Jeff Price's Article in the Huffington Post

Here is the full text of TuneCore President Jeff Price's article that appeared in the first week of January, 2009's Huffington Post. Read it and reap. --Peter

From MTV to YouTube: When the Net Pays Everyone But the Musician

In 1996, taped to the wall of my now defunct record label spinART Records’ 800 square-foot, four-ikea-desk-loaded-with-unsold-CD-and-vinyl office was a $1 check from MTV. I fought hard for that stupid check. MTV wanted to use a song called “Supermerica” by a band called Poole that I released. Usually TV shows pay good money for the use of a song, but not MTV-- they required labels to allow them to use the music for free in their TV shows when you submitted a music video to be considered for programming on their network. I still don’t know why they even bothered saying they would pay a dollar. It really pissed me off. I had fronted money and worked my heart out along with the band to promote, market, manufacture and release their album and along comes a multi-national billion dollar media corporation and demands to be able to use the music for a stinking dollar. I refused to do it. The music had value to me, it was the thing we sold and the thing the band made the majority of their money off of. I could not just give it up for free. But, Harry (lead singer of Poole) convinced me to let MTV have it in anticipation of the promotional value they might get out of it. The show aired, the song appeared in the background for about 30 seconds, the show ended, MTV made money from the advertisers and the song was not mentioned anywhere. This was the way it worked. The labels fed MTV free music and videos and in return hoped to get their videos aired which in turn would drive huge music sales. And MTV made a fortune off the advertising.

And this is more or less why Warner Music recently demanded that all its videos and music be removed from YouTube. Warner previously granted YouTube the legal rights to use its content and YouTube generated a lot of money from it via advertising. Now Warner wants to be paid more by YouTube. If the Google-owned YouTube does not comply, it opens itself up to potentially tens of millions of dollars in copyright infringement fines. Universal did this same thing successfully some time ago.

When media giants fight over music, you know it has to be valuable. Looking, listening and occasionally buying a “good” song drives revenue, tremendous web traffic and generates big advertising dollars. I can kind of understand Warner’s point, but as music sales drop and the multi-national, billion dollar media giants wrestle, lobby congress and sue each other for new income streams the musician seems to be getting lost in the shuffle, and that’s a huge mistake. Creating a new revenue sharing model that focuses on allowing artists to generate enough money to continue creating music would be a win for everyone. After all, it is the music that is fueling the entire machine.

The union of music and advertising goes back decades, but it seemed to reach a new level with the launch of MTV. MTV broadcast free “TV shows” from the labels in the form of music videos. These videos brought viewers allowing MTV to charge money to advertise on its network. In return for the free videos, the labels and artists received promotion. Artists became more famous which in turn allowed labels to make more money from music sales (there were other income streams as well like money from gigs, but the labels only participated in revenue that came from the sale or license of the music). This symbiotic relationship worked very well as long as all involved made their fair share of money.

However, after over two decades of a steady annual increase in music sales generating enough revenue to feed the record industry, music sales plummeted. At about the same time, advertising revenue from music went through the roof. Internet companies made money off music via venture capital investments, going public and getting acquired for a billion dollars. And this is the crux of the problem, music is being used for profit but not everyone is getting a piece of the pie.

Music sales plummeted with broadband proliferation and the mass adoption of the Internet, MP3s, compression technology, peer to peer file sharing, instant messaging of files, email attachments, torrents and other on-line distribution vehicles. The labels found themselves wondering why they should continue to provide their music and videos for free if the channels/sites they gave them to were reaping a disproportionate financial benefit. Labels would not have given MTV free music videos in the 80’s if MTV made money off the videos but the labels did not. (Imagine ABC getting the TV show “Lost” for free, then broadcasting it and keeping all the advertising revenue.)

Move ahead in time to the launch of the original peer-to-peer music file sharing software Napster allowing anyone to get any song at any time for free. Tens of millions of users provided Napster a huge “viewing audience” that it could reach via its “channel.” Unlike MTV, most labels and artists did not give Napster permission to use their music. The one area where value could have been created – music sales from discovery – was made irrelevant by allowing users to get the songs for free. To add insult to injury, despite Napster raising almost 100 million dollars and then being bought for 8 million the artists and labels were not paid anything (some would even suggest they lost money due to pirating).

The money that labels did make came from suing Napster and getting paid settlements for copyright infringement; the artists got nothing.

Over time social networking sites began to pop up and MTV moved on to showing its own TV shows (why not, they now had their own built in audience). Bands began to use these sites to get heard, discovered and to collect fans. Music lovers flocked to the sites, web traffic went up and the social networking sites began to charge advertisers for banner ads based on the “eyeballs” they were getting (for a website, any friend of the band is a friend of theirs). Once again it was the bands’ and labels’ content driving the audience, and once again someone else was making money off the music without an equitable inclusion of the labels and bands in the equation.

