This week In the Hot Seat with Larry LeBlanc: Richard Bengloff, president, The American Association of Independent Music (A2IM).
How important are independent labels to the growth of the music industry?
Ask Richard Bengloff, president of the American Association of Independent Music (A2IM), the New York-based voice of 325 independent music labels, and his answer will likely impress you.
On an evangelical campaign to boost funding, support, and greater awareness of the independent music sector, Bengloff is hell-bent in making sure everyone understands that the music released by indies exerts a potent hold on this generation of music fans.
Bengloff, therefore, seeks to ensure that independents are seated front-and-centre at the table for any discussions affecting the music industry.
As well, he is continually seeking to further develop education and business initiatives for indies; and secure government funding for trade missions abroad in order to secure increased business.
In Bengloff’s words, A2IM’s label members are, "Small-business people who invest in their love of music to bring it to fans and at the same time try to make a living."
Since being named head of A2IM in 2007, Bengloff-- a former top level executive at Warner Music Group, Sony Corporation of America, and R.E.D. Distribution—has been credited for fostering closer working relations between the independent community and with the Recording Industry Association of America, and the Recording Academy that led to the opening of doors for the A2IM on Capitol Hill that resulted in trade missions to Asia in 2012, and Brazil in 2013.
Bengloff represents A2IM internationally, and he is an executive committee member of the musicFIRST coalition seeking performance right legislation to enact an AM/FM radio performance royalty in the U.S.
You have had a diverse music industry career, working for both independent and major labels, including the Warner Music Group, and the Sony Corporation of America.
Before that, I was at Important Record Distributors when we re-branded it as R.E.D. (Relativity Entertainment Distribution). I worked with Relativity (Records) and Combat (Records). So I was originally an indie. That’s where I met a lot of our members. I wouldn’t have this job if I hadn’t met those people in 1991, and 1992. That’s how I came into the music industry. I had been in the film industry (at Columbia Pictures Entertainment) prior to that.
Among A2IM’s roles is educating the music community, including advising labels and digital distributors, as well as maintaining a strong working relationships with other trade associations.
Absolutely. We have three pillars to our organization, and we have different partners with each pillar.
The first pillar is advocacy. Within advocacy, we work with the sound recording creator community as part of the mfirst coalition. Orphan works, for example, has been a big thing for us. We work with some people, and not with others. There are differences of opinion (between independents and major labels). There’s also net neutrality. Obviously, we have a different view than the majors on net neutrality.
So advocacy is very big (for our organization).
In practical terms, how does….
Some of it is national, and some of it is political. Some of it is state wide. When California put in the law about CD manufacturing about two years ago, we worked side by side with the RIAA in terms of turning our members out to lobby to make sure we were heard. Physical is still 50% of album sales (in the U.S.), and more depending on the genre of music, and we have members in every genre of music. So we were sensitive to it (the issue).
It could also be advocacy with international organizations, and it could be advocacy with individual companies.
Our second pillar is commerce. To get treated equitably and fairly, and to be an evangelist (for the independent community’s interests). To work with Merlin, and our other 20 plus colleagues that are members of the WIN organization (Worldwide Independent Network) to make sure we are involved, rather than as people (service providers) used to say, “Alright, I’ve got the four majors, I’m all done.”
The last one is member services. You will see that we are the extra employee (for labels). A lot of times, people have nobody else to call. So they will pick up the phone, and they will call us. We put out white papers. For Indie Week (The 8th Anniversary Indie Week was held in New York City, June 18-20, 2013) over 700 people showed.
Independent labels have different models. Some outsource their support functions while others create these support functions internally. What staff does A2IM have to be able to offer further support?
There’s 5 of us. What we do is that we use our members. The (committee) chairs are members of the committees which create the white papers. We put our membership to work.
A2IM is fairly new. Not even a decade old.
We celebrated our 8th anniversary in June.
