Archive for the ‘record industry’ Category

With Grammys Near, Will Prince’s Music Make a Big Return?

February 7, 2017

Ben Sisario NY 2/6/17

At the Grammy Awards next month, the biggest question for fans may be whether Adele or Beyoncé takes home the prize for album of the year. For the music industry at large, however, perhaps an even bigger question is whether the show will finally usher Prince fully into the streaming age.
The Grammys ceremony, on Feb. 12, is the focus of a major marketing campaign set up by the music companies that have rights to release Prince’s songs, and by the streaming services that have been hungry to carry the music but were blocked from doing so by Prince himself before he died last year at 57. (Currently, Prince’s albums are only available on Tidal.)
If all goes according to plan, Prince’s music will be made available on virtually all streaming services around the time of the Grammys, where an all-star musical tribute to Prince is expected to be one of the show’s splashiest moments.
To promote the music’s availability online, Spotify is expected to run a number of promotional spots, including, perhaps, a television ad during the broadcast and a series of online teasers to begin as early as next week, according to several people with direct knowledge of the plans who were not authorized to speak about them. Spotify declined to comment.
But when it comes to managing Prince’s music, nothing is easy.
Despite the eagerness of the music industry to promote Prince’s music online, many issues with the estate remain unresolved. As a result, the plan to offer Prince’s music around the Grammys, first reported by Bloomberg News, remains uncertain and could still fall part, these people said.
“The drivers of what will happen with Prince will be the estate,” said L. Londell McMillan, a lawyer who represented Prince and is one of two experts advising the estate’s administrators on entertainment deals. “When you are looking to release product, you’re looking for the right moments. The Grammys may represent a moment in time, but it’s not certain that that’s going to be the case.”
Here is a look at some of the complications about the estate and the legacy of Prince’s music.
A Complex Estate
Since Prince died without a will, a Minnesota court is overseeing the estate, whose value has been estimated at up to $300 million. Major tasks still need to be completed, like valuing assets and confirming heirs, although the judge overseeing the case has indicated that the heirs will likely include Prince’s sister, Tyka Nelson, along with five half-siblings.
Those presumptive heirs have split into two camps over the management of the estate. One group, including Ms. Nelson and Omarr Baker, one of Prince’s half-brothers, have nominated Van Jones, the CNN commentator, to be a “co-personal representative,” a role similar to an executor. The other four favor Mr. McMillan.
In a nod to the feuding and finger-pointing of the proceedings, the judge, Kevin Eide, ruled last week that he would not appoint anyone to the role unless all heirs agreed and questions of conflicts of interest are sorted out. The estate’s next step, expected next week, will replacing one bank with another as administrator, a move that will bring in yet another round of lawyers and other overseers.
Music executives who have dealt with the estate say that these issues have not interfered with deal-making, but they raise questions about how the estate will be managed in the future and who will benefit from its business.
A Tangle of Rights
Prince maintained close control of his music rights, and wielded them to an extent few other musicians can. For instance, he used his ownership of music publishing rights — the copyrights for songwriting — to block his music from appearing on YouTube, Spotify and other streaming outlets.
But that control led to problems after his death. Prince withdrew his membership from Ascap, the organization that manages performing rights, and it was not until the very end of 2016 that his estate signed a new deal with Global Music Rights, a boutique competitor to Ascap. Performing rights are essential to having music played on the radio or streamed online.
Randy Grimmett, a Global Music Rights executive, said that before he died, Prince had been considering managing his performing rights himself, a burden that few musicians could manage. “He would have been the first — and only — major artist that I know of to have taken that on,” Mr. Grimmett said.
In November, the Universal Music Publishing Group announced that it had made a deal with the Prince estate to act as administrator for the publishing catalog, and signaled that it was ready to release his music widely. But as with most deals, it still needs approval from the estate.
A Vault of Recordings
The estate still has one more major musical asset to offer: the recordings Prince released after leaving Warner Bros. in the mid-1990s, as well as his storied vault.
That trove of unreleased recordings, including hundreds or even thousands of songs, was stored in two actual vaults at his Paisley Park complex outside Minneapolis, and has been the subject of fan fascination for years. The estate has shopped this material to the major record labels, but no deal has been struck yet; executives briefed on those talks have noted the difficulty setting a value for such a range of material, and Warner Bros. still has rights to a large part of it.
Some unheard recordings, however, are set to come out soon. After putting one long-bootlegged track, “Moonbeam Levels,” on a hits compilation last year, Warner Bros. is set to release a new version of Prince’s biggest album, “Purple Rain,” this spring, with a full disc of unreleased material.
A Lawsuit With Jay Z
When it comes to Prince and streaming, the estate faces a question in court: whether or not Tidal, Jay Z’s streaming service, has exclusive streaming rights.
Tidal and Roc Nation, Jay Z’s management company, have argued in court that Prince granted Tidal rights to his catalog. But the estate disputes that point, and in November sued Roc Nation for copyright infringement, saying that Jay Z’s companies have produced no evidence of a deal.
The suit has become a tantalizing sideshow; one document filed in court shows a lengthy marketing presentation for Roc Nation apparently intended to woo Prince. But so far it does not seem to have slowed down deal activity.
What Would Prince Have Done?
Even if the estate is able to get Prince’s music available on all streaming services, is that what Prince would have wanted? He was well known for policing his catalog carefully, pulling it down from services he found unappealing. “Spotify wasn’t paying, so you gotta shut it down,” he told Ebony in 2015.
But associates who worked with him say that Prince’s true intentions could be hard to divine. After writing the word “slave” on his cheek in protest of his Warner Bros. contract in the 1990s, he returned to the label in 2014 to make a deal that was highly favorable to him.
A high-ranking entertainment executive who worked closely with Prince said that after pulling his catalog down from streaming services in 2015, Prince continued to discuss with them the possibility of returning it. He was in those talks until the end of his life, said this executive, who spoke anonymously to avoid revealing details about working with Prince.
Alan Leeds, Prince’s tour manager in the 1980s and later the president of Prince’s label, Paisley Park Records, said that Prince’s attitudes toward technology in particular could be unpredictable but were focused on protecting his interests.
“Prince’s wishes were subject to change,” Mr. Leeds said. “His attitude toward technology was that when it served him he embraced it, and when it didn’t he turned his nose up. It varied day to day, depending on his mood.”

In Shift to Streaming, Music Business Has Lost Billions

March 25, 2016


There is plenty of good news in the music industry’s latest sales report released this week. Streaming is up. Vinyl has continued its unlikely renaissance. And did we mention that streaming is up?

But a closer look shows that the big sales numbers that have sustained the recorded music business for years are way down, and it is hard to see how they could ever return to where they were even a decade ago.

Revenue from music sales in the United States has hovered around $7 billion since 2010, according to the Recording Industry Association of America. For 2015, the number was $7.02 billion, up slightly less than 1 percent from 2014.

Within that steady total, however, have been drastic shifts in listener behavior. CDs and downloads have been gradually abandoned as streaming has become the platform of choice.

The result is that the music industry finds itself fighting over pennies while waving goodbye to dollars. For instance, the growing but still specialized market for vinyl records is generating more revenue than the music on YouTube, one of the biggest destinations on the Internet, but that’s because YouTube pays royalties in the tiniest fractions of cents.

Streaming — whether through paid subscriptions to Spotify or Rhapsody; Internet radio from Pandora; or even videos on YouTube — now makes up 34.3 percent of sales, edging out digital downloads as the industry’s biggest source of revenue. In 2015, the year that Apple Music arrived and Tidal was reintroduced by Jay Z, paid subscription services generated $1.2 billion in sales in the United States. After adding in free streaming platforms and Internet radio, the total for streaming is $2.4 billion.
Beyoncé with Jay Z, second from right, who announced his plans for the Tidal streaming music service in March 2015 in Manhattan. Credit Sam Hodgson for The New York Times

Getting people to subscribe en masse to streaming services has been a priority for record labels and the streaming companies alike, who have often claimed that by building robust subscriber ranks, they would eventually return the industry to its former glory.

But so far streaming has not saved the music business, and deep worries persist about the model. Many artists are suspicious of the deals that their record companies have cut with technology companies, and they want to know how much money is trickling down to them. In a rough analysis of the recording industry association’s numbers, Billboard magazine estimated that the average amount of money generated each time a song is streamed fell last year by about 24 percent, to 0.506 cent. (The fine print: That number, a retail sales figure, covers so-called on-demand streams, excluding Internet radio.)

What gets lost in the battles over fractions of pennies, however, is just how much money has vanished from the music business as consumers have abandoned its most profitable product: the CD.

In 2006 — years after Napster, and well into the iTunes era — record labels still reaped $9.4 billion from CD sales in the United States, more than the total sales revenue of the business today. Last year, CD sales stood at just $1.5 billion, a drop of 84 percent in a decade. And downloads, also once viewed as the industry’s savior, have now been falling for three consecutive years with no sign of recovery.

