Just read a couple interesting and promising articles regarding the current state of music sales and music consumption.

The first, from Hypebot, indicates that digital music revenues to record companies grew by 8 per cent globally in 2011 to an estimated US$5.2 billion. This compares to growth of 5 per cent in 2010 and represents the first time the year-on-year growth rate has increased since IFPI started measuring digital revenues in 2004.

The second, from Music Think Tank, summarizes several stats from Nielsen Soundscan, some of the most interesting are:
- US album sales were up 1.3% last year, the first year since 2005 that’s happened. 66% of these sales were CDs.
- Rock is the most popular genre of music, with 32 percent album share, while pop music represents 40 percent of all current digital tracks sold.
- Ninety-three of the 100 best selling vinyl albums in 2011 fall within the Rock or Alternative genres.
- Vinyl sales increased 37 percent in 2011, but only accounted for 1.2 percent of all physical sales.
- 75% of all CD sales were made offline. That means that people physically purchased the CD at a brick and mortar store or an event.
- There were 249 million albums sold in the US last year. People will tell you that the music industry is dying, but 249 million of anything is still a huge number.

Both articles are a breath of fresh air amidst all the doom and gloom that currently dominates any music biz discussion. Also, the stats indicate two key points worth repeating:

- rock and album sales are tied together
- pop and individual track sales are tied together

While these correlations may seem trite, many musicians/managers/labels don’t seem to fully understand them. Too often I see rock acts focusing on the big ‘crossover’ pop single, or pop acts working on their concept album masterwork. Not saying there can’t be exceptions to the rule, but first and foremost there needs to be a real understanding of your genre and the demographic you are catering to. Some rock fans will want a chart-topping pop single, some pop fans will want an epic concept album, but 99% of the time the opposite will be true. That doesn’t mean you don’t take chances, but first you need to understand your audience.

Either way, some encouraging articles to start the year with.

- Kurt Dahl, January 23, 2012

On behalf of Bob and myself, Happy New Year to all our friends and clients!

2011 was a great year for D’Eith and Company, as our entertainment law practice saw its largest growth of the past few years and our consulting company, Adagio Music, saw a substantial increase in clients looking for help with Factor apps, other grant apps, and generally receiving advice about taking their careers to the next level.

As we look forward to our biggest year to date, I thought I’d post an interesting article from ‘the DIY Musician’, summarizing the top 10 blog posts of 2011. Some great reading for all our musician clients…everything from search engine optimization to band politics to being ripped off by clubs. All the good stuff! Check it out here.

See you all in 2012

- Kurt Dahl, January 4, 2012

Just read an interesting article here about the Black Keys’ refusal to make their new album ‘El Camino’ available for streaming on Spotify. According to Keys drummer Patrick Carney, “for a band that makes a living selling music, it’s not at a point where it’s feasible for us”.

The article points out that it takes about 64 streams to equal one 99-cent iTunes purchase, and this has prompted artists such as Adele, Coldplay, and Tom Waits to keep their new albums off Spotify, at least for the first few months following release.

Spotify has responded that the company continues to make concerted efforts to create a forum for music via social media (hence their partnership with Facebook) and foster live music (free shows they have sponsored at Mercury Lounge in New York City over the summer). But while some artists praise the service for embracing the new cloud reality, others oppose the miniscule Spotify payouts in relation to payouts generated from the more traditional digital purchase model.

The debate as to whether Spotify is a benefit or harm to artists continues. We’d be interested to hear your thoughts…post them on the D’Eith and Company and/or Adagio Music Facebook pages.

- Kurt Dahl, Dec. 14, 2011

Here’s a little tidbit of info that most of you perhaps didn’t know: D’Eith and Company acts as the head office and records office for over 80 BC companies, ranging from incorporated bands/artists, studios, management companies, record labels, and corporate holding companies.

Why would you want to incorporate your business entity you ask? The first answer is tax benefits. As an example, if you are in a band and are starting to generate income consistently on a monthly basis, you may be able to achieve significant tax breaks by writing off your band expenses (and there is never a shortage of those) against any income made. If you are a management company or record label, these benefits are magnified.

The second benefit is the limited liability provided by incorporation. So if your band/studio/management company gets sued for whatever reason, you as an individual will be safe from liability, i.e. the liability stays with the corporation. If your business entity is making any sort of profit on a regular basis, this benefit cannot be overstated.

The costs to incorporate are completely reasonable, and Kurt can explain all the benefits and provide advice based on your specific situation over the phone. Once he has all the relevant info, you could be incorporated in a matter of weeks, and start making the most of your business in no time.

Give us a shout at 604-675-6227 to discuss, we’d be glad to help.