In the past, lobbying in Washington, D.C. by the music industry had been somewhat limited to the RIAA or the National Music Publishers' Association on behalf of their members. Nobody was going to Washington on behalf of the interests of the indies. A2IM provides a united voice for diverse interests.
If you look at our board, it’s a pretty diverse group. Some younger (members), some older. We have a board (telephone) call 10 times a year, and an in-person meeting once a year. It’s an elected board on staggered terms. About one-third of the board comes up (for re-election) each year. We have 11 members on the board, and we come to a consensus. People listen to each other. What is really wonderful is that people might say that, “It’s not in our best interest for our particular label, but it’s in the best interest of the overall community” and we will come to a consensus 9 times out of 10.
[Elected A2IM board members and re-elected board members serve three-year terms The new board's term began July 4th, 2013]
The global independent rights association Merlin changed the perception of the indies in the marketplace. Are there any overlapping of interests between A2IM and Merlin?
I would say that approximately two-thirds of our members are also members of Merlin. They are different. They are a licensing organization. Under U.S. anti-trust rules, we are not allowed to negotiate collectively. We can do advocacy. That’s no problem. I do it all of time. Calling services, and telling them why (they should negotiate). Dealing with the services to get our fair share at Pandora or at any of the services. Those things I can do because that’s advocacy. But when you get to (talking about) financial terms, that’s where you run into anti-trust.
Merlin is strong because collectively it has I don’t know how many labels from around the world—[In fact, Merlin reportedly represents120,000 independent labels]—it dwarves our 325 labels—and they are able to negotiate licensing. Their focus is strictly on the licensing function, and making sure that our members are treated fairly and equitably by services like Spotify, Rdio, YouTube, Google and everyone else.
To give Merlin a plug, which they deserve, it’s not just (overseeing) on-going deals but with the lawsuit involving LimeWire (the P2P file-sharing company that was shut down by a U.S. federal court in 2010 due to a "massive scale of infringement), we were totally left out. The independent community on those types of lawsuits were being left out. The majors would get compensated, but our members would get left out, even if they were distributed by (distribution) arms of the majors. Well, Charles (Charles Caldas, CEO, Merlin) was able to get money from LimeWire (in an out-of-court settlement), and to get money from (peer-to-peer file sharing application) Kazaa. In addition to ongoing transactions for the infringement resolutions, he’s been able to put us on a footing where we get our share (in settlements). That our members get their share worldwide of what they should be getting.
[Launched at MIDEM in 2007, London-based Merlin is a non-profit organization representing independent labels, and distributors on a global basis. Merlin struck its first licensing deal in 2008 with the Sweden-based streaming service Spotify. The creation of Merlin made it a reality that there would be one global body representing the rights and interests of independents in such negotiations.]
Today: The best and worst of times for the independent music sector?
Well, it’s an industry that is transformed. As a result of the transformation, the good news is that now everybody has access that they never had before. The bad news is that everybody has the access that they never had before.
It’s the best of times in terms of access. It’s the best of times in terms of people understanding brands. The niching of media in general--not just the music industry--has very much played into our strengths of saying, “This is what our label stands for” although a lot of them (labels) can be in multiple genres, obviously.
In terms of the access, Glassnote Records doing a Mumford & Sons or Big Machine doing a Taylor Swift or my buddies at Dualtone Records doing the Lumineers—obviously they are selling less albums than they would have 30 years ago. But relative to what the base lines are there nowadays in terms of their revenue streams; in terms of their sales and streaming, with 10 or 12 different revenue streams, I think that we are more successful than ever.
One aspect of the internet with services like YouTube and Pandora is that people aren’t aware of what they are hearing is from independent sources.
There is no such thing as independent music. It is just music that is brought to you by independent labels. People don’t know (the difference). I teach at Hunter College. I also teach at different times for the MBA program. When I tell my students that Taylor Swift’s label, Big Machine, is one of our members they are very surprised. There’s Rounder which has released Alison Krauss and Robert Plant. Arcade Fire, obviously, on Merge. Adele was marketed in this country by Columbia Records, but it’s Beggar’s XL Recordings for the rest of the world. And there’s Mumford & Sons on Glassnote.
