Music Business Masterclass: Make a Living as a Musician

1. Introduction: I love making music. Ever since I was a kid, I was making music in some form or another. Eventually, I started playing in bands, did a little touring, and had some success. It was at this point that I realized that if I wanted to be doing this for the rest of my life, I needed to learn how to make a living with my music. I needed to master the ins and outs of the music business. Hey everyone, my name is Jay now, I teach music business and production at a university here in the US. In fact, I run the music business program for my university. I've written books, I've written articles, and I've written music for video games, commercials, movies, television, and more. This class follows one simple premise. We deserve to get paid for the work that we do. In this class, I'll show you all the different ways that musicians get paid for their work. I really take an entrepreneurial approach here, focusing primarily on people like you and me. Not on people with million dollar record deals, although we will talk about how those work. Okay, so here's inside my account on symphonic distribution. So this is an album I released a while ago called Anascorsia. So you can see details of the album here, artwork, blah, blah, blah. This is how you're going to pay it back. This is what recruitment is, you say. Let's do some really simple math here. So let's say you get $1,000,000 record deal you put out, you use that to make an album. Also tell you that when you hear about a band breaking up, a famous band deciding to go their separate ways 90% of the time, this is why maybe it's because they hate each other, but the reason they hate each other is because one person's getting money. You are a producer making music, especially producing electronic music. You may have heard about sync rights or sync deals being the Holy Grail right now. This is where the money is, is getting your music used in something. This is what a lot of people seek out right now because of, well, for a few reasons, but probably biggest reason remember this is just from streaming. This, our publishing, this isn't royalties from licensing or anything like that, This is just streaming. So you're saying to yourself, J, just tell me the number. Just tell me what it is. Okay, I'm going to tell you. But there are a couple caveats to that. Let me explain just a few things really quick. Then I'm going to give you a number. The first is that this rate, which is a percentage, is not the same for everyone. Almost every student that I have in my real world classes doesn't know about, doesn't do. And what's crazy about this? People don't realize that there's money just sitting there and all they have to do is sign up, register their works, and then they're like, oh, we've been looking for you, here's your money. I really love teaching online and I'm fortunate to have over 1 million students watching my classes online. Like all my classes, I had a ton of fun making this class. So if you're ready to learn the ins and outs of the music industry, sign up now, and I'll see you in the first lecture. Thanks. 2. Disclaimer: I am not a lawyer.: Okay. The first of two little disclaimers I want to give. This first one is that I am not a lawyer. Whenever you're dealing with a contract, even a verbal contract, a contract written on the back of a napkin, anything like that, you should always, if possible, talk to a lawyer about it. Lawyers are expensive. I know that this class is going to help you really understand what's going on, but having a lawyer look at your specific contract is going to be helpful. I am not a lawyer is not legal advice. However, I have studied this stuff a lot. I've been on the artists side of it. I've been on the business side of it. I've even been sued a few times, which is not fun. But it helped me learn a lot about what's going on. Anything I tell you about this stuff is not going to be better than what a lawyer can tell you by looking at your individual situation. There's a lot of things that you might be going through that I don't know anything about. If you get a lawyer and a lawyer contradicts anything I say. Go with what your lawyer says because they know you and they know your situation and they know that contract that's in front of you. There are relatively inexpensive ways to get a lawyer. I think I'll talk about this more later, but I'm going to mention it just now. There's an organization here in the United States. There's an organization called the VLA Volunteer Lawyers for the Arts. They have chapters all over the country. Look volunteer lawyers for the arts. And then you or your city name and you'll be able to find hopefully an organization in town that is doing that Through that organization, you can get free, deeply reduced advice or representation from an artist who specializes in the arts and music. They're the same music in the arts. So that is a really great resource. If you find yourself in need of having someone look over a contract or anything like that, always seek professional advice from a lawyer. I'm not a lawyer, but I get sued a lot. So I don't get sued a lot. I've been sued Okay. On with the show. 3. Disclaimer: Regionality: Okay, Disclaimer number two, just real briefly is regional stuff. When I talk about some of the publishing rules, some of the copyright rules and things like that, I'll usually specify that I'm talking about something that is specific to where I live, the United States. But in cases where I don't mention that, just keep in mind that my perspective is coming from the United States laws and rules. Now when it comes to copyright and publishing and all of these kind of things, there's really not that much of a difference when you go basically all around the world. With a few exceptions, if I say like the copyright term is X, yours might be slightly different if you're outside of the United States, but it's going to be really close. All of these things are really similar everywhere, but all of them are also slightly different. That doesn't mean that if you're outside of the United States, this is not going to be helpful to you because I'm going to tell you everything you need to know. Just these finer details of what that x number is, is something you're going to have to Google. But once you understand how all of this stuff works, that'll just be a quick Google to find the answer for your country. Okay, United States perspective, but all of this stuff is really similar all over the world. 4. Copyright, licensing, and record deals: Okay, before we get into the meat and potatoes of the big topic, I want to talk big picture about what we're going to talk about in this class because there are three big topics we're going to focus on. Okay, the first big bucket of stuff we're going to talk about is copyright. Okay? How copyright works, why you care about copyright, How to copyright songs, banda, personal name, your image, whatever. Everything we're going to do a lot on copyright. The second big bucket of stuff we're going to talk about is licensing. That can best be summed up as how to monetize your copyrights. Okay, Licensing means I have a copyright to this song. I'm going to sell this movie a license to use my song. And they are going to pay me money to use that song. And they might even pay me residuals, which means money a couple months or every year or something like that. Or it could be I wrote this song and recorded it and this other band wants to record my song, I can give them a license that lets them do that in exchange for money. All of this stuff has to do with how to monetize those copyrights that you've already made and had. Okay, then the third big thing is record deals. Again, how to make some money off your copyrights, But record deals go into a little bit more detail in terms of development and all of these things regarding you as an artist and your band. If you're in a band and how all that works. But it has to do with really you make music that you own, a bunch of copyrights. The record label wants to be a vehicle to help you make money from them. I should also say whether you're interested in a record deal or not, that section of the class will be really helpful to you because we're going to spend a lot of time also talking about independent artists, people who go without a record deal, and promotion distribution. All of that stuff falls into that big bucket. I'll also take a minute here to say that no matter what style of music you're working in, all of this stuff works the same. Okay? So whether or not you're focused on being in a band, or you are a solo artist, or you are a rapper, or a producer, or a film composer, or someone working behind the scenes, all of this stuff is the same. Don't get thrown off when I say something about a band, this is all the same. The genre doesn't matter. It totally works the same no matter what you're doing. All genres are relevant here. Okay, with that, let's go in and start talking about copyright. 5. Copyright in the Constitution: Okay, so in this first section of the class, we're going to talk about copyright. What is copyright? Here's what most people don't realize. Whenever you write a song, make a track, write lyrics, write a poem, paint a picture. Anytime you create a work of art, there is a whole bunch of rights that get assigned to you just magically. That's the law. Let's use the example of writing a song. Let's say you write a song, you are just in your bedroom, you've got an acoustic guitar and you're just goofing around and you land on something. You have some lyrics in mind. You sing something and that's it. You sang a little song, you've got some chords that go with it. You've written the very basics of a song instantly without you doing anything. You now have generated a whole list of rights associated with that song. And these are things that you own and these are things that, if you're careful about it, you can monetize all of these things. Copyright is only one of them. There are a bunch of other rights that you have the right to perform it, the right to record it, the right to use it in a movie, the right to use it in a play, the right to allow people to choreograph dance to it. All of these are rights that you now own and they're connected to that piece of music you just wrote. It just magically happens. Now there are some things you can do to protect those rights. We're going to talk about that shortly, but for now, let's just understand the biggest of those rights. And that is the right to copy that track, which we colloquially call copyright. But do keep in mind there are all these other rights, and that's what we're going to talk about in the next section when we get into licensing is these other rights. Copyright is the biggest one and it's the one where things can go wrong most of the time, and things can go right a lot of the time. It's important to understand it. Copyright is the right to copy the work, the right for other people to do the same thing you just did. Basically, you own the copyright. When it comes to the laws in the United States, copyright comes from Article one, Section eight of the US Constitution. This is the original copyright law. This has been amended a few times, but basically it says the purpose of copyright is to promote the progress of science and useful arts by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries. What that means is that when you create something, what the law wants to do is give you the exclusive right, you and only you, to use that thing for a limited amount of time. The idea is that this will encourage people to make things, but also the limited amount of time. Send those things into the public sphere and everyone can benefit from them. Let's take, for example, medicine. This is a really good example. I invent a new medicine. It cost me a lot of money to invent this new medicine. It is very expensive to invent new medicines. But let's say I invent one. It gets all approved. I can sell it on the market. Now I can sell it. I alone can sell it on the market. I can sell it for whatever I want. This is why new medications are extremely expensive. But after a certain amount of time, the copyright that I have on my new medicine, and it is a copyright, same thing that goes away and that goes into the public domain. That's the opposite of copyright in a way. At that point, anyone can just look up the recipe for my medicine and make it. Now, it's not so easy to do. That's why other drug manufacturers are going to do it. And they're going to create what we call generic versions of it. And that's when the price goes way down. But I have that initial window to monetize my invention. That's what Copyright is designed to do. Now in music, in all arts, it works the same way, except the copyright term is quite a bit longer than it is for drugs. I think for drugs it's like medication, it's like ten years or something. It's not actually all that long. For us it's quite a bit longer. We'll get into that shortly. What we have present day as a legal definition of copyright in the United States is this the exclusive right of a creator to exploit a literary, musical, or other artistic work, whether it be recorded in the form of print, audio video or otherwise. Now, there's an important distinction in that definition that we have to keep track of. That is the part that says recorded in the form of print, audio, video or otherwise. In other words, it has to be recorded. Now that doesn't mean that your song is not copywritten until it is recorded. It means that your work has to be in a fixed media. Now in music, there are two primary kind of fixed media that can exist. One is to record it. You can record it. Now, this doesn't mean something is not copywritten until you get into the studio. You can record it on your phone, you can record it in a voice memo. All of that counts. As long as it's recorded in some possible way, it is copywritten. Okay. Music itself is a difficult thing to deal with because this ethereal, just waves floating around in the air. We need some documentation that it exists in order for it to really be copywritten. Recording it in any possible way, Some document that that song exists. And roughly how it goes, the other way is to write it down. You can write it down in sheet music. You can write a lead sheet any way you know how to do that. You can write lyrics with just chord symbols. All of that works to some documentation that it exists. You don't need both. One or the other is fine. You have to document it in some way. Music Main two ways are to record it or write it down in some notation. Okay, that's the fundamental legal thing about copyright. Let's go into what it means, the rights we get when we create a piece of work. 6. Rights We Get: Okay, what does copyright get you? It gets you a few very important rights. In particular, the right to distribute the work, the right to copy the work, the right to display it, and the right to perform it. Also create derivatives. Let's come back to derivatives in just a minute. Distribute, if you create a work, you own the copyright, you have the sole right to distribute that work. Which means send it out to the world. You can record it, put it on an MP three, E mail it out to all your friends, Upload it to whatever streaming services do you like, put it on the Internet for free. Anything that's distributing it, getting it out to people, you have the right to do that. You also have the right to let others do that for you. All of these rights use yourself or you can hire someone to use for you or have someone pay to do for you. For example, with distribute. If you have a record deal, one of the things that they're going to do is distribute your music for you and then you will get paid for sales of that music. In theory, you have the right to copy it. Nobody else can do that unless you explicitly give them that right. You can duplicate it. You can copy it and you alone can copy it. Display. This one doesn't really apply as much in the music world as it does to the visual art world. But let's say you made a painting and you put it in a gallery. You're the one that has the right to decide if it goes in that gallery or not perform however we do. You have a right to perform that work. You can give other people that right, and we'll talk about how to do that later. But you have the exclusive right to perform that piece of music, which does mean, technically speaking, if you write the song, you show it to your friend, and your friend goes to a bar and performs it live. If you have registered everything correctly, you should get paid for that. Um, there's some special cases there where you can't exactly stop them from doing it. Well, you could stop them from doing it, but it's difficult. You should, however, get paid for it and that's real, you will get paid assuming you have all your ducks in a row. All right, then create derivatives. What that means is, let's say you want to release a remix of that song. You can do that. No one else can do that unless you give them permission. If I want to make a remix album of my music, I can do that, or I can hire people to make those remixes in which I give them the right to make derivatives. A derivative is just a different version of the same piece. It's not a copy, but it's a copy with modification. Like a remix or an arrangement can be a type of derivative. If I have a song that's for acoustic guitar and voice and someone wants to make an orchestra version of it, that would be a derivative. It's a different version of it. I have the right to create them or give that right away. 7. Intellectual Property: Okay, very important concept going forward is this concept of intellectual property. You'll often see this abbreviated as IP. When you see IP, what we're talking about is intellectual property, or I guess Internet Protocol, if you're looking at like an IP address. Totally different thing. That's not the same thing. In our case, IP stands for Intellectual Property. Here's what that is. There are two kinds of property in the world. There is what's called real property and there's intellectual property. Okay. Real property is things like this house I'm in. It's a real thing. It's a tangible thing that I paid money for or I built and I made it. This apple pencil is real property. I own this, I bought this. It's real physical stuff. Think about when you buy a house, what is the name of the person who helps you buy a house? A real estate agent. Real estate. Because they are helping you buy real property. That's one of property. The other property it's called intellectual property. It's stuff in our brain, our mind, the things we make just with thoughts. Virtually all art is intellectual property. Now you might say, what about like a painting? Because it starts as intellectual property but turns into real property. Now really, it stays intellectual property for the most part because its value is in the intellectual property. Its value is not the cost of the paint and the cost of the canvas. Its value is the intellectual ideas that went into creating the piece. Music It's quite simple that song you make is intellectual property. Even after it's recorded, it's still IP. It's intellectual property. This idea of intellectual property is wild to think about, because if you think about like all the things you own, real property, right? You own stuff, right? You own like a bike, maybe a car. Some guitars, I don't know, some synthesizers and stuff. That's cool. But when you think about the amount of intellectual property you own, it's like every idea you've ever had is these pieces of intellectual property that you've owned. Every song you've ever written, every track you've ever jammed on, every riff you've ever played on guitar. This is intellectual property that you own. It's kind of just mind blowing to me. And remember, every piece of intellectual property has all these rights associated with it. Copyright, and then this whole string of other rights that we'll talk about later. But intellectual property is a wild concept. As musicians, as artists of any kind, you are making intellectual property constantly. The name of the game is, how do you protect it and how do you make money off it? That's what we're talking about here. Okay, let's talk about what copyright does not protect. 8. Copyright Does not Protect: Okay, Copyright protects a lot of stuff, but there's a few categories of things that it does not protect. These things fall outside of the jurisdiction of copyright. You're not likely to encounter these as a creator of intellectual property, as an artist or as a musician, but it's worth knowing that they exist. The first is ideas, like if I said, I have this idea to a tunnel that goes under my whole city to make driving across it faster by just going under it. That's a cool idea. That's not copyrightable. It's just an idea, it's out there. If I was to do something with it, that might be copyrightable. But just a big idea isn't really copyrightable. The second thing is facts and figures. If there was a figure of it is 20 degrees outside today, that is a fact and it is a, it's a number, it's truth copyrightable. Everyone has equal rights to that information since it is true. Then the third thing is logos and slogans, things like that. You would think that those would be copyrightable, but those actually fall under trademark, which is slightly different. We will talk about trademark in a bit, but something like the slogan of a company or the logo of a company or something like that. Those are trademark. Those are not copywritten things. It's slightly different. There are a few other ones, like oddities, like a government documents, whenever the government makes something, at least in the US, it's in the public domain. Remind what I said before quickly. Public domain means that it's not copywritten. It is out in the public world. Anyone can use it and play with it. It is totally free. You can find some sites that have public domain samples. They're just samples you can use and there's no claim of copyright on it. People who have put out those samples have given up their copyright so that everyone can use them. If you're salivating at this idea, check out the website. Free. Sound It's a great site for finding samples because they're essentially public domain. Anything that the government creates is in the public domain. 9. Educational Use: Okay, one last thing on this. Educational uses gets a weird wrap. Sometimes a lot of people say I can do whatever I want with copyright. If it's for educational uses, what that means is, let's say you've got a piece of sheet music. This is a really common one that I come across that is copywritten. Can I just photocopy it and give it to my students? We just say, well, we're just going to photocopy it and not pay for more copies. If it is for educational uses. The answer to if you can do that or not. For educational, but probably not. The educational rules are vague and scary and no lawyer is going to advise you to fall back on educational if maybe I can use it for educational purposes. Maybe I'm going to talk more about this in a minute when we get into fair. But I just want to see this in your head right now because I think it's probably bubbling in a lot of your minds is there are some things you can do under the guise of educational use, but they're pretty soft. I wouldn't lean on them, as I'm going to explain in a minute, this idea of fair use, which is what the educational exceptions fall into, is a myth. It's not really real. If you're thinking, well, I can photocopy anything or do anything I want under the rules of educational age. That's not really more on that shortly. Okay, let's go on to the terms and basics of copyright. 10. Term: Okay, so let's get some of the basics out of the way here. The biggest thing that we need to get on the same page about here is the term of copyright. When we talk about copyright term, we're talking about the duration. How long is something copywritten before it falls out of copyright and therefore into the public domain? So there's a short answer to this and a long answer to this. Okay? The short answer is life of the creator, plus 70 years. If I make something today as I have this class, this class, this video I'm making right now, this is copywritten me for the rest of my life. I will own the copyrights to this unless I sell them or something. But I will own the copyright for the rest of my life. And then 70 years after I die, that's the rule. Okay, anybody who writes a piece of music, you own the copyright for that for 70 years after you die. The reason for that distinction is that the idea is that you can will a copyright and it should last two generations. That was the idea behind the term. I could leave my intellectual property to my children so that they can continue to monetize it, make money from it. They can't really leave it to their children then because it'll expire by then. There's a couple tricks around that. There are ways to start the clock over. In some cases, not all. Okay, that's the short answer. The short answer is life of the creator plus 70 years. A slightly longer answer is, it could be life of the creator, plus 95 years, or 120 years, depending on the medium. For different kinds of things, the medium can be a little bit longer, the term can be a little bit longer. I don't know the details of all those other things. What I know is that for music it's 70 years life plus 70 for music. Now, here's the actual longer answer. There's a magic date. There's a magic date when the rules changed, okay? That date is January 1, 1978. Okay? If you made something January 1, 1978, which the majority of you are probably doing making things after that date, then what I just told you is true. It is life of the author plus 70 years. You've made something before that date. Anything that was created prior to January 1, 1978, the life of the author doesn't play in. It's a flat 95 years from the date it was created. If you or your parents or something made in 1977, then it is going to be copywritten for 95 years from when they made it. Now we can unwind that a little bit more and say that anything created prior to January 1, 1923 is in the public domain at this point. Okay? When people are looking up old resources, or looking up old things to see if they're in the public domain, if they can be used for sampling or something like that. January 1, 1923 is what we're looking at. I think that actually might be out of date. It's probably 1924. Now, we're just starting to get to the point where we're seeing some really early movies, silent movies, and even I think last year a few movies with, so for the first time, fell into the public domain. They got released. And that's why you're seeing some people starting to like remix these old, old movies. It's a trendy thing because they're now in the public domain. That is the basics of the copyright term. For us it is life plus 70 years. 11. Public Domain: Okay, we talked a little bit about the public domain and a few videos back, but I want to dig a little bit deeper into this so that we're sure that we really understand what this is. The technical definition of the public domain is the state of belonging or being available to the public as a whole, and therefore not subject to copyright. In other words, if something is in the public domain, it is owned by the public. The community at large is the owner of this thing. Now, there are typically four ways something can enter into the public domain. The first is the copyright expires the life of the author, plus 70 years, that's over. Now the thing goes in the public domain. That's how it works. Or in the case of something that is older than January 1, 1978, it goes into the public domain after 95 years, which is why we're seeing those early films and things like that go into the public domain. The second is copyright owner doesn't renew it. Now, that doesn't really apply to things written after January 1, 1978. But prior to January 1, 1978, there was a provision where you could renew the copyright once or twice. I don't remember exactly how it worked. If someone decides to not renew it or fails to renew it, it would fall into the public domain. The third thing is copyright doesn't apply. That would be things like government documents. That's why sometimes you see people like remixing like presidential speeches and things like that. Because those are not copywritten. Those are owned by the public. We pay their salary. What they make is ours. Anything the government makes is not copywritten. You can chop it up and remix it and use it for whatever you want. There might be some restrictions on that, but but more or less you can play with it. Then the fourth way is the copyright owner explicitly puts it into the public domain. This is called a dedication. You can put a little dedication on something that says, this is in the public domain. Why would someone do that? Why would someone explicitly say, I do not want to own the copyright to this? I want this to be in the public domain. There are a few reasons, three of them come to mind for me. And this is just my opinion on this. But there are three reasons why I've seen this happen and be successful in the past. One is activism. I see this in social and political activism sometimes where maybe someone will make a poster and they'll put it up online and say print this and put this all over your city. By doing that, they can do it in a way that says this is not copywritten. I want you to take this and duplicate it. That can help spread the message faster. The second one that comes to mind and relevant to our world, is sampling. There's a lot of people who make stuff, who really believe in sampling. So they make something and then they say, I want people to be able to sample this. They put it in the public domain that anyone can use it. In fact, I have here on my desk a little thumb drive from a band called The Pool Boys, which is some folks I know here in Minneapolis. They put out this album. It's a really great album, but this is not the album. What? This is a set of samples that they put out for free and they're giving to producers and saying like use them. They effectively put them, these samples into the public domain and said, here you go, have fun with them. That leads me to the next thing. The third one of these reasons, which is marketing. Sometimes putting something in the public domain can get it to move through the Internet faster. In the early 2000 when file sharing systems were still a thing, I remember being like Trendy to put out an album and then put it onto some of the illegal file sharing systems like Napster. And those people would do that on purpose so that they would go out there. And doing that wasn't explicitly putting it into the public domain, but it was because you're encouraging people to copy it and then telling them that you're not going to prosecute them for copying it. That's the public domain. Now there is a gray area in between copyright and the public domain. There's this middle area that we sometimes call copy left, which is like a play on the word copyright. This is where things like creative Commons live. If you've ever come across creative Commons, we're going to talk more about creative commons in not too long. Hold on to that for now. But if you're interested in this middle area, look up creative commons. They have their own copyright licenses that let people straddle in between the copyright and public domain. It's really interesting stuff. It's used a lot on that free sound website that I mentioned more on that soon. 12. History of Copyright: If you're interested in the history of copyright and how it got to be what it is today, it's really fascinating history. It all the way back, well, it goes back to the creation of the Constitution, but it goes way back before that. This video that I have here on the screen is a great telling of how copyright got to be what it is today. It's a bit long, it's 25 minutes, but this guy, John Hess, just does a really great job of explaining the whole story. I'm going to encourage you to watch that now for copyright reasons. I can't just play it for you here because I don't own the copyright to that video. He does. If you're in a platform where I can put text links, I'm going to put a link to this in the next little bit. If you're not in a platform where you can see text links, please just Google this. The history and philosophy of copyright made by Filmmaker IQ. It's on Youtube. It's 25 minutes, but it's a real enjoyable 25 minutes. I promise you won't regret it. Please watch it. If you don't care about the history of copyright or anything like that, then you can skip it. But it's fascinating. Please go check that out. 13. How to get a copyright: All right. How do we get a copyright? You've made something, how can you protect it? I hate to do this to you, but again, there's a short answer and a long answer. Here's the short answer. Nothing. You don't have to do anything anymore. At some point, the law changed to where copyright is already made. If you make something, it is instantly copywritten. The default is that it's copywritten this video that I'm recording right now. As soon as I hit stop and save this file, it is copywritten. If you write a song, the second you've written it, it's copywritten. But remember what I said at the very beginning, In order for something really to be copywritten for music, we have to fix it. We have to make it tangible somehow. We have to record it or write it down. Let's say you're out at the bar with friends, You take out a napkin, you write a couple of lyrics, and you write a couple of chord changes on top of that lyric that is copywritten. That is done, You don't have to do anything else. It is copywritten. Play your guitar and sing a song. You hit record on your phone, you record a little demo of you doing that song. You hit stop, you save that file that is copywritten, it is done. You are now the owner of that intellectual property. You don't need to do anything. However, here's the slightly longer answer. You can do more. You can file the work with the Library of Congress and get an official copyright designation. Why would you do that? What does that get you? The big thing that that gets you is protection. Let's say I do the napkin thing, I write down some lyrics and some chords on a napkin and I hold it up and say, this is my new song, that's Copyriten. I made it. It's instant, it's mine. Okay. Now, six months later, the weekend, the artist, the weekend comes out with a new song that is very similar to the one that I wrote that night. On that napkin I say they stole my song. Now I have to go to court and prove that my song existed first, and that's going to be hard to do. If I would have filed the copyright with the Library of Congress, then it would be a lot easier to do. Okay. Because then there's a date on it, there's a record of when it was submitted, and there's proof that it existed on a certain date. And that is probably prior to the weekends releasing of his song. If you ever have to go to court, you're going to be glad that you went through the extra steps to do it with the Library of Congress. Now if you're really going to go to court in that situation, you're going to have to also prove that the weekend had access to your napkin and was able to hear it. That's going to be a tougher thing to prove, regardless of if you have submitted the copyright to the Library of Congress or not. To summarize, you get a copyright whenever you make something, it is instant. You don't have to do anything special. You can do something special by filing it with the Library of Congress to get yourself more documentation that that existed on a certain date. And that will get you more protection. You don't have to do that. I will tell you that in all my years of doing this, I have only twice submitted things to the Library of Congress that was a commercially released full album. When I released those albums, I submitted those, but everything else I've ever written, I've never submitted to the Library of Congress. There's really not a need to in my case, and I think in most people's cases, you really don't need to do that. Just my humble opinion. Until you're commercially releasing something, then it's worth doing. It costs a few bucks to do. Okay, next let's talk a little bit more depth about fair use and that education thing that we talked about a minute ago, which is part of fair use. But let's talk about fair use and the bigger picture. 