Beruflich Dokumente
Kultur Dokumente
Mission Statement
Mechanical Dues & RightsFlow The Music Business Journal, published
By Trish Hosein at the Berklee College of Music, is a stu-
dent publication that serves as a forum for
intellectual discussion and research into the
various aspects of the music business. The
goal is to inform and educate aspiring music
professionals, connect them with the indus-
try, and raise the academic level and interest
inside and outside the Berklee Community.
The digital age of music has intro- tions like the Harry Fox Agency have begun
duced new legal forms of music consumption to enter the online forum with services like
that do not correlate clearly with the previous Songfile, which radically eases the process of
licensing laws. These old laws were created obtaining mechanical licenses. With Song-
at a time when the recorded music industry file, an artist can shop through HFA’s entire
revolved around physical sales and traditional database of publishers, select a song, and ob- Archiving Sound
radio play. They do not address, however, ser- tain the license in minutes from the comfort Page 8
vices like Rhapsody, where streaming audio is of their own home.
not public performance, nor is it a transaction
of ownership. In some cases, these gray ar- Enter RightsFlow
eas have allowed royalties to slip through the
cracks, never reaching the hands of the rightful On the other hand, since Songfile The Promise of India
copyright owner. is a Harry Fox service, its possible mechani- Page 12
cal licenses are limited to HFA catalogues.
Music Collections Redefined Fortunately, a company called RightsFlow is
rapidly gaining momentum, offering a similar
Over the last five years, the Copyright service that boasts a much larger catalogue.
Royalty Board has attempted to set rates and Founded in October of 2007 by intellectual
regulations to clarify the dispute over how new property and copyright specialist Patrick Sul-
Microfunding Music
media royalties and licensing should be han- livan and partner Ben Cockerham, the compa- Page 6
dled. In 2006, after a lengthy debate between ny acts as a middleman between those seek-
webcasters and copyright owners, the board ing licenses and those that do the licensing.
ruled that non-interactive webcasts would pay
royalties on a per listener basis, while ringtones In addition to mechanical licenses
would have a hefty statutory rate of 24 cents. for physical and digital distribution, Rights- Carbon Footprints
A decision on royalty compensation regarding Flow also does the licensing for ringtones, Page 10
interactive streaming was issued in 2008, which online subscription services, and limited
paid royalties on a per-play percentage of a download services. The company clears the
blanket royalty rate. These steps were integral licenses and assures that the royalties accrued
in the birth of the independent, non-profit per- from copyright use are accurately accounted
formance rights organization, SoundExchange. for and paid to the proper recipients. The An Affordable Pro Tools
The organization is responsible for collecting RightsFlow service is segmented into four
digital royalties from non-interactive streaming, separate branches: Limelight, Limelight Pro- Page 14
internet radio, cable TV and music channels and fessional, RightsFlow Enterprise, and Rights-
distributing these royalties to artists and master Flow Music Service. Each one provides the
recording owners. In addition, the digital age same basic licensing service, but tailors the
has created changes in the ways that artists go approach to fit the needs of its varying clien-
about obtaining mechanical licenses. Organiza- tele.
(Continued on Page 3)
Volume 6, Issue 2 Music Business Journal
Technology continues to reshape the changing landscape of the business. Trish Hosein kicks RightsFlow & Limelight........................1
things off with an informative piece on RightsFlow and its innovative approach to online mechanical Old Formats Die Hard...........................4
licensing. Luiz Silva also shares a well-researched look at US Copyright Law as it relates to digital Polyphonic.............................................5
music. The diminished use of physical distribution mediums is causing lawmakers to reassess laws Finding Funding....................................6
originally written to protect tangible product. Recording technology also continues to bud with the EMI........................................................9
recent release of the highly anticipated, Pro Tools Native. Hunt Hearin provides us with a timely Green Music.........................................10
report on the new software and its significance to the home studio market. Sony & FIFA........................................11
India’s Evolving Music Market...........12
As technology moves forward, the window of possibility for independent labels and artists is Branding & Blogs................................13
steadily opening. Dean Miller reports on the growing number of indie labels that are distributing their Pro Tools Goes Native.........................14
product on formats thought to be extinct; cassettes, vinyl, etc. Nick Susi has also provided us with a
thoughtful analysis of new indie label, Polyphonic. No advances and no copyright ownership- this Law Section
label is striving to reinvent the wheel.
Saving Sounds.......................................8
Artist Branding is quickly becoming an essential factor to surviving in the digital world. Kerry
Fee discusses the ways in which artists are beginning to harness this concept’s power. In addition, MBJ Editorial
Mike King –marketing director at the Berklee College of Music- has provided a very revealing piece
about the fan-funding site, Kickstarter.com. Studying the details of successful funding campaigns,
Mission Statement...................................1
King has compiled a set of information that is guaranteed to change the way you think about fan-
Editor’s Note...........................................2
funding.
Upcoming Topics...................................16
Reporting abroad, Sahil Mehrotra offers a detailed piece on the developing music industry in In-
dia and the ways in which international factors aid its expansion. Mia Verdoorn also shares a detailed Sponsorship
account of her summer internship at Sony South Africa during the FIFA World Cup.