[According to Billboard Magazine, the 2012 year end SoundScan statistics revealed that independent labels grabbed 32.6% of U.S. recorded music sales. As was the case in 2011, independent labels outpaced each of the major label groups to snag the #1 sales sector spot followed by Universal, Sony, Warner Music and EMI.]
Stresses on the independent sector include the decline of bricks and mortar retail, and the general lack of deep radio support for many genres, except Americana.
Previously we couldn’t get into retail because we couldn’t afford the co-operative advertising, and get the space in the old retail. Although there were champions in Tower and Virgin, and the original big box stores. I’m not talking about Best Buy.
The second thing was that we couldn’t get on the radio because we didn’t have the 40, 50 or 60 person independent promotion staff, and we couldn’t afford the independent promoters. So we were really shut out of promoting our music to radio. It had to be done more grassroots through publicists getting the word out, and touring which is always a factor; even today with YouTube. But we had a harder time monetizing (music) because we couldn’t into the stores.
So the good is that while radio is still probably the most important thing (in marketing music), we are able to do okay at triple A (adult album alternative radio). We are doing alright at alternative. Not so good at R&B. I’m glad you mentioned Americana because I will be at the Americana Music Festival & Conference in Nashville (Sept. 18-22nd).
The independent sector has become more influential as the majors have had to deal with consolidations, and roster cut backs. iTunes, Spotify and Pandora are succeeding because they are offering their customers a full choice of major label and independent music.
What independents are giving nowadays is, as you say, because they are signing a lot less at the majors at this point. So our members have become brands. For example, if you want reggae, you are going to deal with our member VP Records, who found Sean Paul, and have Gyptian. At a class, I asked people what they liked. A woman rattled off Kaskade and Steve Aoki. I said, ”So you are familiar with Ultra Records, which is one of our members.
In many cases the independent labels are little more farm clubs for the majors who can tie up rights.
Well, those deals have been around long enough. In some cases, they (independent labels or artists) keep the back catalog, like the Black Keys. (Electronic dance music record label) Ultra has kept those artists, for example. VP has kept those artists in reggae. I can take you on a tour. Metal with Century Media and so on.
Independents have been able to become brands, and now we do have this access. So, although radio has been probably the most important thing, we have made strides in some of the formats. At least, there is Pandora. And Pandora is a wonderful thing because they are agonistic with the Genome project. They allow us to put our music in. It’s coded like everybody else’s music. They actually go out of their way to make sure that there’s a certain level of inclusion for independents. As a result, in addition to radio, we have Pandora. We have (satellite radio service) Sirius/XM with 25 million subscribers in the U.S. at this point. That’s a big number. Pandora’s actives are between 70 million on a month with in a country where the population is what, 320 million?
[Pandora is a pioneer in the business of streaming of music via the Internet, but the sector is getting crowded. Apple recently launched a competing service, and Spotify has gained a lot of followers, and may be doing an IPO next year.]
So the best of times is the fact is that you are promoting your music through Sirius/XM or through Pandora and it’s a two-fer. You are promoting your music and at the same time getting paid some first stream rates. Then, on the commerce side, everything is in Spotify. Everything is in iTunes. Everything is in Amazon. So you are always on the shelf. We actually do much better now than we ever did in terms of getting promotional spots for our music. That was very difficult I remember—and I have been on both sides working with major and indie labels.
On the flipside?
Then on the flipside. Where before you used to be able to just focus on selling shiny plastic discs with a metallic cover, now you have to get revenue from 10 or 12 sources, including performance income, including SoundExchange money, and including money from streaming services that are non-statutory. You have to support a much broader base of revenue streams, and people have to support those streams of revenue. So labels need certain staffs. Some of it, they can outsource. Some of it, they have to do internally. But the overall revenue stream is smaller.
Due to smaller revenue streams, American labels have reached the point where unless they get legislation in protecting copyrights from infringement, and also get performance income, it will be difficult for them to have a sustainable business model. Meanwhile, the fight for performance income has gone on for over two decades in the U.S.