In a note accompanying the recording industry’s report, Cary Sherman, the group’s chief executive, criticized sites like YouTube — characterized in the report as “on-demand ad-supported” — for what he described as paltry payouts compared to their enormous popularity online. Last year, YouTube and sites like it generated $385 million in royalties. In comparison, vinyl records — a niche if there ever was one — brought in $416 million.

“Reforms are necessary to level the playing field and ensure that the entire music community derives the full and fair value of our work,” Mr. Sherman wrote. (In response, Google, which owns YouTube, objected to its comparison alongside audio-only platforms, referring to it as “apples to oranges.”)

It may be possible for the music industry to wring more money out of YouTube. But it seems doubtful that it will ever earn back what it has lost from the CD.

Why Major Music Labels Still Matter

September 13, 2015

By Annie Lowrey 9/9/15

Reports of the music industry’s death have been greatly — or at least slightly — exaggerated. Yes, album sales are down from their peak of 785 million in 2000 to 476 million in 2014; and global music sales have fallen by $5 billion over the past decade; and, in theory, technology has given artists the tools to create, distribute, and promote their music without interference from traditional record companies. But the major labels have stubbornly continued to exist, even as old business models erode and listeners embrace streaming services like Spotify, Tidal, and Apple Music.

How is this possible? Though the occasional upstart manages to hit it big without a label (e.g., Rebecca Black), record companies still provide services for the majority of artists streamed on Spotify, and, given the chance, most musicians are still eager to sign with one. “These people are professionals,” says Russ Crupnick, founder of MusicWatch, an industry-analysis group. “Even assuming that you’re a good musician and have the time and interest to actually make a record, doing it yourself is the equivalent of sitting with a pencil and trying to do your own taxes.”

The three major labels — Sony, Universal, and Warner — remain deeply involved in deciding who hears what, often carefully engineering successes that seem viral or organic. Just this summer, Billboard blew the whistle on a Spotify payola pseudo-scandal: Labels were spending tens of thousands of dollars to get their songs on the service’s popular playlists. Spotify banned the practice, but the Big Three have other ways to get their artists heard. Each owns a playlist-curation service — Filtr (Sony), Digster (Universal), and Topsify (Warner) — that works within Spotify’s app and churns out mixes, featuring its artists, designed for driving, workouts, and other activities.

But what’s in this for the labels? Artists like Taylor Swift and Thom Yorke have complained about the meager royalties they receive from streaming — but their record companies actually make out pretty well on the deal. With Spotify, for example, labels get paid three different ways: First, they collect a lump-sum advance payment when they license their catalogue to the service. (Sony’s 2011 three-year deal with Spotify reportedly netted it an advance of $42.5 million, which it was not obligated to split with artists.) Second, a label gets a small payment every time one of its songs is streamed, a portion of which goes to the artists. (Spotify pays about 70 percent of its revenues to music owners.) And third, since Sony, Warner, and Universal are all investors in Spotify, they’ll cash in if Spotify should ever become profitable.

All of which is giving record labels hope, for the first time in a while, that digital revenues might someday make up some of what they lost when downloading overtook sales of physical media. The real-life music business won’t look like the one on Empire anytime soon — in 2002, more than 150 million Americans bought at least one CD; currently, only 8 million have a paid Spotify subscription — but it’s a start. “We’ve only scratched the surface in terms of monetizing streaming,” says Crupnick.

How to revolutionise the music business: Rip it up and start again

May 28, 2015

Tim Ingham  5/28/15
Hartwig Masuch believes the music industry’s ‘good old days’ are vastly over-rated.

According to the BMG CEO, the balance of power is gradually swinging from music’s executives to its creative community – and that suits him just fine.

While many see the past 15 years of music’s digital revolution and revenue decline as a disaster, Masuch views it as an opportunity to correct a relationship which has too often disadvantaged the talent.

It’s no coincidence that the turmoil of this structural change has given rise to ambitious players like the ‘new’ BMG.

The firm’s pitch is pretty simple: artist- and writer-friendly deals, a commitment to transparency and fairness and a robust approach to overhead, typified by housing records and publishing under one roof with both running off the same infrastructure.

When BMG started signing new recording artists, it launched a fresh kind of deal based on sensible advances and shared risk, with a generous 70%+ share of revenue being credited to artists.

Masuch says that artists and songwriters now have a never-before-seen opportunity to ink genuinely equitable contracts with their industry partners – without handing over their assets for life.

This may all sound a little like clamouring for revolution.

But to Masuch and Berlin-based BMG’s sensible financial backers at Bertelsmann, it’s simply a matter of economic inevitability.

They believe that the “obsolete business model” of many established music companies is bound to crumble, as artists and writers increasingly demand fairer terms.

You can see the logic: across the music business, megabucks advances are dwindling as royalties sink and long-held copyrights expire. All the while, the overhead of recorded music’s largest players remains frighteningly seismic.

Perhaps something has to give. And if so, BMG is ready to pick up the pieces.

Publishers copyrights

The winds of change aren’t just hitting rights-holders, though: Masuch predicts that a new era of transparency will usher in further scrutiny of collection societies, as well as the industry’s occasionally frosty relationship with global digital players.

BMG’s confidence in its gameplan explains why it has invested quite so many of Bertelsmann’s millions since it launched as an independent in October 2008.

Instead of a slash-and-burn approach to costs, mass redundancies and a land-grab of rights (those famed 360 deals), Bertelsmann concluded that it would be quicker and cheaper to start again from scratch.

So it sold off its ‘old world’ music business to Sony, and got busy.

BMG has since acquired a roll-call of some of publishing’s most notable catalogues including Bug, Cherry Lane, Stage Three, Chrysalis, Primary Wave, Virgin Music and Talpa.

It is now comfortably the fourth biggest music publisher in the world, with designs on superseding the current No.3 before too long.

Meanwhile, in recordings BMG has built a portfolio which includes classic catalogues from Sanctuary, Mute, Dreyfus and Skint/Loaded as well as renowned indies like Infectious, Union Square, Vagrant and most recently, Rise Records.

In Q1 2015, BMG officially became the fifth biggest recorded music company in the UK, behind the three major labels and Ministry Of Sound.

Which all rather begs the question… what’s next?

If today’s dominant labels and publishers are destined to suffer in the new-world music industry what, exactly makes BMG so cut out for success?

MBW grilled Masuch on exactly these points – and what he feels needs to change for the industry to meet its potential in the coming years…

BMGLOGOWhen it comes down to it, what makes BMG different from other large music companies?

I believe it’s our values. We respect writers and artists. We don’t try to get away with something because people don’t have leverage.

We try preemptively to say, ‘We want to be your best and fairest partner’, and then act accordingly.
“If you walk into BMG with a heavyweight lawyer you won’t get a significantly different deal than if you walked in alone.”

That’s an extremely strong cultural difference about BMG.

If you walk into BMG with a heavyweight lawyer you will not get a significantly different deal than if you walked in here alone.

You’ve acquired a huge amount since 2008. Why is BMG investing so much money in the future of music when some still believe it’s a doomed business?

We have a different view of the future of this industry than a lot of analysts and stakeholders.

Back in 2005, Bertelsmann analysed the music business and concluded that the biggest obstacle to an efficient and sustainable industry – one that would benefit from the change to digital – was actually the way the industry ran itself.

Bertelsmann concluded that the old mindset – I call it the ‘Mogul Mindset’ – and its approach to artists would become obsolete; that the business would have to change into a service industry in order to participate in the future growth in usage of music.

Maybe the industry might not monetise all that usage going forward. So what? Other industries have to overcome similar challenges. But motivated customers, loyal clients and attractive digital offerings would create a bright future with quantum leaps in digital revenue.
“Digital companies bailed out a massively old-fashioned music industry that aggressively defended obsolete business models.”

For the first time we have the possibility of truly global distribution, theoretically at zero incremental cost.

Apple, Google, Amazon and others, companies with a combined market capitalisation of more than a thousand billion dollars, are helping to create a global market and thus support the businesses of repertoire owners.

Yes, they might be a bit aggressive on terms sometimes. But they have successfully created an efficient and transparent global reach for music repertoire owners. You can’t get much better than that. And we can work on the right quid-pro-quos if our clients support us.

To be clear: these companies bailed out a massively old-fashioned industry, one which aggressively defended obsolete business models and cynical relationships with their clients, the artists and writers.

So why do we invest so much? There is a great future for music – but the existing industry has to turn to new paradigms in order to be part of it.

But can you ever really challenge the major labels’ market share in recordings?

In short, yes. It’s a question of time and/or investment funds.

We constantly discuss the strategy with Bertelsmann, our shareholder: do we apply more capital and speed up our growth or do we take our time over the next five years to catch up?

It’s well-known that it is the ambition of our shareholder to be among the top-players in any sector it’s involved in.
“Our objective is not market share but quality of service and profitability.”

That said, we do not constantly view ourselves relative to other market participants. Our objective is not market share but quality of service and profitability. They are key to our ability to grow.