14. Fair Use is... tricky.: Okay. So you've made something and now you own the copyright to it. What are people allowed to do with it? What can they do with your copywritten work? There are certain uses of a copywritten work that are allowed under something called fair use. Fair use has five things, five things, five ways that people could use your work and they could call it fair use. I'm going to explain what these are, but then I'm going to tell you why this is all very murky. Okay, the five things are commentary. For example, if someone wants to talk about my work, I wrote a song. Someone wants to do a podcast where they talk about my song and provide commentary on it. They may play a little bit of the song and that could be considered under fair use to be okay. The second is if someone wants to use my song as a to make fun of it, to make fun of me or something like that for news reporting, if someone wants to do a story on the news about me, they may be entitled, they may be allowed to use a certain amount, small amount of one of my songs to talk about me or something for scholarly research. If someone is writing a book or a paper or something about my music, maybe they can reprint some of the lyrics. That can be okay under fair use. Five, is that big education one. Someone might reprint the sheet music to give to their class under the guise of education, they're studying it. So those are the five big buckets of stuff that we use for fair use. All of those are quite iffy, and any lawyer I've ever worked with has told me, do not fall. Do not lean on fair use. In other words, if you're doing something that might be against the law in terms of copyright, but you can say, well, I think it's fair use, that's pretty dicey. Fair use is not a great way to justify doing something with copyrighted material. Courts tend to not like it because it's just so murky. It's not clearly defined in ways. There are other elements to it that a court would look at if you ever got in trouble for doing something. Something like what's called the purpose and character of the use. Are you using the thing to make money or is it to inform the public? If you're using it to make money and you're being sued, you're probably going to lose. Let me give an example of that. I wrote a song. Let's go back to the podcast thing. There's a podcast that's providing commentary on the song. And they play the whole song in the podcast. And then they talk about it. Let's say I don't like that and I sue them and say they're not allowed to play my song in their podcast because it's copyright and use if their podcast has ads in it, and they're making money from their podcast. Generally, a court is going to say you're making money from doing that. You can afford to pay the copyright costs, pay me to let you use it, which is not something fair use does. That means that we're going to come up with a contract and you're going to give me some money and I'll let you play the music. Other stipulations would be the amount of the work in that same exact situation, the podcast situation, the Court might say, well, did you need to play the whole song? Could you have just played a little bit of the song, achieved the same thing, But if they played the whole song, the court might not look at that as great. I'm telling you all this to say that whenever you come across fair use and someone saying, I think I can do this because of fair use, always look at that carefully because fair use is just a really difficult term. I haven't found a lawyer yet who's willing to go out on a limb and say we can do something because of fair use. It's just really murky. Okay, let's talk about trademarks. 15. Trademarks: Last thing in this section, let's talk a little bit about trademarks. Trademarks are quite a bit different than copyright. Copyright tends to protect intellectual property, while trademarks tend to protect brand and brand identity. The main thing that's different between a copyright and a trademark is the context matters a lot more with trademarks. Let's take an example. So let's think of something that a company that we all know, Google. Okay, so Google, let's say Google has a trademark, the name Google. They also have a trademark on their logo, which is really just their name in different colors. Right? What a trademark is, A mark. The mark is the name or the logo, the design, the shape, the whatever. That's a that associated with a trade. Okay. A trade like internet search, grocery stores or books or something like that. Wanted to create a company called Google that did Internet search. They would sue me. Right? They would say, no, that's our name and we have a trademark on it. You can't do that. And I would lose. But what if I wanted to create a restaurant called Google? Could I do that? Maybe I might be able to. Their trade mark is protecting their name and logo within their trade. I could use their name in a different trade. I might get away with it. They probably would win if they sued me if I did that. Because they have a lot of money, unfortunately. But this is why you sometimes see the same brand name on different stuff. You could see Target is a grocery store around here. I've also seen other targeting, other things called Target in other industries, and that's fine, they can get away with that. Target is actually a good example, because as a grocery store, one thing that they have famously done is trademarked red. You hear stuff like this all the time, like people trademarking a color or a smell or something like that. They actually can do that, but remember that it's associated with trade. Target has trademarked the specific shade of red that is in their logo. So what that means is that nobody can use that shade of red in a logo that looks like Targets, that is identifying some kind of grocery store. Right? So it's not just nobody can use red, it's nobody can use red within that trade to do something that could cause confusion. Another really big thing about trademarks is that they are not compulsory. Like copyright is what compulsory means is that you just get it. We just talked about how copyright exists. As soon as I make something it is copywritten. Okay. Trademarks do not work that way. You need to apply to get a trademark. And it can be a bit of a tedious process, actually, I'll come back to that in just a second. Another thing about trademarks is that you have to maintain use of them. If you have a trademark and you stop using it after a certain amount of time, you're going to lose it and it's going to go back into the public domain. Back to the idea of getting a trademark. If you do apply to get a trademark, I would really recommend using a lawyer. Like get a lawyer and have him help you. I did this once without a lawyer, and I just did it myself and I got it. But it took a ton of paperwork. I actually have printed off the stack of paperwork and I typically show it to my classes. I can't show it to you now because I've left it in my university office. But it's that thick, it probably six or 700 pages. Trademarks don't need to take that long. The reason that one took that long is because I screwed some things up that I didn't understand. So get a lawyer to help you. It can be not too expensive. If you don't use the trademark, it goes away. They work quite a bit different than copyright. We're really focused on copyright here, but I wanted to explain trademarks just to clarify that trademarks don't get used all that much in music creation. They wouldn't trademark a piece of, you would copyright a piece of music. You might trademark your band name and your band logo. Those are things you would trademark. You might even trademark your own name. That might be something you would consider doing, but the majority of what we're doing in music is copyright. 16. What is work For hire?: Okay, so let's talk about work for hire. I think this was mentioned in the video I asked you to watch a few things ago, not my video, the history of copyright. One, work for hire gets a couple extra rules around copyright. So let's talk about what this is. You are a designer or musician, let's say a musician, since that's what I am. Let's say you're a musician and someone comes to you and says, I want you to write a jingle for my store. Okay, so I want you to write a song for my store that we're going to use in a commercial. It's like save big money at Menards. If you're in Minnesota, you know exactly what I just sang. Actually, if you're in the Midwest, you know exactly what I just s jingle from a popular store. They ask you to write some music for their commercial. They give you a contract on the contract, it says this is a work for hire agreement. It very well might say that. It might not explicitly say that and still be one. There are a lot of cases where it doesn't have to explicitly say it, but most of the time it does. When that happens, what that means is that the company that's hiring you is hiring you and paying for your time to create the thing, to create the music. Therefore, once it is done, being created, it is copywritten, but it is owned by the people who paid you. Okay. As an artist, as a musician, you generally want to avoid work for hire contracts unless you just need money. Because a lot of the time they pay good upfront. Whereas if you keep the copyright, hopefully you're going to make some money off it down the line. But very rarely do we get a copyright on it and immediately make money off of it. Ideally, you get paid to make the thing and then you also keep the copyright. But in a work for hire agreement, you don't keep the copyright, you don't own at all. I'll tell you about a few times where I've accepted work for hire. When I was in college, I got asked to write a bunch of pop songs for an up and coming singer who will remain nameless. I was asked to write a bunch of songs, just like pop radio songs for them, and I collaborated with another guy, we went into a studio and we wrote a whole bunch of songs and recorded them and gave them to her. We were hired by her agent to create these songs. We were paid pretty well to do it, but it was a work for hire. We did not keep any of the copyrights. No matter how successful those songs may have been. We did not make any money off those songs after that initial check that they gave us. They own the copyright. From there on out, they could totally delete our names from it. And luckily, they did delete our names from it. Work for hire. In a work for hire relationship, you don't own the copyright. You're being hired to make something and you give it away. A good example of this is like a logo for a company like you might hire a graphic designer to make the logo and then it's your logo. They don't own it. You paid for it. You can use it for whatever you want. There's a rumor that, you know that Mcdonald's little jingle, that I'm loving it or whatever. There's a rumor, and I don't know how true this is, that they were filming a commercial, the commercial had Justin Timberlake in it. And he was like talking about how great cheeseburgers are or something, I don't know it. The director said, okay, we need you to do something here. Take a sip of the soda, and then do something like react to it and show how happy you are or something. Justin Timberlake just turned around and went Dadadada. That became like a jingle that they used for like years and years and years. Probably still. I think, I don't know. Justin Timberlake did not get royalties off that little jingle that he wrote for them because it was a work for hire. He was being paid to be on set to be an actor. He made something while he was in the process of doing that, and it was a work for hire. So he didn't own it. Mcdonald owned it as soon as he did it. Now, before we have too much sympathy for Justin Timberlake on it, I did read that he got paid $6,000,000 to do that commercial in the first place. Yeah, he kind of got paid to do it. Okay. So that's a work for hire. That's what a work for hire is, something to keep an eye out for when you're working for somebody else. Now, there's a tricky thing about the duration of copyright when it is a work for hire agreement. Let's go to a new video and talk through that. 17. Work for hire copyright term: Okay. When Mcdonalds does that, when Mcdonalds owns this copyright, how long do they own it for? It is a little tricky if you think about it. Because remember, if I own the copyright, since I am a human, the copyright expires 70 years after I die. But the Mcdonalds Corporation isn't going to die. We all know Mcdonalds is going to be here until long after the zombie apocalypse. We shouldn't be basing copyright on the life of the artist. 70, because the person who owns the copyright, they don't have a life in the same way that we have a life. The rules are a little different when a corporation owns a copyright and corporations own tons of copyrights. When a corporation owns a copyright, it is no longer life of the corporation, plus 70 years. It is 95 years from publication of the thing. Okay. So in the case of the Mcdonald's thing, 95 years, it's copyright for 95 years. After 95 years it goes into the public domain and people can start messing around with it unless they do some weird stuff, in which case they can get it. Weird stuff would be like hire someone to make a song out of it and then publish it. In which case it would be a new publication and the clock would start over. In 90 years, they put out Mcdonald's jingle remix album, even if it was a flop and no one ever saw it, it would basically renew their copyright for them. It's a weird thing, but it happens all the time. That's why Disney keeps re releasing their old stuff in new formats, renews their copyright 95 years from when it was published. Now if it was never published, let's say they made it and then decided not to use it. Nobody knew about it, and they just sat on owning a piece of copyrighted material that a rule of 125 years, 125 years if something is unpublished and 95 years of it being published, published in this case really just means made available to the public, right? It is out in the world in some way or another, if it's never released publicly, we say 125 years. That is the work for hire doctrine, the work for hire part of the copyright law. 18. Collaboration and copyright: Okay, so we know that if you create something, it is instantly copywritten. That's great to protect you. However, what if you and three of your buddies are jamming on something and you're just making some music, playing some stuff, and you come up with something cool who instantly owns that. How does that work? This is something that everybody has to figure out for basically every song that you write. People who collaborate are constantly having to decide who owns what. It has to be explicit, it has to be written down. Now, there are some things that can happen automatically if you don't write anything down. But whenever a band writes a song, they have to decide who owns more of it. Is it that the singer gets 50, 60, 70% of it and the rest of the band splits the rest. Is it that everybody splits it equally? Is it that the person who wrote the lyrics gets 50% and the rest of it is split equally or does the bass player didn't contribute anything on this song? They get nothing and everybody else gets something. I'll tell you that all of these options are real options and things that people do. I'll also tell you that when you hear about a band breaking up, a famous band, deciding to go their separate ways 90% of the time, This is why maybe it's because they hate each other, but the reason they hate each other is because one person is getting more money than the rest. That's how this always works. You can also look at bands who have been together forever. You can sometimes figure out that they are equally splitting all the copyrights and therefore there's no animosity and they tend to stay together for a really long time. But when bands split up, it's very often because one person, usually the lead singer, is getting a lot of the copyright and therefore a lot more money than the rest of the band. Okay, so let's talk about how this is done first, let's talk about what happens if you do nothing. If you do nothing, you fall into something called the presumption of equal ownership. Let's go to a new video and talk about that. 19. Presumption of equal ownership (Including song lyrics): Okay, so the presumption of equal ownership says that if you are in a band or any collaborative relationship and you both work on something, you all get an equal share. Now that includes lyrics and that anybody who touched that thing, okay, let's do an example with the band. Let's say that you're in a band, I should say. How about the guitarist and the singer wrote the song. Okay, you go into the recording studio, the two of you record it. The drummer comes in and lays down a drum part. Let's say that you, let's then say that the guitar player lays down the bass part, they wrote the bass part. The bass player comes in and says, okay and replaces the that the guitar player put in with the exact same thing. The bass player. I'm really picking out bass players lately. The bass player didn't contribute anything original, they didn't write the bass part, they didn't write anything played bass on the track. Who owns what? The presumption is, everyone equally owns it. If there's four people who touched it, that includes the bass player. You each owned 25% of it. If you're the singer or the guitar player who wrote this song, you're like, hey, that's not okay. That's the way it works. Now maybe if you went to court and really fought because that bass player really insisted on their 25% you might be able to make a claim that they didn't really contribute anything creatively. I've seen some cases of that lately where this presumption of equal ownership is what it's sometimes called is getting challenged. You can avoid that by writing it down, which we'll talk about in the next video. But let's stick with this for one more analogy. Let's say you are a producer working with a wrapper. As a producer, you write all the music, record it, make the beat, you arrange the track, wrapper comes in, rhymes on the beat. You mix it, you master it, you put it out. Maybe you release it under the rapper's name or you release it together or something. Who owns it then? 50, 50. It's not that the rapper owns the words and you own the music. In this case, it's not that you both own 50% of both the words and the music. Maybe that's right, maybe that's wrong. Now in that a relationship that is pretty typical, even when it's explicitly written out, It is pretty typical to split in that way. 50, 50. Now let's go a little bit farther down that road. What if the wrapper bought that beat from you? Okay, let's think that through. You made a beat, you arranged it into a track, you got it all perfect, you mix, you mastered it. Wrapper comes in and says, I'm going to give you $100 for that beat. Then they wrap on it and they release it. Who owns the copy? Right now, you'd have to look at the fine print or not the fine print but just the normal print of the contract that you got when you sold them to beat. There's to be a contract there. If you sold it to them, it might make it a work for hire. In which case you got your 100 bucks and now you own nothing. You do not own that beat anymore. It could be that you sold it in that way. Now hopefully didn't sell it in that way. You didn't sell the copyright. Hopefully you sold the right for that artist to use that beat. In which case you would still own the copyright to all of the music. And wrapper would own the copyright to the beat, to the wrapper would own the copyrights to the lyrics, which would probably by default, make it a 50, 50 split. However, that should be listed as well. When in doubt, always just write this stuff down into an agreement that says who owns what. Make sure you're all on the same page. In that way you don't have to sue each other later. If you do nothing, it's split equally by everyone who touched it. But don't do that. Don't do not do something. Let's talk about how bands typically do this. 20. How a band divides copyright: How do you decide to divide it up? Well, there's two elements of this. One is the interpersonal. How do you talk to your bandmates about what you think you deserve? And the other is how to write it down in a contract. Let's do how to write it down in a contract first, because that's easier. I just searched for song split sheet, I found this. This is not mine, so I can't include it here. But search for song split sheet. This site, Indie Guide.com is a nice site. This is made into a little form, which is neat. This is typical. The date, the song title, the record name, the name of the recording. We're going to write down on here the different songwriters. I'm going to write me, I'm going to write the guitar player, I'm going to write bass player and write the singer. Then I'm going to write, here I get 50% you get 25, you get 24, and you get one, whatever. You can do it however you want. The publisher, typically the publisher mirrors the songwriter and we'll talk about that later. It depends on how you set up your publishing. After we talk about publishing, which we will do shortly, come back and look at this agreement and it'll make more sense. You're either going to put one name for every person. The person on this line has a publisher. The person on this line has a publisher. Person on this line has a publisher, et cetera. Or you're going to write one publisher for the whole band, we'll talk about that later. Who owns the recording? This might be different from the people who own the song. If it is, you put it here. If it's not different, you reput the whole thing here so that we know who owns what. Any notes. And then all four of you are going to agree to it, okay? You document it here, you all agree to it. This is a contract that says who owns what. Now, another way you could do this is to do this once and say for all future songs we write together, this is how it's going to work. A lot of those bands that have been around for a really long time, they don't do this every time anymore. They say we all split everything equally whenever they write a new song. They never have to worry about this. They always say everybody gets 25% I might be wrong, but I'm pretty sure Metallica works that way. They've been around forever. Everybody gets 25% There's four of them, right? Yeah. So they all get 25% Okay, Let's talk about the interpersonal. How do you talk about this? I'm not a psychologist. I'm not really sure. The best way is just to write the song, maybe even record the song, and then sit down and say who contributed what. It's typical for the person who wrote the lyrics to get 50% doesn't have to be that way. It totally doesn't have to be that way. But that is something that happens often. Whoever wrote the lyrics may come and say, I should get 50% because of that. I've seen it done sometimes by a weird secret ballot where everybody in the band writes down what they think deserve on the track, right? Like I'm the guitar player, but maybe I didn't come up with the riff, but I put a solo on it and did some stuff. I might say, okay, I deserve 10% And then you blindly do it and put it in a hat, and then put it all together and someone says, this is the way it's going to go. You can get a third party, you can get a lawyer to do it for you, can somebody else to do it for you. I also know songwriters, some of the big collaborative songwriters who work with tons of people. I know some of them who just walk right into a project and say, one of the first things they say is, no matter what we do, no matter what ends up happening, the price of me being here is 50% of what we make. I get 50% of the copyright to everything that we do for these big rock star collaborators. That can be a heck of a deal because they write hits. It's often very fair, sometimes it's not. Sometimes I just sit on a couch and do nothing, and then everybody else does the work and then they get 50% That sucks. That's why we have agreements. Split sheets. Split agreements. The split is how this song is split up in terms of copyright. That's what you need to work out. Okay, let's start diving into this weird publishing thing that I was just talking about because we got to tackle this. 21. Publishing: Not just for books anymore!: Good morning. Welcome to what they're calling the Storm of the Century here in Minnesota. There's about two feet of snow that we've gotten in the last 24 hours or so, and it's still going anyway. You don't care about that? So let's talk about publishing. Okay, so you've written all this music and you own all these copyrights, right? That's great. Everything you've written is copywritten, right? We know that. Now the question is, what can you do with those things? You have all these copyrights. Whoop, do you do? What can you do? How can you make money from them? That is the role of the publisher. Typically, when we think about publishing, we're thinking about people who produce books. Maybe you're thinking about sheet music. That's not really what this is about. However, let's think about books for a second. I'm just going to reach and grab one. This is a book I always keep on my desk because I'm a nerd. It's the pocket manual of musical terms. When I'm working on a score, I can look up anything weird, U. Okay, so this little tiny book was published by Shermer. Okay, Shermer, even though this is a very old book, still a very popular music sheet, music and music book publisher. What does Shermer do for this book? Well, they didn't write the book, right? So they're not the creator of the book. The book was written by Theodore Baker. Dr. Theodore Baker. I don't know who that is, but whatever. This Baker fellow wrote this book and then he took it to a publisher and he said, I have created this book, a piece of intellectual property, a copywritten thing, please help me make money on this thing. What the publisher does, I say say, cool, we're going to print it on paper and bind it together into a book. And we're going to get into bookstores and we're going to sell it. What happened there is not just that the publisher printed the book and got it into bookstores. What they did at the core of what their service is, is to take the copyright material and find a way to make money from it. That's essentially the role of the publisher. Now sometimes it looks like printing books, sometimes it looks like printing sheet music, but sometimes it looks like royalties from performances of a piece of music. Sometimes it looks like playing at a club. Sometimes it looks like a license deal in which a piece of music gets used in a film or a TV show, or a video game. The idea that publishing is just about making books is only one very small aspect of it. As musicians, it's one that we interact with the least. Although I wrote a book and published it, you can find it online, Google Me. When we think about publishing and when we think about a publisher, what a publisher's job is, is to take the intellectual property, the copyrights of someone, and monetize them, make money from copyrights. 22. Musicians as publishers: Presuming that you are someone who wants to make money, do you need a publisher? The answer is no, definitive no. It's not quite the same as record labels. A record label is sometimes a publisher, but most of the time an artist will have a publisher and a record label if they're on a record label, but they do very different things. The record labels job is to sell the record period. There are new deals and new structures to record labels in which the record labels do more, but we'll talk more about that later. There used to be a day where back in the '50s, '60s actually even going back earlier '40s, '30s, music publishers were a big thing. And you did seek out a publisher and you wanted to get in with a good publisher because that would get your music in the right hands of the right people. It doesn't really work that way anymore. You do want a publisher, you do need a publisher. I'm going to go out on a limb and say, every single person watching this should get a publisher. But here's the deal with publishers. You don't need to seek one out, and you don't need to sign a deal with the publisher. Those still do exist, but they're very, very rare. What really happens is musicians set themselves up as publishers. This is the most common thing in the world, and you find it from everyone, from people like me and you doing that all the way up to big, big name artists. Setting yourself up as a publisher is something that's super easy to do. If you don't do it, you're throwing money away. The job of the publisher is both to try to make money from the copyrights you have, but also to collect the money that you're making. And there's a lot of cases, in one big one in particular, where your music might be generating some money. And if you don't have a publisher, you're just not going to get it. It's really weird, we'll talk about that soon in the next big section, if you look on an album, if you look at the credits for an album, it will almost always say who wrote the songs and who the publisher is. It could do it by saying all songs written by Metallica published, then some strange name. It looks like a company, Sometimes they're really funny names, sometimes they're not. That's the publishing company, but it's like Metallica's publishing company. They have published their songs through that company. That's one way you can see it. There's another way you can see it, where each individual member of a band has their own publishing company. You might see a band that says published by and then four different companies, or five, depending on how many members of the band there are. That is because each member has their own publishing entity. That's a fine way to do it too. Bands decide how they want to do it. I have my own publishing company. It publishes only the music of me. It's in charge of generating and collecting revenues for me. We're going to talk more about how to set that up. It's actually really quite easy to do, there are a few steps in it, but we'll get to that in the next big section, when we talk about performing rights organizations, That's kind of the key to that. Okay, so a little bit more on publishing before we get to that though. 