Mastering the Hustle: Making Money in Today’s Music Economy

MasteringTheHustle_GatheringSpace_May13 RESIZE MONEY

KEXP, Upstream Music Fest + Summit, and MoPOP have partnered together to present Mastering The Hustle: a new panel discussion with six annual events, tackling a different topic to help emerging artists make better decisions earlier in their careers. Throughout the series, we’ll be discussing everything from how to get airplay, legal and licensing, healthcare for artists, and promoting your brand.


In the third installment of our Mastering The Hustle series, hosted on location at Upstream Music Fest + Summit, we talked with a panel of experts on one of the most pressing questions musicians fact today: Making Money in Today’s Music Economy. For anyone who’s played music in the past couple decades, you know how much the industry’s changed and how hard it can be to generate an income from your music. However, it’s not impossible. We assembled a team of experts to help shed light on how to protect your music and collect royalties. In the recorded video below, you’ll hear from Chair of Washington Lawyers for the Arts and IP Team Leader at Cairncross & Hempelmann Jeff Nelson, Executive Director at CASH Music Maggie Vail, and Wade Metzler who does Artist and Industry Relations at SoundExchange.

Music Law and Copyright

 

Law and copyright laws aren’t always the most exciting topics for musicians, but they’re absolutely necessary for protecting your work. It was fitting that Jeff Nelson would kick-off the workshop walking through the nuts and bolts of legal protections. He was quick to point out early on that no one likes litigation and that the only person who wins are the lawyers. “If you walk away winning, you’re still not gonna feel great,” he said. That’s why he stressed to importance of avoiding litigation. To do that, you must first understand how copyrights work.

Copyrights are the legal protection for creative works, whether those are original works (created by the author and not copied from someone else) and work fixed in a tangible medium (physical forms, which also include electronic and digital). There are also two types of copyright:

  • Composition (lyrics and/or music)
  • Sound Recording (performance of a song)

“Creativity is not a high bar,” Nelson joked. As long as it’s recorded, he explained, it’s fixed in a tangible medium. That can mean it’s recorded audio or even just typed on a laptop. Copyright, however, is not attached to a live performance. So if you’ve played a song live and there’s no recording, you don’t necessarily have a copyright on that work.

How do you get a copyright? You simply just have to create something. As long as it’s fixed to a tangible medium, the work is automatically and immediately vested in the author of an original work. Once you have the copyright you have the exclusive rights to make copies, distribute, perform publicly, display, make derivative works of your music, as well as have the control to allow others to do those things. You can authorize others to use one or more of their rights (aka licensing) and can give away all rights if you wish (aka assignment). It’s also important to know who owns the copyright. Beyond the author of the work, it also extends to the person(s) who performed on the recording (The exception here is if you’ve been hired by another entity to create a music, i.e. a corporation asking you to write a jingle. They will then own the copyright for the work).

“If you asked a buddy to come play drums on your demo and they performed on that sound recording, they are an author,” Nelson adds. The general rule would be they own part of that copyright on that recording. That’s why Nelson stresses the importance of writing down what you’ve agreed to. When you’re still just starting out and no money’s on the table, Nelson says this is the best time to talk about it. It can be awkward and feel unnecessary when you’re just jamming in the basement, but should you get that “big break” it’ll be best to have something written down that ensures everyone is getting what they’re entitled too. Write down who owns the music and the sound recording, who can license it, and who gets paid. You cannot transfer ownership of a song without writing it down. Nelson says that it’s best if you can involve a lawyer, but “don’t let perfection stand in the way of ‘good enough.’”

So, how does this all help you get money? Nelson explains how licensing copyrights is how you get paid. Licensing means that when someone wants to use music they (usually) have to ask the owner’s permission. When someone uses music, they (usually) pay for it, be it album sales, streaming, downloads, commercials, films, video games, ring tones, etc.

If you’re looking to license your music, Nelson says to make sure that you’re easy to find. Register with services like SoundExchange (more on that later) and with a performing rights organization (PRO) like ASCAP, BMI, or SESAC. PROs help you license, monitor, collect, and distribute royalties for public performance. They also make sure you music is available on online searchable databases for free so companies looking to license your music can find you. You can also register your copyright on copyright.gov.

Getting lost trying to figure this all out? Understandable! Nelson suggests asking for help from his organization, Washington Lawyers for the Arts (www.thewla.org). Nelson also stresses that the information from his presentation is not legal advice and that musicians should consult a qualified lawyer as they sort out copyright details. This is all a high-level summary, leaving out some of the more complex details.

CASH Music, Websites, and Owning Relationships

 

Maggie Vail next took the stage to explain a bit about what her nonprofit does. CASH Music creates open source tools musicians can on their websites. “Website”, as she explains, is the key word here.

“If you are serious about being a musician, if you’re serious about making music that way, you need to push as many people to you as possible,” Vail emphasized. “You need to own those relationships as much as possible.”

Vail notes the value of being on other platforms like Facebook and Twitter, but she stressed repeatedly that it’s important to constantly be pushing your fans back to you and not some other site. To help make your site easier to use and customize, CASH music provides opensource tools free of charge to musicians, including: physical and digital shopping carts, subscription services, download codes, fan club assets, social feeds (pull in conversations/hashtags), and more.

Part of CASH Music’s mission is also to educate artists. It’s why they started the publication Watt, which features articles from musicians, industry experts talking about their experiences.

