A Question about Copyright?

[Datahead]

First off Peter, welcome, and I hope you can shed a light on the ever popular debate of on-line vs. label, and is it robbery or just change. The question I have is if you have material that you have already copyrighted, how does that fit into your service, and is it tracked by Sound Exchange etc.

 

As someone who works in the promotion / production side of the business, I have been watching this trend very carefully. As I see it as music in the Internet age, and a trend that is here to stay. Also the one thing I tell my clients, is to embrace change, or get left behind. On that note, I hope I am not steering them in the wrong direction, as there are many here, (Along with some of my clients.) that believe the Internet will be the death of the music business as we know it.

 

From what I am gathering here is your service is nothing more than distribution. Correct? And that being the case the promotion, production, merchandising still lies in the arms of people like myself, and my investors.

 

Don't get me wrong, I am all for music on the net, however my concern is for the artist, who lets face it is already getting the short end of the stick as is.

 

Regards:

Ron

[PeterTuneCore]

Datahead, we founded TuneCore precisely to offer the artist something rare as diamonds in the music industry: a fair deal. It's why I'm here, it's what attracted me to the idea of TuneCore. But let's step back a moment.

 

There are a lot of ways artists have been screwed in the past (and present), and almost all of them come from ignorance: ignorance of the market, ignorance of the law, ignorance of the various different rights associated with making music. Ignorance is the enemy, and as the Internet opens channels of communication, it's going to do more to help artists than anything else.

 

My advice is always to get booked up. If you want to just play music, fine, but if you want to perform it for money, record it and sell it for money, you're not just a musician anymore, you're in business, and you need to learn its rules, or the unscrupulous will take advantage, or you just might trip yourself up, even if there's no evil intent around you.

 

That having been said, digital distribution presents the first real opportunity for artists to get a square deal perhaps in the history of the industry. It's a chance to let go of policies formed back in the eighteenth century, and to shatter the monopolistic, gate-keeper hold of the businesses built to exploit those policies.

 

First and foremost among these are DISTRIBUTION policies. Why start with distribution? Because it fuels everything else. It's that middle-man, the gate-keeper. You can buy yourself a vinyl pressing machine and get the cost of manufacture down low--that's something you can control. You don't even need to own the means of production, as there's tons of competition out there for CD manufacture, you can get that price down pretty low too. Everything else an artist needs, from instruments to recording spaces to venues to marketing/airplay, they're all driven by competition, there's alternatives, there's ways to get in, lower costs.

 

But not distribution! If you wanted to get your CD on to the shelves of Tower Records, you simply couldn't do it without connections or a whole lot of money. No matter how inexpensive you got the cost of the CD down to, that shelf space was special. No matter how efficient you are, you HAD to go through a distributor to get to where your fans could buy your music.

 

Now, stores need never say "no" to content, and anyone with a modem can pipe the source directly to the storefront. Now there's no stocking fees, no transportation, no returns, no insurance, no labor or unions at the warehouse. There's no warehouse at all.

 

It was those costs: warehouses and trucks and inventory systems, tracking, returns, insurance, labor, the hard-won efforts of distributors walking from independent store to independent store, leveraging their distribution muscle (and begging, wheedling, conniving, threatening, selling) to get their content on those precious shelves, that gave distributors a right to that all-important PERCENTAGE. They had expenses, they did work, they needed a percentage, they earned it and deserved it.

 

No artist, not Elvis or the Beatles, could be their own distributor. They could be their own labels, if they were big enough, but even then they required distribution. Distributors have tremendous risk: if an album doesn't sell, there's 50,000 of them in six warehouses, taking up space and doing nothing. Labels had a different risk: they took a larger percentage (they'd be the ones paying the distributor, after all), and they fronted cash for the band (the Advance), and promoted like crazy. The label took the RIGHTS of the music, so they could leverage as much out of any successes they had, to make up for the risk (and all the failures they poured money into while taking chances on that One Big Hit).

 

All this evolved into a business model that worked very, very well in its day. Bands got up-front cash, negotiated some small percentage, got to launch with other peoples' money (the label's). The label took a chance, but had the deals with promoters, distributors, licensers, impresarios, radio program directors, etc., and kept a percentage and many of the rights. With those rights and those contracts written to secure them came a lot of opportunities for the labels and distributors to RIP OFF artists, if they wanted to. They could talk ignorant band managers into signing away things that seem meaningless ("Publishing rights? Who cares about that?"), or worse. Most labels, including majors, are fair, but there was always room for the con.