We expect a growing movement among artists and writers to question the fairness and acceptability of the terms they have historically been offered by the music industry.

With BMG’s focus on fairness and transparency we believe our position on these points can help us to catch up very fast.

Is there an opportunity in acquisitions alone for you to reach your target size, considering the sheer mass of copyrights that are owned and locked down by the three majors?

The amount which is locked down, as you say it, is in flux. There are significant catalogues that are not owned but represented in a certain region for a certain time.

This includes specifically some of the very important, high value catalogues.

If you look at the iconic US and UK repertoire of the 1960s and 1970s, a lot of it is actually not owned by the companies which currently represent it.but It looks like you’re closest in scale to the majors in the publishing world, where your clients include Steve Mac, Dan Wilson and Bruno Mars.
We have made significant progress, but it is profitability and quality of service rather than market share which matters most to us and our shareholders.

Profitability is very high on my priorities, since it is profitability which triggers funding to get scale.

Scale allows you to build a world-class team and invest in technology – both fundamentally important for supplying a consistent and reliable service level to our clients.

The music industry is traditionally heavily US-centric with respect to investment and team capacity, with the UK some way behind. It’s different for us.
“We’ll be able to grow very fast organically. A timeframe of [BMG becoming a €1bn company in] five to six years is realistic.”

The basic chemistry of our industry is Anglo-American repertoire, but you also have to be very strong in local artist repertoire in other large markets. You cannot ignore the dominance of local repertoire in European territories, for example.

In a borderless digital world there is increasing global interest in artists from those countries. And we want a strong presence in those territories to have knowledgeable, competent teams on the ground to represent our global repertoire.

By the way, historically there was a view that local repertoire’s dominance in Europe was a function of media regulation, specifically radio. That’s totally wrong.

Local repertoire is important because it’s important to consumers – that’s what makes it so massively relevant.

How far is BMG from consolidated yearly sales of €1bn?

As I said, short-term that’s a question of allocation of funds. Theoretically you can move fast with three or four broader strokes, but that requires a lot of capital.

I’ m sure we’ll be able to grow very fast organically, so a timeframe of five to six years is realistic.

In terms of organic growth, are you increasing or decreasing the amount you spend on A&R?

We’re increasing our expenditure on A&R. That’s not a common trend in the industry right now.

We’re very excited about supporting new artists and writers.

A&R is a famously shaky business and BMG are very sensible investors. So why is that the case?

Actually it’s a great business and absolutely necessary to keep this industry attractive and vibrant.

If you invest rationally it’s possible to mitigate risk and help create exciting careers.

One of the aspects that has got a bit lost is managing risk.

When labels were able to develop artists long-term and start with an initial spend between £50,000 and £100,000 the risk profile was more attractive than in a new world of £1m decisions.
“industry A&R has forced itself into a situation where speed and immediate impact have become too important.”

The careers of many major artists were based on a long-term view of their creative relevance. Unfortunately the industry forced itself into a situation in which speed and immediate impact became too important.

These days expectations are often that it has to be a Number One immediately or it doesn’t make sense.

Our view is often different: let’s try to break even on, let’s say, 30-50k album equivalents and develop from there.

In this process you want to be in sync with your artist. This is key for a realistic level of investment and long-term commitment and career planning.

We are allocating substantial funds to that process, refining the approach and deal terms, making it replicable.

This will allow us to work with more and more artists who don’t want to get stuck in unrecoupable open balances on their first release.

KordaHow well are Infectious/Vagrant settling in after your acquisitions of both companies last year?

It has all happened surprisingly quickly. Jon [Cohen] and Korda and their teams became fully integrated literally within weeks – sometimes to their own surprise!

Korda was very open about how sceptical he was initially, but he has now thrown himself into his new role which goes far broader than the Infectious roster.
“You don’t show your love for an artist by how much you spend, but by how responsibly you support a career.”

Vagrant and Infectious are part of a very positive story. And putting it into the context of the discussion: both Korda and Jon can now draw on BMG’s resources, team and funding, but retain their sensible approach to spending, which they refined over the years as independents.

This helps us avoid situations where artists refuse to continue because they are practically broke, ruined by unrecoupable open balances.

You don’t show your love for an artist by how much you spend but how respectfully you design deal terms, and how responsibly you support a career.

You’re a very globally-aware company. What is the future potential for markets with very low per-capita music but very high populations – particularly China, India, Russia?

With China and India, it’s quite obvious when you look at other consumer trends – ownership of cars and handsets, for instance – that the next level of engagement will be media usage and this has the potential to give a tremendous up-swing in total industry numbers.

That said, if we want to participate, the right way to approach markets like China is to learn from the local players.

Why did you choose Alibaba as your partner in China?

Everything aligned. The decision was made by our Chinese team. They developed good relationships with Alibaba. Everything was very appealing, a very strong technology company with a drive to engage in media.

We took our time to meet several players and learn. They explicitly told us that the Chinese music industry would not develop on the pattern of the traditional industry in the US.

One mantra we heard in all our meetings: you need to understand the importance of exclusive relationships with strong partners.

Without exclusivity, no-one is interested to protect the interests of repertoire owners. And that means, no one fights illegal usages like piracy.
“I’m very optimistic about china’s relevance as a music market and its fight against piracy.”

A strong exclusive partner tends to say, ‘I paid for the repertoire, I represent the repertoire’ and suddenly you start to see a lot of movement in copyright protection and enforcement. So I’m very optimistic about China’s relevance as a music-market and its fight against piracy.

And there is one more aspect. Big Chinese companies are listed in the US.

You can’t be exposed to supporting copyright infringement when you know you won’t be sued in Shanghai, but where it gets dangerous and massively expensive, in the courts of North America.

The same arguments will apply to Russia.

The collapse of the Global Repertoire Database seemed like a disaster for the global music publishing business. How much of a pitfall was it for the industry – and do you still have any optimism that kind of database can be created in the future?

I have a different perspective: it has to be created. Otherwise, we will be a highly dysfunctional, ineffective industry.

Everyone must agree this has to happen: you need a comprehensive database to deal with today’s realities.

What evolution of collection societies would you like to see?

The reality is they need to feel some economic heat. Governance is definitely from the past.

These very important industry players effectively charge you what they need in order to cover what they spend.

That’s the wrong way round.
“The collection societies need to feel some economic heat. They charge you what they need in order to cover their spend. That’s the wrong way round.”

What is the right price for that kind of service? We should be looking at proxies from the telecoms industry and how much are they allowed to charge for transactions. We have to get real about it.

Who’s to blame? It’s not the guys who run the collection societies as much as the guys who govern them, to a great extent the politicians.

If they don’t do their job, it’s hard to blame the people at the collection societies.

Whether it’s a global database or other ways of aligning interests, there are so many ways to be much more cost-effective. We need them to be efficient – incredibly efficient – or they’ll become the laughing stock of very efficient technology companies… who will continue to say: ‘This is your problem.’

That said, while it’s true there are obviously governance issues and issues over commission rates, there is a bigger issue with those companies coming to the music industry looking to drive down the value of music.

Spotify3What’s your view on the split of streaming payouts – in some cases 14-1 in favour of the artist/label over the songwriter/publisher. Does that have to change?

It’s got to. It’s based on a very historic concept of delivery models, and it’s very hard to justify why these ratios are locked in.

Historically, I agree that running big warehouses, big manufacturing plants, sales teams etc. had an impact on the profit pool. But this has completely changed.

Realistically when I’m licensing music to a streaming service this is not so different to licensing music for a movie.
“Why in hell should someone who records a copyright get nine times as much money as the guy who wrote it? It makes no sense.”

So let’s look at the sync metrics. A typical sync fee is split 50/50 between label and publishers. And realistically – depending on the contract – the labels should split their half 50/50 with artists.

You’re then into a scenario of 50/50 when it comes to publishing/record company splits and also a 50/50 scenario with record company clients. Which means, suddenly record labels would have to deal with only keeping 25% out of the pot.

That’s a very rational and defendable view. But it will be one of the toughest discussions in the next five years in the music industry: how is the pool divided.

That will scare many companies – not just the majors.

Yes, but you have to agree with the principle: it doesn’t matter what your cost base is to your client; you have to be more efficient.

Why in hell should someone who records a copyright get nine times as much money as the guy who wrote it? It makes no sense.

Let’s say streaming dominates the industry, and that payouts are split 50/50 between labels and publishers – and that, in turn, labels share their royalty 50/50 with artists. Could BMG survive?

Absolutely. It was one of our basic assumptions that in the digital world current ratios won’t and shouldn’t survive.

If it’s not forced by regulation, it will be forced by artists and writers themselves.
“If 50/50 streaming splits are not forced by regulation, it will be forced by artists and writers themselves.”

If you assume Apple is as successful as they want to be with their streaming initiative and Spotify keeps its growth momentum, more and more artists will question the need for traditional deals and traditional structures.

It is up to us in the industry to develop new more efficient ways of working with artists and writers. And that is what BMG is about.

BMG might be built to be sustainable in that environment, but are other companies?

