to sue over "genre and feel" instead of the song as it was written, Kinsella Weitsman's Iser says "The whole point of copyright is to progress the art or transform music. If you want to pay homage to someone like Marvin Gaye and then they can come sue you that would be contrary to the purpose of copyright."

Stumpf agrees and notes, "If you are songwriters you have to be a little nervous. You have all of these years of influence in your sub conscience, it can be a scary situation when you think you own some song you created and then you find out otherwise. And as times goes on and more songs come out, there are sonic things going on in your sub conscience."

Or does nothing change for songwriters?

"The case has the potential to cause songwriters to think twice but the truth of the matter is that songwriters rely on their own creative juices. I don't what happens will change the way people do business," says Manatt Phelps & Phillips Jacobs. "Its just another cautionary tale of what can happen."

Gradstein's Geller says the idea that this lawsuit "will chill artist creativity is nonsense. This is a straight infringement case. You always hear arguments about precedent in cases like this and that the world will end if it is decided a certain way. But the world always goes on. This is not out an out of the ordinary infringement case. I just don't see the precedent-setting issue here. Its a run of the mill infringement case."

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Saturday, March 14, 2015

Pointing Fingers on Music Royalties

Written by Leslie Stimson -- There usually isn’t much agreement among the witnesses during a hearing on music licensing copyright royalties, and Tuesday’s wasn’t really different.

About the only thing those from the worlds of songwriters, publishers, record labels, broadcasters and Pandora sort of agreed on is the lack of transparency about where the money goes. But they didn’t agree on how to fix that.

Officially, lawmakers on a subcommittee of the Senate Judiciary Committee were probing for answers on whether Congress should get involved as the Department of Justice reviews the ASCAP and BMI consent decrees governing terrestrial and digital music licensing and those royalties. ASCAP and BMI want the consent decrees to be relaxed, calling them outdated.

The NAB and Pandora cautioned the committee about passing laws to loosen the consent decrees, instituted in the 1940s to prevent anticompetitive behavior. ASCAP CEO Beth Matthews said the organization is not asking to end the consent decrees but to modify them so they can reach a rate decision without a costly and time-consuming decision by the rate courts.

To that, Bonneville International VP of Business Affairs/General Counsel Mike Dowdle, testifying for NAB, said arbitration is not really less expensive or less time-consuming. “Be careful what you wish for.” Based on past behavior, ASCAP and BMI would engage in anticompetitive behavior if the consent decrees were relaxed, he said, unless there is a “regulatory construct” to prevent that.

Artists and their labels and publishers say they’re getting less money per song as consumers switch from buying music to downloading it and borrowing it. Nashville Songwriters International President Lee Thomas Miller said “the current legal framework that allows songs to be streamed for nearly free … will destroy the American songwriter.”

Noting that if he has a hit song, he gets a plaque when that song reaches 50 million or 100 million spins on terrestrial radio but it’s a different ballgame when it comes to spins on Internet streaming services. “At one million spins we’re taking our kids to the movies. One hundred million spins is worth a few thousand dollars. How is that fair and where is the middle ground?” Miller asked.

Pandora VP Business Affairs Chris Harrison said at $450 million in 2014, Pandora pays more in royalties than either terrestrial or satellite radio. Last year, Pandora would have paid Miller and his co-writers about $7,000 for “Southern Girl,” and close to $90,000 to Tim McGraw (who sang the song) and his label. “This disparity must be solved by the copywriters themselves, not on the backs of services like Pandora,” said Harrison.

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A Cheat Sheet for Copyright Reforms: Radio Royalties, Simplified Licensing & More

Written by Ed Christman and Glenn Peoples -- The complex issue of copyright reform took center stage during the Grammy Awards telecast on Feb. 8 when Recording Academy chief Neil Portnow urged Congress to ensure that "new technology [pays] artists fairly." His comments echoed some of the contents of a 250-page music-licensing report issued just three days earlier by the U.S. Copyright Office. Congress may or may not enact some of those recommendations into law -- but if it does, the ramifications are enormous.

1. Recommendation: "More equal footing" for master and musical work rates. Record labels currently earn up to 12 times more digital performance royalties than publishers.

  • Winner/Loser: Digital services will be hard pressed to pay much more, so greater parity between rates means publishers' gains will be labels' losses.

2. Recommendation: Bundled rights: That is, the creation of music rights organizations, basically enhanced versions of performing rights organizations like ASCAP and BMI, to which publishers would license their mechanical and performance rights. In turn, interactive digital services would receive blanket bundled licenses, making licensing simpler.

  • Winner/Loser: All parties win, especially if this change is accompanied by another Copyright Office recommendation: a comprehensive, unified song database.

3. Recommendation: Extend public performance right in sound recordings to terrestrial radio -- meaning record labels and performers would, for the first time, receive royalties for AM/FM airplay.

  • Winner/Loser: Labels and artists win, getting a new revenue stream. Broadcasters lose because they would have to pay new royalties.

4. Recommendation: Federalized copyright for pre-1972 recordings. While songs recorded before Feb. 15, 1972 are covered under copyright by state law, services like SiriusXM and Pandora do not recognize it or pay royalties on those recordings.

  • Winner/Loser: Recording artists and record labels win; digital services lose, paying additional royalties. But labels also lose because full federalization would give artists the right to terminate copyright and claim pre-1972 recordings.

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