Maybe double or triple that. It goes back to (Frank) Sinatra in the ‘60s and ‘70s. John Simpson (John L. Simpson, former executive dir. of SoundExchange and overseer of the musicFirst coalition) is a great historian who goes through this (issue). You start with 1909 which was the first recognition of copyright value (in the U.S.). It (a performance right) has poked up its hand periodically since then. I’m on the musicFIRST steering committee—the group made up of artists and labels trying to make this happen. We are going to keep pushing this along.
[musicFIRST is the coalition of music creators formed in 2007 to lobby Congress for a sound recording “performance right” when music is played on AM/FM radio under the proposed Performance Right Act which has passed the judiciary committee of both houses of Congress.]
Without A2IM, I’m not sure the indie labels would get their phone calls returned in Washington, D.C.
I really appreciate your perception of where we are because the perception becomes the reality. It’s still difficult.
You recently noted that, “The U.S.’s share of the international music market was 34% in 2005. Last year it was 27%.”
My percentage was from the recent IFPI (International Federation of the Phonographic Industry) statistics. What I’m talking about is the U.S. market as part of the world marketplace. it’s Adele being sold in the U.S. or some German metal band or some band from Australia. The U.S. marketplace size in terms of overall commerce has shrunk. It actually rebounded last year a point to 27%. Two years earlier, it was 26%.
Traditionally, America has been the biggest exporter of repertoire—by a wide margin. But there has been a shift in global sales patterns in recent years leading to the decline of American repertoire abroad.
I think what you are talking about is what the IFPI has not been publishing recently which is how well our repertoire travels overseas. I wish that they still had that data. What you are talking about is a hurdle for the U.S. market. Whether it is because people are spending some of their 160 hours a week on apps or watching movies or looking at their Facebook page or whatever it is; they are spending less money on music right now.
In recent years, there’s been the rise of domestic music in individual markets, particularly Italy, Germany, and Korea. Domestic repertoire has traditionally always been strong in Japan, and the UK.
After the U.S., according to the IFPI, the U.K. is the biggest exporter of repertoire. And, in the U.S., the U.K. is the second largest source of repertoire after American home-grown artists. Two years ago British repertoire actually outsold American repertoire in America.
I’m not surprised at all. Between Adele, and Florence and the Machine, there were a lot list of artists (from the UK).
[The decline of an American presence abroad largely stems from cultural differences. Musical genres that have fed the American market in the past 15 years, including rap, hip hop and country music do not tend to sell well overseas.]
With the decline of American repertoire worldwide. it may be tough for your members to expand their businesses abroad without having significant federal and state government support.
I went to MIDEM for the first time 7 years ago. I walked around, and I saw Sounds of Australia, and stands for the Nordic countries, Canada, Sri Lanka, name a country.
It became very apparent that they were getting some level of funding from their governments for their stands.
As well, we started asking questions of our colleagues. That’s one of the great things about Alison Wenham, and the World Independent Network of which she is the overall chair. There are over 20 organizations like AIM (The Assn. of Independent Music, the non-profit U.K. trade organization), A2IM and ABMI (Associacao Brasileria da Musica Independente in Brazil,) which are members. So I am able to pick their brains. So I said, “What about us?”
Duncan McKie then at CIMA (president of the Canadian Independent Music Assn.), my German colleagues, and other friends shared figures with me in terms of how much support that they were getting from their governments. Of course, in the United States, we weren’t getting any support from our government.
So we looked at the numbers, and said, “Jeez, we are only at a low percentage of the market, and we are not doing anything to make our music more attractive overseas. To have a viable business, not only do you need to get revenue from 8 to 12 different sources to keep your label, and your artists healthy on an independent basis, but you are also going to have to look at overseas intelligently to pick certain markets where you could do well.
You mentioned Japan earlier. Twenty plus years ago, when I was working for Relativity/Combat, we knew that Joe Satriani and guitar heroes like him would do well overseas.