We believe it is cost structure, service levels and the fairness and transparency with which you treat artists which will decide the ability of companies to participate in the future of our industry.

The industry will have to deliver reliable services at a transparent, reasonable cost to their clients, the artists and writers.

It is getting harder and harder for those trying to defend the status quo.

Daniel Ek SpotifyDoes it concern you that there has been aggressive public statements from large players in the market about trying to force on-demand ‘freemium’ streaming tiers – especially Spotify’s – to reduce or close entirely?

It’s a very interesting picture. Clearly we can ask more from Spotify in terms of being able to steer the availability of your repertoire.

As a freemium subscriber, I think you should see more constraints; you should see the beauty of it, but there should be limits.

Maybe you can only listen to Taylor Swift ten times, then you have to [pay] or listen to other repertoire.

As an artist you should be able to say at some point: ‘Actually, I want to be able to slow down my profile on certain songs.’

These are things that are possible from a technology perspective.
“Shut down freemium completely? No way. Daniel Ek single-handedly changed the perspective of the entire music industry.”

Big picture is that it’s better the way it is now than it was before: freemium is there to establish the market. But it would be very wise of Spotify and similar players not to stay regimented in their current model, but actually say: ‘What can we do that you are more convinced this is a good service?’

Bjorn from ABBA spoke to me two weeks ago, a very technology-friendly person, and he said: ‘Why can’t streaming companies be more flexible? Why the hell can’t they pro-rate their customers? Why is someone who pays 9.99 Euros a month just to listen to ABBA in the same basket as my daughter, who streams thousands of songs?’

It’s technically completely possible. The phone companies do it already.

The digital music companies just need to wake up to the fact that they should do everything to please their repertoire sources. A confrontational relationship is no good for anyone.

But as for those who say shut down freemium completely? No way.

Remember that the music industry did not create this market. It was Daniel Ek who created a solution that is bailing out a worldwide business.

He single-handedly changed the perspective of the entire music industry. That is a real achievement.Music Business Worldwide

Scooter Braun: Profile

May 11, 2015

Scooter Braun discovered Justin Bieber on YouTube. Now he also represents Ariana Grande, Psy, Carly Rae Jepsen, and several other pop culture phenomena.

Cal Fussman

I’d love to tell you that there are all these lessons and that a lot of my success was based on things that I learned and how I was able to move forward. But really it’s just being stupid enough to think you can do it.

I was too dumb to think about all the conservative reasons why me achieving the things I wanted to achieve were very close to impossible.

It started in first grade. I went to a party and the clown-magician guy was like, “What’s your name? Scott? Scooter!” and I was like, “Shut up, clown-magician guy, my name is Scott!” And my brother, Adam, saw this, and anything that pissed me off, he loved. I had very big lips growing up, so my brother started to call me Scooter Fish because he decided a scooter fish has big lips. So it was, “Scooter Fish this,” “Scooter Fish that.” And I’d chase him around the house and beat the shit out of him.

My dad was a refugee from Hungary, the child of Holocaust survivors, so it was always very important for him to give back. And my mom lost her father when she was eleven and grew up with very little. So there was always an extra bedroom with someone in it in our home.

One day my dad got a phone call from a buddy of his in Philadelphia, saying, “Two kids, good kids, they’re living in an abandoned tenement in Philadelphia, very bad situation, the guy who brought them over from Africa had the wrong intentions. Could you help them out and put them on your AAU basketball team, maybe find them a prep school?”

The kids were from Mozambique. Really good kids. After a week, one of them, Cornelio, in his broken English, said: “Can we stay?” And my dad said: “A couple more weeks until we figure this out? Yeah, sure.” Cornelio said: “No, forever.”

We had one family meeting, and they were adopted.

People hear this story about your family adopting kids and they think, “Oh my God, it’s so amazing for those kids!” But they don’t realize it was just as amazing for us.

I remember watching Cornelio come home from school for the first day. He was very upset because they kept giving him books in every classroom, putting them in his backpack, and sending him to the next room. He kept trying to communicate, but in Portuguese — his English wasn’t good enough, and he didn’t know how to ask what he wanted to ask. He was upset because where he comes from there aren’t enough books for all kids to take home. You have to keep the books at school. And he thought he was going to get in trouble for bringing the books home. When you hear a story like that, you start to realize how much you take for granted in your everyday life.

Every night before we went to sleep — every night — my dad would walk in the room, and he’d say, “Brauns are different. You’re special.” We’d say: “What does that mean, Dad?” And he’d say: “You’re not better than anybody, but you’re different, and you’re not going to be held to the normal standards that other kids are going to be held to, because if you want to be extraordinary, you’ve got to be held to extraordinary standards.” Every night. After a while, you start to believe that shit.

If you really love someone, you push them.

If it’s achievable, there’s no excuse why you shouldn’t be doing it.

If you’re not going to do it to the best of your ability, then don’t do it at all.

There’s been a lot of studies on children of the Holocaust, descendants of the Holocaust. They look at the world very differently. You grow up with these stories that my grandparents told me. As good as your life is today, you have to plan for the worst tomorrow, constantly. And you also have to try to achieve as much as you can because you don’t know if tomorrow is going to be there. Tomorrow is not promised.

To me, surprising my dad meant impressing him. Even in small ways. I’d get a fast break on the basketball court but pull up for a three-pointer. And you’d hear my dad, who was coaching, go: “SCOTT! NO, NO, NO!!!” And then when the ball went through the net, he’d be: “Okay!”

Ball is life, man. You never heard that?

You can’t have five point guards on the floor. You’ve got to have your roles, and you’re going to have to depend on each other, because no one can win on their own.
Braun playing basketball

What I really love about Phil Jackson is how he got guys like Michael Jordan to listen. This wasn’t the bull-in-the-china-shop approach that I’d known my entire life. He was able to get other great people to listen to him so he could shape them.

You have to speak to very talented and very opinionated people in a way that keeps them in a mindset where they’re not threatened and they’re willing to listen to you and trust you so you can grow with them.

I never had the privilege of being the big kid who walks in the park with the attitude that says: I’m going to pummel you guys. I was the tiny kid. In seventh grade, a girl called me a shrimp and I cried the entire night. What a bitch! But it gave me this sensitivity . . . you just don’t treat people poorly. Because I know what it’s like to be that person.

I was four eleven as a freshman. I grew twelve inches in high school — four inches every year. So at the start I was the short kid who was friends with all the girls but not big enough to date them, right? I had to be a very good listener. It was the only way they would talk to me. And it actually served me when I grew. I had heard them vent to me about all the guys who disrespected the girls and were rude. So I never became that dude.

When you’re that small, you find yourself observing a lot because you’re physically not able to compete. You have to use your mind in a different way.

Understand the little man and show respect. And understand that the little man today might not be the little man tomorrow.

Treat the janitor like the CEO.

I wanted my own story. I wanted not to be Ervin and Susan’s kid. Here I was hearing the story of my grandpa and the Holocaust and what he did to get our family out after the Hungarian Revolution . . . and then hearing about my father, you know, coming from Queens and getting us to Greenwich, Connecticut. I didn’t want to be that first kid to grow up with means. I wanted to do it on my own, the same way my father did it, the same way his father did it. So I wanted to go far away so I could make my own story.

In high school, people called me Scott. Scooter was a name only close, close friends called me. My buddy made me a bet that I couldn’t introduce myself to everyone at Emory as Scooter. Hundred bucks. Orientation starts and they say, “Scott Braun” and I say, “I’m sorry, but my name is Scooter.” When I threw the first party and put Scooter Braun on the flyer, that was it. I was in. I was Scooter to everyone who came, and it became this thing.

No one remembers Scott. But it’s really easy to remember Scooter.

Sometimes having your name shift allows you to feel like you’re getting to recreate your story.

I used to not listen.

I was the kid who always said, “I’m going to do this!” and then six months later, even though I gave it the best effort, it didn’t work out. And someone would say, “Hey, what happened with that?” and I’d be like, “Well it didn’t work out” and they’d be like, “You’re full of shit. You talk so much bullshit, you say you’re going to do this, you say you’re going to do that. . . .” Scott did that. Scooter didn’t talk. Scooter would tell you, “I just did this. It’s over, it’s done.” He learned that lesson. He got to start over.

Sometimes the smartest person for the job is the wrong person for the job because they’re just negative. When you have negative people around you, doesn’t matter how capable or intelligent they are, they will hurt the culture of what you’re doing. What they do is they project their negativity onto you. And you start to look in the mirror and say: Do I even like myself? And you realize it isn’t even you. It’s them. They’re putting that shit on you.

Happiness is understanding it’s about the journey.

Risk is being stupid enough to walk around a corner where you don’t know what’s there.

Courage is doing what’s right in every single moment no matter what it means to you.

Sometimes situations change, and it’s not the right deal for you. But it’s important if you gave someone your word, you stick to your word. Even if it’s not the best deal. Even if you know you would have negotiated it differently because circumstances have changed. Unless the other side is doing something malicious or spiteful, when you give somebody your word, stick to it. That’s real courage.