23. Co-Publishers: There's another thing called co publishing. This is something that started off in the book world that has made its way into the music world. What it is is exactly what it sounds like. You might have a publishing entity set up, but you might partner with a publisher and split costs to produce something like a book. In this case, it might actually, this happened to me. I had a case where the book I wrote is being released by a Spanish publisher. They contacted me and said, we want to translate the book and release it in Spanish speaking countries. Then it became a co publishing deal because they were they were going to pay for the cost of translating, I was going to pay some costs to produce the book, and we were going to split the profits. We are splitting the profits. That's how it worked. That was a very logical one because I didn't have the resources to translate the book myself as didn't have the resources to get it into like bookstores and in front of people in the Spanish speaking world. That worked out really well for me. And that was a co publishing deal. Now in music, we were starting to see that come across in some of the distributors. For example, something like a distributor. A digital distributor would be something like Distro Kid or any of the other services that will get your music onto the streaming platforms for you. You can go to Distro Kid and say can upload your music and pay them a fee and they'll put it onto Spotify and Apple Music and deal with all that for you. It's actually a good service, I'm not ******* on Distro kid, but there are some services now where they're offering a co publishing deal in addition to the distribution service that they're providing. Let me explain that a little bit more. You go, you pay some money and say, put me on Spotify. They say, cool, we can do that. But so for this extra fee, we can also manage some or all of your publishing. What they will do for you is maybe monitor places that might be using your music. They might try to get some placements for you, like they might have some connections with a film or TV studio and try to get your music placed in something. There's no guarantees that they will, but they might have some connection to do that. It can look lucrative. I'm going to tell you to be skeptical of them. I've never heard anyone who's had success with a publishing deal through a service like that. That doesn't mean it doesn't happen, but whenever I see that come up and whenever students ask me, they say, oh, this distributing company wants me to, wants me to like sign over some publishing rights. I'm like, it wouldn't do that when you see those, be very skeptical of them. 24. Working with a publisher: Now, there are some cases where you might find yourself wanting to work with the publisher and being approached by a publisher. Let me give you an example. I do work with a professional publisher that is not myself. This is why there is some of my music that I've signed over to another publisher. I initially put it out, it was my mic released it, I held onto the publishing myself then I did fine with it. I made some money. I was pretty happy with it. But after four or five years of that music being out, I wasn't really making a whole lot of money with it anymore. I signed that music over to a new publisher. That particular publisher is a licensing publisher. What they do is they shop your music to film and television, and games, and advertisements and other stuff. I sent them my music. We talked. There was a contract that they offered me and it looked good to me. Now, I wouldn't have signed it with new music, and I still wouldn't sign it to new music. But, um, what I did is wait for some older music, signed it over to them, to breathe some new life into it, and see if I could get any placements out of it. They haven't got me anything yet, to be honest, But that's okay. But it's a little dangerous, right? Because a film contact I have comes and knocks on my door and says, hey, that track of yours, that old track of yours, I really like it, I want to use it. What I have to say is I have to say go to that publisher and talk to them. Which means that they're going to take a cut. That's going to be about 50% what I would make on that deal because I don't own the publishing to that anymore, this other company does. It's a gamble to do that. But in my case, I think it's good. That would be a licensing deal. There are some deals you'll find like that where a publisher will want to have all of your work and future work. I would be very leery of those. You watch out for those because what they're saying there is that they're going to give you a blanket deal, which means everything you create is going to be published by them automatically. You're just funneling stuff over to them. There are people who work that way. I'm sure like Stephen King works that way. But for most of us in the music world, that's not a good bet for some folks in the classical music world that are writing like symphonies and things that can make some sense. But for most of us com making music, making mule music, it's usually not a smart move, it's usually pretty exploitative. Watch out for those, a case where a publisher is willing to take music piece by piece and they have a good track record of actually doing something and trying to get gigs for that, it can be good. Sometimes working with publishers is a thing. You can sign existing music over to a publisher in the right cases, Primarily for these sync deals is what we would call that, getting it placed in a film, television, or a game. We'll talk more about sync deals in a little bit. 25. The history of the PRO: Okay, next we're going to talk about performing rights organizations. Now these are organizations that you simply have to join. You don't have to have to, but you're throwing away money if you don't, in order to explain what they are and what they do, I want to tell you a story. All the way back in 1917, Composer Victor Hubert goes into a restaurant. Victor Hubert was a composer who wrote a bunch of songs. He was well known songwriter. He goes in this restaurant and someone's playing the piano, they're playing a bunch of Victor Hubert songs. He sits down and he has dinner all the while he's listening to his own music being played. But whatever he likes, the music, it's cool. They're playing all this Victor Hubert music And he's just sitting there eating and no one knows who he is. And that's just fine. This is before the days of social media. At the end of his meal, the check comes. The waiter brings his check over and they say, here you go. Your bill for your dinner is some amount of dollar, whatever. He says, no, I'm not going to pay this. They say why? He says, well, I think you owe me money because you've been using my music to entertain you, all of your guests, to make this a pleasurable place for them to sit down and eat dinner. You're using my music to sell food. I think you owe me money. I think I'm owed something for the use of my music. In this context, he refused to pay his bill. This actually went up the chain. It went to court. He sued and he won. An organization called Ascap was created. That's AS CAP. Let me write it down here for you. Ascap, This was the first performing rights organization. Ascap stands for American Society of Composers, Authors and Publishers. People who write music. Now, the author's thing is strange here. I don't know if authors, like people who write books fall, actually fall into this. But it's generally people who write and publish. Music is what Ascap governs in a way. For a while, Ascap was the only one. It was set up by, I believe, an act of Congress. I could be wrong about that. But it was set up to be a performing rights organization. There are now several. There's another one called BMI, which stands for Broadcast Music Incorporated. There's another one called Sac, which I don't remember what that stands for. I should mention that these three entities are the three that operate in the United States. Every country has a performing rights organization or two, or sometimes three. I know that Sac also operates in Canada. Whatever country you're in, you have one, just Google, like performing rights organization for your country. And you'll find it when I talk about Ascap, BMI, and I'm talking about the American ones, but they pretty much work the same everywhere. These are collectively called, that stands for Performing Rights Organizations. And we can thank Victor Hubert for the creation of them. Now what these do is make sure you get paid when someone's using your music to entertain their guests. Let's go to a new video and let's talk about what these things actually do. 26. What the PROs do: Okay, so here's a technical definition for you. A PRO is an agency that ensures songwriters and publishers are paid for the public use of their work by collecting royalties on behalf of the rights owner. Okay, so let's pick that apart a little bit. It's an agency. It ensures songwriters and publishers, songwriters and publishers file that away for a minute, are paid for the public use. We're going to talk about public use in just a minute of their work by collecting royalties on behalf of the rights owner. Let's dive into this word, public use. Let's say I'm a singer songwriter. What is the public use of my work? It could be a few things. It could be me performing in a venue. If I'm hired to play a gig at a club or a bar or anything that's public of my work, okay? The bar is effectively using my music to bring people in and get them to buy drinks. That's why bars have bands. They're trying to sell drinks. They might pay me. They might pay me to play, but they're paying for my performance. They're not paying for the use of my music. This is a very important distinction. There is a difference between paying me to perform and paying for the use of my music. We're going to see this later when we talk about recordings. There's a difference between the recording of a piece of music and the actual song, Right? There are two separate rights that happen there. So if I'm paid for the gig, I'm paid to perform. Right? Whether or not I play my own music or I play some covers or I play someone else's music, I'm getting paid to perform, the use of the music that's happening isn't getting paid for there. So that is what the PRO does. They make sure that you get paid for the use of your music in that club. Okay, so that's a performance. Let's talk about another situation. Let's say I go to, let's say there's a hair salon somewhere and they decide to put on my album and hit play and just use it as background music while they're cutting people's hair. That's great. I'm happy for them to do that with my music. But do they owe me a few bucks for doing that? The PRO would say, yes, they do. The job of the PRO is to go to that hair salon, say thanks for playing the music of this person. You owe us a few dollar for doing that. The playing of a recording is also a public use of their work. Performing in the sense of performing rights organization means public use. It means whether or not I'm performing the music or a recording is being played or someone else is performing my music. If a band decides to go into a bar and play one of my songs, I get paid for that by the PRO. That's what the PRO does. They make sure I get a couple bucks if I go onstage and play a Leonard Cohen song. The PRO's job is to make sure that Leonard Cohen gets paid for me playing their song. Now you might be thinking two things. Two things are probably popping up in your head. Maybe you are popping up into your head. One, maybe you're thinking, I've played cover songs before and I didn't pay anyone. Did I break the rules? No. The answer to that is no. You're okay. Don't worry. We're going to talk about that in a minute. The second thing you might be thinking of is, are these organizations like Ascap and BMI, are they like shaking down little hair salons all over the world? Is that what they do? The answer is no. There's a system in place that makes this easier so that they don't need to shake down hair salons. Although I have gotten a little annoyed by how aggressive they can be sometimes, maybe I'll tell a story about that later. But the job of the PRO to collect money for uses of the music. Now let's talk about how they do this, how they actually get you paid. 27. How the PRO gets paid: Okay, How does the PRO get money? How do they get paid? There's two steps to this process. The first step for them to get paid for things being used, pieces of music. Second part of the process is the PRO, then distributing that money to the songwriter. Let's talk about that first part first. How do they get paid? This comes to the performer, this comes down to the venue. It is not your responsibility. Let's go back to that situation where I'm playing a Leonard Cohen song in a bar. I'm doing my cover of a Leonard Cohen song, It's great, I'm happy I like it. Do I need to get offstage and immediately call Leonard Cohen and say, I just played one of your songs? Where do I send the check? No, I don't need to do that. The venue is responsible. The venue is the one that's using the music. It's their responsibility to make sure that Leonard Cohen gets paid. Now they don't need to hop on the phone as soon as they hear me play a Villard Cohen song and call up Leonard Cohen and ask where to send the check either. It's not that complicated. What they need to do, the venue needs to just have a blanket license that says music can be played here. Ascap will go to the venue once a year or so and say you pay us X amount of dollars and we will make sure that everyone gets paid, that's supposed to get paid. The venue gets a blanket license. If you go to any respectable venue right on the front door, you're going to see a little sticker that says As Cap in the United States. It'll say Ascap. There's probably one that says BMI. Also, they might even have a Sac one that means that they have the correct licenses. If they have those licenses, then then they've paid money as a blanket fee to those performing rights organizations So that when somebody plays music, whether it's your own music or Leonard Cohen's music or anyone else's music, a couple bucks goes to those songwriters. Now how does the RO, know this is where things get a little tricky. The PRO Ascap can't call every venue in the country every day and say, tell me all the music that was played there last night. They can't do that. That's just too impossible. They typically use a random sampling. This is what sucks about this system, but it's the best we get. What it means is that they might venue and say what music was played there yesterday or something like that. The venue will report as best they can. That might be the only tracking that the PRO has for that year. But the PRO will extrapolate from there and figure out who did what. You as an artist can also submit stuff to the PRO that says, my music was played here, here, here, and here. If you know, they can make sure it gets tracked or try to make sure it gets tracked, but it's tricky. There's a lot of times where you just don't get paid if you know your music being performed and it just doesn't happen. That's just the nature of the beast. Now in something like the hair salon example where they're playing music, what they should be doing is using a service that has a Ascap license. A hair salon shouldn't be just like putting in CDs and playing them or just like queuing up their Spotify playlist. They shouldn't be doing that. They should be using like a satellite service or like, I think there's a spot like corporate account or something like that, commercial account, that's probably what it's called, Plays. What gets played there can get tracked. That can get reported directly to Ascap automatically because it's on a server, it's on a playlist. That can be a little bit better if you're thinking well, my hair salon, or my coffee shop or whatever Plays Music We don't have an Ascap license, we just play whatever we feel like playing. Is that against the law? The answer is it, you're not supposed to do that, because that means the people who wrote those songs aren't getting paid at all. People like me would say whatever. I'd rather you played my music than not. The odds that Ascap is going to catch it and actually pay me are low. I don't really care. But there are people who will get upset about it. And if Ascap catches you, they can issue a fine for not having the right license. That's how the performing rights organizations get paid. Typically, when I'm talking to students about this, the next question I get is, okay, I want to get paid. Which one do I join and how does that work? Do I join Ascap, BMI or A? And what do I need to do and what's the difference? Let's talk about that first, and then we'll talk about how you get paid from them. 28. How to join a PRO, and which one to join: Okay. You have to join one of these. If you want to get paid from them, you have to join one. You can only join one. I'm going to speak here in the US, we have these three Ascap, BMI, and Sac. You can join whichever one you want. Most students ask the question, what's the difference? What do I need to do? They all do the same thing. There are some differences. I'll just say this Sac is by far the smallest of the three. They are I believe, a for profit company, that doesn't make them bad. I know very few people that are on Sac. They might be great, but I just really don't know. I have the least experience dealing with Sac. Ascap and BMI are the two big dogs in the area. It used to be true that more like classical music people I know are on Ascap and more pop music people are on BMI. That's not really T anymore. Now you can find any genre on either Ascap or BMI. I'm a member of a cap, a bunch of my friends are BMI or As. There's no difference. I don't see a big difference. I really don't think there's a difference in how much you get paid by which one you join. Look at the websites of both of them. Look at the artists on them. Maybe there's some big names that are attractive to you, although that really doesn't mean anything. See if anything that they say on their website appeals to you. If you just can't decide to flip a coin because they basically work the same, there's no major difference. You have to join them. I believe at this point joining them is free. It might not be, but if it's not, it's a one time thing. I can't remember, Ascap or BMI. I think one of them still has a fee to join. It's like 40 bucks for your life. It's not an annual thing, it's just sign up thing. It also used to be that in order to join, you had to prove that you had one performance in a licensed venue at some point in your life. That's pretty easy to do. You can walk into your coffee shop and sing a song and then you can say you did it. I don't even know if that restriction is still there. I joined S cap like 20 years ago. I don't remember. I don't know what the current rules are, but they're very easy to join. Now, one of the tricks here is that you need to join twice. You're going to join as an artist and you're also going to join as a publisher. We're circling back around to this publisher business. We're going to talk about publisher stuff in a minute, in a few videos from now. Just file that away for a minute. But for now, you're going to join as an artist, as a songwriter, whatever they call it when you create your account. After you join, you're going to input just by typing your list of songs or compositions or whatever it is, things you've written, things that they can track. You're not going to upload music to them. You're going to give them data about the music. You're going to give them the song name of the piece of music, the duration of the piece of music, the publisher, the instrumentation. Maybe a few other things. If it was on an album, things like that, that's going to help them match you to the song when it shows up somewhere they can look it up on their database. You have to keep them up to date. Whenever you publish some new material, you go to their website, add those new songs, that's all you do. You just have to keep it up to date. Show them what you've created and they can match things that pop up in their database of works. Then you get paid. Okay. Now let's talk about how you get paid. 29. How you get paid by the PRO: Okay, so let's talk about getting paid. Your music is performed in a venue. That I'm just going to use, Ascap as an example has an As Cap license. That performance gets tracked by a Cap. They pick it up and see it then quarterly Ascap says, hey, we owe you money. They send you a check. I think they prefer to do it by digital stuff. Now you input your bank account things, it's cheaper, Wich is fine. You'll get some money from Ascap Quarterly, I believe the distributions are quarterly. And then education, stuff like performances at a university, things like that. One of those payouts is devoted to that stuff. Since I do a lot of education stuff, I usually get small things every quarter and then a bigger one for those education payouts. It's a sampling, like I talked about, it's very common for you to get nothing in a quarter because it didn't catch anything. Sometimes it can take a while for Ascap to catch it. It could be that you got a performance and it doesn't show up on Ascap for six months later. That happens, especially with foreign stuff. There are agreements between all the PRO's. If I have a performance in Italy, I will get paid and I will get paid from Ascap. It's just that the Italian PRO picks it up and then shoots it over to Ascap. And then Ascap pays me that can take like a year for it to filter through. It takes a while, but it does happen. There's these agreements that happen between the PRO's so that you're covered in most places in the world, but not all now. Because it's a random sampling, it's very important for you to dial your head into what you're getting paid here. Here's what you should very much not do. See your rent is coming due and then see that there's an Ascap or a PRO Distribution date right before your rent is due. And then think, sweet, that's how I'm going to pay my rent. Don't do that, because remember this is a random sampling. That payment you get is going to be somewhere between zero and maybe a little bit more than zero. This is not a lot of money we're talking about, It's what that amount is going to be. I should mention because maybe you're thinking this, like let's say someone performs my music at a bar. How much do I get paid? This is like a cryptic thing and Ascap, none of the PRO's will give you a number. It has to do with how much that venue paid for their license, which is also a hard to find number. It has to do with the length of the song, the instrumentation, all kinds of stuff. I've seen things come through. The majority of performances that I see on my list of things, because you do get like an itemized list, are ten to $0.20 for a performance. That's like a performance performance. If it's like playing a recording on a radio, it can be 0-1 cent. The biggest I ever got for a single performance was, I think, about $2,500 That was a large orchestra piece for a full orchestra performed in a concert with a big orchestra, lots of forces long piece. I got a pretty big check from it, that's what we're talking about here. But the best thing to do, in my experience, is do not pay attention to when these distribution dates are. Just forget that they happen. Just make sure you're keeping your PRO up to date on what you've written and then every once in a while you're going to get some magic money. Sometimes it'll be zero and you'll be like, oh, you won't even notice that it happened. And sometimes you'll be like, oh, there's like an extra couple hundred bucks in my bank account. That's great. But don't plan on this money to pay your rent because it's not huge amounts of money and it's random what it's going to be. If you're a big name artist that's playing everywhere and doing a tonne of work, then yeah, it's going to be a significant amount of money, but for the majority of us, it might be a couple hundred bucks on a good month. And but there's no way to really know exactly what it's going to be until you get it. Now, one other strange thing about this is that when you get paid, you will get paid exactly half of what you're owed 100% of the time. That's the law around this stuff. It's weird if they pick up x number of performances and decide to pay you x dollar for it, you're going to get that x divided by two. That's what you're going to get paid. You're going to get paid half because the other half half goes to the artist and half goes to the publisher. Always, if you don't have a publisher, that half that goes to the publisher goes poof and nobody gets it. This is why you have to set up yourself as a publisher, even if you have no interest in doing any actual publishing, you set yourself up as a publisher to catch that other half. It's important and it's what everybody does. Let's talk about that real quick. 30. The "publisher cut": So when you join the PRO, it's going to say do you want to join as an artist or a writer, I think it says, or a publisher? Now, somebody told me recently that the new registration form on I think BMI ties those into one step where you can register for both at once. But last time I checked on Ascap, you have to do it as two separate steps, that's fine. Whatever you register yourself as an artist and then you register again as a publisher. And then when you're entering works, you list your publisher as the artist. When you create a publisher account, you got to give it a name. What's the name of your publishing company? Whatever you want. Some people just make it their name and then publishing after it. Sometimes you come up with silly stuff. You can do whatever you want. They do require it to be a unique name. If somebody is already using that name on that PRO, you can't use it. They're going to ask you to put in a bunch of names until one clicks that isn't being used. Come up with a clever name. If you've got that list of band names that you're never going to make, this is a good opportunity to do that. To use those names, half is going to go to the publisher and the publisher payout quarters are offset by a month. This is actually a really fun thing, I don't know, it's fun to me because what's going to happen is you're going to get a payment for your work as a writer, as a songwriter. And you might say, okay, I got 200 bucks and you're like, great, I got an extra 200 bucks. Here's what you can guarantee on, if you set all this up correctly, you can guarantee that in one month from that day, you're going to get the same amount again as the publisher. You're going to get another 200 bucks that day that I got that $2,500.01 for the orchestra performance at the time I was still in college when that happened. At the time, that was the biggest check I'd ever gotten, and I was like, Holy bananas. I desperately needed a new computer. At that point, I went out and bought a new computer basically. And then I realized I next month I'm getting this check again. This is great. Made five grand off that. Awesome. You can plan on the check coming to you again a second time. If you set this up right to set it upright, all you have to do is make sure that you're registered with the same PRO as a publisher, and that each of your works is published. Each of your works is registered with the PRO and you publisher is connected to it, which is really easy to do. When you register a work, he's put in the title and it's going to say who's the publisher you put in your publishing account done? So that's how the system works. It's weird, it's outdated, right? Like this is a little archaic and it was designed in 1917 or whatever. Victor Hubert era. But it's how things still work. It's one of those things that everyone has to do that makes music. You just have to do this. If you don't do this, you're not going to get this money. This money is going to be generated. Your copyrights are generating this money. If you don't set these things up, you're just never going to see that money. You just have to do it if you have any interest in getting, getting any money. Now, there are a few other things you can do to get money because there are things that Ascap doesn't cover. Things like certain kinds of streaming radio, something called webcasting, also uses in other mediums, things like when your work is used on, in a play or on TV or anything like that. Ascap doesn't really cover that. It can sometimes pick up TV stuff and movie stuff, but that's not its main thing. All of those other things happen through other kinds of licenses. For example, we know now that if someone wants to play a piece of my music in a bar, they can just do it. They can play it. That's fine. There's nothing to stop me to stop them from just playing it. In theory, I'll get paid for them playing my music in their set. I'll get a couple bucks right from the performing rights organization. But what if they want to record my mic? If they want to release an album where they cover one of my songs, Not performing rights organizations, that's not what is going to factor in here. There's a whole other can of worms we have to deal with here. It is called a mechanical rights. It's another one of those rights that you have as someone who creates copyrights. It's another way to monetize your copyrights and specifically related to recording. Let's go to a new section and talk about mechanical rights. 