Berklee Media....................................... 15
As environmental awareness spreads, an increasing number of companies and organizations are
“going green.” This month, Minden Jones brings a telling article on the numerous advantages of a
green music industry. Lastly, I’ve provided a detailed report on the court case that will decide the fate
of the EMI record label. Equity investor, Terra Firma challenges its lender, Citibank, in federal court
on alleged claims of fraud.
It gives me great pleasure to introduce this latest issue of the Music Business Journal. My hope
is that you will find it both timely and informative. Be sure to check us out on thembj.org and our
Facebook group page.
Evan Kramer
Management
Editor-in-Chief............................................................................................................................................................... ...Evan Kramer
Content Editor.........................................................................................................................................................................Nick Susi
Webmaster..................................................................................................................................................................Itay Shahar Rahat
Faculty Advisor and Finance.....................................................................................................................................Dr. Peter Alhadeff
Layout Editor..................................................................................................................................................................Lau Meng Wai
Marketing Manager.......................................................................................................................................................... Minden Jones
Contributors
Editor’s Note.....................................................................................................................................................................Evan Kramer
Business Articles...................................................................................................Kerry Fee, Hunt Hearin, Minden Jones, Mike King
Business Articles (cont)............................................................Evan Kramer, Sahil Mehrotra, Dean Miller, Nick Susi, Mia Verdoorn
Law Section...............................................................................................................................................................Luiz Augusto Buff
Staff.............................................................................................................Witt Godden, Ben Hong, Trish Hosein, Gabriella Howard
Staff (cont)........................................................................................Dean Millser, Silvina Moreno, Dahyun Ed Jeong, Mia Verdoorn
Business Articles
RightsFlow & Limelight (cont.)
RightsFlow’s Limelight As of right now, Limelight claims to More Limelight Services
be able to clear licenses for any previously
Limelight is currently RightsFlow’s recorded song. RightsFlow works with the RightsFlow aims to ease the me-
fastest growing brand, providing indepen- Harry Fox Agency and an assortment of chanical licensing process on all levels of
dent musicians with unlimited accessibility smaller independent agencies and publishers the music industry. Limelight Professional,
to affordable mechanical licenses on a user- to obtain mechanical licenses for the major- which caters to independent record labels,
friendly platform. The service is available ity of songs requested. With some of these and RightsFlow Enterprise, intended for ma-
to anyone who can cough up the meager $15 companies, a blanket license is negotiated for jor labels and distributer’s, both operate on
service fee plus the statutory reproduction Limelight users, while others have agreed to the same basic concept as Limelight, but on a
costs. It also provides complete assurance a rolling schedule license, where additional larger scale. Contrary to Limelight however,
that 100% of the behind-the-scenes paper compositions can be added to the license Professional and Enterprise both provide
work regarding legalities and royalties will with publisher’s approval. If the publisher accurate and detailed royalty reports and
be handled. cannot be reached, compulsory mechanical earnings statements for their clients to ac-
licensing is utilized and RightsFlow takes on curately track the use of licensed copyrights.
In years past, independent artists the arduous accounting and legal tasks that RightsFlow’s fourth branch, RightsFlow
had to endure a far less accommodating pro- go along with that. Music Service, delves even further into data
cess in order to obtain a mechanical license. tracking by supplying licensing reports for
Until Limelight, an artist’s only option started It is important to note that while major online music services like Rhapsody.
with acquiring a compulsory mechanical li- copyright law only requires mechanical This program determines to whom, and how
cense directly through the US Copyright royalties to be paid once a physical album much the employing company owes royalties
Office. However, the regulations and re- is printed (or a digital/ringtone download is whilst supplying monthly, quarterly and an-
quirements involved with obtaining (not to purchased), Limelight demands all royalties nual royalty statements. So far, after only 5
mention maintaining) this license were excru- to be paid upfront. What is interesting about years in business, RightsFlow has accumu-
ciatingly time consuming and, at times, rather this upfront payment process is that it is lated a sizable list of well-known partners
expensive. Monthly audits by an accountant completely up to the user to honestly report including companies like EMI, CdBaby and
and royalty due dates on or before the 20th the number of intended copies, as Limelight Muzak.
of every month were required or the license has no real way of tracking how many cop-
would be revoked. The only other option was ies are actually printed and sold. Tradition- Market Potential and Risks
to negotiate a license with the publisher di- ally, when obtaining a mechanical license,
rectly, yet this was a complex legal process whether negotiated or compulsory, detailed With the largest catalogue of me-
that many small artists would not have been royalty statements had to be presented to the chanical licenses available, and a well-tai-
privy to. publisher. With Limelight, it is assumed on lored service for users of all kinds, Rights-
good faith that the artist will notify Limelight Flow has certainly created a very lucrative
The barricades that prevented an if they wish to sell any more copies of the market for itself. Having handled over 1 mil-
unknown artist from receiving the proper li- covered song than originally expected. lion licensing transactions in its short history,
cense not only discouraged them from further the company is well on its way to establish-
pursuing the issue, but in many cases also This may seem to be a rather open ing itself as an industry standard. Yet, when
meant that covers were recorded and dis- ended policy, leaving many concerned that one is in the business of dealing with such
tributed without mechanical licenses at all. adequate mechanical royalties will not get complex legalities, there is enormous op-
More often than not, this was not a question paid to the writer. It is reasonable to con- portunity for problems to arise. For instance,
of whether or not an artist wanted to pay; it clude, however, that the average Limelight an issue could stem from copyright law’s re-
came as a result of not knowing how. customer utilizes the service because they quirement that a song covered by a compul-
actually want to pay the right mechanical sory mechanical license cannot change the
With Limelight, the process of royalties to the respective artist. It is also “fundamental character of the work”. With a
clearing a license through the online website worth noting that services like Limelight are bulk licensing system, there is no way to en-
-songclearance.com- is simple. The service actually bringing in royalties on copyright sure a writer that their music’s “fundamental
takes the information on the song intended for use that would have otherwise been pirated character” will remain in tact, perhaps lead-
use, such as the title, songwriter and publish- by making the process so much more ac- ing a string convoluted legal complications.