Which brings us back to Warner demanding that YouTube take down its content until it receives what it perceives to be its fair share of revenue. Following Google’s one billion dollar acquisition, YouTube is not yet profitable and suggests it cannot give up even more of its advertising revenue. Labels contend that this is really not their problem and need to be paid more for the use of their “products.” Unfortunately, advertisers are not paying the same sort of rates for online exposure as for TV and radio airtime, and there is not enough money to go around. And the artists, the ones who create and make the music that fuels it all, have yet to be directly included in the conversation.

As the “golden era” of MTV morphs into the world of MySpace and YouTube, a new model of advertising around music – ads appearing on artist’s WebPages or popping up on a streaming internet radio player– is not creating enough money to share. And no one is seriously discussing sharing it with the artists anyway. How then in this shifting landscape can they survive?

One possible piece of the puzzle may be the democratization of corporate sponsorship; instead of companies deciding which bands they choose to endorse or random ads appearing when music is played, let bands decide which corporations they want to work with. Bands can then tells their fans to click a link to land at a sponsor’s webpage where the fan gets a “free” song. The advertiser gets the web traffic and the artist gets their proportionate share of the advertising money for each free download. Going a step further, the artist has the ability to collect information about the fan (i.e. email address, age, zip code) thereby providing the opportunity for a targeted ad buy , i.e. 18 – 25 year old woman in the 02134 zip code. Or, taken another step further, as opposed to a random ad appearing on a streaming Internet radio player as a Pixies’ song is played, assume an ad appears for a product that the Pixies selected, i.e. The Pixies use Gibson Guitars or they love the movie Fight Club. Targeted demographic marketing allows advertising fees to go way up.

TuneCore is launching this model in January 2009 (full disclosure, I am CEO). This connection allowing artists and corporations to work with one another directly may prove to be one of the better ways to generate revenue in the new model. New companies such as TuneCore can then become facilitators providing the tools and information to the artists to collect fans, create music and provide access to opportunities such as corporate sponsorships. I by no means believe this is the magic bullet to the problem, but I do think it has the potential to be part of the solution. In 1981, video killed the radio star, here’s to hoping the Internet does not inadvertently kill the musician.

Comments

[SaxManRan A.K.A. DJ HornSolo]

--refreshing to wake up to this morning...

I am new to Tunecore, and glad I found you when I did, anticipating feeding my family from the sales of music.

Earlier this week, I had a long conversation with a close friend about the $ aspect of the industry, and why we actually do what we do. Is it for money, or for the love of music? - and at what point does it go from being a "work of art" to just "work"?

It's a catch 22 for sure. Almost every musician I have ever met will say (and I'm sure you have heard it or said it yourself) "It's NOT about the money." when it actually is. Everyone deep down wants fame, fortune and success, or at minimum to make enough money from CD sales, club gigs, and merch to recoup investment of time and $. If there is some extra loot after the bar tab is paid, maybe put a couple bucks in the gas tank, or a nice meal...

I am glad that someone is thinking about the well being of the musician's pocket, and actually doing something about it.

After all, it's the music makers that allow everyone else in the business to get some cheddar. Can we get some cheese?

"Making it" is a process, not a destination.

Thanks for doing what you do!
SaxManRan A.K.A. DJ HornSolo
TEXAS, USA

[Gavin Povey]

Jeff
Interesting reading and compounds my fears for over the last few years. I have been involved in the music business since the early seventies - have worked with some 'names' and now content myself with running a small local studio and put out some releases via Tunecore (a great breakthrough) and small cd runs.
This problem first started with cassette tapes and domestic recording machines. Obviously it was difficult to imagine the situation now, back then, but that was when the first horse bolted !!
The problem is unifying ourselves as musicians and performers - and not in the way that the Musicians Unions espiecally in the U.K. have done. (When video-tape agreements came about all chance of making money died - I did a T.V. show previously to the agreement and still receive payments now - otherwise if I would have been obliged to receive a £200 buy out).
Many of the name artists who I've worked with now don't bother with record companies - if you can sell 20,000 cd's - bar manufacturing costs and tax- you keep all- work out the figures at $15 a pop.
The difficulty is for new arists to make the same profile - and thus the money to keep going.The question is, do you get involved with the corporate powers that be or do you tough it out alone on the cliff-face?
Identifying your market - however small - is the key. Indeed many minority styles of music have existed and survived through the past few decades - namely Rock n Roll and Soul. It is possible.

At the moment Tunecore is the branch that we are all holding onto, halfway up the cliff face.

Thanks and good luck

Gavin

[Will]

Thanks for a good article.The more new ideas the better.

The need for focus and targeting your audience is essential.

I wonder if bands could make money by becoming affiliates for suitable products and selling through Clickbank etc. Or forming alliances or Joint ventures with product makers? It's not that much different from singing in pub to draw customers.