31. The player piano: Okay, so where we left off, we were talking about performing rights. If you remember back at the beginning, I said when you create a copyright, which we're virtually always doing, there's all kinds of rights getting created that are connected to, to that piece of intellectual property right. We write a song, all these rights just magically appear. Copyright is a big one. Performing rights is a big one. You can sell or lease or rent those rights out. Let's talk about another one. This one is called mechanical rights. Mechanical rights is a weird term. Don't get stuck on the mechanical part. It comes from the right, We have to control which machines can play back our Music That's where the term mechanical comes from because it's an old terms in this sense. Machines mean human also. Humans are machines in this case. Let me explain better. Back in the old days, we had this thing called the player piano. That's what I have here on the screen. Maybe you've seen one of these before. This is the piano in which you get a piece of music on a big piece of paper, and it's got little holes punched out of it. And you put it in here, and then you pedal it. That moves the scroll that plays the music. Actually you see the piano, the keys moving. Maybe you've seen one of these in an old Timy movie or something like that, This predates recording. This is a mechanical piano. That's where this right comes from. It comes from the right. We have to control recordings of our music. In this sense, the recording was a mechanical playback thing, which is why we call it a mechanical, right. But what we're really talking about here is the right. We have to control who can record our music. We can give people permission to record our music. We can get permission to record other people's music. Let's say I want to record a Bruce Springsteen song and put it on my album. I can do that. I need permission from Bruce Springsteen, and I need to give Bruce Springsteen and his publisher a little bit of money. Now luckily for us, there's a system in place that makes it so I don't actually have to give Bruce Springsteen on the phone. There's a much easier way we do it that makes it so Any of us can do this if we want to. We'll talk about that in just a minute. We can connect this to the previous thing we were talking about with performing rights. If I want to play that Bruce Springsteen song in a bar, I totally can do that. Right? That's covered under performing rights. We all know now how a couple bucks, really a couple cents, would trickle down to Bruce Springsteen. If I played his song in a bar or in any live setting. I shouldn't just say a bar, any concert, anything that's a performance of it. But if I want to record it and sell it and make money off his song, then I need the mechanical rights to that song. That's what we're talking about here. You can also think about the term mechanical in terms of the recording playback. In the old days, we had records where it had to spin. It was a mechanical device in a way. Depending on how you define mechanical. Whenever you see this term mechanical rights, think of it as the right to record something. That's what we're talking about here. 32. Writers and publishers: Okay, so when it comes to mechanical rights, the thing we're going after here is called a mechanical license. So if you want to record someone else's music, you need a mechanical license to do that. We're going to talk about how to go about getting a mechanical license. And just second. First, let's talk about who you need that license, right? Who can give that license to you? You may need a license from two people, because we have to think about who owns the song, the writer of the song, and probably also a publisher associated with that song. Now if you remember, one of the things that the publisher does for us is negotiate these rights for us. In 99% of the cases you can go to the publisher. The publisher is the one that has the rights to grant mechanical licenses, but sometimes it's the writer. Not usually though. Critical to this conversation though is that it's not the perform. A good example of this is to think about the song Hallelujah. This song has just had a lot of performers that have gotten well known. Most recently, you may know this song from Rufus Wainwright's version that was used in the Shrek soundtrack. I heard there was a secret that David played, and it pleased the Lord that song, but Rufus Wainwright didn't write that song. He's covering the version of the song that Jeff Buckley put out in the '90s, but Jeff Buckley didn't write that song either. Jeff Buckley was made famous a version of that song that he did, but the song was originally written by Leonard Cohen. If I think that song on the Shrek soundtrack is really cool, and I want to do a cover of that song. I need to get a mechanical license from the publisher and the writer. Nowhere is Rufus Twainwright or Jeff Buckley in that picture. They were performers, they were interpreters of it. They got a mechanical license to do what they did. The song, the original song is by Leonard Cohen, and that's where I need to go to get my mechanical license. I don't need to go to Rufus Swainwright or Jeff Buckley. In other words, if someone made the song famous, it doesn't matter. It's the writer and the associated publisher that you need to go to to get the mechanical license. You can think of 1 million different cover song examples. Another one that comes to mind really quick is Nothing Compares to You by Shand O'. Connor. If I want to do a cover of that song, I'm not Shatner, I'm going to, Prince wrote that song. Shatner made it famous, but she has a mechanical license. In order to record it, Prince is where I would need to go to get that mechanical license. Okay, So let's talk about how you get one of these licenses and how you can sell one of these licenses. Let's say someone wants to record one of your songs, how can you give them permission to do that? There are two ways. Let's go to a new video and walk through those two ways right now. 33. Two methods for getting a mechanical license: Okay, so there's two ways this can be done. We're talking about getting a mechanical license. Now let's set the stage. I am in a band. My band does a really cool cover of a Led Zeppelin song. We're really excited about it. We want to record it and put it on our next album. There's two ways we can legally do this. One is way easier than the other one. Let's talk about the hard one first. This is just spoiler alert. This is not the one you want to do, but I want to outline it just to tell you how it looks. Method one, we go to Led Zeppelin, we go to Led Zeppelin's people, they're publishers, and we say, we want to record this song, How much would you charge for a mechanical license? And they're going to say, okay, well they might say, let me hear the song. They want to hear your version. You can do that. We'll give you permission without even hearing it. It's going to be 20 or $0.30 for every album you release or sell. That includes streaming and everything. It's going to be per sale or per stream amount. But the trickiest part of this is you're going to need to get in touch with Led Zeppelin's people if you're not a known quantity, if you're not a known name, are going to have a hard time getting them on the phone. They're going to be like, who are you? I don't know who you are. That makes this difficult. And it makes it so that if this was our only way, it would mean that only big names who have people could record a cover. Because it's virtually impossible for you or I to get in touch with Led upland. Right. Especially two thirds of the half of them are deceased. There must be a better way, a way that anybody could just buy a mechanical license. There is we have something that exists that lets us do just that. Let's go to a new video and go over the way that it's actually done. And it doesn't involve getting in touch with Led Zeppelin's people. 34. The Harry Fox Agency: The way that it's usually done is through an organization called the Harry Fox agency. It sounds a little weird. It's like there's one agency that is like dishing out these mechanical license. But yes, that's exactly how it works. The reason that it works that way is because at some point, mechanical license became compulsory, which is another word for standardized. It means that in most cases, the cost of mechanical license is the same. Whether or not I want to cover a Led Zeppelin song, or I want to a Led Zeppelin song, or I want to record a Beyonce song. The price is going to be the same. It's a fixed price. What most artists do is grant this agency, called the Harry Fox agency the right to sell these licenses for them. The Harry Fox agency, it sounds like it's just one dude named Harry Fox, a big agency, and it's basically a clearing house for mechanical licenses. You can find most songs there and it's like the Amazon of mechanical licenses. Basically, you can buy pretty much anything. Now there are some artists who are not listed there. Those folks have explicitly decided not to be listed there in those cases, if that's a cover you want to do, then you're stuck with method one. Reach out to the artist or the artists publisher and try to negotiate a mechanical license. Most artists, however, are listed on the Harry Fox agency website, which they recently changed it. It is now called Song File. Let's take a look at it. Here I am on Harryfox.com I'm going to go to license. Music This is going to take me to a place called Song File. This is the.com This is their licensing administration thing. It used to be all on the Harry Fox website. Now they've separated it. You can skip a step by just going to songfile.com Let's go search. Let's go to Lead Zeppelin search. Okay, here's a few songs. Now what's interesting here is that I only see three things. And maybe one of the reasons is because I typed in the songwriter as Led Zeppelin. If I typed in the name of the name of the people in Led Zeppelin, I might get more returns. Let's do an individual person that way. I know I've got it. We were just talking about Rufus Wainwright. Let's go to him. Wayne Wright. I think that's right. If you're not familiar with Rufus Wainwright's music, check it out. It's beautiful stuff. I really love his music. I think I spelled it wrong. Nope. Okay. Yes. These are Rufus Wainwright's songs. 258. Results only ten are displayed because I'm not logged in. Cool. Okay. I could buy one of these. Here we can see songs. And if I created an account and logged in, I could buy a mechanical license to these. Okay, I would see up to 258 songs. I wonder what happens if I put in me, oh, interesting. I didn't really write a bunch of songs called I Will Survive. This was a licensing thing where I wrote some music. Some other person added to it, and then it was used in a show long story. We'll talk about that a little bit more when we talk about sync rights, which is actually coming up soon, but that's what it looks like when you do that. Anyway, all the songs here are at a standard rate. Let's go in and talk about what that rate looks like and what you're actually going to pay. 35. Ok, what does it cost?: Okay, let's talk about rates. How much is it going to cost you? Well, it changes around a little bit with inflation and cost and things, but presently it is this. There are two ways to calculate it. First is for physical releases and the second is for streaming for physical releases. Because the math is easier, the rate is usually about $0.09 per song, per copy, okay? If you want to release one song that lead Zuplin song, if you want to record it and cover it and put it on your album, you do a physical pressing of that album. Let's say you make 10,000 copies of that album on a CD or vinyl or whatever. You're going to pay about $900 You're not going to pay them a percentage of how much you make on the album. It's flat. It's $0.09 per song, per copy, okay? For every album you print, you're going to give them $0.09 That's not that bad, actually. $10,000 You're going to give them 10,000 copies of an album. You're going to give them $900 for a song that's already famous. It's probably going to add some value to your album if you do a good cover of it. A good investment. Actually, the streaming rates are a little bit different. I don't know how these are monitored because I've never done it for streaming before. But the rate is $0.06 per 100 streams, for every 100 streams of the song. $0.06 That calculates out to 0.000 $0.06 per stream. Hard to say if that's a good deal or I think that's more than you're going to get from the streaming services. That's not the best. Yeah, I don't know, It's hard to say. But if it's going to add value to what you're doing, then it's not a bad deal. Those are the rates that you'll pay right now. You can do all of this through the Harry Fox agency, the Song Trust website. You can also list your music to be licensed on that site. Again, all of this works because have this compulsory license for mechanical rights that makes it so that the price is the same and this agency can manage them for everyone. Not all rights associated with our intellectual property work that way. In fact, none of the others do. For all of the other rights that we have to deal with, we're basically stuck with method one which is going directly to the person and negotiating the rate could be anything that is none more true than in sync rights or synchronization rights, which is our next topic. Let's go to a new video and talk about synchronization rights. 36. Back to silent movies: Okay, let's move on and talk about another one of these crazy rights that we get with intellectual property. That would be sync rights, or the long version of that word, which is synchronization rights. This is like mechanical rights in that it's just a really strange word to use. And we could use easier and more transparent words, but we don't because these rights and terms are very old. Let's talk about where this one comes from real fast. Way back when, if you went to the theater and you wanted to see a movie, you saw a silent film. We're back in the land of silent film because film didn't have audio tracks in it. It just had black and white moving image. You went to the theater and you saw a silent film. There was often music that you heard. That music was either from a pianist sitting at the foot of the stage playing the piano. And they were playing something that maybe fit or maybe they were just playing random music. They were playing something or sometimes it was a record player. They would just play a record that was, again, maybe supposed to fit and synchronize with the movie. And there's our term, right? Synchronize with the movie. Music synchronized to film. In those days, when someone played the piano, let's say they played my music on the piano to accompany this movie. Shouldn't I get paid something? People bought tickets to watch the movie and listen to the music, so I should get a cut. That's what we're talking about here. In other words, sync rights are the right to put your music into another form of media. Typically that means film, television advertisements, video games. Technically the definition is the right of music composition owner to have their work reproduced in a timed sequence in an audio visual work. It's a fancy way to say music used in film or any other instance where the music is accompanying a visual image. It can be a still image, I have seen that done before. Where a synchronization license was needed for a still some installation. It could happen with certain kind of advertising. But again, the typical thing is using the music in some film or television. Now, if you are a producer, if you're making music, especially producing electronic music, you may have heard about sync rights or sync deals being the Holy Grail right now. This is where the money is, is getting your music used in something. This is what a lot of people seek out right now because of, well, for a few reasons, but probably biggest reason is just the massive amount of high quality video content that's being made right now on all the streaming services have tons of programs. Cable has tons of programs. Movies are coming out. Youtube, Tiktok, all these people are making content like mad and they need music. So this is our opportunity to get a piece of the pie. So let's talk about how you get and sell these licenses. 37. Sync deals: Okay. If you remember, a mechanical license, we had a thing called a compulsory license, meaning that it was a standardized thing, you could just go to the clearing house, the Harry Fox agency, and buy a license for just about everything. Unfortunately, in sync, it does not work that way. There is no compulsory license, there is no standard amount. Every time you want to get a sink license or sell a sink license, it's a negotiation with the artist or publisher. Usually the publisher, let's say I'm a filmmaker and I want to use a Bruce Springsteen, Bruce Springsteen song in my film. How can I do that? Well, the first thing to know is what I need. I need a sink license. That's what you need. The only way I can do it is I'm going to call Bruce Springsteen's people. I'm going to somehow get in touch with the publisher, or possibly the record label. In his case, because he's so big, the record label might be able to point me in the right direction. I'm going to say, I need to buy a sync license. Bruce Springsteen is probably going to say no because he doesn't know me, he doesn't know what I do. That's why there's no compulsory license here. Because everyone, because the artist wants to say in this, they want to say and where their music is used, everything is a negotiation. Let's say someone comes to me and says, I want to use this track of yours in my commercial. I'm going to say, cool, that sounds fun. What's the commercial for the Habitat for Humanity? I'm going to be like D. That's awesome. I love Habitat for Humanity. And they're going to say, we'll pay you this much and we're going to use this song. I say, great, we write up a license, a contract and then it goes out. Okay? He's a scenario, let's say I get approached by somebody. I'm going to get myself in hot water here. Well, I'm trying to think of something that I would not want to be associated with. And I'm going to isolate some of you no matter what I say. Instead of that, let me tell you a story about what the artist Mobi did. Mob was a electronic producer still is. He's still making music, he's still making really cool music. Actually famously did a of licensing sync licenses for his 2000 Is album called Play Mob is a devout vegan, he has been for the majority of his life, He was licensing stuff all over the place. One company came to him and said, we want to use the song in a commercial And he said, great. They said it's for steak sauce. So he has the right to say, no, I don't want you to use my music for that. He turned it down. In summary, there's no compulsory license. There's no set amount. There's no fee that is standardized. If you could convince Mob to use his track in your film, it's going to cost you a lot more then it's going to cost to use my track because he's very famous. There's no standard cost because it's just going to cost more for someone who's a really big name. Whenever you want to sync license, it's a matter of going to the publisher and negotiating for a sync license. That's why Film Studios have music supervisors and people whose whole job it is to do that. All right, let's move on to Dramatic rights. 38. Dramatic rights: Okay, another one of our crazy long list of rights that you have with your intellectual property is dramatic rights. Dramatic rights can sometimes overlap with a sync right a little bit, but it is specific to theater. If someone wants to use your music in a theatrical production, it is a separate thing. It's not a sync license, it's a dramatic license. Let's say I write some music and someone who's writing a play wants to use it. They need to negotiate dramatic rights for that. Music Now, just like sync rights, there's no compulsory license here or standard fee. Every time this happens, it needs to be negotiated. Let's talk about one really interesting situation. Let's say I wrote music for a movie. That movie does really well, it's a huge blockbuster and they decide to turn it into a play and take it on the road like Moulin Rouge was a movie that did really well, and now they've turned it into a stage production that's touring in addition to the actual show that happens at the actual Moulin Rouge. For the movie, the production company would have negotiated a sync license with me to use my music in the movie. Once they did the theater show, they would have to come to me. If they wanted to use my music in it, they would have to come back to me and say, we're now doing a theater show and we need to get the dramatic rights for it. This is actually really great, right? Because they obviously really want to use my music because it was in the film and it would be weird if they didn't use it in the show. I have a lot of negotiating power here and I could demand a really high price. This is why sometimes when this happens the music is different because the deal just couldn't get done. But dramatic rights are specific to theatrical production. I think the actual rule on stage and with costumes, I think it says something about costumes in the actual law, but I don't have that written down. I should mention also, right, these are synonymous, dramatic rights and grand rights are the same thing. When you see grand rights, it means the exact same thing as dramatic rights. Just keep that in mind. 39. All the rights!: One more little thing that I forgot to mention about dramatic rights and grand rights is that sometimes a lot of the time, actually I see people incorrectly use the term rights to mean all the rights. If you got a license that included grand rights, you would get mechanical sync and dramatic rights all tied together. That's not true. That's not what a grand right, grand rights does not mean all the rights, It just means dramatic rights. It's just another word for dramatic rights. Don't think of grand rights as everything. If you want all of the licenses, you can negotiate that as a thing. But there's no special term for all the rights to everything all at once. You can do an agreement that has, like in the example I gave a minute ago where I wrote music for a film that turned into a stage thing. If the music supervisor and producers were forward thinking when they wrote the sync license, they may have also thought to include the dramatic rights and do it under one contract. That's possible. But that's not grand rights. Grand rights is just another word for dramatic rights. Don't get those confused, it's easy to do. 40. The Love Song Medley: Okay, let's talk about a few oddity examples. And we'll treat this like a quiz a little bit to see which license do we need in a couple of weird cases. The first case that I'd like to point out is this Elephant Love song medley. Now this is a reference to a song in the movie Rouge. I don't know if this song is in the stage production of it, probably, but in the movie Rouge there's this song. You can Google it, It's right here. I'll get in copyright trouble, ironically, if I play it for you here, but this is what you're looking for. Moulin Rouge Elephant Love medley. Now in that song, they take a whole bunch of popular songs and smash them together in this really beautiful and hilarious way to make this epic love song that uses a whole bunch of different popular songs. It's a medley. We've taken a bunch of the choruses of ten or 20 songs and put them together. In order to do that, what rights did they need? Did they need a mechanical license? In other words, did they record it? Yes, they had to record all of these other songs by other people. They needed a bunch of mechanical licenses for each one of the songs. However, this gets into a little bit of a tricky situation because a medley is considered a derivative work. It means you're changing it. It's not just a mechanical license, it's probably a mechanical license plus a specific license with the artists who wrote the original pieces of the song, like Elton John and Whitney Houston and all these other ones. They each have pieces in the medley. By putting them together, we're creating what's called a derivative work. That's going to be a private license, just with the publisher, probably to get the permission to create the derivative work. A mechanical license, some kind of special license to create the derivative work. Now, what else would they need? They might need a sync license also in order to put it into the film. They definitely need a sync license Also, if that's not covered in their derivative license, they need a sync license to get it into the film. We can add to this now that there's a theater version of it, they also need grand rights to make it, put it into the theater version. This is a case when all the rights are needed, which is funny. Because before there was a theater version of this, I talked about a hypothetical situation where something would need all the rights, and we'll do that in just a minute. But this is actually one of them now. But it has a special oddity because of the medley aspect of it and how that creates a derivative work. It's a fairly complicated one. 41. Hairball and Tribute Bands: Okay, Next I want to talk about a fun one, Hairball. Hairball is an '80s tribute band. They look like this. They do concerts where, I think there's actually like a bunch of different hairball bands, it's like a franchise, it's really weird. But they do concerts, they put on the outfit and look like the band. They are really great musicians. They look and sound just like the bands they're imitating. They'll do a concert where part of the show, they're dressed as Kiss part of the show, they're dressed as guns and roses, dressed as whatever this is, maybe Aerosmith, something else. Acdc, Freddie Mercury, Queen. They wear all these personas and play all this music, okay? In order for them to do that, what licenses do they need? Okay, So this is an interesting one because it adds one new thing that we haven't talked about yet, but let's go through the ones we do know the performing rights. Do they need the performing rights? Absolutely, because they're performing music by other people. Okay. So that's covered by the venue easy. Do they need mechanical rights? Maybe, but probably not actually. They only need the mechanical rights if they're going to record this and put out an album, which they're really not doing. They have a few videos on their website here in order to distribute those. They probably needed a mechanical license just for those tunes that they put in these videos, But for their main stick of putting on these shows, they don't need a mechanical license. Only if they're recording it. Okay? Probably not. If they're not making recordings, then they're not putting them into film, commercials, television. They don't need sync. They might need sync for these couple of videos that they put out. But probably not the mechanical license they got. Probably let them put out a few. Probably let them put out those videos if it's not theatrical media that I don't think they need a sync license for those. What about grand rights or dramatic rights? Maybe this is actually a really good question. Remember the definition that we have of theatrical performance is a stage thing with costumes. That's exactly what this is. It's not a play, but it is staged with costumes. They might need dramatic rights in order to put on their shows, because they definitely have costumes. They definitely have staging. I'd probably want to consult a lawyer on that one. But I would guess that because this band, which is really a company, is a big budget operation, they're probably playing it safe. They probably have the dramatic rights to do this. There's one more I think definitely need for this that we haven't really talked about yet. It's called a right of publicity. And what that is, the right anyone has to their public image. In this case, it translates to the right to look like somebody else. This is particularly important with celebrities. The right to look like the guy from Kiss who was a freely, no, Paul Stanley, I think that's a singer. The right to look like Paul Stanley would be a right of publicity from Paul Stanley or from Kiss completely. Especially in the case of Kiss where they have this trademarked makeup that might actually be a trademark issue. But something like maybe the ACDC person here, we just look like them. There's maybe nothing that is a trademark look to them, but we're clearly depicting that person that falls under what's called the right of publicity and it's the right to your public image. That is something that they would need here in order to pull this off is a whole bunch of those for each of the people that they're imitating, a complicated one, but this band makes millions of dollars a year. Doing this whole thing, I think they've got all their licenses probably in a row. They're really fun to watch. You need to check them out sometime. Okay, let's move on to another weird one playing off that right of publicity idea. 42. The Frank Zappa Tribute Band: Speaking of the right of publicity, there have been a whole bunch of weird things going on with people doing the music of Zappa and the whole Zappa family. Like Frank Zappa family, there's a couple of really fascinating copyright and trademark problems going on there. And we'll talk more about them later. But I want to talk about just one right now. There was a famous case, there was a festival, I think it was somewhere in Europe. Organizers of the, a bunch of bands that were going to play the music of Frank Zappley. They needed just performing rights because they were just going to play the music of Zappa. That's easy enough to get. It's just the venue. It should have ended there and gone without a hitch. But they made this unique logo, their logo got in the way of Frank Zappa, right of publicity. Let me explain by showing you if you're not familiar with Fran App. This is what Fran Zappa looked like. This happened after he died, but his family is quite litigious in some ways. This is what Frank Zappa looked like. He had this iconic mustache and goatee thing. Always had it. The logo for this festival, Frank Zappa Music, used that. Now I don't have a copy of their exact logo. I think it's been scrubbed from the internet. But I found something similar and it looks like this. It says Zappa. Here's his mustache and goatee thing. I think this is an official one because you can see it says, registered more on that later. This image, not the words, but just this image of the mustache and got this probably falls under trademark, but it's a trademark connected to this right of publicity idea that the family, the estate of Zappa has a right to control images of Zappa that includes what he looked like and impersonations of him. This is how somebody can control basically that. You can't make a T shirt that says that has a picture of like Kurt Cobain on it unless you have a license to do that. This whole festival got shut down because of the logo that just had this mustache on it. Again, this thing is now a trademark of the family, the Frank Zappa family, but it's connected to that right of publicity. It's a really interesting case where just something as simple as someone's mustache being used without a license, got the festival shut down. 43. A case for all the rights: Okay. So, a little bit earlier I said when we were talking about grand rights and dramatic rights, I said people often make the mistake with grand rights, assuming that that means all the rights, grand, all of them put together in one. That's not what grand rights means. But let's talk about a situation in which you would need all the rights. We sort of talked about one with the Elephant Love song medley, now that there's a theater version of that, but let's talk more generically, what would you need to do in order to create a situation where someone wanted to get a rights, at least all of the big ones, for a piece of your intellectual property. It's actually pretty easy to figure out. Let's say I wrote a song. That song gets used in a movie which gets turned into a theater production that inspires people to play covers of my song. I wrote a song called Detroit is Awesome. There's a movie that comes out about Detroit, and my song, Detroit is Awesome in It. Then that gets turned into a stage production and it tours. They use my song, Detroit is awesome in It. Then everyone, not everyone but some bands around the world are like, This is awesome. We want to play this song and they start playing my song, Detroit is Awesome in bars and stuff and in concerts, It's great. That covers everything. Because I wrote song, I recorded it and used that in a film. That sync rights that gets turned into a play, that's grand rights or dramatic rights, then other people perform it, that's performing rights. Presumably sooner or later, one of those bands is going to record it and that's mechanical rights. The mechanical rights is also covered in the initial recording. I guess if I recorded it myself, there's still a mechanical right there. I suppose that's a case where you would get all the rights. Now, how would that work? If someone was making a film and they anticipated needing all the rights, they would probably go to you and make a customized contract that said we want all the rights, here's what we're willing to pay you. And they would do it all in one big contract rather than piecemeal, but they don't know how successful the thing is going to be. The film wouldn't be responsible for the mechanical rights. That would be the band that's recording my song later. So that's not too far off from what we found in the Elephant Love song medley. The only difference is that the medley of the derivative work, part of it isn't here, but everything else is in that situation. And it's happened fairly often. Probably. Okay, let's move on and start talking about record labels. 