er, as well as information on how the client cessible. As recording technology becomes These are just a few of the countless poten-
intends to use it. Then, the number of intend- less expensive and more available, an un- tial “honorary slipups” that could arise in a
ed copies (or digital downloads/ringtones) as precedented number of independent artists licensee’s copy report. Nonetheless, Rights-
well as the length of the song is used to calcu- are recording and distributing music – thus, Flow’s innovations in mechanical licensing
late the statutory rate applicable and total the expanding the market for services like Lime- are still moving the industry in a very posi-
sum of royalties owed to the publisher. Once light. tive forward direction.
the projected royalties are computed, a $15
dollar fee is tacked on for service. For fre-
quent users, the fee is incrementally reduced
with each purchase.
Business Articles
Indie Labels Tap Old Formats
By Dean Miller
An increasing number of small in- analog format. They also feel as though they leg; it’s just that Jon and I do have to put
dependent record labels are surviving based are doing their part in supporting the artist. a lot of work into each and every release,
on a new alternative Do-It-Yourself culture, so it’s nice to see a reward…Once a re-
which has a genuine love for old analog for- A Special Listening Experience lease is sold out, though, we usually have
mats. Traditionally, these labels are under- no problem with supplying the mp3s for
dogs, thriving in areas that the over-manned Given their attachment to the prod- the people that missed out or just want it
and over-funded major labels ignore. They uct they trade, sellers of this niche market on their iPod. [Sometimes], we’ve even
tend to specialize in locally played musi- view piracy with mixed emotions. For some, given away entire releases in digital for-
cal genres, even though self-produced mat on which we had our won physi-
bedroom-pop seems to be the flavor of cal stocks. Why? Because, the most
choice. important thing, ultimately, is that the
music gets heard. That’s why we’re
The Trend doing this in the first place.”
Business Articles
Polyphonic : An Artist-Friendly Label in the Making
By Nick Susi
It would seem that artists, both es- increases. The immediate opportunity to earn Despite numerous attempts,
tablished and aspiring, are searching for more money is appealing to artists, since under a Polyphonic has been unsuccessful in ob-
flexibility and freedom in their careers. There traditional label deal, an artist is instantly in- taining venture capital investments. Yet
is a surging demand for alternative options to debted to the label through the requirement of the company remains undeterred, still
traditional label deals, and therefore, industry recouping their advance. working to prove to investors that their
executives are being forced to reexamine and new model has potential. But since the
adapt their business models to meet this de- Polyphonic uses its connections to company’s creation in the summer of
mand. The question is, are these alternative help artists build a team for publicity, mer- 2009, Polyphonic has received little pub-
business models sustainable? chandise, and touring by contracting from licity and there are no artists signed yet to
outside sources. Taking a transparent ap- their roster.
The major labels – Sony, EMI, proach, Polyphonic encourages direct-to-fan
Warner, and Universal – have made a clear relationships without a visible buffer of a With able management backing
attempt at adapting to the ever-changing in- go-between label. Finally, Polyphonic leaves the company, and a business model that
dustry through the use of 360 deals. Control- all recording and publishing copyrights, and meets the needs of artists, Polyphonic
ling every facet of an artist’s revenue streams, master recording ownership in the hands of is still not getting the support it needs at
however, does not seem to fit this demand for the artist. This is an incredible new opportu- a time when its major rivals are failing.
flexibility and freedom. Granted, 360 deals nity for artists, since before Polyphonic labels From April 2010 to August 2010, War-
do appeal to some artists who are entirely ca- controlled the rights to the master recordings, ner’s stocks fell nearly 40%, from $8 to
pable of becoming extremely wealthy writing leaving artists with only a fraction of earned $4.64 per share. In August 2010, EMI’s
hit singles under this type of deal. Yet is also royalties. With Polyphonic, artists are given annual financial report stated a 512 mil-
fair to say that the business model for 360 total control over every aspect of their cre- lion pound loss. Even now, EMI is tan-
deals does not attract all artists. ative compositions and are allowed to share a gled in a massive legal battle between
more reasonable percentage of the profits. Terra Firma and Citibank, which is cer-
Thus, bold and new business mod- tain to be draining the label’s coffers.
els have begun to surface that show signifi- This new service certainly seems to
cant promise. A good example here is the fit artists’ demand for flexibility and freedom. Polyphonic could still prove to
alternative label Polyphonic, whose pedigree The abolishment of recouping advances and be an answer to the industry’s problems.
is impeccable. The company was founded by the right to full royalties are the most enticing If so, it would keep company with other
Brian Message, the manager of Radiohead factors by far. Even from the fan’s perspec- like-minded businesses that allow artists
and one of the minds behind the name-your- tive, this may be a preferred transaction mod- more freedom and flexibility in the mar-
own-price release of the band’s latest album, el. The money paid for albums makes its way keting, distribution, and financing of mu-
“In Rainbows” (from that album release, Ra- to the artist in a less roundabout way. “We are sic. Topspin, TuneCore, and Artist Share
diohead kept all of its profits and utilized the all witnessing major labels starting to shed are in that category.