I don’t look at money as success. I look at it as an avenue to freedom.

When I was about ten years old, a Greenpeace worker knocked on the door to our house in Connecticut. It’s a defining moment of my life. I run over, open the door, and he starts telling me the whole Greenpeace thing. Good salesman. I’m pumped. Let’s save the ocean. Let’s save the whales. Mom! Come here. Greenpeace guy! You’re always saying give back. We should do this. “Scott,” she says, “we give to a lot of charities. We can’t just give money to everyone who shows up at the door.” Mom . . . I begged her, and I think she wrote a seventy-five-dollar check. He was super grateful, and he left. I watch him walk out of our driveway and I’m thinking: Where’s his car? And my mom says he doesn’t have a car. That he’s walking from house to house as part of his mission to show people he supports the environment. It’s part of him showing his devotion and his dedication to the cause. And I thought: Okay, cool, but there’s no train station close to here. There’s no cabs. That’s a long walk. And in that moment he was like a hero. To be that dedicated and that passionate to his cause. In that exact same moment, I realized without my mom writing him that check, he was just a guy walking door to door. That’s when I decided I would never, ever have to rely on a little kid begging his mom to give me a check to make a difference in the world. So I ran for class president. And I wanted to be successful. So when my brother says, Hey, I want to do this charity to build schools for children, I can write him a check. I wanted to be in a place of influence because I never wanted to rely on anybody. The lesson I learned was to skip a step.

My first memory is of my Uncle Will coming to visit me when I was born. Everyone thinks I’m crazy. They say: “That’s impossible. Babies can’t see distance when they’re born.” But I remember my Uncle Will wearing suspenders and I was completely fascinated with those things he was wearing. No one believes me. But Uncle Will says he was wearing suspenders. That’s my story, and I’m sticking with it.

It’s this weird thing that happens. I get a gut check in this way I can’t explain. It kinda feels like, Oh, I know what this is. It’s like something else is telling me.

I saw the video of Justin. It had sixty thousand views. My gut went: That’s the kid you’re looking for. And I knew, as I watched those videos, what to do. I had the whole plan in my head. I knew the next four years. Done.

I compare it to falling in love. I told my wife on the first date I was gonna marry her.

She freaked out. Completely freaked out.

But at the same time, she was freaked out that she wasn’t more freaked out.

Just because you know doesn’t mean they know.

Same thing with Justin and his mother. Found him, give them this idea, sounds crazy, but something in their gut is saying this guy is telling the truth. Then I have to show them it’s real.

At some point you gotta believe in a higher power and some mysterious plan that we don’t understand, that we can’t even fathom, because we’re just too small to fathom. Certain things happen and you just get gut feelings and intuition that simply doesn’t make sense. And you go against every logical thought in your head and it works out because something inside you tells you to do it.

L: Scooter Braun and Ariana Grande. R: Steve Angello, Martin Garrix, and Scooter Braun

This gut feeling is like that with all the artists. Same thing with Ariana Grande. I called her up and I said: Can I meet with you? And they were like, Sure. I went to the house, gave this whole pitch, and they’re like, We believe you. Let’s give it a try. I could just see it. I knew what to do with her. You know, with Martin Garrix, you heard Animals, you just kinda know. “Gangnam Style.” I saw the video, it had under a hundred thousand views. My COO sent it to me as a joke. Ha ha isn’t this funny? You should tweet it. He’s silly. And I said: “FIND THIS GUY.” What do you mean? “This is gonna be the number-one song in the world.” In the office, it’s like a running joke. People always ask me: Is your gut saying anything? Most of the time I’m getting nothing. But if I say to them, “My gut went off,” everybody runs with me.

At the same time, I’m the idiot who will go and give free hugs to people on a sidewalk.

Go with your gut no matter what. Because when you go with the logical thing and you go against your gut and you’re wrong, it haunts you. I knew it. Knew it. When you go with your gut and you’re wrong, you say: Ah, I went with my gut. No problem.

I wasn’t fully prepared for the transformation from young man to young adult, and seeing Justin struggle with that. And that’s where my father came in handy: Being that rock for me; I had to be that rock for him. And we got through that.

Photo by Alfredo Flores
Mistakes are lessons. Cherish your mistakes. Learn from them. And by the way, cherish other people’s mistakes. Learn from them without taking the hit.

When I die, if people say, Man, he was an incredible entrepreneur . . . but my kids are thinking, He was a piece-of-shit dad, then I failed. But if I lost everything, and my kids felt, He lost everything but he was still a good dad to us, then I succeeded.

When you have a kid, this shift takes place. When you’re young, even though you know you’re gonna die, you feel kind of invincible. But all of a sudden you’re holding your kid and you’re like, Okay, this is weird. I’ve worked thirty-three years hard as hell to be the man I am in the world today, and you don’t even know anything about it nor do you care. In fact, you didn’t even fucking exist, and I love you more than anyone I’ve ever met. I don’t even know you, but I love you. And you have this weird moment where you realize that you don’t really know you’re gonna die until you make life. Because the moment you make life and you’re looking at your child, you realize, You never existed. All the things that I’ve done in thirty-three years, all the experiences, all the feelings, all the things I’ve seen, I didn’t even exist to my child. And someday my child will continue to exist, and I won’t.

And when that happens, you realize that you have to do as much as you possibly can while you have time on this earth to make a difference and impact this world and at the same time pass as much of that knowledge that you have to this little person before you die.

When you’re a young kid, you’re like, I wanna be a millionaire! I wanna be a billionaire! And then you realize, making five grand is really fucking hard. And your perspective on making millions to billions of dollars is completely changed. So you start to reevaluate and set new goals. What number is enough for me? I was very lucky to start passing those numbers when I was twenty-seven. At thirty, you start seeking people out that have so much more than you financially. All right, when do I stop being hungry for this? Because I’m confused now. I didn’t get any of the satisfaction when I hit my number. I thought when I hit my number, I’d feel something. And I felt nothing, and that was depressing. My life didn’t change. I just had more in my bank account. What the fuck? That’s when David Geffen told me to read that poem “Ithaka,” which is about the journey. It’s always about the journey. And he said something to me I’ll never forget. He said: “Hundred years from now, no one’s gonna remember me, and sure as hell no one’s gonna remember you.” And I realized, he’s right. No one’s gonna remember me. But they’ll feel my impact, and that’s good enough for me.

A real live Sire: Seymour Stein on half a century in the music business

April 30, 2015  04/21/15
Seymour Stein, a bona fide music industry legend, turns 73 this month. Get him talking about music he loves, though, and he’ll match the passion of any young industry whippersnapper pound for pound.

Stein is still every bit as full as admiration for great bands as he was more than half a century ago, when in 1966 he co-founded Sire Records with his friend Richard Gottier.

Stein – who these days plies his A&R trade within the walls of Warner Music Group – remains a hero to the ‘next generation’ of independent music executives; those now running labels and publishers around the world.

Through Sire, he played a vital role in bringing the likes of Talking Heads, The Ramones, The Cure, Ice-T and Echo & The Bunnymen to mainstream recognition.

And then there was that signing, when Stein fell head over heels for the music and theatricality of Madonna Louise Ciccone – launching the career, in 1982, of a woman who would go on to define music’s pop culture time and time again.

[PIAS]’s Kenny Gates shared a coffee and a chat with Seymour at SXSW to delve deep into the career history of one of independent music’s true godfathers.

I’m sure you’ve told this story hundreds of times, but please do cast your mind back again: you started Sire in 1966?
Yes, late 1966 as a production company. If you go back a few years further, you find the reason we were able to get Sire started: I was 14-years-old, and the first man I ever worked for was Tom Noonan, the charts editor at Billboard magazine.

He had just taken over a position at Columbia Records, running a label called Date. He helped Richard and I get a big advance – in those days it was a big advance, anyway!

Do you remember how much it was for?
Oh, of course. $50,000. It was a lot of money back then. Plus, we got free use of the Columbia studios anywhere in the world and [then] they would pay to sign up the acts. The $50,000 was just operating capital, which we desperately needed.

How did you and Richard meet?
james_brownThat’s important! We met in the Brill building; that was my last job [before Sire] – working for Red Bird Records for George Goldner, another one of my mentors. And in-between, after Billboard and after Red Bird, I worked for King Records.

Syd Nathan at King was my greatest mentor. [King’s roster included] James Brown (pictured), Hank Ballard and the Midnighters, Freddy King and a great country roster.

I know that without being mentored by these and other people – including Ahmet [Ertegun] and Jerry Wexler, even Nesuhi Ertegün – I wouldn’t have had such a successful career. I believe in mentoring very much.

Well you are one of my mentors! I’m amazed by your longevity and your passion.
Thank you – I’m amazed at it too given the life I’ve lived!

How old were you when you started Sire?
I was, let’s see, 22. But Sire wasn’t a label to start with; it took about a year-and-a-half for that to happen. Again, I was very fortunate. We had no office.