44. What is a "master recording"?: Okay, we're going to move into talking about record labels, how record labels work, and how best to use a record label or take advantage of a record label for your music. It's not really as simple anymore as just getting offered a deal. To get started talking about records, I want to start with one piece of vocabulary, a rather confusing little piece of vocabulary, that is the master recording. Maybe you've heard the phrase, who owns the master or, or writes to the master or something like that in terms of recording, that refers to this idea of the master recording. What this means is if you go back to vinyl, right? So let's imagine a vinyl record. The way vinyl records are made, the very short version of it. We take the record and we make the inverse of the record, that's a stamp, right? Then the pressing plant can take a little piece of vinyl, which I believe is called a puck, and then they put it on the stamp and they push it down and then they go up and then they have a record. They basically press them out of this stamp. The person who owns that stamp is the one who has the right to produce duplicate copies of that recording. They're the ones with the keys to release albums. Right? If you don't have that master, you can't make more of that album. Okay. The person with the rights to that master imprint are the ones who have the rights to authorize copies. Now in the digital world, we don't have that stamp thing, but the word persists when it comes to who owns the masters. What we're talking about there is who has the right to authorize copies to be made. It's very common. Well, okay, this can split the rights we have in a song into a new thing right now. We have the rights to the song itself, and then the rights to the recording that was made, and in particular, the master recording, the right to produce it. If you made the recording yourself and you financed it and there's nobody else involved, you own the master. You have the right to duplicate it and put it on the Internet as many times as you want. But if you're working with a record company, you may or may not own the recording. The record company paid for that recording session or paid you to go into the studio, then they might own the master, in which case you don't have control over that recording, may or may not be actually making money from it. The record E will, though more on that in just a second. Now, I'll also say about recordings you'll find in this section, I do have a bit of a cynical attitude towards traditional record labels. I'm much more a fan of the DIY artist going independent, starting your own record label, or even some of the indie labels. I'm trying not to let that cloud what I'm saying and just give you facts, but just fair warning, I am quite cynical about the traditional record label industry, so keep that in mind with the things that I tell you. But okay, let's move on and talk about the roles of the record company. What do we expect a record company to do? 45. The 5 roles of a traditional record company: Okay, I realize my slides here have gotten quite ugly and in an effort to make them even uglier, I changed the text background to orange, thinking that it would help us to be able to read what's on the screen a little bit better. And I realize I've just created something profoundly ugly but legible so you can read it better. Sorry, graphic design, not my thing. I'm pretty good at music though. Okay, let's press on the roles of the record company. Traditionally, we think of a record company as having five roles. There's five things we expect a record company to do traditionally. In modern record companies, in distribution companies, in indie record labels. This works a little bit different, but this is thinking of like Capitol Records, like the big record companies, this is what we expect them to do. Traditionally, I've written the five things here, but let's go through each one first. That means discover new talent. They're out in the clubs, they're listening to performers, new records that come out. They're just listening all the time. They have scouts, I know a few scouts and have known more for the majors. They're just always digging for talent. Part of their job is discover new talent. Second thing, capital. Provide capital, That means money provide capital expenses to the talent that we'll talk more about this capital issue in a minute. But that might mean just give them enough money to live on so they don't have to worry about having a day job while making their music for the record company. It might mean keeping them in a certain lifestyle by giving them enough money to do that. It might also mean simply covering their recording studio expenses so that they have what they need to make an album, but provide some money. Number three, produce content with that talent. Now, the degree to which the record label is involved in the production of the music is something that has changed throughout the years, like everything involving record labels. But even if you go back to the '70s, '80s, and '90s, when record labels everywhere, when record labels extremely important, you saw some instances where record labels would want to put a person in the studio with the band to make sure that they were making hits. You saw some deals where the record label stayed fairly hands off. It fluctuates depending on the artist and the record labels comfort level, but that was one of the things we considered them responsible for. Number 54, Distribute, get that music out there, get it into the hands of the fan, getting it into record stores, getting it online, promoting it, making sure people know about it, getting it on the radio. These were all things that we expected the record company to do. Last is promote. That's more on the distribute it, maybe get some licensing deals, put up a billboard, what they used to do, just make sure people know about it and are going to buy it, Advertise the album, that promoting it might blend into tour support. In some cases, where the label might put up some money to support a tour because the tour is essentially an advertisement for the album. That was an old way of thinking about it, but that's the way we thought about it for a while, back in the '80s and '90s, where people went on tour to sell albums. Now it's the opposite, actually, not entirely, but that is, we thought about it back in the old days. Those are the five roles that we think about with the record label. Now, next I want to talk about which of those five, which of those five can we do by ourselves and which do we still need a record label to do for us? There are a lot of ways we can do just about all of these things on our own without a record label. But still having a record label with big piles of cash helps but allow me to have a voice for the independent label and the independent artist for a few minutes and tell you about how you can do all of these things without a record label on your own. 46. Record Labels: Discovery: Okay, let's talk through these five things and see what we can do ourselves. Now when it comes to discovering new talent. The business model of the traditional record labels is that they might sign 100 acts and 95% of them are going to fail. That's just traditionally how they think about it. Five or they might find 100 artists, sign them, give them some money to put out an album. They've got 100 albums and they're going assume five of those are going to make any money, 95 of them are just going to fail and they're going to drop them and then that's the end of their career with the record company. I would argue in my, again, cynical towards record labels idea that the record labels are not so great at discovering talent, that's not what their jam is, because they have a very high failure rate, 95% If you don't have a record label, how can you get discovered while there's a lot of people doing it on their own, just through social media, through clever Tiktok things or whatever is the latest social media thing by the time you see this also getting placements on some of the top playlists like the Spotify playlists or Pitchfork playlists. All of those things are things that the average person can do if they have really good music. I would argue that the way that artists, the way that we as consumers can discover new music on our own now is actually better, because the things that could rise to the top are the things that are musically most interesting and not the things that are most profitable to the record companies. Try not to be so cynical here. Let's just say that being creative and clever on social platforms can be from what I've seen as effective, if not more, than what the record labels are doing for you. The discovery piece is not something that we necessarily need the record labels to do for us anymore. 47. Record Labels: Capital: Okay, let's talk about second one, capital. Now, recording albums cost money going into recording studio. Cost money. That was always something that the record labels really had a leg up on against the independent artist who just didn't have the money to do these kind of things. There are a couple things that have made the tables turn here. Two in particular. First, the cost of recording an album has radically dropped an insanely low percentage of what it used to be. It used to be that if you wanted to go to a studio to record an album, you went to one of the big recording studios. You paid thousands of dollars an hour sometimes to use these big studios and to get a great sounding album. You paid an engineer, you might pay a producer. It was a big ordeal. That's not how it needs to work these days. Yes, If you're Foo Fighters, you still do that. You still go into a big studio or you convert your garage into one or whatever they did. Those big studios still exist for those people with big budgets, but if you don't have those big budgets, people are recording Grammy winning albums in their bedrooms, that is awesome. This crosses over into my jam, which is electronic music production, but not just in electronic music. In rock music, people are using amp simulators to get like a big, awesome sound. Even recording drums at home, which is probably trickiest thing to do. Or using an electronic kit and just sequencing it or like playing an electronic kit. There are a lot of ways to do it that is way cheap. Using the computer you probably already have. You can record a whole album. But the second thing is that raising money has become something that anyone can do. Now. Any band, an artist can go on Kickstarter and try their luck there. Raising money just from existing fans. If that doesn't work, you can leverage the fans you already have through something like Patrion and try to get an album out. That way you can pre sell the album and raise enough money to actually make the album in pre sales. I know one group of artists here in my city that does that amazingly well. They'll say we're putting out a new album in ten months, buy it, Now people will go and buy it, and that's how they have the money to record. The album is awesome. We don't really need the majors to provide capital anymore. If you look at the details of how they provide capital, which we'll talk about in just a minute. I think in the next section or two, You'll see that it's problematic anyway, because the way that they provide capital is generally a loan, But we'll talk about that shortly. In the meantime, let's move on to the next one, produce. 48. Record Labels: Produce: Okay, when we talk about producing or helping the artists produce, this overlaps with what we were just talking about with capital a little bit. But I want to point out one more thing here. It used to be in the old days that a lot of record companies owned recording studios. They had their own studios and it would be cheaper to get you into one of their studios that's long gone. They don't really have that anymore. That was a big element of this helping you to produce thing was getting you into one of their studios. With that gone, since they don't own any studios anymore, it's their way of helping to create music with you to co produce music really isn't a thing. Now one would argue that one of the things that they have an advantage on is they could send a producer, someone with a defined ear to help you make your music better. They could still do that, but could you? If you are recording an album, nothing stops you from finding someone whose music you really love. Someone who has extremely good taste to chime in and say, to get involved as a producer or co producer with you. You can do that on your own. You're probably not going to be able to get Rick Rubin to jump in on your album, but maybe you'll discover the next Rick Rubin, who knows. 49. Record Labels: Distribute: Okay, distribute. This used to be the big one. This was the Holy Grail for a while where if you were an independent artist and you are making records and you wanted to get your records into a record store, if you weren't going with a record label, you had a really hard time, even in the early days of streaming on Apple, music, Spotify, title, all of those by early days of streaming. I'm talking like five years ago. If you wanted to get your music onto those platforms, had to have a record label. The only way to do it was for the record label to get you on to Spotify. That was how it worked. It doesn't work that way anymore, but it was that way. Of course, you could make your own record label and do it. That was a workaround, but now you don't even need to do that. There are distribution companies that you can hire something like Distro Kid is probably one of the most popular ones. There's a bunch of other ones you can just go on those websites, upload your album, input info for it, and have it on line in a few days. Have it on Spotify in a few days. That makes your distribution just as good as anyone else's. Right. You can get it on Spotify the same as anyone else can get it on Spotify. It's still hard to get physical albums in stores. You can certainly do it in your local area just fine by hoofing it and going to all of them. But to get in with a distributor is a little tricky if that's what you want to do, but it is possible now there are some companies that are distributors like Distro Kid, that are evolving into record labels where they're doing a little bit more. You might go to release an album and see that this company like Distro Kid that is a distributor and they just want to help you get your music on Spotify or whatever. They're also offering you services related to discovery or promotion or something like that. Possibly even drifting into publishing, that's the bigger thing that I'm seeing distributors do lately. For example, a distributor might or might offer services related to helping you find some sync deals, like getting your music used in a show. I haven't heard of anyone having success through a distributor like that, but maybe they're good, maybe they're bad, I don't know. But those roles of the distribution companies are evolving. They're interesting to keep an eye out for, something to consider. 50. Record Labels: Promotion: Okay, the last thing is promotion. Do we still need labels to promote our music? Well, it certainly doesn't hurt. That is something that record labels can do with some efficiency because they've been doing it for a long time, they have a lot of connections and they have a lot of money. But that doesn't mean you can't do it on your own Again, social media and just hustling your music, touring, all of those things, promote your music. A whole bunch, there are promotion companies and I actually have worked with a few of these and had good results actually. There are companies you can hire that are just promotion. You would hire them, you'd pay them a flat fee and you'd say, get me on as many radio stations as you can. You'd get me some sync deals, they'll work their butt off and try to get those for you. It's not cheap, but if you have saved up a little bit of money, really want to make a go of it on your own. Those companies can be helpful. I'm sure there's a lot of companies that are promotion companies like that, that are not so good. But in my experience, I've lucked out and found a few good ones and had good experiences doing that. I think you can promote an album just as good on your own as the majors can. The majors can do it faster without their money. It tends to be a slower promotional drip that we can do on our own, but there's nothing wrong with that. Okay. So let me wrap this whole thing up. Let's go to one last video on this topic and then we'll move on. 51. Do artists still need a record label?: Okay, so to sum this all up, do artists need labels? I'm going to say firmly, no, because of this word need. Do you need a label? No. Do labels still have some advantages to offer? Yes, I think they do. If a record label is knocking on your door, I think you should hear them out. But there are a lot of artists who have gone without record labels entirely or with independent labels, small labels and done really well for themselves. Don't think just because you don't have a label means you can't be making great music and you can't be making a living from it. Now I'm going to also point out here that specific to the electronic world, I see a lot of electronic producers really relying on labels lately for single tracks. It's a strange phenomenon where someone will make a track and then they'll get assigned to one label and make another track and get assigned to another label. This seems really important to the culture, there's certainly nothing wrong with it. I think the advantage of it is that a lot of these labels are getting these tracks in the hands of as bigger name DJs that are performing the tracks a lot. Which if you remember, that will provide a performing royalty to them. If I make a track and my label gets gets into some big famous DJs set and they're performing it, in theory, I will get royalties from that performance. It can be good. But it's just a new and interesting phenomenon that I'm seeing all these artists signing single track deals to many different labels and a whole bunch of these independent labels looking to sign single tracks. I'm not really sure what's going on with that, but it's a super new phenomenon that's happening, let me to look out for if you're in that genre. I don't see it happening in any other genre than electronic music production. Okay, enough about why you should not have a record label. Now let's dive in a little bit deeper into what having a record contract actually looks like, what is in one, and if you're looking at one, how to make sure you're not going to get taken advantage of. Let's go into the details of that in the next section. 52. What is a Term?: Okay, so let's go into the details of what's inside a typical record contract. Now, these have changed a lot over the years, especially in the last couple years. And they're going to continue to change. I'm hard pressed to say what is typical anymore. There's just so much variation in how these work now, and everyone that I've seen is very specific to that artist or band. But I do want to go through things that you might expect to look at if you're considering one of these contracts. Again, I'll remind you if someone puts a record contract in front of you, I very strongly advise you to get a lawyer and have them help you read through it and make sure you understand everything you're signing up for. Because some of the terms and jargon and things in these can be confusing. But let's go through some of that. We start with the terms. The terms basically means what you have to do to fulfill the contract. Now normally when we talk about a contract, the terms of a contract, we're talking about a length of time. You might enter a contract for two years or for five years, or whatever, some amount of time. Record contracts work a little different. They typically don't include a length of time, but a number of albums or a number of tracks that you are expected to produce and release with them. The contract might be for one album, which will be specified how many tracks, typically ten tracks or ten albums. If we go back to the '90s, bands were getting signed to ten album deals where they would basically get their next ten albums released by this record label. That ended up being not such a good idea because the lifespan of a lot of these bands was shorter than ten albums, those kind of longer deals are even more rare. Now what you see typically is one to three album deals. Now one thing that's interesting is that if we go back to the old days, the '80s and '90s when these really long deals were happening. If an artist was unhappy in, with their contract, they could do weird things to get out of it. In particular, the greatest hits album, it used to be that if a band had like a five album deal after three albums, they really wanted to get out of the deal. They were not happy with their record label. They would release like two greatest hits albums and then be done because that was the deal. Five albums, sometimes live albums also fell into that category of just a way to fill out the deal and get out of it. Now that doesn't really work anymore. I think labels have ways around that that really isn't going to be something that you will consider going forward. But it's interesting, the first thing to look at when you see one of these contracts is how long does it last? And it'll be written in terms of albums or tracks to be released to fill out the terms of this deal. 53. Additional Songs: There might be a little bit more to the term than just a number of albums. There might be additional songs specified traditionally. What that has meant is extra songs that the record label will use as besides foreign releases, exclusive retailer arrangements, maybe soundtrack inclusions. What that means is extra things that they can use to promote special versions of the album. You might be expected to put out like a ten song album and then have two extra songs that are not on that album. This is a very common thing. Not so common now that some of these deals are focused just on tracks. But I imagine even with a deal that's just focused on tracks, like a ten track deal rather than a one album deal. I imagine they still want some exclusive tracks. Think about like when you go into a retail store like Urban Outfitters or whatever, and they have some special track by this band you like, that's only being released if you buy some genes at Urban Outfitters or something like that. Like they used to put out like mixed CD's, thumb drives, and stuff like that. That's what those are, those are extra things that the label wants so that they can include on the other opportunities, the other merchandising opportunities. They could also get used in a film soundtrack. We used to see that a lot, where there would be a film soundtrack that came out and they might have a song by a band that wasn't included on their album. Now those are included usually in any release schedule or streaming, but sometimes they're not. In addition to the term length, there might be additional tracks that you're expected to give to the label as well. Then after you give them all of that, you might not be done even after you've fulfilled these terms of the contract. There is something called options. Let's talk about options next. 54. Contract options: Okay, When you are looking at a record contract with your lawyer, make sure you ask them to point out options and explain the options to you so that you really understand what your options are. The options typically go something like this. I am going to release, I'm going to get a contract that says I'm going to release two albums with the label. If those two albums go well, the record label may have an option to get a third one from me. What that means is that after I give them two, they can look at it and say, okay, we want a third one, or we don't want a third one. If they don't want a third one, my contract is done, I walk away. If they do want a third one, I got to give them a third one because that's an option in the contract and they get to exercise that option. It is typically not the case where I, where I, as the artist can exercise the option. I get to a point where I've released my two albums. I go to the label and say, hey, there's an option, I want to release a third one or I want to be done. It's not really usually my option, it's the record labels option. One thing to think about with this is that options can be negotiated. If there's an option in a contract and you don't like it, it's easy enough for you to counter and say, I don't want that option in there. And you might think, why wouldn't I want that if I'm going to release two albums with them, why wouldn't I want to release a third? Well, think about it like this, If they sign you, you're a unknown artist, okay? You're going to make some money by them releasing these two albums. If those two albums blow up and they're huge now, you're a huge artist, then you want to shop around for a new contract because you can get paid a lot of money, but the record company is going to say, no, no, no, no, no. We have an option to keep you for a third album on your old contract where we paid you peanuts, okay? So of course they're going to exercise that option because they can pay you the same amount that they paid you when you were an unknown person, now that you're a superstar. That's how those options work. So it's in your best interest as the artist who's going to blow up to say, I don't want those options in there. After two albums, either we walk away or we renegotiate for another contract. That's typically what you want, but if the label is firm on it, then it's something to look at. Again, it can be negotiated. Um, anything in this contract can be negotiated. So that's what options are, keep an eye out for them. 55. Making 10 albums doesn't mean releasing 10 albums: Okay, one more thing on this before we get into getting paid advances and payments is this idea of a release commitment. You generally want to make sure that you have a release commitment in the contract. It's something that might not be front and center, but you want to dig around and make sure it's in there. The reason I bring this up in this section is that if your deal is to release two albums with this label, that's probably not what it actually is. It's probably to provide the label with two albums. It may not say that the album that the label will release two albums. You might just say that they receive two albums from you. They might get your albums and then say, we don't want to release this, maybe they don't know how to market it, it's usually the thing or they don't like it for whatever reason and they decide to shelve it, meaning like put it metaphorically on a shelf and leave it there and not release it ever. What you can do is you, if it's not in the contract, you can negotiate to have a release commitment in the contract. That basically says something like, any album I give you, either you will release within one year of me giving it to you or that album becomes mine to do whatever I want. I could release it with a different label, can do whatever I want. There's a very famous example of this with the artist Fiona Apple and her Extraordinary Machine album. It was a weird album, if you listen to it, it's weird. But she gave it to the label, they didn't like it, and they just shelved it for years. Eventually there was like a big public outcry. Everyone wanted to hear it and some of it leaked online. This is the early days of online too. This is like 2002. I think it a eventually the record label said, okay, we'll release it, but we want to record the whole thing. They just didn't like the production of it. They recorded it. And it sounds almost identical like you can search around and find the unreleased versions and the released versions and put them side by side. They're so similar, but it was only after a lot of her fans wrote letters and e mails and whatever that there was enough buzz around it that they finally agreed to release it, knowing that there's no single, there's nothing good on it. They didn't like it at all, but they released it grudgingly, And it won the Grammy for Best pop vocal album that year. Take that for what it is, but she did not have a release commitment. They didn't have to release it. It's something you want to look for in these contracts. Make sure that if you're going to give them two albums, they have to release two albums, or you can release them however you want to, if that is a thing. Okay, let's talk about advances. 56. The "million dollar record deal": Okay, so let's say you're friends with a band who's about to get a deal and that band comes to you and says, I got $1,000,000 record deal. This is awesome. My dreams have all come true. That is awesome. That's great. They got a big record deal, that's awesome. However, the million dollar record deal is not what it appears to be on the outside. And you have to understand what is the purpose of that $1 million. Someone gets a record deal, they get $1 million, and then they go out and buy a bunch of stuff. This is not a good thing, this is not a good idea. In order to understand the idea behind this, we have to circle back around on the business model of a traditional record company. We remember that a record company is in the business of getting people big and famous. That's what they try to do because that's how they make their money. When they do that, they make their money, they take a lot of risks. They might sign 100 people knowing that one of them they hope is going to make it big and famous 99 of those are going to be losers are not going to do well and they're going to lose money on them, but they're going to make so much money on that one that goes nice and big that they can afford to do it however they are going to do their best to make sure that they lose as little money as possible because it's business after all. How do they do that? They do that by a recoupment system. What that means is if you get $1,000,000 record deal. That million dollar is a loan. You can look at it a whole bunch of different ways, we can put fancy terms on it. But at the end of the day it's a loan and you have to pay it back. You're going to pay it back by working for the record company and selling records, making good stuff. If you sell $1 million worth of records, we actually quite a bit more than that. But let's just keep the math easy. You pay back that loan, then you will start making some money. But that million dollar is all you're going to make until you pay that million dollars back. It's complicated, so we'll go into the math of it in just a second. The first and most important thing you should keep in mind about any kind of deal like this is you're going to need probably two things. One for sure. One, and I know I've said this before, but I'm going to reiterate it. If you are staring down $1,000,000 record deal, get a lawyer period and exclamation point. Have a lawyer, look that over to make sure you understand everything about it. Even if you are 100% sure you are going to accept this contract, hire a lawyer to just walk you through and explain everything in that contract. Um, just so that you know, The second thing is that it might be worthwhile to get yourself a financial advisor or maybe even just an accountant will do, but make sure that you have someone who's really good at money to help you handle your money and not blow it because you've got some big responsibilities that come with that money. So let's go into a new video and let's talk about recruitment and how this loan situation really works. 