Internet for cheap distribution and instant ac- artists that are hitting only 80,000 or 100,000
cess to fans). But behind Polyphonic there unit sales,” says Driscoll. “Do a quick calcu- BIBLIOGRAPHY
is also Adam Driscoll, the chief executive of lation on those sales, with an artist who can
the British media company MAMA group, tour in multiple cities, and that is a good busi-
“Polyphonic: Music Label That Promises Fairness to Artists.”
P2p File-sharing &
and Terry McBride, the creator of the Cana- ness. You can take that as a foundation and Torrent News, Top P2p Sites, Facts, Guides and Reviews. Web.
26 Oct. 2010. <http://www.p2pon.com/2009/07/12/polyphonic-
dian management firm, Nettwerk Music, who build on it.” music-label-that-promises-fairness-to-artists/>.
manages Sarah McLaughlin and the pop/rock “Resnikoff’s Parting Shot: Less Ownership, Less Long-Term
group Barenaked Ladies (the latter run their The Questions
Value... - Digital Music
News.” Home - Digital Music News. Web. 25 Oct. 2010. <http://
own label in order to keep a greater cut of www.digitalmusicnews.com/stories/072609polyphonic>.
their revenues). Others, however, are much more Stone, Brad. “Artists Find Backers as Labels Wane.” The New
York Times - Internet.
skeptical. Polyphonic has high promises for Web. 26 Oct. 2010. <http://www.nytimes.com/2009/07/22/tech-
The Promise the artist, but does create a sustainable busi-
nology/internet/22music.html>.
Business Articles
Lately, it seems that phrases like a balance between number of pledges and
“direct-to-fan” and “fan funding” have been overall percentage contribution of funds.” defeats the overall purpose of the campaign.
echoing off the walls. In the last few years, TABLE I illustrates his findings. By limiting a contributor’s options to a hand-
artists like Trent Reznor and Radiohead have ful of specifically defined ranges with cor-
pioneered a new kind of marketing using the In a blog post from his Official responding rewards attached, supporters are
Internet’s vast power of communication to Website, craigmod.com, Mod shares his in- forced to think bigger in terms of their dona-
make more personal connections with their sights on the data: tions.
fans. In many cases, this has yielded some
overwhelmingly positive results --Reznor “This data is, of course, hardly per- Based on the data collected, Mod
scored an in-pocket $750,000 in just a few fect (for example, not every project I looked and Rawlings put together the price tiers
days selling a limited-edition box set to fans at used the same tiers). But it’s good enough found in TABLE II, with corresponding re-
in 2008. to give us a sense of what price ranges people wards for each. TABLE II shows that the
are comfortable with. The $50 tier domi- lowest price tier offered ($25) only generated
However, at this point, most in- nates, bringing in almost 25% of all earning. 3% of the total earnings. A paltry 28 people
dependent artists would complain that the Surprisingly, $100 is a not too distant second (11% of total contributors) opted for this tier
luxury of these types of revenues is only at 16%. $25 brings in a healthy chunk too, while 155 (59%) went for the $65 tier. Also,
available to those that have a pre-established but the overwhelming conclusion from this the $100 tier got more than double the dona-
fan base. On the other hand, authors Craig data is that people don’t mind paying $50 or tions than the $25 tier (64 compared with 28).
Mod and Ashley Rawlings, would beg to dif- more for a project they love. It’s also worth Lastly, as the amount of each tier climbed, the
fer. In funding their latest book, Art Space contemplating going well beyond $100 into number of contributions proportionally dwin-
Tokyo, the duo meticulously researched the $250 and $500 tiers: they scored rela- dled, yet the $850 tier still pulled in a higher
kickstarter.com’s greatest success stories and tively high pledging rates compared to other percentage of total earnings than the $250 tier
formulated a plan that generated an impres- expensive tiers. The lower tiers — less than with only 4 supporters.