Syd Nathan was closing down the King headquarters in New York and rented me this amazing office for $325 a month. The first thing I did was to take the biggest room in the office and rent it out to Julie and Roy Rifkind – Roy was a manager and Julie was a great record man, working for Bang Records.

Bert [Berns, Bang co-founder] did all the producing and Julie did just about everything else.

What was the first artist you signed?
MattieIt was a woman named Mattie Moultrie. She was a black woman from Georgia, and I had always loved that song – That’s How Strong My Love Is. That was the first thing we did with her.

Columbia wanted us, as much as possible, to sign black acts. They stated that. My background with King meant I used to go on the road with James Brown amongst other things, all in my late teens. I never went to college.
“I used to go on the road with james brown in my late teens. I never went to college.”

They also had this guy Dave Kapralik at Sony who brought in Sly & The Family Stone – when they finally ‘got’ it.

The majors lagged behind [the indies] and even within the majors, Columbia lagged behind Decca, Capitol and RCA in terms of getting involved in rock’n’roll, rhythm and blues… Part of the reason they did the deal with us was to play catch-up a little bit.

You say you didn’t go to college. Did your parents support your business career?
They didn’t understand it. My father just scratched his head. But they didn’t interfere, and that was help enough.

My father was an orthodox Jew, so, you know. He didn’t believe rock’n’roll was the devil’s music or anything; in fact, my father loved music.

He told me about his days of checking out vaudeville shows.

And your mother wasn’t scared about the music industry?
No. My mother came from a totally different background.

She’s Jewish as well, but my grandparents were in the Italian food business. So I think my mother was a little more rough and ready!

I loved music ever since I was a boy. My sister is six years older than me, so I heard pop music very early.

So your sister is responsible for getting you into music?
Well, I just listened to the radio with her. She had records. It certainly helped me in life to have a big sister, yes.

Was there a defining moment from your teens when you thought: ‘I’m going to be successful in this business.’
I wanted to be part of the music business since I was nine years old.

I went up to Billboard when I was 13 to do research on the charts. Tom Noonan was very gracious and gave me access. I’d go there every day after school – my parents didn’t like that, but then they met Tom.

Was there a moment where your parents saw that you were successful?
MadonnaThey both lived to see Madonna be No.1 on the charts. They were very proud of me.

You’re twenty years older than I am – I see you at shows, underground gigs, terrible toilet venues. These are places no sane person would want to go!
Well if I survived the toilet at CBGB’s, which didn’t even have a door, I think I can survive any toilet out there.

What gets you up in the morning?
I love to work. I think it keeps me young – at least in spirit and in mind. I mean, what else would I do?

It offers me so much. 15 years ago, when music really started to taper off [through piracy] I was low.
“My parents both lived to see Madonna hit No.1. They were very proud of me.”

I felt everybody, if they want to, should have the experience of being in the business.

And I knew that if there wasn’t a music business, it would be terrible.

How did you stay positive about the business during that period?
I started focusing on India and China, which I still do. 20-25 years from now, I probably won’t be around, but over 80% of the world’s population will be in Asia and Africa. It’s hard to believe.

I remember when Hong Kong was totally a pirate market. Nothing is impossible. There are 1.3bn people in China. And in India, there’s 1.2bn, but it will eventually be bigger than China because there’s no restriction on the number of children they can have.

In each of these countries you have 400m or more middle class people – with millions more joining the ranks every year. [The music business] really better get started in these markets.

You’ve been internationally-minded for a very long time, though.
Great hits can come from anywhere. I put out Australian music in America before anyone – a record, I’m Stranded by The Saints. I felt bad; I heard this record in EMI and they said, ‘Oh, you can have this. American record labels will never put this record out.’

Well, why should they? They rejected The Beatles twice – not once, twice! That’s why those early [Beatles] records came out on a rhythm and blues label, Vee Jay.

And when Vee Jay couldn’t pay royalties, the rights came back to Capitol. And then Capitol rejected them again!

That’s why Swan Records put out Please Please Me [in the US].
“The music business really needs to get started in india and china.”

I told The Saints’ manager that I’d never signed a band until I’d seen them live, and that I’d always wanted to go to Australia. Eight months later, I went out there and signed [The Saints] and another band, Radio Birdman.

Both of those bands have been inducted into the Australian music Hall Of Fame, and I’m very proud of that.

You, of course, know of the success I had in Belgium with Ca Plane Pour Moi [by Plastic Bertrand] and with Telex. In fact my first million-seller was Focus, Hocus Pocus from Holland.

When you signed Madonna, did you think she’d still be making music 30 years later?
I didn’t think about it. What people usually ask me is, Do you think she’d ever be this big? Of course not! I knew she was special.

And you met her through Mark Kamins?
Yes, I’d always befriended Mark. He was a DJ who played all sorts of weird music but somehow made it work – he was playing Faro music, mixing it with African music and making it all work.

I gave him $18,000 and I told him: ‘This should be enough for you, over a period of a year or longer – don’t rush it – to make six demos.’ Madonna was the third demo he brought me. I listened to it and I loved it.
“The ramones never sold what they deserved – but they influenced so much.”

Everyone knows this story: I heard it in the hospital, and I got so excited, I made her come to see me. No, that’s not true – even then you couldn’t make Madonna do anything unless she wanted to!

She came to the hospital and we agreed on a deal right then and there. I asked her to go to her lawyers so we could draw up the papers.

All these bands you signed: Talking Heads, The Pretenders, The Ramones… Discovering The Ramones must have been an incredible moment.
ramones_1290682013Yes, but a regrettable moment in a way. They’re all dead now – the last of them died last year. In addition, they never sold [what they deserved to].

But they influenced so much of the music business. I met with someone from The Grammys recently, and they’re going to do a big spotlight on The Ramones next year.

It breaks my heart they weren’t bigger.But whenever the public learn who I am, the first thing they ask about is The Ramones. So they have ‘made it’, I suppose, it’s just horrible they’re not alive.

To me and many others, you are a friend of the indies, but you work for Warner. You are the most independent major label executive!
Yes. Well, first of all, Warner is a bit different than the other majors. It never started out to be a major label. Warner started out the way the other record labels did – in the motion pictures business.

Columbia Pictures had a label – all of them did. But luckily, they bought Reprise Records, and with it they got a business man who was very smart in Mo Ostin.
“When I was put into the rock & roll hall of fame, I was embarrassed to be inducted before jac holzman.”

Then they bought Atlantic, which was the greatest of all the indie labels. They actually paid their artists – that’s how great they were!

I’m not saying the others didn’t, but Atlantic was the most honest. They started Bang: it stands for Bert, Ahmet, Nesuhi and Jerry. And they bought Elektra Records; with that they got not only a great music man, but a great technical guy who knew about making records – Jac Holzman.

Jac still works for Warner to this day. When I got inducted into the Rock & Roll Hall Of Fame, I was embarrassed that I was inducted before him. Such a great music man, you’d love him. Like me, like you, Jac’s an independent.

It sounds like I’d like him. You still consider yourself an independent executive?
Of course! It’s in my blood! I don’t think like a major label. I’ve never gone after a big artist.

Lou Reed came to me because his lawyer recommended me after he left RCA. I’ve never done any big deals.
“Being an independent is in my blood! I don’t think like a major label.”

I’m embarrassed to tell you what the deal was with Madonna. She’s probably a billionaire now!

I’m very happy for her, and very proud of her.

You said you were embarrassed by the deal: you have to tell me!
$15,000 for three singles and then an option to pick up an album.

That was not the usual kind of deal, but I felt that she would be the queen of the 12” – and she was.
“When I heard madonna’s borderline, I knew there’d be no stopping her.”

And when I heard the fourth single, Borderline, I knew there’d be no stopping her.

I always believed she’d be very big, but not like she became. I couldn’t even think that big!

When you sign an artist, is it the song or the performance that makes a difference?
In almost every case, it’s the song.

Recorded music is about 150 years old. But there’s been a music business for hundreds of years.

Warner/Chappell is 215 years old, and Schott Music in Germany is even older than that.

There’s no such thing as ‘classical music’ at birth. Bach, Beethoven, Mozart and people like that were rock stars!

Because they survived, they became ‘classical’. I’m sure Elvis will be considered ‘classical’ at some point, same with Madonna.

What’s your greatest miss? Which one band do you most regret not signing?
Oh, there are a number of them. But I’ve signed so many, successful and unsuccessful, that I’d rather not dwell on it.

We talked about mentoring before. Is it right you’ve taken Tim and Toby at Transgressive under your wing?
I have. Not as much these days – I still think of them as little babies, but they’re old enough to take other people under their own wings now and I hope that they do.

They’re great guys. I wish them all the best.

Korda Marshall told me about them at first, and he’s fantastic. He’s an all-round music guy, one of the best in the UK. You must know Korda?

I interviewed him last month! We are business supporters of both Transgressive and Infectious. What drew you to helping Tim and Toby in their early years?
I saw a little bit of myself there. I liked them, and they were genuine – they are genuine. They care about their artists.