57. Recoupment: Okay, so let's talk about recruitment. Recruitment is the biggest word you'll have to wrestle with when it comes to record contracts. Recruitment is a fancy term for how you're going to pay back that loan by working for it. The record label needs to recoup, which means to get back their investment in you before you make any money. They give you $1 million. What's that for? Why are they giving you $1 million upfront? We it might be for a number of things. It might be that you need to actually make the record with that money. That means that you have to use that money to go into the studio to hire the band, potentially to hire songwriters, to pay the producers, the engineers, the graphic designers, all of it. That may or may not have to come out of that million dollars. The other thing you're expected to do with that $1 million is survive. You can use that money to pay your rent. Buy yourself a car, buy yourself some nice clothes. You can do all that in some ways that is encouraged. You're expected to look the part a little bit. If you're a rapper, if you write songs or something about having a lot of money, then you should probably use some of this money advance, we call it, to look like someone who has a lot of money that might help your image and ultimately help your music. Sure. But you're not going to go out and buy a big house and a bunch of cars. $1 million actually isn't going to go that far for doing that work. What you should do with $1,000,000 record deal is make an awesome album and then save as much of it as you can. In my personal opinion, here's how you're going to pay it back. This is what recruitment is. Let's do some really simple math here. You get $1,000,000 record deal, you put, you use that to make an album. Let's say you blow all million dollar of this on the recording of this album. If you're going to go big, that's not very hard to do. You go into a good studio, you hired like session players, you hire some good co writers. Yeah, you could blow $1 million Easy doing that. Okay. Let's say your album is out and it's doing pretty well. It's getting a lot of downloads, it's getting a lot of streams. Maybe even press it on vinyl and you're making some money. Let's say that all things being equal, you're making $1 per sale. Now we're simplifying this a lot because if someone buys a vinyl record, you might make $1 on that sale. That's a lot, but maybe not, If someone's streaming it like a whole bunch, you're not going to make $1 But let's just keep it simple. This is the percentage that you are getting. The record label is going to keep a cut and you're going to get a cut. The record label is going to keep the big cut and you're going to get a smaller cut. But remember they gave you $1 million up front, so that's how they can justify it. That's cool. This $1 an album sale, just to keep it simple, that's great. You're making $1 sale, however you're actually not. That means you're not going to get that dollar because that dollar is going to go into a bucket. That bucket is already negative $1,000,000 because that's the money that the record label gave you. In order for that bucket to get full, you need to do 1 million sales, what we're calling sales. For the sake of easy math, that equals $1,000,000 Okay? Now you're breaking even. You have not made a penny yet other than that million dollars that they gave you. So they gave you that money and that's great. However, you just paid it back. After 1 million sales, what percentage of albums get to that million dollar mark? Not a lot. Not a lot. So it is very likely that your album comes up short of making $1 million. What happens in that case? We'll come to that in the next video. But let's continue down this road. You've finally, after maybe two years of touring and selling that album, you finally broke Even now you're going to make $1 per album sale, right? In the meantime, if you spent that whole million dollars producing that album and then you spent two years touring and promoting that album, how are you eating and paying for that tour? You're not, you are starving and probably barely alive because you've made no money for the last two years. You've spent the whole time on the road and promoting this album for which you were getting nothing. What you need to do is you need to know this going in so that when that million dollar record deal comes aside, you're going to say, okay, I'm going to put $50,000 aside per year. I'm going to put $200,000 aside knowing that that is $50,000 per year for four years, and that's going to fund me for four years. Just basic necessities of life. I'm not going to be rich. I'm going to keep it simple, keep it smooth. And that's going to let me tour and support this album. You can use the rest of it to make the album. Do whatever you need. I mean, you have to be thinking long term like that with this money, otherwise you're in trouble. Okay. Let's say after 234 years, you never hit that $1,000,000 mark in the label comes to you and says, it's just not going to happen. You've only made $100,000 you're on the hook for $900,000 You're in the negative. Let's talk about that. 58. Payback: Okay. A number of years go by. Your album is out on the market and it's just slowed down and it's not going to make it to recoup. Let's go back to our easy math year. You got a $1,000,000 advance, okay, And you've sold, well, let's just say you've made 100,000 on it, okay? Your balance with the label is negative $900,000 That is a bummer. What does that mean? Well, there's good news and there's bad news in this. What should we do first? Let's see, the bad news. The bad news, that probably means the label is going to not renew your contract. It's going to be the end of the end of your career, but the end of your time with that label, they're probably going to say, okay, you didn't make us any money. Thank you. Goodbye. You will effectively be dropped from the label. That doesn't mean your career is over. Absolutely. That means you can go to a different label. That means you can do it on your own, It just means your time with that label didn't work out. That's the bad news. The good news, in almost all cases that I've seen, you do not owe the record label that $900,000 That is a loss to them. That is cost of doing business. They're, they're not going to pay that back to them. The model here is they're going to give you money. You're going to work hard to recoup that money. If you can't, they're going to say okay, bye bye. That's it. In most cases, you do not owe them the debt. It's right. It's like a bank loan where the bank just says, okay, you're not going to be able to pay this back. So forget it. It's weird. Now, I have seen cases, particularly back in the late '90s, early 2000, some cases where the contracts were written in such a way that the band was on the hook for the money. And this happened to a friend of mine's band where they had a big hit, but they didn't make $1 million. They didn't recoup, they eventually were dropped. The label said, you owe us, I don't remember how much it was. It was 100, maybe 200,000 They were on the hook for it and they had to sell some of their publishing to get it sucked. That's not typical. That was, I think, a weird period, there was some real shady stuff happening that doesn't really happen anymore. But another reason why you should really have that lawyer look over your contract to make sure that's not in there. Make sure that your lawyer is looking out for this specific thing. If you don't recoup, do you owe money back? All of this is to say, when you get offered in advance by a record company, it actually is in your best interest to maybe not accept the million dollar record deal, but consider accepting the record deal, but with a smaller advance. Only take out what you need of an advance to get the album made and some modest living expenses for a little while. Because the less you take out, the more you're going to make. Because after you recoup, you're going to start making money. That's my personal opinion and other people have different ways of looking at this, okay? So that's how the million dollar record deal is a little deceptive. 59. What kind of royalties?: All right, so let's talk about getting paid. We talked about going in the negative, but how do we go in the positive? There are a few ways we're going to go over a couple different ways that you may or may not get paid in a typical record contract. The first, probably most obvious, and royalties, maybe a tricky thing to say, but we'll come back to that royalties. When we talk about royalties in terms of a contract, this is a little bit different than the royalties we were talking about before. Earlier we were talking about performance royalties, licensing royalties, or royalties from licensing. This is different than that. This is straight up sales royalties that we're talking about. The exact same thing as you go down to a consignment shop or something, You sell something and you get a cut. The consignment shop keeps a cut and you get a cut. It's basically that. Let's imagine we're working with physical records, right? So it's quite easy to think about in physical records there's a number. It's a percentage that you're going to get. If you sell a record and it costs 20 bucks, you're going to get some percentage of that. You'll get a couple bucks. The record label will get a couple bucks. Typically a bigger couple bucks. And you'll get record store gets a couple bucks. There's some other people in between, their distributors and things that get a couple bucks. Also, these are not mechanical royalties. These are not performance royalties, sync or grand royalties. Straight up sales royalties that we're talking about. Now that percentage of the sales is really completely up to the record label or is what you have negotiated into your contract. Now it works a little bit differently with streaming, but not a lot. You'll still get a percentage of the streaming revenue. This part of it works more or less the same because we're just talking about money in and money out. I don't want to go real deep into this because it's so different on every contract. And the way things are working in more modern contracts is very different than what I have experience with. But there are a couple key things that I want to point out when it comes to how that royalty rate is determined and how you can calculate what you're going to make and maybe even edge your bets, make a little bit more if you're willing to be a little risky. I'll talk more about that in just a second. Let's talk about how this is calculated, and to do that, we need to talk about something called the royalty basis. Let's go to a new video and do that. 60. The royalty basis: Okay, what is the royalty basis? The royalty basis is the thing that the royalty is calculated from. If you think about it, let's use the most simple explanation. Let's say I put out a CD and looking for like an album of some sort. I don't have one handy. Let's say I put out an album of some sort on vinyl. I go down to my local record store and they agree to sell it. Okay. They say we'll split the revenue. 50. 50. Cool. That's great. They put it on sale for 20 bucks. I'm going to get ten bucks. It's great. In that case, the royalty basis is the retail price of the record. Meaning that I have an agreement to get 50% of the sale and that 50% is of the retail price of the record. Cool, But that's not always the best way to do it. Record store might say, well, in order to sell this record, I'm going to have to do a little bit of advertising of it. It's going to cost me $5 to advertise the record, you say, Okay? In that case, the royalty rate you're going to get is going to be based on the price of the record after the promotion of it by our record store. We might call that net revenue. In this case, that means that the record store is going to get 20 bucks, but they've already spent five, so they're going to reimburse themselves for that. Now what's left would be the net revenue, 15 bucks. I'm going to get half of that. So now I'm going to get 750. Right. In that case, the basis would be net revenue. If you know these terms gross and net gross is like all the money you get. Net is all the money you get after some expenses, it could be net revenue. Now let's do another case. Let's say, let's say I go to the record store and say I want to get $10 per sale of this record. You can charge whatever you want, but I need $10 Okay? So they say, great, we're going to sell it for 30. So we're going to sell it for 30, we're going to give you ten, and we keep 20. In that case, your royalty basis is based on the wholesale price. It's based on what they paid for it, not what they sold it for. Then we'll just do one more example. Let's say you go to a record store and you give them the thing. And they say, we'll sell it for 20 bucks and we'll give you four. And you say, why, why four? And they say, because that's what we want to do. There are a lot of different ways that your basis can be calculated. That last one would be based on just some other amount, just random thing that they've agreed to or that you've agreed to. Those four things that I just outlined are the main four. They are the retail price of the product, your royalty could be based on the retail price of the album, the wholesale price, the album, the net revenue. So that would be the revenue after expenses, or it could be some other arbitrary thing that they agree to. Now again, all of this works the same with streaming stuff. It's harder to calculate because we're always talking about fractions of pennies and things. It works the same. Now, which of those do you want? If you are given the option and you will always be given the option, if you're talking about a record label, well, they're not going to give you the option. But this is always something that can be negotiated. And it's something you should try to negotiate if possible. The thing you want is the retail price of the record. Because that's always going to be the highest. The highest will always be the retail price of the record. If you're given the option, that's the one you want because that's the one where you're going to make the most money. Okay, so let's talk about what the actual royalty rate is and put some numbers on some of these things. 61. The royalty rate you will get from the record label: Okay. So, you're saying to yourself, Jay, just tell me the number. Just tell me what it is. Okay. I'm going to tell you, but throw a couple caveats to that. Let me explain just a few things really quick. Then I'm going to give you a number. The first is that this rate, which is a percentage, is not the same for everyone. If you are an unknown artist and you get signed to a deal, your royalty rate is going to be much smaller than Elton John gets for his latest album right now. Why is that? The reason is that record company is going to say when we sign Elton John, people are going to buy that record always, all the time. They're going to stream it, they're going to buy it. We're going to make a lot of money, so we can afford to give him a little bit more in order to keep him on our record label. He's going to be able to demand a higher royalty rate than your average just getting started person, the status as an artist, if they're a major celebrity versus a minor celebrity or a new artist or something like that, that affects a lot of what their rate is going to be. The second is the potential to be marketable, if I am the black metal band in the world versus the hottest pop act in the world, the pop act is going to get a higher royalty because they're more likely to sell a bunch of albums versus the black metal band, they might be awesome, but it's just a smaller niche. They're probably not going to make as much money. That's, that ties into genre also does play into this. Some genres just demand a higher royalty rate because they sell more typically, there's a lot that goes into it. Now you're saying, shut up Jane. Just tell me the number. 12% 12% is typical, maybe average, maybe a little high for a new artist. 10-12% would be something I would expect to see in a young artist contract. But we're not done yet because we haven't talked about deductions. You can look up something called record contract deductions. I don't want to go through all of them here because there are a lot of them. But what it means is you might have a deal where it says you're going to get 12% of every sale. Okay. That's pretty good. I know they're going to say, but when we give away free things that you don't get cut of, that you're going to say, okay, well that's fine. So when we give things away to radio stations, you don't get any cut of that. You say, well, that's fine. And then they're going to say, and sometimes, you know, we print records and that's expensive, so we're going to deduct that. And sometimes you're doing a really not standard thing in the artwork and that's more expensive for us. We're going to deduct that. You want to stream these at a higher fidelity, that's a tricky thing for us to set up with the streaming services, we're going to deduct a little bit for that. There's all these deductions that can happen. After all of that, you might get down to what equals out to seven or 8% depending on how it's set up. In the digital world, there are less deductions because we don't have things like breakage and stuff like that at least. But there are still some of them you want to look for those just Google, like record contract deductions and you'll find a whole list of them. Just something else to watch out for. Okay, That's all a great way to make money from sales of our music, but there's more ways to make money in a record contract. Let's talk about that. There are two big things I want to talk about. One is merchandise and other stuff. You might think that selling T shirts at the concert is just a funny little thing that the band makes gas money. And that might be true, but it's also a big business merch is a real thing. And then the other thing I want to talk about is this new trend of 360 deals And how that has really changed the way that a lot of these contracts look. Let's go into Merch next. 62. Merchandising rights: Making t-shirts, stickers, patches, and more: Okay, We're going to talk about merchandising here for a minute Now, you might be thinking how does like making merchandise that's like T shirts and stickers and stuff, how does that factor into the record deal that we were just talking about? Well, it does. So what we're going to do is we're going to talk about merchandising as its own thing for two or three videos. And then we're going to circle back around and talk about how that intersects with the record deal. Okay? So just hold on to the record deal stuff for just a minute while we talk about merchandising, okay? You do not need a record deal to make me. Everybody can make merch. It's very easy. Let's stick to the situation of a T shirt, right? So it's quite easy to have a T shirt made. You can go to any local shop. Most cities have a few shops. And you can go there with your artwork and ask them to make you a bunch of shirts, just like anything, the more of them you make, the cheaper they're going to get. So if you go to a shop and say, I want you to print 100 shirts, they might cost you $10 a piece. So that means you're going to have to sell them for 15 or 20 bucks a piece. But if you say, I want you to print 1,000 shirts, they might be down to $7 apiece, In which case you can sell them for 12 or $13 A little bit more affordable people might buy them. I don't know what a T shirt costs. Maybe it's normal to pay 2020 $5 for a T shirt at a concert. I think it probably is. That's why things are more expensive at concerts when you're on your own, leaving the record label out of it for the moment. When there's really three ways you can go about making and selling merch. The first is producing it on your own, lugging it around and selling it at the gigs. This is the way most people do it. Merchandising does account for a large percentage of touring musicians revenue. The money they make, they get paid for the gig, but they also get paid for the stuff they sell. That might be T shirts, it might be stickers, it might be albums, it might be physical albums, then it might be like weird stuff. I've seen people condoms and I've seen a lot of bands branded condoms. It's a thing in certain genres, but other things, anything you can imagine water bottles, pine classes, you're probably not going to sell those at a bar, but you can and brand anything. Trust me, that's method one. You bring it to the gig and you sell it. Method two is you can actually hire a company to do this for you. There are these full service merch companies that make all your stuff. They'll ship it to the places on your tour, then you just have to pick up the box and sell it. There are also companies that will be even more full service for a certain amount of money. They will make all your stuff and put someone on the road with you who will go to the show, set up a table and sell your stuff for you. You don't have to do anything except get the money at the end. Now they're going to take a serious cut for doing that, but it might be worth it to consider. That's method two. Hiring like a full service company to deal with it for you and make some money. Option three is to license trademarks, possibly your right of publicity, to a manufacturer or a sponsor to produce these things for you. That would be like, let's say your tour is being sponsored by your favorite beer company, you would license to them, in some cases, band logo, your brand, possibly images of the members of the band and maybe the album artwork that you're currently promoting. They would produce all the stuff. They'd slap their logo all over it also, and then they would sell it at your shows, and then you probably get a cut of some sort. That licensing thing happens in the stages, if you will, where you've got bigger sponsorships and things like that. There is an intellectual property issue here to be aware of. If you are making T shirts, you are using intellectual property, you're using trademarks. And you might be right of publicity thing, if you remember back to early in this class, that is the right to use someone's face or a likeness in print. If you're going to do that, Who owns it? Well, if it's your band, using it in your band is making the shirts and selling them, then you own that intellectual property. If you're licensing trademark your rights to a third party company, then that's something you absolutely maintain the intellectual property to. That if you ever see a contract where you're licensing your image to a company that's going to produce merch for you, and you are actually selling them your intellectual property. That's bananas, that's not good. Don't ever do that. You should retain your intellectual property in all of this. Okay, let's go to a new video and let's talk about actually selling these things in a concert. 63. Merch companies: Okay, let's talk about some of these merch companies really quick. I just Googled quick for full service company, for bands. This one popped up. Hello? I've never worked with these people before. I don't know anything about them, but I have heard of this one. Here's what they do. They have a web store, that's cool. That means that you could direct fans to go buy stuff on their store if you want. Fulfillment means that they're going to make and send stuff to you. They can fulfill orders directly for you or customers printing, they can make stuff drop. Shipping is a weird term. If you've ever got involved in any online sales, you might be familiar with this term. What this means is that if you're playing like a festival, they can make a bunch of stuff and send it to you at the festival where you can sell, you can sell it there or sometimes this can even you could take orders for me at the festival without having physical products there, but you could take orders. Then after the festival, you submit the orders to them and they ship directly to the customer. You don't need to have any merch, you don't need to buy it in advance. You can order it and then you would pay the cost of making the thing and keep the profit directly and never have to deal with the shipping or anything like that. They have support and other stuff. They do screen printing, they can make all stuff like T shirts and posters and bags. Hats. Well, they're doing vinyl. Now that's interesting. Has more stuff. More bags. This is cool. Where are they? Phoenix. Not that that really matters because you're all over the place. This is one of those companies that's really full service. If you want to go this route, that can be great. If you just want to make stuff. There's Atonis companies that will produce things for you and send you a C of stuff. I've done this all the time. Again, I'm not endorsing any particular company, but this company, Vista Print, I've used a few times to make various branded stuff. They just make a ton of stuff. Now, they're not like a merch company for bands. They just make stuff. That's what they do. You could go to them and say, okay, I want a, I don't know, paper cups. I want branded paper cups. Sure. Or go to clothes, backpacks, cooler. I want a branded cooler. Let's look at that. They're like cooler, bags like that. Cool. You can put your logo on it and they'll make it for you. Okay. There's tons of options for that. I could do a whole separate class on how to do, afford large quantity merch stuff. My experience with doing it is both through bands and also through companies like the different companies that I've helped start did a lot of branding. Even here is a huge box of branded thumb drives that I'm slowly giving away. This is my last album on them. I did that through Alibaba, which is another site, if you want to buy 10,000 of something, you do it through Ali Baba is a good way to go. It's a little tricky to get used to, but it can be done. Again, this is a big rabbit hole. But just so you know the basic rules of the road, that's a couple of things. Okay, next let's talk about actually selling these things at a show. 64. On-site sales: Okay. Last thing you need to know about this because this can come as a surprise if it's your first time going on a tour with merch or anything like that. Is that it is very common for the venue to insist on a cut of the merch. It's weird, you think about it. You think, okay, I'm the band, I'm on tour. I'm going to sell T shirts. I'm going to ask the venue to give me a little table in the lobby, but I'm going to staff it with one of my rotis or something. I'm going to deal with credit cards through like a square reader. It's not going to go through the venues POS system or anything like that. Why do they get They're literally going to provide me a little corner and a table. The reason that they're going to get a cut is because they can and they will. It's just how it works. Now, it might be 1015, 20% 30% I've seen you have somebody set up in a lobby at the show or in the back of the hall selling shirts. If they sell 100 bucks worth of stuff, you're going to give 30 bucks to the venue for the right to sell stuff at the show. You can complain about it all you want, but it is standard practice at this point. Some venues don't do it to those venues. I salute you, but most venues do. Sometimes they can ask to see your receipts. They will insist on staffing the merch table, having the person sell so that they know exactly how much was sold and they can get their cut. They can audit your sales for the night. The details of this will be in the contract to perform. It'll say what you're allowed to do with selling stuff at the show, what they're entitled to get. Just keep in mind that the venue is going to take a cut when the first time you see that, you're probably going to say that doesn't make any sense. I don't like that at all. You're right to have those feelings, but it is standard practice. So keep that in mind. 65. Why "360"?: Okay, so let's take Merch and circle it back around to talking about record labels. So far when we've been talking about record labels, we've been talking about traditional record deals. How they've been working for a long time. The contracts the band to make an album. That album goes on sale. The label promotes it, people by the album or stream. The album money is made, the record label keeps a big chunk, the band gets a chunk and everyone's happy. But as revenue from sales of albums declined over the last, well about ten years ago, 1015 years ago. As streaming was rising and the revenue was getting a lot smaller, record labels started seeking out new ways to make money. Thus the 360 deal was created. Now, not all record deals that are, that happen now are 360 deals. Only some of them. They happen in a very specific situation, which we'll talk about in just a minute. First, let me explain what they are. In a nutshell, if I'm a band and I'm on tour promoting an album and people are buying or streaming that album, I am also getting paid to play those shows. Live shows in the streaming world are not always, but often more profitable to the artist than the streams the record label said, well, we want to cut of the live show also. In addition, artists started doing significant amount of revenue from merch, from people buying T shirts and stickers and everything. A notable amount of money. The record labels said, we want a piece of that too. Then artists started doing collaborations with other artists and performing on other tours, other albums doing guest spots and things like that. And the record labels said, we want to cut of that too. Then an artist may have signed that deal, a brand deal with their favorite beer company. For example, they're doing commercials for this beer company. And the record label said, we want a piece of that too to be fair. The logic here is the label says, we discovered this artist invested in this artist, we made this artist famous. Everything that they do, we are owed a cut of, they started treating artists like an investment in a company, which isn't on the surface a bad thing they said, We discovered, we nourished, we built the career of this person. We're owed a percentage of virtually everything they do, Gigs, guest appearances, endorsements, advertising, everything. That's what a 360 deal is. It is 360 Degrees. It is everything. The whole picture of what they do. Not just the stream sales, not just the record sales, but a cut of the cut of the merch, everything. There are a lot of people on these kind of deals. Let's talk about probably the most famous example of this and Taylor Swift. 66. Taylor Swift: Okay, let's talk about Taylor Swift now. There's going to be people watching this that know a lot more about Taylor Swift than me. I'm just going to go big picture and focus on the 360 deal part. I don't know a lot about Taylor Swift. I think she's brilliant. She's a great songwriter, a great artist, and a crazy, good business person. But I do not have her whole biography memorized that whenever I bring her up in class, I get a whole bunch of, well, actually from students. But to make a long story short, when Taylor Swift was very young, 14, 16, can't really remember 14 or 16, I think. It depends. I think at 14 she was signed as a songwriter and at 16 as an artist, if I remember right, doesn't matter to our current topic. When she was very young, she was assigned to a relatively unknown label called Big Machine. Big Machine, I believe was affiliated with Sony. It was like a sub brand of Sony, but it was its own thing. Big Machine records relatively unknown. There was one person in charge of that company who really the farm on Taylor Swift. He invested a lot of money and a lot of time, and a lot of money. I know I said that twice into breaking Taylor Swift, meaning making her a huge star. Breaking her into the big time. And it worked. But he knew that if he was going to do that, if he was going to invest all of this money to this one woman, he was going to reap the benefits of her success. He signed her to a 360 deal. It was, I believe, a ten year deal for ten years. Everything she did, he got a significant cut. And she became one of the biggest stars in the world. And that's awesome for both of them. But then a couple of years ago, it became time to the ten years was up, her contract was up, and she had to decide what she wanted to do. She could either resign with Big Machine records or she could switch to a new label. Either way, or she could go totally independent, which is what I was really hoping she would do. But she didn't. In all three of those situations, she was not going to have a 360 deal. Because she has the negotiating power at this point to do whatever she wants. She does not need to have a 360 deal. She can have a deal where the record label focuses on her music, maybe on her publishing, and she collect the revenue from everything else that she does. That is what she decided to do. She switched label, she left Big Machine and she went to, I think just Sony and there's no on that label where she has more autonomy, she does not have a 360 deal anymore. These 360 deals are really, they are sometimes called development deals because they're used to an unknown person with a huge potential, a huge risk by the label and the money behind the label and try to break this artist into the mainstream. That is the purpose that they are. If you're a band that doing good has slowly built a big following, you're probably not going to be looking at a 360 deal. They really go to quite young artists most of the time that have almost no following and are just brand new. But somebody sees in them a monster potential. It is something that you see a lot. There are a lot of artists today that are on 360 deals. It's really easy to say, oh, this is very capitalistic and just record labels trying to steal more money, but that might be true, but I actually get it. They're investing a ton of money. They're taking a huge risk. It probably doesn't work a lot of time and they lose a ton of money. Sometimes it does. People like Taylor Swift and they do really well. Decide what you think about that. Okay, Let's move on. 67. The Producer: Okay, next let's talk about producer deals and what that means. In a record contract, you may or may not need a producer. But in most cases, if you're with a major label or a smaller label, they will want you to be working with a producer. That producer is going to get paid in a variety of ways, but most of the time they are going to get paid something up front. Or a percentage of royalties, typically part of your percentage of royalties from the sales of the album. A good thing, that means they're incentivized to make a hit, right? We're going to go into that in just a minute. But first I want to talk about this term producer. Because in our landscape, it really means two different things. It's important to clarify what we're talking about here. If you are in electronic music, hip hop, any genre that focuses on beats and making music on a computer, you might think of producer as synonymous with composer meaning or songwriter even meaning a piece of music. Track is made up of two things. The track which is made by the producer and the lyrics which is made by the rapper or singer or whatever. The producer is the one that writes the music right or makes the beat. That is one definition of a producer. However, the more classic definition of the producer is very different. That definition is that is of a person who is like a coach in the recording studio. You might hire a producer to be a surrogate member of the band. That's how they worked traditionally. If I'm a band, I'm like a four piece band. We're going to go into a studio and record an album. I'm going to hire a producer and they're going to sit in the booth while we're recording and they're going to say that was good, that was not good. It's a new set of ears. They're going to be someone who's probably a fairly gifted songwriter and they're going to say that take was great, that wasn't. And they might even say, let's think about how we can redo the arrangement of this song. Let's use this as the intro and move things around. There are some very famous producers who are typically considered like another member of the band for at least the period of time that they were recording that album. They are not the songwriter, but they are like the coach of the band. This is why a label will want a producer in the session to protect their investment, right? To make sure that the session goes the way that they wanted to go. And that 'all are making hits. Two definitions