© 2009 CMA Close Up® News Service / Country Music Association®, Inc.
The music industry can seem like a labyrinth. Destinations are clear, but the paths toward them are prone to run head-on, double back and, too often, terminate in dead ends.
CMA Industry InSite offers a roadmap through this tangled terrain. Developed by CMA’s Artist Relations Committee under the leadership of its Chairman, Kix Brooks of Brooks & Dunn, and Vice Chairman Jay DeMarcus of Rascal Flatts, as part of CMA’s ongoing strategic mission to serve as an industry resource, this project makes complex issues easier to understand through 11-minute Webisodes. Each of these covers one aspect of the business and is posted on the third Monday of every month at the CMA members-only Web site My.CMAworld.com.
Episode 3 went online in July. “The Record Label Machine” follows the approach of the two previous installments, on Publishing and Artist Management, by mixing reflections from leaders in the field into a clear presentation enhanced by graphics, commentary and a bit of humor.
The topic is addressed generally at first, as the participants explain what makes labels vital. Their emphasis is on business, with CMA Board President Randy Goodman, President, Lyric Street and Carolwood Records, describing himself and his counterparts as “music venture capitalists.” As a specific example, he noted how Lyric Street built “a small company called Rascal Flatts into a global brand.”
Acknowledging that this terminology may puzzle up-and-coming artists, narrator Alex Kendig introduced a floor plan of a hypothetical record label office. One by one, the different departments are highlighted, beginning with A&R and continuing through Publicity/Media, Radio Promotion, Digital Service Providers and Marketing/Sales.
One key contribution of each label is its ability to coordinate and, equally important, finance the activities of these departments. Mike Dungan, President and CEO, Capitol Records Nashville, estimated that it costs about $1 million to launch a new artist. Joe Galante, Chairman, Sony Music Nashville, broke that into physical production, advertising and other components and added, “You see these dollar signs rolling by.”
This explains why labels hesitate to take risks with artists that seem unlikely to generate a return on their investment. But artists are advised to approach label deals with caution too. For example, Fletcher Foster, Senior VP and GM, Universal Records South, suggested that male artists might consider signing with labels whose talent rosters are dominated by women.
The focus stays on business as the impact of digital distribution and the advent of the “360 deal” are examined. Though negotiations between artists and prospective labels can be tough, the bottom line remains that these two players are as vital to each other as they ever have been. “If you want big success,” Dungan summed up, “you need the machine that goes behind it.”
Taking that step can start with Episode 4, “The Music Rule of Law.” Posted in August, it emphasizes the importance of legal representation. After an amusing intro, complete with stern music punctuated by gavel-like beats, the lesson begins with intellectual property, whose chief divisions as far as music is concerned are copyrights and trademarks. Their relevance is made clear by Duff Berschback, VP, Business Affairs, Sony/ATV Music Publishing, who observed, “The most valuable thing a band owns is its name.”
Whether the focus is stage names or songs, ownership is critical in a business built around intellectual property. It is therefore important to find an attorney who is not only knowledgeable in these areas but specifically in their application to music, especially in digital distribution and other areas of increasing importance. “To be effective, you have to know how to be a lawyer but you also have to know the entertainment business,” said Rusty Jones, Attorney, Harris, Martin, Jones, Shrum, Bradford & Wommack P.A.
“The legal issues aren’t necessarily new,” said Berschback, while discussing the impact of digital downloading and social networks. “It’s just new circumstances that test and stretch the old legal issue.”
Billing depends on a number of circumstances, including whether an attorney is retained for a single assignment such as contract negotiation or for ongoing relationships; the Webisode explores typical terms for various options. And Tyler Middleton of Baker & Kelly PLLC (B&K) cautioned that long-term arrangements in particular should include the right of the client to audit an attorney’s charges. “It’s not a malicious thing or a sneaky thing,” she said. “It’s simply about administrative and human error.”
CMA Industry InSite is produced by the digital marketing firm Hi-Fi Fusion. Upcoming installments will address digital downloading, performance rights organizations, radio, royalties, social networking, touring and other topics. CMA members are invited to submit questions to the experts appearing in each episode, with replies posted when received.
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