sive $24,000 in just 30 days. Their findings $25 — are so statistically insignificant (bare-
provide some very enlightening information ly bringing in a combined 5% of all pledges) Promotional Considerations
that could apply to creators in all mediums. that I recommend avoiding them. Of course
this depends on your project — perhaps To spread word of the campaign,
Musicians and Variable Pricing there’s a very good reason for a $5 tier. More Mod and Rawlings engaged in an online pro-
importantly, this data shows that people like motional plan that focused on their permis-
Kickstarter is the definition of paying $25. Having too many tiers is very sion-based social medial touch points, as well
fan funding. Independent musicians, writ- likely to put off supporters. I’ve seen proj- as key design blogs and magazine sites that
ers, entrepreneurs, etc. can use the service ects with dozens of tiers. Please don’t do this. were completely in target with their psycho-
to present their idea to a world wide web of People want to give you money. Don’t place graphics and demographics. They focused
potential investors. The site allows anyone them in a paradox of choice scenario! Keep their messaging campaign using Twitter and
who feels so inclined to contribute money to it simple. I’d say that anything more than five Facebook (their messaging was relevant and
a given project by selecting one of the many realistic tiers is too many.” minimal, too), as well as their own mailing
price tiers available --ranging from $1 up list. Mod and Rawlings had built up an ex-
into the thousands. Contributors’ pledges In the case of musicians, Mod’s tensive mailing list of design and art world
are only used when the project has reached findings seem to correspond well with the contacts over the past 6 years, which they lev-
its funding goal, thus reassuring investors multi-tiered product offerings that are gain- eraged nicely. Examples of the spreadsheet
that their money is constructively going to a ing popularity on most artists’ websites. $1 with the timing and results of their targeted
go-project. These various price tiers are very downloads, $25 CD/ Poster sets, all the way email campaign, are found in TABLES III.
important (especially for musicians) because up to the $250 box sets; these price tiers cater
the amount a fan contributes is directly re- to the varying level of a fan’s commitment Perhaps the most impressive part
lated to their level of commitment to the art- to an artist. It is worth noting that, for musi- of the whole campaign was Mod’s outreach
ist, and the goods or services being offered in cians, the $25 tier might be a bit more use- strategy to the blogs that he felt were in line
return. ful than Mod and Rawlings found it to be in with what he was doing with his project, and
their book campaign. Nonetheless, Mod’s his method of communication to them. He
In selecting price tiers for the fund- data illustrates the fact that lower price tiers was not focused on the quantity of external
ing of their book, Mod and Rawlings looked are far less effective (accounting for only 5% outreach; rather, he was more interested in the
at the top 30 grossing Kickstarter campaigns of total earnings). In addition, giving inves- quality of the blogs he gave focus to. This is
to determine which tiers would be the most tors too many options to contribute small a marketing strategy that creators of all kinds
effective. This provided Craig with data that sums of money, in a way, encourages them to would do well to consider. As Mod describes
he could use --in his words-- to “look for give less instead of more –which to a degree, it:
(Continued on Page 7)
6 www.thembj.org November 2010
Volume 6, Issue 2 Music Business Journal
Business Articles
“I’m writing to blogs that I’ve TABLE I
been reading for years, so for me, referenc-
ing older posts of theirs and personalizing
these emails is trivial, and fun. Whatever you
do, don’t send scattershot emails to media
outlets. Be thoughtful. The goal is to appeal
to editors and public voices of communities
that may have an interest in your work, not
spam every big-name blog. A single post
from the right blog is 1000% more useful
than ten posts from high-traffic but off-topic
blogs. You want engaged users, not just eye-
balls!”
TABLE II
TABLE III
Law Section
With the advent of search engines. On the other hand, the pro- of preserved commercial recordings for ar-
sound recording at the end of the nineteenth tection and maintenance of digital audio re- chival purposes. The whole idea of preserv-
century, many different kinds of sounds – cordings is not at all simple. Problems like ing audio content is very positive and impor-
from musical performances and important server crashes and incompatibility of file for- tant to our cultural heritage; however, it is
government speeches to animal sounds and mats due to the successive releases of new crucial that any changes made in the existing
baby laughs – were captured and registered software are an everyday struggle. There system do not harm the copyright owners in
for future listening. In order to commercial- are many more positive and negative issues any way.
ize those recordings, early entrepreneurs to consider, but it is clear that digital storing
established an industry around these re- must be the preferred format to achieve the The study further emphasizes that
cordings that grew vertiginously, becom- objectives of recorded sound preservation. digital development does not ensure preser-
ing a fundamental part of our contemporary Hence, the archives require the development vation for present and future creations. As
cultural history. For years, it had been a of totally new preservation techniques. time progresses, newborn digital recordings
solid, profitable structure. Lately, however, are in similar danger of being lost, like old
it is undergoing drastic transformations. 78-rpm recordings. The dissemination
The transition to a digital age is causing of sound recordings is happening exclu-
a huge impact on the way sound record- sively in digital format, via downloading
ings – especially music – are commer- and streaming. Inexpensive tools for pro-
cialized, consumed and distributed. The duction and recording, matched with ef-
creation and consumption of recordings ficient marketing tools, allow new artists
are now occurring at a much faster rate to offer their productions directly to their
than the efforts involved in preserving costumers. Therefore, the institutions re-
this cultural heritage for posterity. sponsible for sound recording preserva-
tion will have to face challenges like the
In that regard, the US Con- diversity of file formats, possible virus-
gress assigned the responsibility to contaminated files, digital rights manage-
“maintain and preserve sound record- ment and legal issues related to the cap-
ings that are culturally, historically, or ture and maintenance of these files.
aesthetically significant” to the National
Recording Preservation Board of the Another arduous task will be the
Library of Congress (NRPB). This was discovery and selection of the record-
done through the National Recording ings to be preserved, due to the immense
Preservation Act of 2000 (Public Law quantity of potentially important mate-
106-474), that also required them to “... rial, extensively spread on the Internet.
