The street fight over EMI's publishing catalog.

On April 19th it was announced that Sony Music had gotten the nod from the European Union to go through with their purchase of EMI's publishing rights. You can read the full article on The Guardian's website. Warner has been fighting Sony's attempts ever since EMI defaulted on a $5.4 billion dollar loan in early 2011 and was put up for sale by CitiGroup to ease the debt. Almost immediately the big four major labels were left to but three, Sony, Warner, and Universal.

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At that time Universal already controlled the market with roughly a 27% of the business and was able to pounce on the fire sale going after EMI's recorded music division which holds the rights to such artists as Norah Jones, The Smashing Pumpkins, Keith Urban, Brad Paisley, and some small band known as The Beatles. The purchase will boost Universal's market share up to 36% dominating Sony's at 23% and Warner at 15%. Despite this fact the war over EMI's assets hasn't revolved around their recorded music division, but rather their publishing division which, according to Rolling Stone Magazine, holds the rights to 1.3 million songs including works by Rihanna, The White Stripes, Sting, and many others.

Ever since EMI's publishing assets were put up for sale Sony and Warner have gone to war trying to secure these copyrights. Each company has attracted outside investors to help sweeten their offer until Sony was able to throw down $2.2 billion for the catalog ousting Warner from the race. But the third largest music conglomerate in the world wouldn't go down without a fight. Since then Warner has challenged the deal both in the U.S. and European court systems hoping to thwart Sony from gaining such a huge market share in the publishing business of the music making world. But why such a fight for publishing rights?

The reasoning has to do with the current trend of musical consumer buying behaviors, and how these behaviors can equate to large amounts of income for whomever owns the proper rights. Recorded music rights provide income to the persons who control the actual recordings of a work. So if you buy a CD, or you license Sting's recorded version of "Every Breath You Take" for a movie you have to fork over some dough to whomever owns the copyrights to the actual recordings you use. Publishing rights on the other hand cover many more situations. Not only would you have to pay whoever owns the recorded version of the Sting tune you plan to use, but you would also have to pay the publishing company for the underlying music and lyrics in the song. So what's the big deal if you own the recorded music you are getting a piece of the pie and if you own the publishing you get the other half? The answer lies in how we are using music today.

Take for example the popular FOX hit Glee. These teenagers, whom all appear to be in their mid twenties by the way, perform a number of popular music hits in each episode, but because they are the ones performing the hit the owners of the recorded music are paid less, if even paid at all. This is because they aren't using the original recording of the song, instead they are remixing it in their own way.  Yet despite this fact they still must pay the publishing holders the statutory rate. Now think about all the television shows, movies, and advertisements that do this. We've got American Idol, America's Got Talent, and The X Factor all presenting contestants singing their favorite hits and that's just in the U.S.. Still don't think it's a big deal? Now think about the millions of videos on YouTube of people performing these hits with their own bands or by themselves with their dogs singing harmony.

But the income stream gets much larger for publishing rights holders. In the current musical landscape touring has become a major breadwinner for bands. In these situations the only people getting monies from these performances are the performance rights organizations whom pay the publishing holders of the songs that are performed. Many of these publishing houses also own the rights to the Artists images, signatures, fragrances, and whatever else can be branded with their namesake.

So to put it in simple terms the recording music royalties will make you money on the uses of the actual recording while the publishing royalties will earn you money on those items plus any other way that the song may be used in the marketplace from other performers singing your tune, to public performances, and even a bunch of people trying to impress judges or sing about their high school angst on television. Which income stream would you rather have?

That is why there is a street brawl over EMI's publishing division. The big boys know how much money is at stake, and the company whom holds the largest stable of hits will eventually win the battle when it is time to knock it down to the big two.

Your most important musical product.

Ok, so now that I am a few months away from graduating with my Bachelor's Degree in Music Business Management it seems that so many of my friends, and even people I didn't know, are after for me on advice to launch their musical careers.  In listening to them I am overwhelmed at how many of these green musicians are still under the impression that a huge musical industry professional will show up to their next show, wave their magical record deal wand and turn them into the next Adele or Lady Gaga overnight.

I hate to be the bearer of bad news guys, but this just isn't going to happen.  So pack up your delusions of grandeur and think about what you really want from your music.  If you want to be the next international jet setting superstar that's cool, but it may also be impossible.

So how do you know if you have what it takes to get the bowl of M&M's minus all the brown ones at your next show at Madison Square Garden?  Well the answer is quite simple.  It all starts with your music.