The point, she says is to demystify the music industry and the tech industry surrounding music. CASH Music is all about empowering artists. By creating free and open tools to artists, they’re able to empower them to control their careers and directly manage the relationship with their audience. Every tool they’ve built has been done with the artist.

“Everything we make is part of a real release for an artist,” Vail says. “Sometime’s that’s Bikini Kill, Run The Jewels, or Lenny Kravitz. Sometimes it’s an artist at the beginning of their career. We start with questions and build platform features as partners. Open means everybody wins.”

This manifests itself in many ways. Sometimes it’s providing tools for Run The Jewels to manage their massive email list that lets them stay in direct contact with their fans. Other times it’s building a web store for Bikini Kill — a move that Vail says doubled the bands’ sales.

“Fans want to support you directly. They want to know that it’s a direct relationship,” she says.

Vail noted that there’s an obsession with scale in the music industry. Once your stream numbers start going up, there’s a pressure to start building up and getting wider reception. But Vail cautions artists here.

“Scale’s a really shitty measure of impact,” she says. “Especially when you’re talking about art. Not all art can scale, not all art should scale.”

Numbers may be great for the label or the industry, she explains, but not always great for the artist. Instead of worrying about the numbers, focus on the relationship with your fans. They want to support. Find ways to let them support you directly and for you to connect to them without a middleman.

SoundExchange 101

 

Wade Metzler rounded out the discussion with a deep dive into SoundExchange and what it can do for artists. Here’s the high-level summary Metzler used at the top of his presentation:

“SoundExchange is the independent nonprofit performance rights organization designated by the U.S. Copyright Office to collect and distribute digital performance royalties to featured artists and copyright owners for the use of their content.

Digital royalties are fees that service providers such as Pandora, SiriusXM, and webcasters are required by law to pay for streaming musical content. These royalties are paid by the service providers to SoundExchange, and accompanied with playlists of all the recordings played by the service provider. SoundExchange distributes digital royalties for more than 130,000 music creates. They collect from 2,900+ digital radio licensees. They administer through 45 international agreements.”

To best understand this, it goes back to the two kind of copyright Nelson mentioned at the beginning of the presentation: musical composition and sound recording. From there you can figure out who administers the performance rights for digital radio. For a composition, it goes from a PRO like BMI/ASCAP/Sesac and then to the songwriter or publisher. For a sound recording, it goes from SoundExchange to the artist/musician or the copyright holder (which is often the label).

SoundExchange royalties come from satellite radio, internet radio, and cable tv radio. SoundExchange also administers statutory licenses for non-interactive transmissions (Pandora, SiriusXM, iHeartRadio, Music Choice). However, a statutory license is NOT available for on-demand or audio-visual transmissions (YouTube, Apple Music, Spotify, SoundCloud). Those are done directly with the label/copyright holder. This will depend on your contract.

Why should you care about this? Well, as Metzler notes, 70% of income in the music industry comes from digital today. 2017 was also the first year streaming overtook digital downloads. Not just that, but 16% of the recorded music industry’s revenue comes from SoundExchange. So if you’re not using it, you’re missing out.

SoundExchange pays artists and rights owners directly. The payments breakdown thusly:

  • 50% to copyright owner of master
  • 45% directly to featured artist
  • 5% to backup musicians and session players (even if you don’t have sessions players on your track, 5% still goes to musicians union because it’s part of the statutory license)

For musicians who own the masters of their music, they keep 95% of the payment. SoundExchange takes out a 4.6% admin fee as well.

SoundExchange’s guiding principle is that all music creators deserve fair pay for their music, whenever and where it is played. Period. That’s why they advocate for royalty structures that respect the value of music in the courts, the legislature and at the negotiating table. They’re constantly fighting for better rates. That’s why they’ve been proponents of the Fair Play Fair Pay Act.

They also administer letters of direction. A SoundExchange Featured Artist Letter of Direction (LOD) is a document in which a Featured Artist directs SoundExchange to pay a portion of their sound recording performance royalties to a participant in the creative process — e.g., producers, engineers, mixers, re-mixers, etc. The producer’s cut is typically taken from the artists’ portion. In the case of featured performers (i.e. Jay Z featuring Rihanna) SoundExchange considers that a 50/50 split unless album artist specifies something different.

To best monitor your work, there’s SoundExchange Direct. This is a portal for SoundExchange payees that offers real-time account management and provides insights into what services are playing what tracks and includes frequency and amount earned.


Key Takeaways

  • Copyrights are essential to getting paid
  • Copyrights can be either compositions or sound recordings
  • Write down the breakdowns of your agreements with your band mates/featured artists, even if it seems premature
  • Licensing is the most effective way to monetize your work
  • Register your work with SoundExchange and performing rights organization like ASCAP, BMI, or SESAC
  • SoundExchange will help you collect your digital royalties
  • Make a website for your project
  • Try and make a direct connection with your audience and cut out the middleman as much as possible when it comes to sales and communicating with fans

Resources

This entry was posted in KEXP, Mastering the Hustle. Bookmark the permalink. Post a comment or leave a trackback: Trackback URL.

Post a Comment

Your email is never published nor shared. Required fields are marked *

*
*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Donate Now!

Donate to KEXP Today!

Donate to KEXP Today!
where the music matters

The KEXP Blog

Sponsored By
Become a KEXP Sponsor!
  • KEXP Post Categories