undertake studies and investigations of Meanwhile, much information is being
sound recording preservation activities lost. For instance, a podcast that could
as needed, including the efficacy of new have great content for scholars may not
technologies, and recommend solutions be available the following month. It could
to improve these practices.” As a result, be due to the closure of the web site, or
NRPB published ”The State of Recorded an inability or refusal to pay royalties. As
Sound Preservation in the United States: a possible solution, the Library of Con-
A National Legacy at Risk in the Digital gress considered capturing the entire au-
Age.” – a comprehensive study that delin- To overcome this transitional dio material produced online. Although the
eates the web of issues that endanger the phase, NRPB envisions that a collective ef- modern industry has all of the technology re-
sound recording history. fort must be made. Different archives and quired to complete such a task, under the cur-
collectors should work together to avoid un- rent law and license agreements, it is illegal
There are several organizations, necessary costs caused by redundant efforts to copy this born-digital content to public ac-
both in private and public spheres, which of reformatting, cataloguing, and archiving. cess servers and to provide access to it in an
are committed to preserve the audio legacy That would help develop a new system in institutional setting. Dark archives – where
for future generations. More and more they which both old and new works are available data has restricted access until the content
are benefitting from the digital technology and preserved for posterity in a single digital falls into public domain – are suggested in-
to store files and manage their collections. format. According to the report, this would stead, but funding for an archive that has
Digital storage helps overcome problems only be possible with a change in copyright such limited use may be very difficult.
such as physical space – since long halls law, allowing the creation of a file-sharing
with countless shelves are being substituted network of credentialed institutions. They It could be said, as a student did
for hard-drives – and provides enhanced would acquire licenses to share digital files at an NRPB public hearing in 2006, that
(Continued on Page 9)
8 www.thembj.org November 2010
Volume 6, Issue 2 Music Business Journal
Business Articles
Business Articles
Currently, environmental issues be ordered and delivered directly to the buy- emissions of the sale of music products and
concerning greenhouse gases and CO2 emis- er’s home. Transportation accounts for 50% live music performances to UK consumers at
sions have become increasingly significant. of the greenhouse gases emitted. By cutting least 540 000 t CO2e per annum. Approxi-
In the summer of 2009, the Major Economic out customer transportation to the retail out- mately three-quarters of the industry’s GHG
Forum addressed these matters proposing let, CO2 emissions are greatly decreased. In emissions are attributable to the live music
that, by 2050, CO2 emissions should be re- this scenario, removing the retailer from the performance sector and approximately one-
duced by at least 50% from what they were physical distribution equation produces 1/3 quarter to the music recording and publishing
in 1990. Regardless of whether or not that less greenhouse gases. sector. The major GHG producing activities
bold idea is feasible, it is important to be- are audience travel (43%), live venue mu-
come aware of one’s own carbon footprint, sic events (23%), and music recording and
and the music industry is certainly no excep- publishing (26%), with smaller contributions
tion. Distribution, live music, and transpor- from music festivals (5% excluding audience
tation in the business contribute to energy travel) and music organizations (1%).”
consumption and the production of green-
house gases. The UK operates over 2000 live
music venues and over 500 annual festivals.
For example, a study entitled The Considering the 540,000 tons of CO2 emit-
Energy and Climate Change Impacts of Dif- ted by the entire UK music industry per year,
ferent Music Delivery Methods prepared in live performance venues and festivals alone
August 2009 by professors Christopher L. cause at least 400,000 tons of annual CO2
Weber, Jonathan G. Koomey, and H. Scott emissions, not to mention the amount of en-
Matthews for Microsoft Corp. and Intel ergy consumed. 175,000 of the 400,000 tons
Corp. to evaluate energy and CO2 output in of annual CO2 emissions are derived from
the distribution of music in physical versus audience transportation to the shows. More-
digital form. Its executive summary says: over, the use of diesel generators, trucking,
and tour busses all increase these CO2 emis-
“We find that despite the increased sions. Keep in mind, these statistics only
energy and emissions associated with Inter- reference the UK, and do not factor the ad-
net data flows, purchasing music digitally re- ditional emissions of all other countries.
duces the energy and carbon dioxide (CO2)
emissions associated with delivering music These findings led to the creation of
to customers by between 40 and 80% from a comprehensive guide on building a sustain-
the best-case physical CD delivery, depend- Clearly, digital media offers the able and responsible music industry, called
ing on whether a customer then burns the simplest, most direct means of distribution, the Green Music Guide. Julie’s Bicycle car-
files to CD or not. This reduction is due to thereby conserving the most energy in the ries the mission of reducing the UK music
the elimination of CDs, CD packaging, and process. The music is still produced in stu- industry’s carbon emissions by 60% from
the physical delivery of CDs to the house- dios, but afterwards, it is transferred to digital 2008 to 2025. They enforce recommenda-
hold. Based on our assumptions, online de- format and stored in an electronic data hub tions regarding how offices, venues, studios,
livery is clearly superior from an energy and until being purchased and downloaded by the festivals, touring, transportation, distribu-
CO2 perspective when compared to tradi- consumer. In this scenario, only 400g of CO2 tion, and merchandise can reduce their car-
tional CD distribution”; p.3 per album are produced, compared with the bon footprint. Their four major guidelines
latter example’s 3200g. Carbon emissions are are: 1) assess how much greenhouse gas your
Prior to the digital distribution aggravated, however, if the consumer decides business produces each year, 2) reduce en-
model, a long, complicated process of physi- to burn their digital downloads to CDs, and ergy consumption in buildings, 3) influence
cal delivery was used to bring music to the even further, if that CD is stored in a pur- your business’s supply chain to decrease
hands of consumers. The CD itself, the re- chased jewel case. Overall, digital music their emissions, and 4) support electric sup-
cording process, and the packaging (leaflet, delivery can make a significant difference in pliers who output low carbon emissions.