You can't sing if you don't eat!

[Sjoko]

My small label first concluded a distribution deal with a large Independent. They they went bust before we released anything. Then we spend months negotiating a deal with the largest UK based label. They were sold and "reorganized" so we spend months negotiating and compiling legal fees for nothing. Then we spend more months negotiating a distribution deal with the largest major. Who just informed us that they changed their rules and now only would distribute artists with a proven SoundScan history. Apart from wasting enormous amounts of our (and our artist's) time and our money, here is the real joke - 2 of our artists sell extremely well, but not in SoundScan regions. In fact, they are by rights well in the world's top ten selling artists, but no SoundScan, no distribution.
In summary, the majors are going the same way as the US car industry. The top brass are drawing their wages .... until the whole lot collapses, but they will be fine. They refuse to adopt modern distribution media, they are too slow to react to market demands, and to top it all, they are simply bad for music.
It is thinking like Jeff's we need. Some things might work, some things won't, but for gods sake, lets do something!
I have been in this business for 40 years, and I am looking forward to NEW!!!!! I'm sick of seeing innovation squashed, musicianship disappear, and corporate bullshit.
You go Jeff, we've just put our first single on TuneCore, and there will be at least 5 albums to follow in the coming couple of months. Lets make something fresh happen, give fans what they want, and the artists something to eat!!

[Michael]

Whenever someone comes up with a new business model, the music creators are also expected to give their stuff away. Even the older model, TV, is at it. I was contacted by a company producing shows for MTV and asked to find music but was told there was no "upfront fees". These are not fees, these are synch rights, that have value. Sonicbids (which is a great idea) has a number of "offers" where bands pay to be considered for publishing and opportunities (on top of Sonicbid's own fees, which I don't question). There's notably an "opportunity" to get heard on inflight radio shows - if you pay.

These systems would not work if bands and small labels were not so willing to give their rights away. Don't complain about hard deals if you are giving stuff away. Why should anyone respect an industry that shoots itself in the foot?

[ian mcgrady]

Hey Jeff,

We're submitting to Tunecore soon at the recommendation of the producer we worked with (Daniel Wise). I am also inspired by the recent interview about Meiko on MusicBusiness Radio. I'm so grateful to find a moderately-priced aggregator. I hope tunecore will offer services like the Orchard one day which include all that back-end office-type stuff.

[Todd Zimmerman]

This was a great article which sums up the state of the label
side of the music business nicely. Tunecore is a great model
for a new type of music business, although I would say that
it has limited potential for replicating that success for another
music promotion business. I think the public want the
filtering process the major labels offer. Most people prefer
a familiar group of options from a limited menu. Once the
major labels are gone, people will look for another form of
filter, rather than spending hours cultivating and developing
their own taste. The music business is really not about music,
it is about personality or lifestyle marketing, and that is really
what the masse audience is interested in. The music business
as we know it is failing partly due to the proliferation of other entertainment choices. Tunecore represents our best hope
for the artist to see a fair return for their efforts, but who
knows where we'll be ten years down the line.

[Bernard Hull]

Thanks for your article Jeff. Very well put together. Sadly, as you so succinctly put it, most labels are only interested in one thing - making money for themselves. Artists are just expendible commodities to them.
I look forward to seeing how your idea is put to work. Hopefully we can tip the scales a little in our favour.

[Sam]

Jeff -

Excellent article. MTV has been exploiting artists and their for quite some time with the claims of "promotional value"...and get this one..."Well, you actually do get paid for this via your Performing Rights royalties." And the sad thing is, some artists actually buy in to this along with the hope of catching some lighting in a bottle promotional value. The fact that these licenses are worldwide, in perpetuity and allow permanent usage by MTV Networks and their related companies in ANY way THEY choose..with zero compensation to the artist is just beyond belief. Back in the day when the "M" in MTV actually stood for Music, those blanket usage sync licenses actually did have a value because chances were, MTV was giving the band and video clip some actual worthwhile exposure and the ancillary usages were music related and not cannon fodder for the next sweep of insipid reality shows.

Thanks for the article and keep up the good work with Tunecore. You were a stand up music and artist guy at SpinArt and good to see you continuing with intelligent and innovative concepts.

Sam

["Crunchy" Steve Jay (FKA B&Massa)]

Great article, Jeff. You give it a free market spin, but the real free market is your "democratisation" model. The whole label system, with labels and networks fighting over rights while the artists don't even get the bones, is the death of the old empire.

I've been really impressed with just how much success Tunecore (and your competitor, CD Baby, too) have generated for artists. Keep up the good work. Looking forward to seeing how the new service can work for me.

[Jeff]

Jeff,

Thank you for sharing this article. I didn't see it on HuffPost!

I think your idea is innovative and more than anything else, that's what's needed now. The problem is clear; the solution is not.

Jeff
www.cerebellumblues.com