 

What got me going with TuneCore was the realization that the artist-label-distribution business model I just described MAKES NO SENSE in the age of digital music online. A new model has emerged, but the old compensation system of percentages and rights-holding has remained, and that's institutionalize theft, in my mind, and very, very frustrating.

 

For instance, let's look at the distributor now. I can tell you to the penny how much it takes to get music on to the "shelves" of the top digital stores. I can tell you I have no warehouses. I don't have to deal with returns. I don't maintain a staff of physical laborers. I don't have product to insure against a leaky roof or fire. I don't have a fleet of trucks. I don't have a sales force that goes out begging the stores to stock my product, or to verify the product has been stocked, or to check and see if the store REALLY put the CD face out, on an end cap, or at eye level near the register, just like they promised. All of these things would earn me a percentage, but I don't have to do them any more. SO WHY SHOULD I GET A CUT?!

 

There's only one way I can maintain my reason for taking a cut: staying a gatekeeper. iTunes and the other digital stores simply can't do direct deals with individual artists. There's too many, they'd have legal liabilities, have to produce millions of royalty reports, build systems of customer service, etc. So they went with digital distributors, "aggregators," and the majors and other very large independents, just to keep their sanity. Those aggregators, now that their costs were super low, could stay the "gatekeepers" and make serious scratch by charging a percentage even though they no longer incurred the expenses. Why? Because of 200 years of industry habits, everyone just naturally understands that "the distributor takes a cut," and it wasn't questioned.

 

We started TuneCore because the cost of and access to distribution doesn't HAVE to be built on that old model. I liken TuneCore to FedEx: your music is now a parcel, we ship it off to the stores ONCE, it's there, it's in, it's good. If it sells, it sells, we report back the sales data and pipe you the money. Since we only delivered once, why should we get paid as if we were shipping box after box of product to "restock" the shelves? You don't pay FedEx a percentage of the money you earn on your product just because you shipped it with them: you pay an up-front shipping fee and go about your merry way.

 

We do have costs, we do have to keep albums stored, we do have to track all the sales data, day after day, so we charge a yearly maintenance fee. We charge for up-front delivery. BUT WE DON'T TAKE A PERCENTAGE, and we certainly don't take your rights, the way distributors and labels used to. And that means, even as artists and managers learn about the business, they can learn with their rights still in their own pockets, and THAT prevents ripoffs.

 

So if you want to go it alone, without a label or a distributor (in the old sense of distribution), now you can, and that's a tremendous freedom for artists. You can now earn 100% of the money your music makes. It does, however, mean that what risks there are you must now shoulder yourself, including the up-front costs of marketing and promoting yourself, by spending money on such things as posters, stickers, a fancy fresh website, etc. Those costs have to fall somewhere, and if you want to keep all your rights and get all the money, you have to bear them on your own.

 

But even now, things are changing. TuneCore offers FREE websites for your band. Yes, you heard it here first: DCOMB, "Dude, Check Out My Band" pages are already live for all TuneCore customers. We host it. So you don't have to spend a penny more to get a fancy website that has all your music on it. Your reward for reading this far down is this early announcement. Also, TuneCore markets you, also at no extra cost, and gives you opportunity to reach millions of people. Not EVERYONE gets it, but then, the Internet lets you market in ways that cost so little, you might not even have to risk money on posters, physical CDs or bumper stickers at all.

 

So the artist is no longer getting the short end of the stick, for the first time ever. This isn't philanthropy, TuneCore is a business, and so is CD Baby and all the other digital distributors and aggregators. The business has simply shifted so that companies who want to stay lucrative can do so without ripping people off--a refreshing development. And the collateral side of things, tracking and charting, come along for the ride. Yes, your music is safely under copyright unless you gave or sold away that right on your own. ALL rights, from mechanical to sampling to publishing to performance and beyond, are yours. Yes, they track on SoundScan and can be picked up by BillBoard and anyone else who wants them (note, Sound Exchange is for Internet Radio, different beast, but yes, we'll report to them too, when that day comes). There is no "previously copyrighted," it's just copyright, whether or not you send forms away to the government or not, and it's yours unless you disburse it.

 

I call that a revolution.

 

--Peter

peter@tunecore.com

[Datahead]

Peter:

Thank you very much for clearing that up for me, and I personally think you got something here. As one who has seen the abuse that artist get if they don't have their "A" game on when signing contracts. Not to mention the abuse the labels have shelled out to people that were shall I say ignorant as to what they were signing and when.

 

To sum this thread up, I am currently involved in a project that the investors have allot of money to throw into said project. Involving a full studio, and know how from many people that are in the industry now, but are looking to change the cookie cutter approach to the music biz as we know it today. I guess in a nutshell want to ride the winds of change instead of fighting it. In other words "if you cant beat them join them" approach to the change the Internet has made in the music business.