[In contrast to America’s limited trade policies for exporting music, British government investment helps British companies and artists compete on a global scale. U.K. Trade and Investment (UKTI), a government organization, invests and helps promote U.K. artists abroad. UKTI provides funding for artists, has trade missions to key markets (including the U.S., Japan, China and India), and offers the help of trade advisors for working in other countries.]
So what did you do?
I went down to Washington. We have all sorts of allies in Washington. Daryl Freidman, who works for the Recording Academy (Daryl P. Friedman, chief advocacy & industry relations officer for the Recording Academy) took us around and introduced us. Who says that artists and labels don’t get along? We don’t agree about copyright reversions, but we certainly care about copyright protection and we both work on the musicFirst steering committee to get a performance right.
So Daryl introduced us, and we met with the Export-Import Bank of the United States (the official export credit agency of the U.S.), and we met with individual congress people and we met with the Small Business Administration. We worked our way around commerce (United States Department of Commerce).
So I started getting statistics of what other countries were doing in our marketplace from my colleagues and friends and that was an eye opener to the people down there. So we were able to win the second time.
What reception did you receive in seeking funding?
All of them told us, “We don’t do that in the U.S.” I wasn’t going to take no for an answer. So they have this marketing development co-operative program through the Commerce International Trade Agency, ITA. They said, “Well, we don’t have a lot of money. We get a lot of applications. I’m not so sure you will be successful.”
So I did an application, and I got help in my application from my colleagues in Germany, and Duncan McKie in Canada. They fed me comparable (statistics and background) so I was able to do some of the work (for the applications). We went in, and we were turned down. I called up and asked, “Can I get a debrief as to what we did wrong?” The guy who runs the program, Brad Hess (dir. market development cooperator program at U.S. Department of Commerce—What a terrific person; really smart, and really well-organized--he said, “Sure, we offer that to anyone who asks for it.” So he gave me a debrief, and we came back and the second time, and we won. It’s a three year program that we are in the midst of. We are just starting the second year.
At the same time, as you alluded to, the administration’s national Export Industry initiative started, the STEP program. I a found out about it from some guy from Denver who was on loan to Washington when I happened to be down there three years ago.
This led to the historic A2IM trade mission to China in 2012?
Well, you are going to be my straight man then. The first trip we took to China. First, we got money from the U.S. Small Business Administration In conjunction with a State Trade & Export Promotion Program. It was a partnership between individual states. So we got support from New York, and Tennessee with the Small Business Administration. Our members had to contribute about 20% to 25% of the trip. To have some skin in the game. You don’t want anyone just free riding, right? You want people to have some incentive.
We intelligently picked the members that came. We brought a delegation of 15 label companies that came over plus a couple of non-labels. The total delegation was 18 people.
The people we brought with us had to be more instrumental-oriented. I had people applying to go on the trip that were singer/songwriters, where the lyrics are very important. I said, “That’s just not going to work.” So we took some classical, some Latin (labels). We took people like VP Records and Ultra where the beats are important. There are so many things for China where the lyrics had better be less important. We brought the right people to the marketplace. We were extremely well-received.
To get the money, we had to go to China. It was part of the administration’s STEP program. You got extra points for going to China. We wanted to go to China anyway. China, we are old friends from MIDEM, CMJ, and CMW (Canadian Music Week) because they were one of the host countries. So we know them very well. That’s why we went to Shanghai as opposed to Beijing and then we went to Hong Kong.
The trade mission also went to South Korea.
We said, “If we are going to China, what are we going to before and what are we going to do after? Yes, we went to Seoul. We went to Shanghai, and we went to Hong Kong. When we were in Hong Kong, we met with people who were there from Singapore and Malaysia. People coming in from other markets. We were hosted by the Music Matters’/Branded Asia people. They were wonderful hosts. We had wonderful hosts in all three locations.
In the past few years, South Korea (officially the Republic of Korea) has embraced international acts.