Would you consider yourself a hopeless romantic?
Well I am hopeless, so at least half of it is true [laughs].

I just love what I do. I don’t have to work, but I don’t know what else I’d do if I didn’t.

If an when the time comes that I’m really not able to do this, and I’m still trying, I hope someone’s good enough to sit me down and say: You know, enough is enough.

But I don’t feel that time has come and I’d like to keep going.

Well if at any time Warner is mad enough not to want you anymore, there’ll be a job for you at [PIAS]! They’re lucky to have you – you inspire trust and make people want to work with Warner.
Thank you. As I said, Warner is very different from the other majors.

There are only three majors now, but even when there was seven or eight of them, Warner was always different.

Is it true you had a complex about being a musician then found out it was better not to be one?
Yes, it’s true. I was at the Windsor Pop & Jazz Festival in 1966 or 1967. Jethro Tull were playing and they were unsigned.

Mike Vernon was a producer then. I said to him: ‘Look, this band are great.’ And he said to me: ‘Oh Seymour. I could never work with a flautist.’

I didn’t know what a flautist was – we called them flute players! I thought he meant he was a deviant or something.
“I didn’t know what a flautist was. I thought he meant a deviant or something.”

So I turned to Gus Sturgeon, who was sitting to the other side of me. He was an engineer who became Elton John’s producer, and I told him: ‘You could be involved in [Jethro Tull] – you could be their engineer.’

He said to me: ‘Seymour, obviously you don’t play a musical instrument… If you did, you’d have heard all the mistakes they made.’

What’s been the highest point and lowest point of your career?
All I can say is, I love the business so much – and I love being part of it so much. It’s been mostly high with a few lows.

I’ll tell you what I’d like to leave behind a little bit; to make it a truly connected world of music, that’s why I’ve spent so much time in Asia.

Would you still recommend someone sets up a label in today’s music business market?
There are good times and there are bad times. There are opportunities during both. Music is not going away.

The music business is older than the film business and certainly older than radio or television.

I don’t know of any form of entertainment, other than live theatre, that’s older than music.

A kid on the street knows more about the technology than I do, so I guess I’m no good in that regard.

But the one thing that’s the constant is that it all begins with a song. Great music, for the most part, will always prevail – sooner or later.

You mentioned before we sat down that you have a book coming?
Well, I have to write it first! It’s true that I’ve got the deal in place. I’ve probably given half of it away in this interview!

Sales of Streaming Music Top CDs in Flat Year for Industry

March 20, 2015


The American market for recorded music was flat in 2014, but income from streaming services like Spotify and Pandora has quickly grown to become a major part of the business, eclipsing CD sales for the first time, according to a report released Wednesday by the Recording Industry Association of America.

The association, a trade group that represents the major record companies, said that recorded music generated $6.97 billion in 2014, down less than 0.5 percent from the year before, when revenue was slightly more than $7 billion.

Overall revenue from recorded music, after falling from a high of $14.6 billion in 1999 — when CDs were the dominant format — has remained relatively stable for the last several years, hovering around $7 billion, according to the recording industry association. But within that total, the sources of income have changed significantly as consumers have increasingly shifted their purchasing habits online

In 2010, for example, when 253 million CDs were sold, sales of physical formats, like CDs and vinyl LPs, made up about 52 percent of total music revenue; downloads represented 32 percent, and streaming about 6.6 percent. (Ringtones and other miscellaneous income made up the rest.) By last year, the number of CDs sold had fallen to 144 million, and the split between formats was evening out: Physical formats were 32 percent of revenue, digital downloads 37 percent and streaming 27 percent.

The finer details of the industry association’s report, which is compiled from data supplied by the record companies, show how quickly the shifts are happening. In 2014, downloads of singles and albums generated about $2.6 billion, down 8.5 percent from the year before. CD sales were down 12.6 percent to $1.85 billion. (Vinyl records, a growing niche, were worth $321 million, up 50 percent.)

In aggregate, the various kinds of streaming outlets generated $1.87 billion, up nearly 29 percent from the year before — and, for the first time, slightly more than the total for CDs. That figure includes not only paid subscription outlets like Spotify, Rdio and Rhapsody, but also Internet radio services like Pandora, which does not let users pick exactly what songs they will hear, and outlets like YouTube and Spotify’s free tier, which let users pick specific songs and are generally supported by advertising.

2014 Summary

February 22, 2015

Top Music of 2014 - Infographic
Infographic Created by

43 things that scare a major record company in 2015

February 13, 2015

Tim Ingham 2/12/15

It’s tough running a major music company today. For starters, you’re reliant on off-the-wall creative types to help you hit your ever-stricter targets.

Then there’s piracy, cost-cutting and that big question mark over whether streaming, in reality, can ever really take this industry back to the promised land.

In fact, you might not realise just how many fears play on the mind of a major label boss every single day.

So we’re here to tell you. It’s 43.

Earlier today, Warner Music Group announced its fiscal results for the last quarter of 2014, recording Q1 net losses of $41m against a 1.7% revenue jump to $829m.

Buried within the company’s investor information lay something rather revealing about its biggest fears for the future: a list of what it deems its ‘risks, uncertainties and other important factors’.

This is the stuff that Warner warns, at any moment, could derail its hopes of hitting its financial forecasts.

Non-fiscal types might find some chuckle-worthy language in there: “Our indebtedness levels, and the fact that we may be able to incur substantially more indebtedness which may increase the risks created by our substantial indebtedness.”

But that doesn’t mean that many of the points below aren’t salient for any big music company in this day and age.

Don’t have nightmares.
1.The continued decline in the global recorded music industry and the rate of overall decline in the music industry;
2.Downward pressure on our pricing and our profit margins and reductions in shelf space;
3.Our ability to identify, sign and retain artists and songwriters and the existence or absence of superstar releases;
4.Threats to our business associated with home copying and digital downloading;
5.The significant threat posed to our business and the music industry by organized industrial piracy;
6.The popular demand for particular recording artists and/or songwriters and albums and the timely completion of albums by major recording artists and/or songwriters;
7.The diversity and quality of our portfolio of songwriters;
8.The diversity and quality of our album releases;
9.The impact of legitimate channels for digital distribution of our creative content;
10.Our dependence on a limited number of digital music services, in particular Apple’s iTunes Music Store, for the online sale of our music recordings and their ability to significantly influence the pricing structure for online music stores;
11.Our involvement in intellectual property litigation;
12.Our ability to continue to enforce our intellectual property rights in digital environments;
13.The ability to develop a successful business model applicable to a digital environment and to enter into artist services and expanded-rights deals with recording artists in order to broaden our revenue streams in growing segments of the music business;
14.The impact of heightened and intensive competition in the recorded music and music publishing businesses and our inability to execute our business strategy;
15.Failure to realize expected cost savings and other synergies and benefits contemplated by the PLG Acquisition;
16.Risks associated with our non-U.S. operations, including limited legal protections of our intellectual property rights and restrictions on the repatriation of capital;
17.Significant fluctuations in our operations and cash flows from period to period;
18.Our inability to compete successfully in the highly competitive markets in which we operate;
19.Trends, developments or other events in some foreign countries in which we operate;
20.Local economic conditions in the countries in which we operate;
21.Our failure to attract and retain our executive officers and other key personnel;
22.The impact of rate regulations on our Recorded Music and Music Publishing businesses;
23.The impact of rates on other income streams that may be set by arbitration proceedings on our business;
24.An impairment in the carrying value of goodwill or other intangible and long-lived assets;
25.Unfavorable currency exchange rate fluctuations;
26.Our failure to have full control and ability to direct the operations we conduct through joint ventures;
27.Legislation limiting the terms by which an individual can be bound under a “personal services” contract;
28.A potential loss of catalog if it is determined that recording artists have a right to recapture rights in their recordings under the U.S. Copyright Act;
29.Trends that affect the end uses of our musical compositions (which include uses in broadcast radio and television, film and advertising businesses);
30.The growth of other products that compete for the disposable income of consumers;
31.The impact of, and risks inherent in, acquisitions or business combinations;
32.Risks inherent to our outsourcing of IT infrastructure and certain finance and accounting functions;
33.Our ability to maintain the security of information relating to our customers, employees and vendors and our music-based content;
34.The fact that we have engaged in substantial restructuring activities in the past, and may need to implement further restructurings in the future and our restructuring efforts may not be successful or generate expected cost-savings;
35.The impact of our substantial leverage on our ability to raise additional capital to fund our operations, on our ability to react to changes in the economy or our industry and on our ability to meet our obligations under our indebtedness;
36.The ability to generate sufficient cash to service all of our indebtedness, and the risk that we may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful;
37.The fact that our debt agreements contain restrictions that limit our flexibility in operating our business;
38.Our indebtedness levels, and the fact that we may be able to incur substantially more indebtedness which may increase the risks created by our substantial indebtedness;
39.The significant amount of cash required to service our indebtedness and the ability to generate cash or refinance indebtedness as it becomes due depends on many factors, some of which are beyond our control;
40.Risks of downgrade, suspension or withdrawal of the rating assigned by a rating agency to us could impact our cost of capital;
41.Risks relating to Access [Industries], which indirectly owns all of our outstanding capital stock, and controls our company and may have conflicts of interest with the holders of our debt or us in the future. Access may also enter into, or cause us to enter into, strategic transactions that could change the nature or structure of our business, capital structure or credit profile;
42.Our reliance on one company as the primary supplier for the manufacturing, packaging and physical distribution of our products in the United States and Canada and part of Europe;
43.Risks related to evolving regulations concerning data privacy which might result in increased regulation and different industry standards