- Kurt Dahl, Dec. 7, 2011

Just read a great article here from Music Think Tank about ‘the best kept secret for advancing your music career’. The writer asks what is the best way for an up and coming band with some buzz to spend $5000 to advance their career. Advertising? Touring? Radio promotion? Publicity? Nope, none of the above.

The answer: hire an entertainment lawyer.

If you are surprised, you are not alone. In fact, I think it’s safe to say that many musicians don’t discover the benefits of a music attorney unless prompted to for negative reasons. But the positives are far more abundant!

The author goes on to say that “in the world of entertainment, the attorney is king in many ways…they are the silent force behind every deal and advancement…the music industry’s silent gatekeeper and its best kept secret”.

So, have a read of the article, and shoot us a phone call or email. Whether it’s getting more out of your career/catalog, negotiating you a better deal, or offering guidance in any area of the business, we look forward to sharing this ‘secret’ with you.

- Kurt Dahl, Nov. 22, 2011

 

Just read an interesting article here about electronic music distributor STHoldings pulling all its distributed labels from streaming music services Spotify, Simfy, Rdio and Napster. The reason for the pull: a recent study concluded that music streaming and other free or low cost online music services “are more likely to cause listeners to continue to stream songs, rather than buy them”.

ST’s clients include some 238 labels around the world.

This raises a huge question going forward, one we have touched on before: is Spotify good or bad for artists? The above study concluded that Spotify and other streaming services have the effect of devaluing music by exploiting it as a low value/free commodity, with the end result being less and less music being paid for, and of course, less money to artists.

The counter argument is that if more artists, labels, and consumers got on board with Spotify, there would be a snowball effect in the coming years, and far more revenue and value would accrue to artists from streaming vis-a-vis the rapidly dwindling revenue flowing from more traditional ‘purchase’ services such as iTunes.

As always, consumer choice will point the direction forward. And based on the numbers in the above study, consumers have made one thing clear: they want Spotify. The question is, do artists?

- Kurt Dahl, Nov. 16, 2011

 

FACTOR has extended the deadline for Juried Sound Recording and Demo Applications from Oct 28, 2011 to Nov 30, 2011. On our consulting side of the company (Adagio Music), we offer comprehensive services in relation to FACTOR grant applications, and have a pretty strong track record in terms of approval.

So if you’d like Bob and I to help you take your application (and career) to the next level, shoot me an email at kurt(at)bcmusiclaw.com. We need at least 3 weeks advance to do the app properly, so hit me with an email and we’ll make it happen!

- Kurt Dahl, Nov. 2, 2011

Many of you may already be using this service to track the data of your band, or someone else’s band. However, I meet many artists who are not yet benefiting from the service known as Next Big Sound.

It’s free for the regular version, $79/month for the premier version (still in beta, but I keep hearing great things), and it’s a one stop shop to measure, track, and understand the performance of your band online (which of course is directly connected with your performance offline).

Any time I hit the road with my band on tour, we inevitably tweet more, post more videos, and make more new fans than any other time of the year. And without fail, the following week when my NBS report comes in, all our numbers have shot up. Clearly, the key is to use these metrics to better understand how to operate as a band in order to maximize exposure to your fans, give these fans what they want, and gain more fans along the way.

Promoters, labels, management companies and all other ‘music industry professionals’ are using this tool more and more, so if you are not yet hip to it, I’d suggest getting on it.

Start harnessing the power of your metrics now…

- Kurt Dahl, Oct. 19, 2011

Found a great article here that breaks down the actual revenue streams flowing to artists from digital sales and streaming sites. The actual payment per play from a service like Spotify seems shockingly low in comparison to the revenue generated from a sale on iTunes. In fact, many indie bands have reacted strongly to the article, suggesting Spotify profits off the use of indie acts, while not adequately compensating them.

To me, the real issue here is one of volume, and understanding the changing consumption habits of music fans. Less and less music buyers want to ‘own’ their music, choosing instead to merely access it in the cloud, at their leisure. What is the ‘value’ of granting such access? Clearly it must be a lot less than 99 cents, or Spotify would have no business model. And while the per-play payout put forth in the above article seems low, the more people embrace streaming services like Spotify, the more revenue it will obviously generate. If we are truly moving to a cloud-only music world, we would be looking at millions of plays an hour…which could really start to add up for acts that are somewhat ‘visible’.

In the end, we are left with the same music industry conundrum: the big acts keep getting bigger, and everyone else fights for recognition.

- Kurt Dahl, Sept 29, 2011

I’m proud and excited that my friends in the Sheepdogs made the cover of the Rolling Stone! check out the article here.