I am often overwhelmed at how little importance young artists put into their music.  I have heard everything from "we have an amazing show, the lead singer eats a baby kangaroo on stage" or "the label will give us this big name producer who will make our music into the next big radio, or better yet Spotify, hit.  Where is my red buzzer, or better yet my hoop to pull these idiots off of their pedestals so I can scream Trump's catch phrase "your fired".  Honestly if you think that your music comes second in your career I hope you enjoy salting fries at McDonalds.

Remember this the music business is just that a business and the central point to any business is a competitive product and/or service.  I mean Henry Ford didn't start selling his automobiles to the public in hopes that someone would come along and build them for him after he made a number of sales.  No he had the cars first and then marketed his product to the marketplace.  The music industry is no different.

First and foremost your music is going to define who you are in this huge market.  According to www.quora.com there are upwards of 15-20 million bands on the Internet. And when it comes to live shows Martin Atkins in his book "Tour Smart" reports that there is close to 2940 bands performing each week in L.A., and 1235 in New York, and that's only two markets.  The U.S. is a HUGE country, and we are just a small part of the music world on this planet.  Do you still think that the head of A&R for Atlantic Records is going to show-up at your show in bum fuck New Hampshire and sign you to a multi-million dollar deal.  If you still think yes stand there for a moment while I grab my hook.

The first thing I tell young bands is "take it slow".  Your music is so vital to your success so you should be willing to woodshed the group for weeks and really craft your songs.  Then pick five or six gems and practice them some more.  When you can play through those tunes perfectly your next step is to find a decent studio, and by decent I don't mean your buddy with his Radio Shack recording set-up.  In today's market there are dozens of people with quality home studios who can record your demo.  Make sure they know what they are doing, after all this is your business "product" and it needs to sound as good as it possibly can.  Why?  Because we are going to use that as center point to your marketing, touring, and promotion strategy.  And for Christ's sake after your done recording get that CD professionally mastered. Spend the money and you will be very glad you did.  Unmastered CD's, even those mastered by some dude with a Dell laptop and some free program, get tossed in the garbage by more radio stations, promoters, and label executives than I care to research right now.

So now you heeded my advice and you have a killer demo of your tunes.  Here is how that one little product can change your career.

Your "quality" demo can be uploaded to a digital ramp service provider like ReverbNation or TuneCore to get your tunes in the digital music stores such as iTunes, Rhapsody, and Amazon along with the multitude of streaming services out there.  Or it can be used to press CD's to sell at your shows, to your friends, or your parents.  I hope your parents are buying your music, or at least taking the cost off of the food and rent you currently owe them among other things. Now you have created a product that can sell and earn you some cash, but there is more to it than that.

Your demo will be used to get clubs and promoters to book you at shows.  Who do you think they are going to hire the group that calls them and says: "Hey dude we are the next Metallica. We don't have a CD for your to hear, but trust us we are awesome the drummer has the most expensive kit you can get" or the band who is able to direct them to their music on iTunes, or even send the owner a copy of the CD?  There you go that "quality" demo can help you land shows.

Ok, so now a few club owners bit and you have some gigs.  With your music available you can use it to promote that show with journalists, radio dudes, and possible fans.  The more people you get in that door the better and the best way to get them there is to showcase how great your music is.

Once the show starts you now have a room of fifty people exited to hear you.  With music available you can sell them CD's or hand out free stickers that push them to your website where they can buy or download that music for free.  You can even give away discs to people in the audience who traveled the farthest to your show or street team members who hung posters promoting the event.  Basically your music can be used to build your fan base and as a sales point at the same time.  You need good music to do that.  You need a good product.

Then down the road you are playing to 400 people a night.  Your website and Facebook page is jammed with thousands of fans and "like" comments.  All the sudden you are on a labels radar and they sneak into your next performance.  Like what they hear and offer you a deal.  It is now your choice to accept or tell them to fuck off, because you are doing just fine on your own.  I suggest you sign, but that's another blog.

The point is this I have never heard of a label signing a band without first hearing their music.  Sure they have created bands out of the blue like NSYNC and 98º, but they knew that these cats could sing and perform before they invested.  The labels understand that this is a business and at the core of their business model is music.  If you call them and tell them how great you are they won't care.  You have to show them how great you are which means you must show them that you can connect with fans and make them buy your music.  How can you do that if you never recorded a demo?

I will end this blog with a great point to hammer home that demonstrates how important good music is. One of my favorite groups is The Dave Matthews Band.  Their music was so good that a local bar owner named Coran Capshaw sold his business to manage them band.  In an interview he stated that the biggest factor in his decision was the quality of the group's music.  Because the group had such great music they peaked the interest of one of the best managers to walk this planet.  This manager helped them sell close to 40 million records worldwide, win a Grammy, and sell out some of the biggest venues on the planet.  As Capshaw saw it is all about the music, your product, in this business.  Why rush creating that product?  Why try to sell someone a bridge you do not own?