The only place that we went in cold was Seoul. It was really shocking because most of our members had never done business in Seoul before, and (South Korea) is one of the world’s biggest digital markets. We were well received. We worked with the U.S. Commerce Department there since we didn’t have connections. We also worked with JC Ahn (business partner and international director, VU Entertainment), and Bernie Cho (president of DFSB Kollective). They had all of the connections. We worked with them through (global music business consultant) Robert Singerman who was along for the trip. He’s an internationalist. As a result of that, we were so well received. The English language TV, radio, newspapers, everybody was out to meet with us.
We had a wonderful event which the U.S. ambassador hosted for us. (American guitarist) Larry Carlton happened to be in (South) Korea. So we had a reception that the U.S. ambassador hosted at his residence. I said to Larry’s 335 Records GM Robert Williams who was with us, “Invite Larry to join us.”
How did A2IM come to take 11 labels to Brazil this year with a trade mission co-funded by U.S. Commerce ITA?
We took 11 labels to Brazil. But we also have something that we did at MIDEM last year and we are doing again. That’s sort of Export 101 Foreign Trade as opposed to Brazil which is Export 102.
Our colleagues, ABMI (Brazil Independent Music Association), the sister independent organization, and Luciana Pegorer is the head of that organization (ABMI’s managing director). I saw her at MIDEM last year, and she told me that they were having a conference. I said, “Do you mind if we crash, and we will pick up some expenses?” That mission was funded by U.S. Commerce ITA. It was about a 50/50 share (with labels).
With Brazil, we went to their convention because everybody was there. Som Livre is the largest record company in Brazil, and they were there. Kappamakki and iMusica, the two biggest digital people, were there.. All sorts of sync licensing people. We met with the PROs (performance rights societies), Abramus and UBC (União Brasileira de Compositores).
It was really a 102 (experience).
When you look at the list of labels that went, it was a sophisticated list of labels that went. People, with the exception of one, that all been to MIDEM before so they were doing it but it was new to them. People who were sophisticated enough to take advantage of it. Then it becomes an issue because you say, “You only had 11 members there. Not so great.” If you look at our website, and if you’ve got our newsletter, you would see that we introduced people who were not there for a digital deal that these are the two companies that you probably want to contact. If you are looking for a label deal, here’s who you should probably contact.” We shared it with our entire membership at large. Then we got calls from members.
[American label delegates traveling to Brazil between March 19th and March 22nd, 2013, and visiting Rio de Janeiro and São Paulo, included: Robert Williams (335 Records), Paul Dryden (ATO Records), Seymour Stein (Blue Horizon Records), Bruce McIntosh (Codigo/Fania), Phil Waldorf (Dead Oceans), Jurgen Korduletsch (Lollipop/Radikal), Tor Hansen (Yep Roc Records), Jim Selby (Naxos of America), Randy Chin (VP Records), Tor Hansen (Yep Roc/Redeye), Alexis Bemis (Brassland), and Joachim Becker (Zoho Music).]
China and Brazil are countries in transition, as is India which I’m surprised you didn’t visit while in Asia.
Your magic word is BRICS. That’s what you are talking about. You just didn’t use the acronym which I know you know. When is it a cost effective time to go into the BRICS countries? I do have conversations with our government in India. BRICS is (about) what time do you go into the marketplace and be able to get your return on investment.
[BRICS is an acronym that stands for Brazil, Russia, India, China and South Africa. BRICS countries represent 43% of world’s population, 18% of global trade, attract 53% of the foreign capital, accounts for about 25% of global gross domestic product on purchasing power parity basis and are currently generating about 45% growth of the world economy.]
In the past the U.S. federal government didn’t do any funding of labels because American music dominated internationally.
If I went into how much work I had to do to get this money, it would be like I was bragging to you.
Is there a greater recognition by the federal government now for the need to fund to the independent music sector for exporting its music?
It’s not like the independent sector is coming cup in hand seeking a handout. It’s about more jobs, and building a balance of trade.