jewel case, shrink-wrap), all produced en- reducing greenhouse gases.
ergy consumption and waste. Furthermore, From the touring side, these rec-
shipping the product from the warehouses, to Environmental activist group, Ju- ommendations include keeping the lighting
the retailer, and finally to the consumer also lie’s Bicycle, commissioned the Environ- turned off when the rig or performing hall is
contributed to an estimated per album CO2 mental Change Institute at Oxford University not being used. Also, turning off the exterior
emission of 3200g of CO2. to conduct a study that would evaluate the lights can help save CO2 emissions while
greenhouse gases emitted by the UK music saving money for the venue. Creating differ-
For the consumers that absolutely industry. In their findings, they report: ent heating and cooling zones is free and it is
must get their hands on a physical copy of estimated to see savings within six months.
their favorite band’s latest album, CDs can “We estimate the greenhouse gas If every venue implemented these recom-
(Continued on Page 11)
10 www.thembj.org November 2010
Volume 6, Issue 2 Music Business Journal
Business Articles
Business Articles
Bringing a new style of music sence, the Indian pop music market had been music in direct correlation with faster down-
into a market of over a billion people, and created thanks to Churamani’s way of distrib- load speeds.
finding the right distribution channels for uting international music and the introduction
such a style, is anything but a simple task. of MTV into the marketplace. Star Network It is unclear how much the music
Atul Churamani, a music producer con- even went on to create their own version of industry is benefiting from the distribution of
sidered to be one of the principal innova- MTV called Channel V. music via wireless mobile networks because
tors of popular music in India, managed to telecom carriers don’t provide any informa-
achieve such a feat when he brought west- The Future tion on what percentage of music sales they
ern popular music into the market. In 1988, keep for themselves. However, professionals
Churamani joined Magnasound India, a Distribution for music in India has in the music industry have noted it is upwards
production company that had just acquired drastically changed since the turn of the 21st of four-fifths. Regardless of the low cut given
the exclusive license for Warner Music in century. CD’s, and even more so MP3s, have to labels, the distribution of music through
India. replaced the cassette tape, and offer higher telecom companies has definitely boosted the
audio quality amongst other benefits. In market for the music industry in India. Again,
A History particular, the format has proven extremely it definitely benefits the music industry that
popular because of its ease of distribution via almost all the musical content provided
At the time, the music market- cell phones. There are 670 million wireless through cell phone networks is legitimate and
place was suffering from two major prob- subscribers in India, out of which ringtones, not pirated.
lems, according to Churamani. The first and music already pre-loaded onto phones,
was that music was only distributed on account for 30% of the Indian music indus- With a population of over a billion
poor quality cassette tapes. The other prob- try’s 7.5 billion rupees—or a revenue of $168 people--of which not even half have access
lem was that India only received interna- million. Only 7% of the population (81 mil- to the Internet or mobile phones—there is a
tional albums months after they’d been re- lion) uses the Internet on personal computers. lot of optimism that the Indian music industry
leased in their respective countries (mainly It is clear that the emerging cellular market will grow. With the right distribution chan-
the United States and Britain). By the time has a huge potential to bring all sorts of con- nel bringing an end to pirated music, one can
the albums reached India, the market was tent, particularly music, to people all across hope that the record labels within India will
already flooded with pirated copies, mak- the nation, including rural areas that would begin receiving larger percentages of music
ing it very difficult for international releas- otherwise have no access to digital media. sales from the cellular network providers, and
es to sell successfully. Although some people do use internet café’s continue providing music for the nation as
for their internet browsing, rural folk, which digital content continues to spread.