of producer here. What we're really looking at when we talk about producer agreements here, I'm mostly talking about the second one, the one where this is someone in the studio with you serving as like a coach making beats thing. We're going to talk about that too. Let's talk about both in this section. First, let me give you an example of a famous producer in that classical sense. Then we'll talk about how producers work when they're like doing things like selling beats. Okay, let's go on to a new video and do that now. 68. The legendary George Martin: Okay, let me give you an example of that classic idea of the producer, meaning the coach of the recording session. The biggest, probably best known historically would be a guy named George Martin. George Martin was the producer for the Beatles, I believe, on all of their records and some of their solo records. I think he is sometimes called the fifth beatle, meaning he was so intrical to the hits being made by the Beatles that some people say that The Beatles wouldn't be The Beatles without George Martin. So let me just give you a little taste of what the kind of work that George Martin did. So I found this little interview with him. Let's just watch a tiny little segment of it. How long did it take you to do this song? Just a day. Just afternoon? They worked out pretty well. The nice thing about that is the vocal harmonies they were doing. When you go, I want to hold your hand, they hit that high, sort of open forth, which is a great sound that was that kind of hallmark of their early days. They gletched on very quickly to what worked and what's sold. And they were very commercial in their minds. I mean, they got a voice, things like that. They knew excited people, they knew that excited people and they shook their heads. It was all pretty calculated time. They had it together though. They knew what they were doing. Why wasn't that on like the first English album? Well, because Brian and I, you know, we sort of worked out a game plan once we had a succession of hits and we said we'd try and do four singles a year, maybe a couple of albums, but the album, we would try and give people as good value for money as possible. We crammed generally about 14 titles onto an album. The album was completely fresh, no one would ever, ever have heard the start before. We reason that if we put a single on the album, we'd be giving people short measure because they already got it right. So we had this policy of not putting singles on records on the album. It's wild to think about how much influence the producer can have over a record. You can hear records that were produced by two different people. There are some examples of that, and sometimes they are wildly different and sometimes they're really similar. Now when we get to the more modern idea of a producer in the more electronic realm, we're talking about basically the composer. That gets us into the idea of the producer as soloist, right? Meaning someone who produces things and then sells them. They're not working with another artist, they're on their own. So let's talk about the world of selling beats for a few minutes. From a business perspective, just talk about the legality of what goes into that. 69. Selling Beats: How to sell beats, and where to sell beats: Okay, so let's talk about selling Beats. This is a very popular topic, one I get asked about all the time, two main things to discuss here. The first is, how does it work from a copyright perspective? The second is, how do you actually do this? Like where do you go to sell beats? Let me talk about both of those in this video. First, copyright perspective, there's two ways you can do this. An exclusive sale and there's a non exclusive sale. Okay, let's say I make some beats and I'm selling it to you. Use them and you're going to wrap on them or something and release them commercially. Okay, I could sell it to you as a non exclusive deal, meaning you get the right to use the beat to add to the beat and to sell the beat however you want. And you don't have to give me a royalty. If this is a non exclusive deal, then that means I can do that. You pay me some money. You have the right to do whatever you want with that track, but I'm going to keep selling it to anyone else who wants to buy it. So you run the risk of putting out a track that does really well. And then like someone else, putting out the same track, basically the same beat, which a lot of people don't want to do. There's no legal problem with that. It's just not super cool. The other way you can do it is with an exclusive sale, which means you're going to buy it. I'm going to sell that beat to you, and then I'm going to take it off the market. No one else can use that beat. It is yours. You own the intellectual property. Now, in the first case, I still own the intellectual property and I've sold you a license to use it. But in the second case, I am selling you the intellectual property done, you own the copyright to that. Typically when this happens, what people do is to get the non exclusive license to a beat. It might be 100 bucks, might be less than 100 bucks, It's not super expensive. But to get the exclusive right to use a beat, it can be 1,000 2000 and way more. For a more accomplished beat maker, it can be rather pricey for the exclusive because that's all the money they're ever going to make on it. And you can find other deals too. You can find deals where someone might make the beat, sell it to you at an exclusive deal, but maintain the copyright so that they get some royalties on what you do with it. That's, that's halfway in between. But the majority of the deals that I've seen are exclusive and non exclusive completely. Now there's a whole bunch of websites out there that will let you sell beats. I just Googled it really quick and found this one called Beat Stars. All of these sites are cool. Sure. But to be perfectly honest with you, I don't know anyone who's really made a living selling beats on one of these platforms. There's a whole bunch of them and maybe I'm wrong, someone here can tell me otherwise. But all of these platforms, I just don't think they have the audience. I think a lot of them are great at getting beat makers to post stuff, but not great at getting people who want to buy beats into their platform. There's not a lot of sales happening in my experience. The better way to do it is to find and people who need beats and put together a demo reel. Send them a demo reel and reach out to them one on one. That's been my experience and that's gone much, much better than posting things on these sites. Look around town where you live, find people making awesome music, really good wrappers that you really like and agree with. And then reach out to them and say, hey, I'm a beat maker and I'm a producer, and see what they say. Hopefully they know that you're not a George Martin type and you are someone who actually makes speech. Okay, back to record contracts, and let's talk about development deals with a producer next. 70. "Development deals" with a producer: Okay, there's another kind of contract that can happen, and it's not terribly different than the 360 deal. And you might even argue that they could be the same in a lot of situations. But this is called a development deal, and it often comes from a producer, which is why I'm bringing it up here. And now you see this happen a lot with imprint labels. For example, an imprint label would be like if I, let's say I have a record deal with a major record label and I'm really popular, I'm doing great and I decide that I want to produce some bands. I want to take some up and coming bands and produce their albums and get them released. I might make an imprint record label, which is a smaller record label that exists within my bigger record contract. The record label I work for might let me create a sub record label that's focused on my little niche. These little imprint labels will often be attached to like a rock star, um, or someone of major celebrity. Examples would be Death Row records I believe is Dr. Dre imprint. I know Stone Gossard from Pearl Jam has his called Loose Groove. There's tons of other ones. Those are just two off the top of my head right now. In those cases, those artists and I think Dr. Dre is best known for doing this. Artists will work as producers and they'll find some upstart. I think we can say this is how Snoop Dog got his start. And maybe even M and M, where Dr. Dre, Dr. Dre found, let's say M and M. There's famous story about how they met. But he got a demo and listened to it and liked it and brought him in the studio. They made some stuff together. M and M may have been signed on a development deal, meaning that he was going to go under the wing of this and this producer was going to work on developing this artist and making them into a big name. You're basically getting like a red carpet treatment from a major artist or a major producer in this development deal, record label. That's how those work. They're rare. We see them a lot in hip hop, like we talked about also in rock and pop and other genres. But especially encounter them in hip hop, but they're basically when a producer takes a unknown artist under their wing and develops them and tries to get them into a major deal. 71. The last stronghold of "the majors": Okay, let's talk about distribution. Distribution is something that is commonly considered one of the last strongholds of the major labels. This was true up until about ten years ago. What is distribution? It's getting your music in the hands of people who can buy it. That's what it is when we're talking about physical stuff. Albums like CD's, vinyl, and even T shirts and stuff. But specifically like music products like vinyl records, it's getting the albums from the manufacturer into the stores, getting them displayed prominently in the store, and having the store sell them, buy more copies, and continue to sell them prior to the kind of digital revolution, which we'll talk more about in just a minute. If you wanted your album to be in a record store, let's say you put out a CD, this is the late '90s. And you put out a CD and you wanted to sell it at every CD store in town in the world, right? You had to go through a distributor. That distributor usually the record label, the big record labels were the only ones that had the resources to get your CD onto trucks, put them all over the country, in all the stores. This is a major logistics issue to do. Your average independent person just doesn't have the ability or the resources to do that. You could get your album into local stores by driving it there and talking to the people at the store and either getting them to buy a couple copies and put it up for sale or to leave it there for consignment. That would be that they would put it up for sale. And then when someone buys it, they would give you a couple bucks and they would keep a couple bucks. And that's how it worked back in the old days of the '90s, if you wanted your album in that store, you had to be on a major record label or have some distribution deal with a major label. In this section, I want to talk about all of this stuff. First, I want to talk a little bit about physical product distribution. Because even though it isn't the biggest thing in the world anymore, understanding a little bit about it will help us understand a bit more about digital distribution, which is still a very big deal. First, let's talk about three different types of deals that could happen. We've already talked about the first one, that is if you wanted distribution, you could get it through a major record label deal. I shouldn't say some of the minor record labels had the same thing. Some of the minor record labels had the ability to work with distributors and some of them even distribution and still do distribution. The majors, it might be a small record label partner with a major label for distribution purposes. That was a deal that could happen, but there were two more that could happen and still do happen, although much less frequently. But I want to talk about those now also. The first is independent label distribution partnerships, and the second is distribution alone deals. Let's go to new video and talk about those two things. Then after we deal with this, we're going to go into a big, long bit about digital distribution and what you need to know about that. 72. Independent label distribution partnerships: Okay, independent label distribution partnerships. This is the thing that I mentioned briefly in the previous video. Basically, what happens in these situations is you might have a smaller independent label who creates a partnership with a major label specifically for the purposes of distribution and really nothing else. I was remotely involved in a situation where this happened. There is a El based right next door for me in St. Paul, Minnesota called Inova Records. Inova does weird stuff like jazz, avant garde. It's a lot of really great music. I recommend it check out stuff on the Inova record label anyway, so it gets lumped into like avant garde, classical a lot. The Inova label was a small independent label and what they eventually did was they were able to forge a deal. No, no, Naxos is a record label that you may have never heard of before. But I believe it's the biggest, if not one of the biggest, classical music labels in the world. They release a ton of classical music. If you have any recordings of classical music, look on the back and see if it's on the Naxos record label. It just might be they are a huge distributor in the classical music market. This became a really huge deal for Inova Records because suddenly they were not just a tiny little independent shop, they were a tiny little independent shop that was distributed by Naxos. They had the same reach that No Does, which is everywhere. They could get into all the stores, everything. This was huge for Inova. Now, why would Naxos want to do this? Well, they get a cut, right? So they're going to get some money out of the deal. Of course, nothing happens in this industry without somebody getting their cut. They must have also decided that the likelihood of competition is low. The music that Naxos puts out is more traditional classical music, not all of it. They do some edgy stuff, but most of it is a new recording of the Beethoven symphonies, And whatever the likelihood that those two labels would compete is pretty low, because Inova is putting out like really weird stuff. But it's also possible that someone might be interested in both those two things. Someone might want to buy a recording of Beethoven and a new record. Crazy thing that Inova is putting out, It's not all crazy. It's actually pretty tame and some of it's really beautiful. I know the Inova folks really well. They put out some really great music, check them out. But that's a good example of this independent label distribution partnership. Inova, distributed by Naxos, is now a thing. Now being on the Inova label is much more valuable. You can find this in all of labels. This is just the first one that came to mind independent label distribution partnerships. 73. Distribution alone deals: Now there was a case, still is a situation where distribution alone became a thing and became popular. The really interesting thing about this is that we saw these distribution alone deals pop up right around the same moment as the digital Revolution, where physical distribution became a whole lot less important. However, for people releasing vinyl or physical products, we still do see these. There's a company called Cobalt with a K that started off, as I understand it, really focused on these distribution alone deals now has pivoted to doing a whole lot of other stuff in the industry still related to distribution, A digital stuff, a record company, they are really interesting companies check out cobalt, but the thing we're talking about here is basically a record contract with a distributor. They're going to do nothing for you. They're not going to give you the advance, They're not going to give you a producer. They are going to distribute your records and take a cut. This is the deal you would go after you saved up the money through gigs to produce your album. The album is all done, it's mixed, it's mastered, it's printed. You have made physical copies. They exist in a warehouse somewhere or in your basement in boxes. You want to get them into stores, but you don't want a record label to have anything to do with it. You can find these companies that are distribution alone where they're going to look at what you have. They're going to look at how much money they can make with it, and they're going to get it out into the stores, they're going to keep a couple bucks, they're going to give you the rest, and that's the extent of the relationship. It's not a record contract in any other sense other than distribution. Like I said in the first video in this section, the reason that these came about is because distribution was that last stronghold of the major labels. These types of company like Cobalt when they started, were really disruptive to the major labels. Because they were offering something that the major labels thought they had a lock, right? Like no one would be able to mess with. It was pretty wild. Like I said, everything went digital shortly thereafter. But you do still see a need for some of these companies. There are still a whole bunch out there that have distribution networks all set up. They have the infrastructure to do it, and they are offering distribution only deals. If you want to get into the remaining record stores, this is a good way to do it. So something to consider. 74. DIY distribution: going it alone: One more thing about this. I should mention that there is an argument to just going it alone. People have been doing this. I'm thinking of some of the bands and artists that have gotten away with not going with a major record label like ever. Still becoming a hugely popular name that we all know or most of us know just from touring and making their work available, especially prior to everything being digital. It did happen that people would tour and drop off albums at record stores or record stores, figured out how to reach that artist and order albums. I'm thinking of bands like Fagazi. I don't know exactly what their distribution story is, but I think it probably falls along those lines. An artist like any de Franco who just toured forever and sold albums out of the trunk of her car until she was so big that stores started finding her and ordering albums. There are ways to do it alone without any formal distributor, especially now that we all have websites and we all have social media stuff, and there's easy ways to track down someone and order products if you want. Those are great ways to do it. If you are interested in just going it alone and doing it that way, highly recommend it. I don't want to discount that. I wanted to make sure. We talked about that for just a second. But now let's start dipping into digital distribution, which we can't talk about without talking about this giant thing that happened, which is the digitization of music and specifically file sharing. Let's go to a couple new videos and talk about that quickly, and then we'll get over to digital distribution. 75. The effect of file sharing: Okay, in the late '90s, early 2000, we had this thing that happened, where you could suddenly, very easily and quickly digitize music into an MP three file. You could upload it somewhere and anyone could download it. Now to today, that sounds like such a no brainer, right? Like you can e mail an MP three file, whatever. But when that technology came out, you just can't understate what a paradigm shift that was to the music industry. It was like someone pulled the rug, the floor out from the whole industry. Everything changed very quickly because suddenly distribution didn't matter. Distribution was just an e mail or a file being downloaded from a website or from a service like Napster. It was devastating to the major labels, a lot of the minor labels and a lot of artists, a lot of artists were used to making a certain amount of money by selling albums and suddenly that went away. I don't want to be like the grumpy old man that gives you this whole long tirade about in the old days we used to sell records and blah blah, blah. But I do want to point you to a resource if you want to learn more about this. There is a fantastic movie specifically about Napster. Napster was like a free service that anyone could do that would let you upload all of your MP three files and download an MP three files that anyone else had. It was like a global network of file sharing for music and other stuff, but primarily music they sued and it was just crazy. I would love for you to understand the details of what was happening with this. There's a movie called Doled, The History of Napster, but it also goes into the wild stuff that was happening at the time when it comes to the whole music industry's reaction to the digital revolution. This is a documentary film. I think it's about an hour long. It was made by Alex Winter who you may know as actor who is from Bill and Ted's Excellent Adventure. Not the Kiana Reeves one, but whoever plays the other one, I can't remember who's Ted. But anyway, here's a little trailer, let's watch it real quick. You're talking about revolutionizing the way we use computers. The fact that you could kind of share emotion over the internet, Something so important to you, you could just trade so freely. That's what was so profoundly different about the explosion of the Internet, was that it was one network, so suddenly you could be connected to everyone. I released an early beta version of the Napster software during the summer and it's spread quickly by word of mouth. It hasn't stopped growing since, you know, wanted to create a way to meet people through music. Music will be ubiquitous and we believe, you know, you'll be able to get it on your cell phone, you'll be able to get it on whatever the device of the future is. We knew it was a long way off from all the music being available digitally. And then there it was. I just felt like this was one of the great moments in human history, correct? This is a company that is building a business. You know, they've got venture capital money. My response to my opinion type Fasten was, don't take the money. You don't have a business. They're building a business by facilitating the stealing of artists music. We saw the clicks of the numbers and that's what they were downloading at that particular time. That was shocking. Music is a great example, just complacency being tall, death sentence. I thought that the way that people got music for the last 50 years work, the record companies are not adjusting to technology, major music industries, entire floors were turning the lights off. Bootleg Proof, you dig. That's great. Isn't that Metallica was coming to our off. What we're merely doing is giving Napster the information that they thought that we couldn't get it. Napster is stealing from us straight out, and I'm going to fight them to the death. This last fall semester wore on. Hundreds quickly turned to millions. With the program spreading across college campuses. Like wildfire, only 60 million people use the site to swap music files from each other's computers for free. Literally went from being high school kids leading normal Monday lives to 12 months later, bringing one of the largest US industries to its knees. And basically fighting what is the largest corporate lawsuit in the history of the world. Lawyers representing Napster and the recording industry squared off before a three judge panel. What is it capable of being used? We are not trying to stop the internet cert. Final word on Napster will eventually end up coming from the US Supreme Court sic downloaders beware. The recording industry is suing computer users. What they've done is to turn an entire generation of kids into electronic hezbolla. A bomb went off and nobody knew what the hell was happening. It has changed every, it's obviously so big, it's out of their control. The cat wasn't going back in the back. Now the people have a choice. There's no stopping, you know? This revolution has already taken place. Pretty cool looking, huh? So I encourage you to watch this. I'll post this link in the class just after this. But you can find here, you can get it on Vimeo. Yeah, I think video is the way to watch it. I think if you Google it around, you can find a couple other places to do it. But yeah, six bucks. You can watch the whole movie online. Yeah, I highly encourage you to watch this movie. Like I said, it's about an hour, hour, 46. Wow. It's almost 2 hours, but check it out, it's awesome. Really well done movie about this whole issue. Okay. With that being said, let's go in and talk about digital distribution. 76. The labels fight back - music industry digital revolution: Okay. In this section, what I want to do is go a little bit deeper into the legal stuff that came up in that movie that you may or may not have just watched. If you didn't watch it, that's okay. I'm going to go over the law stuff. If you did watch it, this will shed a little bit more light on some of those things that happened. But essentially new technologies like MP Three's even back before that. Cassette tapes, being able to copy a tape freaked out the record labels and they started losing tons and tons of money. First from people being able to copy tapes. And then big time when it came to digital distribution and being able to just send files, music songs, over e mail and download from sites like Napster. In retaliation for that, the major label started fighting back using the law and started lobbying to get a whole bunch of laws passed to protect them. Most of these laws are still in place today. I want to go over those laws. You can see them here on the screen. I'm going to go over each one here and what their main thing was and what they did. You can see two main things. 1999 Napster starts operating their small outfit. At that point they're out of, they just start popping up around college campuses. But then 2001 is when they become a formal company and really start going at it. You see a lot of laws passed right around there. One more video to watch aside from my videos outside of mine. This video, the music industry and the digital revolution from The Economist is a great video that talks about the economics of what was happening in this time and how the money was shifting from these labels to really no one. It's a fascinating example of a paradigm shift in economics. This one is a little bit shorter, is 18 minutes. I'll put a link in the next little thing. Please watch this if you can. Then we'll go on and talk about some of the laws that were passed around this whole time and to deal with this topic. 77. 1992: Audio Home Recording Act: Okay, we begin this chronological series of laws with 1992. The audio home recording, now prior to the MP three. This is prior to Napster. By a ways this centers around digital audio tapes or at tapes. Well, you may not remember. I was going to tell you the evolution of recorded media. We had vinyl, we had eight tracks. Eventually we got to cassette tapes that looked like this. Then CD's. Cd's for a while were difficult to record onto. You couldn't copy a CD. Eventually you could, but you needed a computer. It wasn't super practical, but these audiotapes were. But that's not what this is about, because even copy a cassette tape like this was an analog transfer, which meant every time you did it, recording was not as good as the original. It degraded a bit every time you did it. It wasn't something that they were super concerned about, although it was a point of concern. But once we got to a Tapes DAT, digital audio tapes, those looked a little bit different than this. They were a little smaller. They're like this by this big. I have a few of them and I think I left them in my university office, but I'll throw a picture of one on the screen here. These were briefly popular. They weren't all that popular ever, but they were a way you would buy these as blanks and they were a digital copy, which meant the copy was as good as the original that got people up in arms about copying music without buying it. The way they dealt with it in this first law was really novel and strange. The idea was that blank media like a tape, blank Dat tape in this case encouraged people to copy material that would destroy the market. What was happening was the RIAA, I'll come back to that acronym, just second was threatening to sue everyone who made blank media. Now the IAA is going to be at the center of almost all of these lawsuits that we're talking about or all of these laws that we're talking about. It stands for the Recording Industry Association of America. I think it's basically the trade group behind all the major record labels. And a lot of the minor ones too, are part of the RIAA. They threatened to sue. Congress, stepped in and passed legislation that would put some mandatory copy protection and royalties onto blank copies. That's two things. The minimal copy protection, it was an early system called serial copy management system. It basically made it so that you couldn't, you could, but it was difficult for a copy to make another copy. It didn't last very long. People found a way around it super fast. But the royalty thing, not so much. The royalty was on the devices and this is what's unique about this. What it meant was if you bought a Dat machine that was capable of recording, there was a royalty on that machine, which is essentially another tax created on that machine that went to the RIAA. It was 2% So every time you bought one of these tape decks, you paid an extra 2% for that right to copy. That went to the RIAA. Now, it wasn't really a right to copy, you weren't getting that right. Um, it was just a rule that you were probably going to copy something with it and do something illegal with it. So you're just going to pay 2% to the RIAA, which is going to get dispersed between all the different record labels. That was the rules, very strange, right? Like the media, not the artists, not the labels, not the people doing the copying, but the actual hardware. The tape machines that could copy things were what got this extra royalty, which is really just another way of say tax, in this case, 2% of the machines that could do it. Now, I think I just misspoke there. The actual blank media did also get a tax, get a royalty, let's just call it a tax of 3% on each blank tape that you bought. Went also to the RIAA. Okay. This was 1992, I think when this law got passed, the Audio Home Recording Act, Everyone in the IAA and the record industry in general was pretty excited about it. They thought this was a good win for them. However, what they didn't see coming was that in 1991, just prior to this, um, the MP Three format was born, MP Three's are existing, but they're quietly existing and people are just playing around with them. It's the MP three that's really going to change everything. This rule, this Audio Home Recording Act doesn't do anything for purely digital media. It only taxes the blank media and the devices. It totally Mrs. the mark on what's coming next. But nonetheless, it happened. They thought it was good, but there was this MP three Bahemeth right behind them. 78. 1995: Digital Performance Right in Sound Recording Act: Okay, let's move forward a few years to 1995. Get the digital performance right in Sound Recordings Act. Now this one is a little weird. What it basically did was split the definition of performance in a way. If you remember back when we talked about performing rights, the term performed can mean played, either live or a recording is played. And there's really no distinction between the two prior to this, This act separates those so that a separate royalty rate could be applied to performances of a record, specifically recordings broadcast by digital means. Now, streaming isn't a thing yet. We're in 1994 at five, so we're not talking about streaming. What I think we're talking about with this act is those Midi reproductions of songs that happened on people's websites. If you're of a certain age, you won't understand this. I'm going to tell you how the Internet worked in the early days. At this time, 95 seems actually well, no, that's about right. At this time, there was some ability for any person that wanted to to make a website. You used a service like geocities or something like that. Anybody can make it a count and put together their website. We used a sparkly backgrounds and animated Gifs and things like that. Another thing that we used a lot of was Mi sounds like a recording. So you would go to a site and it would automatically start playing like, I don't know, that sublime song that everyone loved, but it was like a weird corny midi version of it. Because we couldn't stream audio. The Internet wasn't fast enough for that yet. But we could stream these little midi rendering things without going into technical detail on that. It was totally feasible to do it that way. That's what we had. I think that's what this act is about. It's about people getting paid for those. If your song was used in this cheesy Midi thing on a website in the late '90s, you could get some royalty for it. It doesn't have a huge impact on what we're talking about here with like the MP Three and digital distribution of music, but it is a music related law that happens in this timeline, so I wanted to include it, but it is a different thing. 