When the administration first announced the National Export Initiative, they talked about products that are easily exportable. I went, “Well, that’s us.” They said that the future is going to come from small and medium sized enterprises—what they call MFEs. That’s us again. (Music) is easily exportable and, as a result of making these exports, it improves our balance of trade; and, as a result of improving our balance of trade, being able to create jobs.
The big drivers are going to be small and medium enterprises Small becoming medium, and medium becoming larger than medium to create all of these jobs. You should read Tor Hansen’s testimony to Congress. It’s on our website. Tor runs Yep Roc/Redeye Distribution which he and Glenn Dicker started 15 years ago in a basement. Two wonderful guys. Now they have over 60 employees. He represented us in Washington, D.C. at a judiciary panel on copyrights and innovation.
[On July 26, 2013, the Congress’ House Judiciary Sub-Committee on the Courts, Intellectual Property and the Internet held a hearing on “Innovation in America: The Role of Copyrights.” A2IM board member Tor Hansen (Yep Roc/Redeye) testified on behalf of both his company the overall A2IM independent music label community.
Among the issues facing the independent label sector outlined by Hansen were:
* The need for royalty rate parity for all copyrights, as the value of a song should not be determined by which music label created or owns a song as all copyrights are created equally.
* The need for government support of an AM/FM sound recording royalty for over-the-air radio play, which would also ensure international trade reciprocity for the overseas radio performance royalties that U.S. labels and artists generate but do not currently receive from overseas.
* The need to support U.S. Intellectual Property commerce overseas to improve our U.S. sector.]
As many of the international music services launched, they immediately made deals with the major labels, and often overlooked the independents. Have those days gone?
Merlin has done a terrific job on an international basis of making sure everybody understands the importance of independent copyrights. (Beggars Group chairman) Martin Mills, who I have unbelievable respect for, brings up the point—and I bring it up all of the time---I’m not a musical snob. I may not like One Direction-- it doesn’t matter whether it’s a major label which it happens to be or independent—but they have an audience. What they are doing, they are doing well.
All of the different types of artists under my genre umbrella may have different levels of fandom sort of speak in terms of the number of followers that they have, and in terms of Twitter followers and so on. But they do what they do well, and their copyright is worth just as much as anybody else’s’ copyright. So one play of Girl In A Coma (the indie rock band from San Antonio, Texas) should be compensated for the exact same amount as one play with Adele. But Adele, because she might get listened to 20 times more, gets compensated more because of her popularity.
You are talking with the streaming services?
Yeah, with the streaming services, for example. Or on iTunes if they are both putting it up on there. If they are selling individual tracks.
The free market is about demand. Product more in demand sells at a greater price in any store. The argument for different tier payments for tracks is that the labels are selling hit or popular tracks.
I think that happens via synchronization licenses and some of the other revenue streams. And I think that some of the others have become more commodity type pricing. Listen, Mumford & Sons on Glassnote put a $14.98 version of their album out on iTunes which is different. It included some B rolls, and some extra videos. They were pushing the price. According to Billboard over 80% of the digital purchases—that shows the level of fan support that they have—that went through Apple were at that higher $14.98 price. So I agree with you in that they should get a higher price if they are giving the consumer more value.
You are arguing for equitable pricing on all individual tracks.
Right. If Spotify is doing something, they should each be valued (the same). They are valued the same if they are both going through Pandora or if they going Sirius/XM or something else.
Despite the popularity of music from independent label sources, digital services do not often provide independent music labels with a proportionate amount of landing page promotional opportunities, deck promotional opportunities on mobile, and so on.
It still happens.
But not as bad as it was?
Not as bad at all. We are able to wake them up, and within the service provider community, we now have our evangelists. People who have done business with us before. Why is Pandora so successful? One of the reasons is that part of the music discovery is that they are introducing a lot of independent artists that never got introduced before. Sirius/XM likewise and in some of the documents that we have seen they talk about how much of their independent helps their overall.
The ongoing fight with Pandora over royalties goes on.