I have been lucky enough to help them on the legal side of things over the past few months as things have developed, and look forward to doing much more for them as they take things to the top.

- Kurt Dahl, August 16, 2011

 

The first big headline that came across my inbox this past month was that HMV has sold all of their 121 Canadian stores to a ‘restructuring specialist’ for a measly $3.2 million. Times surely are changing…$3.2 million used to be a drop in the bucket in the CD-focused music industry of the early 90s…now it can buy you an entire chain of music stores!

The second major headline was that Spotify has now launched in the U.S., to much fanfare. And for good reason…the service seems to point the way forward for streaming music. There are still growing pains associated with the service (it is currently difficult to sift through, is often missing songs from certain albums, and frequently contains multiple versions of the same song), and it is currently unavailable in Canada (however, simply Google ‘how to use Spotify in Canada’ and you will discover a workaround!). That being said, the service promises to be a game changer in terms of how music is enjoyed on a daily basis…without overloading one’s hard drive.

What is so great about it? Unlike Last.fm or Pandora which only allow you to stream genres of music, Spotify lets you pick and choose whatever song you want without having to pay a dime. The only catch with the free version is that is that it’s ad-supported and you have to put up with ads in the program browser. It also doesn’t allow streaming to portable devices.

The elephant in the room: will services such as Spotify sufficiently compensate the artists creating the music? At this early stage, the numbers seem to point to a strong ‘no’: a recent study found that artists received as little as 1/10th of a cent per stream. By comparison, artists and labels usually collect about 70 percent of the amount paid for a download from iTunes or a similar service – that’s 70 cents, assuming the track costs a dollar.

But looking big picture, and a few years down the road when everyone is enjoying music in the cloud, and enjoying a huge amount of said music…you can see a light at the end of the tunnel. I guess that is the key…realizing that the industry will never go back to the overinflated, overindulgent days of the CD…and that revenues will accumulate from millions and millions of minuscule transactions, rather than the old $18/CD transactions that used to be the backbone of HMV and other record stores.

So if streaming a large amount of music becomes a daily routine for the average music fan, the revenues may start to add up and end up in the pockets of artists. Will this bring back the sort of revenues that were flowing at the height of the CD era? Definitely not. But it is an encouraging move in the right direction…

- Kurt Dahl, July 27, 2011

“People hear live music with their eyes,” Tom Jackson. The first time I heard that, I didn’t get it at all. Then I realized that it is completely true.

We are in a new world where making it in the music business is not just about having a cool video and a radio hit. If artists are not able to perform live and tour, chances of success are very low. Sure, there is the odd YouTube sensation, but without a follow-up live show, initial interest will dwindle.

To sustain a career in music, artists need to develop an amazing and compelling live show. Working with Tom Jackson over the past few years has really opened my eyes as to the importance of spending a lot of time creating a live show that creates memorable moments and really connects with fans. Fans who get excited about a show and feel a connection to the artist will run, not walk, to the merch booth. And that, my friends, is where the money is being made. Tom Jackson has produced a series of DVDs which really drill down into live performance. These are a must have resource for emerging artists (onstagesuccess.com)

Kevin Pauls, another live performance producer, recently gave a talk to this year’s Peak Performance Project Top 20. (kevinpauls.com). One of the stories was of a band who spent a year writing songs, six months recording and then 2 days rehearsing for their big tour. What is wrong with this picture? Winging it or being spontaneous on stage is not only over-rated, it is also great way of getting nowhere in this business. I am not talking about changing who you are, I am talking about taking what you do and making it amazing in a live setting. This means not only looking at the way the band is set up and how it moves, but also on song arrangements. The bottom line is that songs are not set in stone, they are mutable and need to be re-arranged for live concerts. This means thinking about longer intros, extended solos, more dramatic break-downs, crowd participation and space to explore those key elements that already exist in the songs.

Mike Snider is co-head of Paradigm Talent Agency (Dave Matthews Band, Coldplay, Toby Keith, Aerosmith). He was asked questions about how they’ve handled changes and challenges in the industry. Mike says Paradigm now has to count on “how (artists) are doing on radio and on the road… There are so many people out on the road. Bands and artists – that’s the only way they can make money.” So if as a recording artist 90% of your income is from live performance and merch, then why is so little time spent on developing the live show?

I remember when I was touring in the early 90’s with Rymes with Orange, we would get back from the road after a few weeks and dozens of dates to finally declare that the live show was coming together. It took 20 shows of finding happy accidents and things that worked to put a great show together. So, we had 20 crappy shows to get to the first really good one? That is a bad model.