 

We are currently in the early planing stages of this project, and really thats as far as I can explain due to disclosure contracts. What in your opinion would be your approach to developing a company of this nature, and what advise would you give to the people involved in setting up this new approach to how music as a whole is marketed and produced?

 

Regards:

Ron

[PeterTuneCore]

Datahead, I honestly don't know what advice to give, except it's not a bad idea to have the WHOLE route planned out: from the creation of the music, its mixing, the ownership of the publishing and performance rights, subsidiary rights, to production (physical, digital), if digital, compression, then right on to distribution, marketing and into the end of the life cycle: collecting cash. No surprises up front means no surprises later!

 

--Peter

peter@tunecore.com

[Datahead]

Datahead, I honestly don't know what advice to give, except it's not a bad idea to have the WHOLE route planned out: from the creation of the music, its mixing, the ownership of the publishing and performance rights, subsidiary rights, to production (physical, digital), if digital, compression, then right on to distribution, marketing and into the end of the life cycle: collecting cash. No surprises up front means no surprises later! --Peter peter@tunecore.com

 

Have to totally agree with you there, hence why we are taking allot of time to work the bugs out right from the start so everyone wins in the end including the artist. Thank you for your input.

 

Ron

[Jazzy20]

Thank you Peter for the enlightening info.

 

Sorry if I missed something, but who takes care of the author's royalties.

 

Regards.

Sylvain

[Standard8]

ASCAP or BMI takes care of royalties.

 

 

 

Peter, I read far enough to get the special offer. Thank you

[Jazzy20]

Yes but who pays to ASCAP BMI SACEM AKUM .... ?

[rlindsey0]

 

ASCAP or BMI takes care of royalties.

 

 

Only the performance royalties. The record company--or you, if you're putting out your own record--have to pay the writer and/or publisher the mechanical royalties for every copy of the song distributed. If you're the artist, the record company, and the author/publisher, of course, you don't have a problem. But if you're recording and selling or giving away your version of somebody else's song, you have to pay the writer/publisher for copies distributed, not ASCAP or BMI.

[Johnny-Boy]

Yes but who pays to ASCAP BMI SACEM AKUM .... ?

 

The three major television networks: ABC, CBS and NBC

 

Public television - the Public Broadcasting System (PBS) and its affiliated stations

 

The majority of the 11,000 cable systems and virtually all of the cable program services

 

Over 1,000 local commercial television stations, including affiliates of the Fox, Paramount (UPN), Warner Bros. (WB) Networks and PAX

 

The Univision Television Network and its stations

 

About 11,500 local commercial radio stations

 

About 2,000 non-commercial radio broadcasters, including college radio stations and National Public Radio (NPR) stations

 

Hundreds of background music services (such as MUZAK, airlines)

 

About 2,300 colleges and universities

 

About 5,700 concert presenters

 

Over 1,000 symphony orchestras

 

Over 2,000 web sites

 

Tens of thousands of "general" licensees: bars, restaurants, hotels, ice and roller skating rinks, circuses, theme parks, veterans and fraternal organizations and more.

 

My wife works in the accounting office for our County. They receive quarterly bills from ASCAP for the piped in music at our local jail. Basically establishments anywhere music is being presented to the public pays the performing rights organizations.

 

Best, John

[PeterTuneCore]

 

Thank you Peter for the enlightening info. Sorry if I missed something, but who takes care of the author's royalties. Regards. Sylvain

 

 

Whoops, I thought I responded to this. Thanks to those who jumped in.

 

Royalties is about the most confusing and problematic part of this business, and the misinformation swamps the vital truths.

 

Since TuneCore (and thus the bulk of my experience) is a digital distributor, the royalty we deal with most often is the PUBLISHING (also known as the MECHANICAL) royalty. This is the royalty owed to whomever owns those rights (either the writer or whoever bought it from the writer, such as the label when they signed the artist) that gets paid every time a COPY of the music is sold.

 

The answer to your question is, YOU, the person who controls the right, are responsible for paying it. TuneCore makes it easy, by giving you all the information you need (what sold, by album and song, where, when, from which store, how much you earned to the track, etc.), but the responsibility is yours.

 

As already pointed out, ASCAP/BMI, SESAC and the companies like them DO NOT DEAL with publishing and will not help you. Even representation companies like Harry Fox Agency (HFA) are but tools for you to use when doing the due diligence of finding who to pay (if you don't already know) and paying them.

 

More here: http://www.tunecore.com/index/faq#Cover

 

Enjoy!

 

--Peter

peter@tunecore.com