The Rise and fall of Dreamworks Records

December 9, 2014

by Pete Crigler 12/14

What started out as one of the most hyped, exciting record labels of the late ’90’s and early ’00’s wound up as a piece of meat torn to shreds before being sold to the highest bidder, in this case Interscope-Geffen-A&M. DreamWorks began as a film studio in 1994, thought of by three of the biggest names in the business: Steven Spielberg, Jeffrey Katzenberg (former head of Disney) and record company mogul David Geffen. Together, the three formed the company known as DreamWorks SKG and set about to make their own kind of films. Shortly after announcing the film studio, the idea of a record company was also broached and with enough capital behind them, the label was announced in 1995 with Lenny Waronker and Mo Ostin, former heads of Warner Brothers and Reprise Records, placed in charge.
One of the first signings to the newly integrated record company was George Michael, fresh off of beating the corporate giant formerly in charge of his musical destiny: Sony Music. After suing the company for allegedly for not promoting his material and getting a release from his contract, he signed with the new company and began recording his first full-length album of original material in almost five years. In the meantime, the new label’s A&R reps went about signing a diverse batch of new and established artists including: eels, Powerman 5000, Morphine, Rufus Wainwright and the Rollins Band. The Rollins Band had just emerged from its own legal battle with its by-now bankrupt and near-defunct former label Imago. Morphine had been picked up from Rykodisc and eels, Powerman 5000 and Wainwright had been picked up on the strength of demos and indie releases.

The label at the time had distribution from Geffen Records which David Geffen, by this time, had no real control over, just his name stamped on the back cover. 1996 was the label’s first year of releases and they hit hard with George Michael’s Older, his first full record since 1990. Scoring two major pop hits in America, the album only managed to go platinum, quite a disappointment for the multi-platinum Michael but not a bad start for the label. The eels’ debut, Beautiful Freak came out next and launched a smash number one modern rock hit in “Novacaine for the Soul.” The new Morphine and Rollins Band records wouldn’t come out for another year but already it looked like things were going to be off on a roll for DreamWorks Records.

1997 brought the previously mentioned records as well as debuts by comedian Chris Rock, which became the label’s Grammy winning artist and Powerman 5000. The label also signed two of the most intriguing acts ever seen by a major label in the ’90’s: Dr. Octagon was an electronic supergroup comprised of Dan the Automator on beats and legendary/notorious rap icon Kool Keith on vocals. The duo’s first project, Dr. Octagonecologyst was released in 1997 and garnered instant critical acclaim and the group looked like they were going to ride the same wave of success as The Prodigy and the Chemical Brothers were at the time. But just as they were about to start touring, Keith bailed, citing various reasons and saying he would come back. As a result, the duo missed out on performing with Lollapalooza ’97 and by the end of the year, it was clear that Keith wasn’t coming back and Dr. Octagon ended up becoming the first artist let go from the label.

Forest for the Trees began as the brainchild of Karl Stephenson, who’d begun to make his name known for working with The Geto Boys and most famously for Beck. Unfortunately, he also suffered from mental illness which resulted in more than one breakdown. Starting work on his own album around 1993, Stephenson persevered in making his vision heard. By 1996, he was institutionalized after a breakdown when demos of the now finished record made their way to DreamWorks. Striking a deal with Stephenson’s family, the self-titled album was released in 1997 and launched a hit single in “Dream,” a trip-hop ’90s masterpiece complete with bagpipes. Stephenson’s mental health was bolstered by the great reviews and he began to work on new material. Unfortunately, it was not meant to be as he withdrew from the public eye and a second Forest for the Trees album was never heard or completed.

As the years wore on, Rufus Wainwright released his debut album to critical acclaim and the label signed one of its most important artists, Elliott Smith. Fresh off the disbanding of Heatmiser and a few critically worshipped solo albums, Smith signed with DreamWorks and released XO in 1998 to middling sales but rapturous critical response.

It was also around this time that the label began to break out and experiment, signing R&B and country acts. While some acts like Emerson Drive, Sole, Kina and Jessica Andrews managed to score a couple of hits and then disappear, the label struck pay dirt in 1999 with the signing of Toby Keith, who by sheer will of force became the label’s best-selling artist across any genre. After signing Floetry and resurrecting The Isley Brothers, the label began selling more R&B records and spinning off more hits than previous.

Getting back to their main business, the end of the nineties saw the label start to have more success than ever in the rock department. In 1999, Powerman 5000’s second album Tonight!! the Stars Revolt went platinum and shortly thereafter, Buckcherry, signed right off the Sunset Strip, gave the label a smash debut album and enduring hit with “Lit Up.” The next year, rap rockers Papa Roach released their critically acclaimed major label debut Infest and then were given carte blanche to start their own label, New Noize which soon became known as El Tonal after lawsuits. The label’s first signing, Alien Ant Farm also garnered Grammy nominations after Buckcherry and Papa Roach and had a platinum album almost out of the box.

As the decades changed and the 2000’s began, the label had switched distributors, from Geffen, which no longer existed as a real label after the Seagrams merger of 1998, to Polydor which distributed the label until the end of the line. The early 2000’s, besides Papa Roach and Alien Ant Farm brought about some new successes including All-American Rejects, Lifehouse and Jimmy Eat World, each of whom went multiplatinum and spawned numerous hit singles. The label also released its fair share of failed records including Self, Blinker the Star, Pressure 4-5 and Ash.

Around 2002, Nelly Furtado who exploded into the spotlight with her debut record, 2000’s Whoa, Nelly! was preparing her sophomore record and the label was waiting for the next Elliott Smith. While waiting for these releases, the label released a few more interesting records to fill the void.

The Apex Theory, a rap rock band with one of the most unusual vocalists, a man who became known as Ontronik, were supposed to be DreamWorks’ answer to System of A Down, who’d just broke into the mainstream with 2001’s Toxicity. It just happened that the majority of Apex Theory also were Armenian and had a similar style, musically and lyrically to System. When the album, Topsy-Turvy was released in the spring ’02, it promptly laid a big fat egg because the music was so out there and Ontronik’s histrionics wore thin rather quickly. As a result, the album didn’t sell enough to justify DreamWorks’s spending on them. Add to that a horrible reception during that summer’s OZZFest where Ontronik’s ramblings alienated much of the audience and he was fired from the band that fall and not long afterwards, the band were dropped by DreamWorks.

By 2003, the label had shed some old skin and signed some new acts including Rise Against, AFI, Sparta and country singer Daryl Worley. That summer, the label started undergoing some internal shifts which resulted in less than stellar sales for the label’s previously established acts. Powerman 5000, finally releasing their follow-up to the 1999 smash had seen one album in 2001 shelved at the last minute by frontman Spider One in order to try something more creative. The new result, Transform, was dead on impact and the label threw no real promo power behind it. The same could be said for Alien Ant Farm’s sophomore album, TRUant which, despite some good material, didn’t even sell half of what 2001’s ANThology sold. Then in the midst of all this, Elliott Smith committed suicide, devastating the industry and leaving the label without one of its brightest talents.

By 2004, the walls were starting to crumble. The label’s biggest selling record that year was whatever piece of junk Toby Keith put out. The label itself had recently been bought by Universal Music Group for about $100 million. But DreamWorks was still trying to go about their daily routines. They had recently signed Brand New and were preparing upcoming releases by Sparta (a spin-off of At the Drive In).

By that summer, the merger had been completed and DreamWorks SKG Records ceased to exist. Every artist that had not been dropped, including All-American Rejects, AFI, Rise Against, Nelly Furtado, Papa Roach and others were moved to either Interscope or Geffen. Numerous other acts including Powerman 5000, Alien Ant Farm, comedian Jimmy Fallon and a couple dozen others were dropped outright. The only semblance of the label that was left was DreamWorks Nashville where Toby Keith still ruled the roost until the spring of 2005 when the label was absorbed into Universal Nashville. With that, Keith left the label and started his own label where he still records today.

Over the years, almost every artist signed to DreamWorks has left the Interscope-Geffen conglomerate. As of this writing, Rise Against, Nelly Furtado and All-American Rejects are the only acts still signed to the label formerly known as DreamWorks. Although DreamWorks has not existed since 2004, its legacy and spirit are still alive and the label will always be remembered as one of the most adventurous and daring labels of the last twenty-five years.