79. 1998: Digital Millennium Copyright Act: Okay, all right, that brings us to 1998, the Digital Millennium Copyright Act. Now this is the big one. This is the one that's responding to the MP three craze which is now happening. We're not really seeing Napster out and about yet, but there's definitely, um, a problem brewing in this P three thing and the ability to share digital files easily. There's a lot in this bill. Let me just give you the main points. There are five main things that this bill does. Number one, it creates DRM. Drm became a household name almost at this point. Drm Sand, digital rights Management. It is a way to prevent things from being copied. There were a whole bunch of attempts at this. Still people are attempting this, but u, there were ways to hide a little bit of code into an MP three file that would prevent it from being copied. That's what they were really going for here. It didn't really work. Tech savvy, people found ways around it really fast. But that was the result of the Digital Millennium Copyright Act. Number two there, anti circumvention provisions. This is a wild idea. What that meant was for the DRM you could be guilty of a crime for to crack the DRM, right, for trying to copy something that was protected, you could get in trouble. This has resonances with some more modern laws that are taking place, which are collectively called anti tinkering laws. Which is to say, if you buy something, we typically have the right to take it apart. Here's a remote control. I have a remote control for this TV that's up there. I bought this, this is mine. I have the right to take it apart, smash it open, and see what's inside. There's a lot of tech companies that don't want you to do that. There are some rules around that right now, and the law is still wrestling with that. But going back to the Digital Millennium Copyright Act, the deal here was that if you tried to open up the DRM in a digital file, just the attempt to do it could be a criminal thing, could get you in trouble. It's wild to think about it. Criminalized the act of circumventing. Trying to circumvent the DRM number three, heightened the penalties for copyright infringement on the internet. Copyright infringement was not new, right, that goes back 100 years, but what it did is it made the penalties for copying something that was protected specifically on the internet, stricter, bigger fines, even jail time Number four, created exemptions for direct liabilities from Internet service providers. That was a mouthful. What that means is if you get your Internet from your local Internet company on whatever, Verizon can't be held accountable if you get caught sharing MP threes on the Internet. Prior to this, those files passed through Verizon's servers and therefore they could be liable. This takes the ISP, the Internet service provider, off the hook and makes it just the user who does the uploading that can get in trouble. Number five, creates DMCA takedown notices. This is a wild thing that was really popular around this time. What this means is that if you posted an NP three file to a website, you could get a letter from the government or the RIAA that says you are in violation of the DMCA Act and you need to take this down or go to jail. And all of a sudden everyone was getting these, it was all these stories back then about your grandma getting threatened to go to jail because she emailed her friend, Neil Diamond Song. Right? All these stories like that, they were called takedown notices and the, they were brutal. They were really scary to get some people started taking it seriously and some people didn't. They were people got real fines and some of their lives got really ruined for this. It was just a wild time. We still have DMCA takedown notices in a way, if you post a song to Youtube and it gets taken down because it's copywritten, that is related to this, that is a part of the DMC, DMCA takedown notices. It gives them the right to force something to come offline, A source of constant frustration for people like me who make music because I post my own music on Youtube and it gets taken down because somebody says, this is copyrighted material, we have to take it down, and then I have to file mountains of paperwork to show that it is actually my material. It drives me insane, but it still happens. Okay, that's the Digital Millennium Copyright Act. Really going after MP three's here. 80. 2000: RIAA creates SoundExchange: Okay. 1999. The whole world, it's about Napster, as you saw from that movie. When Napster started operating, it was just floating around college campuses. People were using it. It took a while before it started to really get some attention in 1999. It's not really alerting anyone yet to its full potential. We don't really get there until 2001 or a little bit later even, but it really in 99. In 2000, the RI, A, A, remember that's Recording Industry Association of America creates something called Sound Exchange. This wasn't really a law, although, because Sound Exchange was an organization designated by the US Congress to collect some performing royalties, like how Ascap was created by Congress originally. Sound exchange at this point is part of the RIAA. It's designed as something really similar to Ascap. It's designed as a performing rights organization but slightly different. Focusing on digital royalties, what they were trying to do here was find a middle ground, find a way for artists to collect royalties from all this digital stuff that was happening. They ended up on this thing called Sound Exchange. Sound Exchange is different from Ascap and BMI, other performing rights organizations in two ways. The first is who gets paid from Sound Exchange. Pro's like Ascap, pay the songwriter, the composer, and the publisher. Right? That's who they go after, that's who they compensate. Sound Exchange collects royalties for the copyright owner, whoever that may be, of the recording, the recording copyright owner and the featured artist. Okay. Jeff Buckley's version of Hallelujah. The people who get paid on that, I believe I used this example earlier. The people who are going to get paid by sound exchange are Jeff Buckley because he's the featured performer, even though he didn't write the song. And whoever owns the recording copyright, which is probably, in his case the record label themselves, but could also be, could be the publisher. Now, the second way that sound exchange is different than a PRO is that it specifically covers something called webcasting. What is webcasting? It's really an outdated term that we don't really use anymore, but it was like all the rage at the time, we're stuck with this term. When it comes to sound exchange, it basically means streaming services. Satellite radio would be counted as webcasting, cable television, music only channels, those channels in the high digits that just play music counts as those in general. Non interactive stream is a weird term, but non interactive streams, it's like a stream of music. Your streaming music, you can't control it. You can't say skip. You can't say repeat. You can't say pause really. It's just like coming in like a radio station. Pandora is typically considered non interactive streams because you don't get to choose what you hear, it's just playing stuff for you. Satellite radio, not playlists. Playlist, you get to choose what you hear. That's non interactive podcasts. That's a whole separate can of worms. That's what sound exchange was. It was created as a way to try to get some money out of this streaming stuff that was just starting to happen and it worked. Sound exchange is still a thing. And we'll talk more about sound exchange and how to make sure you're getting paid from sound exchange, which you should still do. We'll talk about that shortly before the end of this class. 81. 2003: SoundExchange spun off into own company: Okay, and then the last thing in my little time line here is 2003. 2001, we get Napster full on, they are company and everybody knows who they are. One of the interesting things that happens because of Napster is that the RIAA spend so much time and so much money attacking Napster that they basically ruin their public image. Everybody hates the RIAA. And interestingly, everybody hates Metallica too, by the way, because Metallica is super on the side of RIAA, especially the drummer Lars. That's kind of a whole another kind of worms like me who are around in this era are very aware, still hold a weird little grudge for Metallica about all this. You may have seen that in the movie, but the RIAA was so adamant about going after users that they were going after fans of music. They were going after people who bands really didn't want them going after. There was a lot of bands speaking out against the RIAA, their public image was just trashed from all of this. In 2003, they did actually a smart thing, which is they spun off sound exchange into its own independent organization. It no longer has anything to do with the RIAA. Now, they may or may not have done that because of the public image thing. I can't say for sure, but I'm almost positive that that would be why, Because there would be no other major reason to do it. Sound exchange still exists. Like I just said, we'll talk about how to sign up and get paid from them soon, largely. I think they still exist because of this moment in 2003, when the RIAA decided that it was time to break them off and turn them into their own thing. The RIAA also still exists, although they're not at the front of anything anymore, because a lot of people still have a bad taste in their mouth for the RIAA. Okay, that's our lightning round history of all this legal stuff that happened right around the millennium. Next, let's be done with the theory and let's go into the practical stuff. What do you need to know if you are looking to digitally release music of your own today? 82. The GateKeepers: Okay, let's fast forward to today. We're done with Napster, we're done with the illegal file sharing. For the most part that still happens, but we're not going to worry about it too much because we have legal and easy ways to do it, mostly streaming. When it comes to digital distribution, today we're talking about streaming and how to get your music on the streaming services. You can still use websites, band camp and things like that to sell MP three files. To even sell full quality wave files if you want. That's great and you should totally do that. But that's also easy, right? Like it's easy to set up an account on band camp, upload your files and tell people that they're there and make money doing that. That's the easy part. The hard part is getting your files on Apple, Music, Spotify, Amazon, all these different services. That's what I want to talk about now is how you do that and how you make some money doing that. We start with the gate keepers. Those are the ones I just talked about. Apple music and Spotify were the original two big gate keepers. When I say gatekeepers, what I mean is they were the ones deciding who could get music on the streaming services because they were the two big names in town and the only names in town for streaming services. What they required in the early days, and actually up until pretty recently, was a record label. If you wanted to get your music on Spotify, the record label had to submit it. You as an artist could not do it. This is gate keeping. This has changed in the last couple of years. For the better, there are now fairly easy ways to do it. Some ways that can make it actually even easier. That was weird way to put that, but we have two options. One, we can go directly now to Apple, Music, Spotify, title, Amazon, you name it, all of them. We can do that ourselves or we can go through a distributor. There are digital distributors that are very easy to use. We pay them money, we upload files and they get those files to all the different services for us. Two good options for doing this. Let me just tell you right up front, going with the distributor is 1 million times easier than managing all the different accounts with all the different services. Trust me, it's so much easier if you want to work directly with Apple, Spotify. Most of them now have artist portals. You can go to something like Apple music for artists. You can upload your music through here. This is inside my account. I'm going to show you the details of my account, but it says, I can see some stats. I upload music, I can do some promotional things if I want to. Spotify has a really similar thing too. That's all good. But let's talk about these digital distributors, how they work, what to look for in one, then what it looks like to use one. 83. Popular Companies: Distrokid, Symphonic Distribution: Okay, let's talk about some of the different distributors out there. Going to focus on two of them, although there's a lot. Let's first talk about what these folks do. I already told you what they do is they get your music onto the streaming platforms. That's the first thing. Some of them will have a bunch more services. Also, they might handle licensing on Youtube. They might handle licensing on some of the social media platforms, especially Tiktok, which can be quite lucrative. Some of them will essentially act as a publisher. That can be a little problematic. Let's talk more about that in just a second. Let's look at one for example, here is Distro Kid. Distro Kid is very popular. Let's look at what they do. They're going to get our music on a whole bunch of different platforms. Spotify, Apple, Tiktok, Instagram, Amazon Music, Pandora, Youtube, title, radio dies. And a whole bunch of great. They're going to try to get you on some playlists. They're going to try to do a whole bunch of other stuff for you. This is all great. Here's a bunch of people saying nice things about them. Okay, let's go to costs, okay. Here we go, 22, 99 to upload unlimited albums and songs for a year and get in stores faster than any other distributor, Okay, so this getting in stores faster than any other distributor doesn't really matter because what you're going to do is you're going to upload it and you're going to set a release date. It's not like you're going to upload it, say it has to come out today, 22, 99. That sounds about fine. I don't remember what the average price is, but 22 99 for a year to do unlimited albums is actually pretty great, now that I think about it. Distrokid is good. A lot of these companies are nearly identical. There's not a huge difference in a lot of the stuff they do. You're going to pay more for these extra services, promotion and things like that, which you can do. The thing that I would watch out for is that there are some distributors that want to keep a percentage of your publishing, which means they're going to take a cut of your royalties. I think this is quite unnecessary and so I would watch out for it. With all of these, what you really want is this thing. You're going to give them money, they're going to get your stuff on these platforms. Look at the extra stuff that they offer. Those are cool. You can decide to use those services or not. I've never used them through any of these folks and I don't know anyone who has. But they might be good. I don't know, we're checking out. Let me show you another company. This is the one that I actually use. This is Symphonic distribution. This one is a little bit different. It started off I think more directly like Distro Kid and some of those other ones, but now they have morphed into more like a label. They do curate things. It's not just that anyone can sign up for this particular company and they will release it. They keep track of, they're a little more choosy about what goes on it. This is different than Distro Kid, where they don't make any judgments about the music at all. Anybody releasing music can use Distrokid to get it onto different platforms. Symphonic is a little more picky. Let's see, digital distribution, video distribution, royalty collection, marketing, and more for creators. They get you on a ton of stuff. Everyone says this, these are things that they do, blah, blah, blah. Okay. Is that Sims? No. Do I think that these folks are better than Distro kid or anything else? Not really. I signed up with them because someone from this company reached out to me really early on and asked me to put out some music. I don't remember how that actually happened, but they were good to me and they've been good to me. It's not just for symphonic music, it's just a name. However I do like the name. Okay, let's dig around and I'll show you inside my account a little bit. 84. Inside my personal account: Okay, so here's inside my account on symphonic distribution. This is an album I released a while ago called Anascorsia. You can see details of the album here, artwork, blah, blah, blah. I can take it down. I can, it can listen to it. Here's the information I need for each track. Can listen to it. The ISRC, this is essentially a barcode. Everything needs one. If I remember right, this is something that handled by the distributor. They'll assign that IRC code to each track. Here's all the tracks, it's cool, here's where it's live. You can designate a territory if you want to only be available in certain markets. Meaning geographical areas, North America, South America, Europe, Asia, whatever. Generally, that's by continent. There are some reasons you might do that. If you have any rights problems, maybe you used some sample that in it. They only are going to let you use it in North America or whatever. But unless you have anything weird like that just said it to be worldwide, why not? Right, it is in all the obvious places. Apple music, Pandora, Youtube title. Sound Cloud, I guess. Youtube. Google play in service. I don't know what that is. Amazon, Beat, Port Heart Radio, Youtube content ID, Spotify. It's also in a bunch of these other ones that I don't know what they are, but my philosophy and I think most people's philosophy is why not? If I'm going to make some money there, I might as well put them in all of those things. When it lists the places that you can have your music live, I highly suggest you just select them all unless there's some good reason not to let it be everywhere that wherever somebody goes, your music is there. Now, some of these are really big and they're territory specific. Some are going to be a huge thing in India for example, but not a well known thing here in the US. It's interesting to keep those things in mind. So it might be that you make a lot of money off some of these ones that you may not have ever heard of. Now what I want to point out just because of our recent conversation, I want to point out that Napster is here, right? Why is napster there that's weird? That's not really Napster. I don't remember to what extent the movie that I asked you to watch talks about this. But basically what happened was at the end of Napster, after all the lawsuits, the company went bankrupt. And so they sold the name and the brand identity to another company and they tried to start a legit streaming service. It still exists. It's there. You can subscribe to Napster. It's not what it was before. It's a totally different company. Somebody bought the name and started a new company. It's still in business though. It's been in business for a while. Some people must be using it. I'm not sure who or why, but it's there cool power to him and my music's on it and I get paid for it. That's great. 85. A look at my royalty statements: Okay. I'm still in symphonic and I just want to show you a couple other things you can do here. Again, none of this is incredibly unique to symphonic distribution. You can do most of this in any of these digital distributors. These are the two albums I have out on Symphonic. They're offering me some marketing services here that I'll have to pay for, but they might be good. They're giving me some analytics here. One thing that's curious to look at, and I just looked at it for the very first time, is Tiktok, is my music showing up on Tiktok? It's certainly licensed to be on Tiktok at this point. Is anyone using it? Did I make any money off Tiktok? Let's click on it. I will tell you that this album is like seven or eight years old. It's older than Tiktok, I think. No, no one's using any of this music on Tiktok. That's cool, whatever. Let's look at royalties though. Royalties are not going to be empty, so I'm going to blur them out because I don't want to advertise how much money I'm making here. But basically how this works is this is just showing me the period so far, there's been two for this year, January and February 23. I can switch and see the whole, here's a whole bunch of stuff. Let's go back to 23 because it's probably a little easier to deal with. What is just saying is how much money I had when I started. What I earned this month, any adjustments that might be like if I owed a bill to Symphonic or something like that and payments if they actually paid me. Typically what these companies do is they're going to just hold on to your money like a bank account. And then you go here and you say, this is how much it has right now. And when I'm ready to get a check or a direct deposit, more likely, I click this button and I can take that money out and they'll pay me. I can see some more details. If I look here, I can see what's making money and how much it made. Here I can see all the different revenues of the different tracks, can see where those revenues came from. Majority came from Spotify, some from Apple Music Dieser, Youtube little bit, Amazon, Soundcloud. It's cool what regions they came from. Us obviously, but also Germany, Brazil, Japan, France. Uk. Sounds about right. There's a lot of data here. Tell you where your money is and how you're making it. Remember, this is just from streaming. This, our publishing, This isn't royalties from licensing or anything like that. This is just streaming on those platforms and it's how much those platforms are paying me for my music. This is what it looks like. 86. What you need to get started: All right, what do you need to get started? If you're ready to release music on any of the streaming platforms, what do you need? The first thing you're going to need is music that is done. It's got to be recorded, mixed, and mastered. I won't go into too much detail right now about the mixing and mastering process. That's a whole different can of worms. But let me tell you this, there is some benefit to working with the mastering engineer who's familiar with streaming services, which is basically every mastering engineer that's worth their weight in magnetic tape at this point because there are some compression settings that don't have to be followed. But we'll make your music sound better and get people to listen to it more often. If it's mastered to be perfect for the streaming services, just keep that in mind. You've got tracks, they're good, they're ready to go. The next thing you need is all the meta data that is this stuff, okay? You're going to have to tell it a genre subgenre, what type it is, UPC. That's just like the other thing I think that they will provide you with that track names, album artwork, and all of these things. That's not like a heavy lift to make, but it's like a day of work to do. You're going to also want to have a band or artist image, this is something that you're not typically going to upload through symphonic, but the way it's going to work or through whatever your distributor is, the way it's going to work. And this is a little convoluted, but you're going to release music, let's Spotify as example. You're going to release music through your distributor, then you're going to go to Spotify for artists and you're going to claim yourself, it's weird, let's say your band name is like a Smooth Rock, okay? That's a horrible band name that I actually process those two words next to each other. But anyway, Smooth Rock, you're going to release music as Smooth Rock. Then once it's released, you only have to do this the very first time you release music. You're going to go to Spotify for artists, you're going to make an account, and in that account you're going to load up the music of Smooth Rock and you're going to say, this is, this is me. And then they're going to go through a verification process for you to prove that it is actually you. Then you'll have access to that artists page and you can upload an image and a bio. You can't do a whole lot on those pages, but a little bit you can do the same thing on Apple music to don't call your band Smooth Rock. All right. Now aside from that, you're really only going to need a little bit of money. You do have to, if you use a distributor, you do have to pay to get that up and running, but it's not that much. It we saw on Distrokid it was 22 bucks or something like that. For a year to just release all you want, it's going to be 22 bucks every year. Most of them are going to be in that ballpark, 20 to 30 bucks to get your album out. That's it. Once you have all that stuff, you're good to go. Now I will add one more thing. Don't forget that you also want to have, you don't need to have, but if you're smart and you are, you will also have set up your PRO, your publishing. All of that stuff will be ready to go so that you are going to make the maximum amount of money with your music. If you don't have those set up, you're just throwing money away. So be sure you have those also set up before you release any music. 87. The ways we get paid: Okay, as we're getting near the end of this course and what I want to go over real quickly here is the ways that we get paid that we know of already. Because there's one more that we've talked about in a minute ago, but I want to show you how to do it, but let's review how we get paid. The first one that we talked about is the use of our intellectual property right. We have copyrights. And those copyrights come with a whole bunch of other rights. And we can license those rights out. We can license them to the use of our music, can be licensed to a TV show, a video game, or whatever. That gets us into mechanical rights, then synchronization rights, dramatic rights. That leads us into publishing, which is basically a two x doubler that we found. If you have publishing set up, you're going to, for most things, get paid a second time, once as the artist and once as the publisher. That is especially true in performing royalties, which we've talked about with PRO's performing rights organizations and getting that all set up, Ascap, BMI, Sac, those things. That's another check that comes to you for the use of your music in public performance or display in some way. Then we talked about actual sales and sales royalty primarily through a record contract. Through those, you could get an advance. You could just sell albums and make a cut of the sales of physical or digital products through streaming services or other or retail sales of physical products. However you want to look at it, there's tons of ways that we're making money now. There's one other one at almost every student that I have in my real world classes doesn't know about and doesn't do. What's crazy about this is that you can sign up for this and immediately see sometimes a little pot of money waiting for you. Like literally people don't realize that there's money just sitting there. And all they have to do is sign up, register their works, and then they're like, oh, we've been looking for you, here's your money. Let's talk about how to do that in the next video. 88. The secret of SoundExchange: Okay, so we are of course, talking about sound exchange. Now if you remember, we talked about sound exchange for a minute back when we were talking about digital distribution just recently. And the timeline of things in that timeline we talked about in 2000, the RIAA Recording Industry Association of America created sound exchange and then a couple of years later broke it off into its own organization. That's what we're looking at here, its own thing. Now, what you're going to do with sound exchange is you're going to collect royalties for webcasting, right? I know we already talked about this, but I want to just really hit a home. Webcasting is this weird term that we use for non interactive streaming. So any streaming where someone can't directly choose the song, like basically radio, right? Like radio isn't streaming. But if you imagine a radio station, they play what's next. And you can't just dial in what you want to play, that's what it is. Digital radio, Pandora, anything like that. If you remember, there was a whole bunch of services that when we set up digital distribution that we selected and Pandora was one of them. A lot of people still use Pandora and it's still quite popular. It was really popular years ago, but now it's less popular. But it's still popular if you don't have this set up, everyone who's listening to your music on Pandora or any of those other streaming services that are this non interactive type, you're not getting them. Those royalties are not going to go through the PRO or anything else. You have to set this up to get those. Let's set it up. 89. Setting up Sound Exchange: Okay, here it is. The thing that everybody forgets to do. I literally do have friends who signed up for this and they just had money waiting for them. So Exchange, you're going to go to Sound Exchange.com Click on, Okay. It says if you are a creator or copyright holder, register online, I receive royalty payments that may be due to you update an existing account, such a musician or air estate. You just want to click here to start. Okay. So now you're going to walk through this and you're going to create an account. After you do this, what it's going to do, you're going to have an account. You're going to go into that account and it's going to ask you to claim your music. What it's going to do is it'll show you a little search window. And what you can do is type in names of your tracks that are publicly released albums you have out on the streaming services, You're going to type those in and then they're going to come up and then you're going to click on them and say, that's me, that's me, that's me, do all those things. Then if any of your music doesn't come up, you can't upload recordings for them. And then they have them, they'll know who you are, what music is yours. And then it'll either say, great, we're going to keep an eye on your music and we'll let you know when we have some money for you. Or it'll say, hey, we've been looking for you. Here's some money we've already collected for your music. Keep an eye out for those. It's quite easy to do, It's a fairly simple process. Sign yourself up for sound exchange and get some money. 90. What comes next?: Okay, that's the end. We're getting to the end. I have a couple more things for you though, so don't go away quite yet. First, let's talk about what comes next. What if you're really into this stuff and you want to learn more about it? Any of these topics, I wouldn't say we scratch the surface on. We went deep into some of them. But there is more. There's a couple books I could recommend. If you really wanted to dive in deeper and read some stuff, maybe I'll put that in the next little segment. I'll recommend some books to read if you really want to. However, the problem with books on this subject is that we are in a very rapidly changing world. In the music industry. A lot of books tend to be outdated before they're even printed. I might rather point you to some websites, blogs, social media accounts for a few popular big thinkers in this area. I'll put some resources into the next video or the next segment, check that out. There are also some more classes by me on this platform that goes a little bit deeper into these things. I have a copyright class that goes deeper into copyright trademarks and things like that, and a couple other topics as well, including things like, I have a class on band dealing with contracts as a band and how to split things up and how that all works. If that's interesting to you, you can find that on this platform here. You can go a lot deeper. Again, I'll put some resources for you in the next segment, check that out, But then after that, I have one more thing I want to share with you. Stick around. 91. Bonus Lecture: Hey everyone, want to learn more about what I'm up to? You can sign up for my email list here. If you do that, I'll let you know about when new courses are released and when I make additions or changes to courses you're already enrolled in. Also check out on this site. I post a lot of stuff there and I check into it every day. Please come hang out with me in one of those two places or both, and we'll see you there.