In order to fix these problems, account for around 73% of the population, do
Churamani took advantage of being the ex- not access them. However, cell phones have
clusive Indian licensee for Warner Music become increasingly popular in the country- Sources:
and began releasing international albums side. An additional benefit to the distribution
[1] The Wall Street Journal Online - http://blogs.wsj.com/
in attractive packaging, on higher quality of digital music via mobile phone networks
indiarealtime/2010/10/22/mobile-not-net-drives-indian-
cassettes, and at highly competitive prices. is the fact that mobile phones are less vulner- music-sales/ (Oct 2010)
This in turn resulted in a substantial rise in able to digital piracy because wireless carriers
the legitimate international music market. have much more control over what content is [2]http://www.wipo.int/wipo_magazine/en/2010/05/ar-
The demand for legitimate international available. ticle_0003.html (Sept 2010)
music was quickly growing and in 1991,
Star Network facilitated the launch of MTV Mobile Music Is It [3] Physorg.com – Mobile music a cell-out in India (2006)
into the marketplace. At the time though,
[4] India Technology Investments – “Magnasound India
MTV was only playing music videos from Bharti Airtel, the largest wireless Ltd.” (2000)
artists within the United States and Britain. carrier in India, reported in 2009 that their us-
However, according to Churamani, ap- ers completed over 200 million downloads of [5] Mobile internet in emerging markets – “How the mobile
proximately 70% of the local music within music content. Although the pricing for mu- internet will transform the BRICI countries” (Sept 2010)
India was coming from Bollywood, so he sic is much lower in India than in the Unit-
jumped at the opportunity to incorporate ed States, approximately 33 cents for a ring [6]http://en.wikipedia.org/wiki/Demographics_of_
India#CIA_World_Factbook_demographic_statistics
the local Bollywood music into MTV. tone, the market is still growing. Analysys
Mason, a telecom and media-consulting firm,
In 1992, Magnasound India pro- believes that the true potential of the music
duced two music videos by local artists, market, measured by mobile music penetra-
an English-singing female vocalist by the tion, has yet to be tapped. India is currently
name of Jasmine Bharucha, and a Hindi at around 30% penetration for mobile music
rapper by the name of Baba Sehgal. Baba’s services where China is currently over 80%.
music videos became so popular that his al- Once a faster 3G wireless network becomes
bum reached sales numbers unprecedented available it can be speculated that the new
by any local pop artist before him. In es- network will also boost downloads of digital
12 www.thembj.org November 2010
Volume 6, Issue 2 Music Business Journal
Business Articles
In the current music market, personal Recently, non-music related busi- that has a strong image is a prime target for
branding, sponsorships, innovative distribution, nesses have been seeking brand equity re- such deals. Companies are getting comfort-
and public image have all become key aspects lationships, i.e. using an artist to deliver able connecting with these new artists be-
for an artist’s success. These concepts are valu- themselves to a specific audience they want cause fans adore them, and blogs passionate-
able tools that artists are using to their advantage to connect with. Music is a part of the con- ly cover them. “Indie artists have audiences
to differentiate themselves in a market of clear sumer’s daily life and conversation. The key that believe what they say, and partnering
over saturation. In each case, an artist’s utiliza- is to portray an honest image and to be aware with that kind of credibility means more to a
tion of branding needs to be considered, and of credibility and consistency issues. consumer than connecting with an artist who
most importantly, its effectiveness on consumer just has mass popularity,” says Jeff Tammes,
behavior must be examined as well. There are Many major campaigns have arisen senior VP of strategic marketing at Corner-
recent developments within the industry that are within the past few months, including Nata- stone. “Some brands are willing to grow with
creating trends and testing new angles of pro- sha Bedingfield’s partnership with boutique an artist, and use these lanes to connect with
motional branding and image establishment. hotel chains, Keith Urban with Target, John a demographic honestly and thoughtfully, be-
Legend & The Roots with American Express, cause all in all, it is about building a commu-
Essentially, every artist is a product, Zak Brown Band with Dodge, and Drake, Pit- nity with an artist, protecting it, and finding
and the current industry demands that an artist bull and Trey Songz with Kodak. Finally, a a new audience. This in turn, will generate a
to be able to market themselves on a variety of promising partnership is Converse’s yearlong large amount of revenue for the indie artists.”
levels. Artists also owe it to themselves to look campaign centered on British talent, such as
at their art as a commodity, following a similar Hot Chip, Bitman & Roban, Hot City, and Brands and sponsorships are be-
progression as a company would with releasing New Order. coming the new labels for many artists --able
a product. Market research, target demographic, to generate substantial revenue and combine
and consumer demand for what you are trying Converse has identified its market, marketing, advertising and PR all in one. The
to do must be carefully examined in order to and created an agreement that is beneficial for Economist magazine recently placed the val-
hurdle over the clutter. Branding has become a them and their clients. Bands are promoted to ue of sponsorships in the USA at about $1.8
new way to connect with fans, reaching out and clients and fans through Converse’s website billion dollars , a figure that is equivalent to
pulling two communities together. and other means, and the company narrows its roughly a half of annual concert ticket sales.
marketing by learning from each band’s loyal Clearly, this part of the business, which used
The ultimate decision is how to craft fan base. Over the summer, the company also to be unaccounted for, is expanding. Quest-
the brand to compliment your art. In order for paired up with Kid Cudi, Vampire Weekend, love, percussionist for The Roots, summa-
any personal brand or partnership to be success- and Bethany Cosentino of Best Coast for the rized the current sentiment at a recent press
ful, an artist or company must determine what single “All Summer,” as part of their “Three conference. “There is no more selling out”,
they do well. Everything starts with authentic- Artists, One Song” collaboration campaign. he said, “just selling.
ity. Artists should not attempt to sell themselves
to everyone, but should take time to evaluate Although many wide reaching Sources
their demographic, and be sure the brand is the mass media deals are only seen with artists [1] The Economist, “What’s Working In Music”, Oct. 9,
2010; 101-103; 102.
right match before moving forward. of a superstar level, the model is beginning to
change. To many companies, a debut group
Business Articles
Upcoming Topics
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Some of the topics we will tackle in and once in the Summer.
next month’s issue of the Music Business
Journal:
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member of the editorial board. The journal’s
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