Yes, I’m hoping that at some point we will have some settlement.
It must be a concern to your members.
Pandora is very important for us. Pandora is agnostic is how it ingests its music. It scores it. It decides whether they think it worthy or not to be on their service. They have created a very level playing field for us. I would say the very same is true for programmers at Sirius/XM . Anyone outside of the traditional terrestrial radio area.
Pandora seemingly doesn’t want to pay the fitting freight for music.
Well, Pandora (sighing), I’m hope that at some point there will be an amicable solution between them and the industry because we are very big on how Pandora treats us otherwise. I believe that there are people out there that would just as soon that Pandora would go away because they can’t control them like they can other forms of media.
[Despite the significant access that Pandora gives Independents, A2IM opposed the Internet Radio Fairness Act proposed by Pandora, Clear Channel, CEA and others which, if passed, could have reduced internet royalties paid to SoundExchange.
A new bill may be re-introduced under a different name and could have different language than the one seen last year.
Meanwhile, SoundExchange recently filed a lawsuit against Sirius/XM over the computation of royalties that it collects from Sirius/XM on behalf of the sound recording community. The lawsuit states that Sirius/XM incorrectly excluded from gross revenue performances of pre-1972 recordings, and made other deductions, and incorrect computations. This lawsuit is separate from the recent lawsuit filed by the Turtles regarding pre-1972 copyrights.]
How important to your members are the numerous music industry conferences?
MIDEM is very important---not withstanding a lot of people not feeling that way anymore—because everybody is there. We prepare our people if they haven’t been there before in terms of making appointments in advance and counseling them on who they should and shouldn’t meet with.
Preparing them to pay $35 for a bottle of beer.
And in the rain and the cold in January. That’s the thing that gets me every year in May when it’s there for the Cannes Film Festival. This confirms my relative importance (as part of the music industry). We have an outside terrace (there) which makes it worse because 50% of the time we can’t use it.
South by Southwest?
MIDEM is the business event. South By South West is a wonderful event. I go every year. It’s one of my favorite events of the years. It’s a music event; it’s not a business event. You will have business meetings while you are at South by South West but you have to go and find them. You have to plan them far in advance. “I’m going to meet you a 5 o’clock for coffee here.” We have a breakfast on the second day of Music (conference). This year, we had over 260 people over a three hour period. We schedule one-on-one meetings with publishers. licensees of music, and music supervisors with our members. We also do ones on ones with service providers, people like Pandora, and Spotify; whatever those services might be with our members. We go to Music Biz which is run by NARM (The National Association of Recording Merchandisers) which enables us to get together with our L.A. members as well. That’s become more of a tech conference than a retail conference. I think that Canadian Music Week (in Toronto) is one of the best conferences that I have ever attended because it’s a conference that has a little bit of everything. It’s a real umbrella.
But our members have limited resources. Notwithstanding the $35 for a glass of beer, they tend to not to leave the United States, except for MIDEM and these trade missions. It is strictly a cost issue.
Of course, there’s also the New Music Seminar conference and festival held annually in New York City.
Tommy Silverman is one of the founders of our organization, and has been one of the standard-bearers of the independent movement for over 30 years. The independent label movement would not be where it is without Tom Silverman. No question.
[A2iM awarded its Lifetime Achievement Award to Tom Silverman, founder of Tommy Boy Records, and the co-founder of the New Music Seminar on June 20, 2013.]
Larry LeBlanc is widely recognized as one of the leading music industry journalists in the world. Before joining CelebrityAccess in 2008 as senior editor, he was the Canadian bureau chief of Billboard from 1991-2007 and Canadian editor of Record World from 1970-89. He was also a co-founder of the late Canadian music trade, The Record.
Larry is the recipient of the 2013 Walt Grealis Special Achievement Award, recognizing individuals who have made an impact on the Canadian music industry.
He has been quoted on music industry issues in hundreds of publications including Time, Forbes, and the London Times. He is co-author of the book “Music From Far And Wide.”
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