If I was starting out now, I would set up my band on a stage the size of the majority of the tour dates for rehearsal. Then, we would spend at least one day per song figuring out the best arrangements and the best way to have the band move and be set up. Then, once we had the entire set figured out, we would program the set to maximize the impact on the audience, taking into account the pressure on the audience.

I like to say that as a band you should always be playing for a bigger room than you are actually in or you are destined to stay in that size of room. You should be busting out of whatever room you are in. Looking for an agent or a manager? Blow them away live. I also notice that a lot of great bands are forced to make changes to their sets once a light man is introduced. Don’t wait for a light man to get an idea where you need to be in any given song. The spontaneity lives within the form (that I stole from Tom Jackson).

If you can play a show and change a person’s life, even a little bit, you will have a fan for life – and a career in the music business.

Bob D’Eith July 19, 2011

Just read an interesting article here on how music in the cloud is the future, and how this may result in increased compensation for artists. However, what is equally interesting is one of the responses posted below, from ‘Mr. Cranky’, who argues against most of the points raised in the article.

The response post suggests that charging a levy on all smartphones and PDAs sold would unjustly penalize users who don’t steal music, which is an argument that has been around since the levy debate began.

However, the response post also suggests that the lack of success of music subscription services is a result of ” the current lack of cultural importance of music than any particular failing of the services”. This is where I disagree. The use and enjoyment of music in our society seems to be at an all time high, as music is permeating more aspects of our lives than ever before. I recall reading an article last year that music is used more per day by more people than ever before. It is simply that no one is paying for it. The million dollar question that plagues the industry is ‘how do you compete with free?’, and up until now, no valid answer has been provided.

So, we know two things: i) use of music is at an all-time high, and ii) the ability to store and access music is becoming infinite. Now, I would be fool to proclaim the answer to the million dollar question, but one thing is sure: it lies in connecting the above two trends…and making the nearly infinite storage and use of music seem like it is free. Will this restore artist compensation to the (over-inflated) levels reached at the peak of CD sales? Clearly not. But it would be a start.

Kurt

In a recent article, Apple has agreed to pay Universal Music $100-$150 million for the right to include Universal artists in the iCloud: “According to CNET’s sources, the agreements call for the record labels to take 58% of iCloud revenue, while publishers will get 12% and Apple will receive 30%.” The amount paid to Universal will be an advance on the royalties to be paid out. All four majors are now on side for the launch of iCloud.

So, it seems that the much talked about “cloud model” is actually happening. But what does this mean to labels, manager, artists and other music stakeholders? So far, the subscription services seem to form the smallest portion of most online sales royalty statements, with iTunes downloads being the most significant portion of sales. If the download model is going the way of the CD (note the dodo reference), how will this impact on a very thin bottom line for artists and indie labels? Hard to say really at this point. Some have argued that the “music as water” model where everyone pays a small monthly fee is the way to go as this would generate billions of dollars in revenue. Others feel that the new model waters down the revenue streams even further and erodes copyright to an even greater extent than has been happening over the past few years.

The fact is that the world of music has changed forever and we all have to adapt to the new paradigm. We now have a generation of consumers who have never paid for their music and have no intention of doing so unless forced in some way. There is nearly a feeling of entitlement to free music downloads amongst many young consumers.

If recording artists cannot make money from their sound recordings, then how do we sustain the buisness? Many labels have moved to “360 deal” model to start sharing in live, merchandise, publishing and endorsement revenues. But often, they don’t know what to do with those rights as they are not savvy in those areas of the business. The roles of mangement, label, publisher, producer, studio and artist have all blurded to the point that it is very hard to draw clear lines as to who is doing what.

It will take some time to settle out, but it seems that this is the time where artists have the upper hand. With the majors losing their stranglehold on ditribution and the rise of digital aggreggators such as IODA, Tunecore, CD Baby and The Orchard, artists are able to release their own music directly. This means when negotiating deals, artist who own their masters are able to ask for more than they have in the past. On the flip side, labels are offering less and less in terms of advances and are signing less artists every year. Artist are having to develop themselves.

Will iCloud and other cloud services be the answer? Will labels rally due to these new services or continue to clounder? Will artists forgo labels all together? Only time will tell…but we are certainly living in interesting times.

 

Bob and Kurt are entertainment lawyers with extensive experience drafting/reviewing all forms of contracts related to the entertainment industry. Some contracts that the firm has been working on a lot lately include:

- management contracts
- license agreements
- publishing deals
- investment agreements (to secure funding for your next album/project)
- record deals
- band agreements
- producer agreements

Email us for a quote, and we would be glad to help! Whatever you do, don’t just sign without getting advice first! Click on Legal Services above for more.

 

Adagio Music Inc. is moving with the times. With the changes in the music business has come a re-focusing on what works and what does not. Adagio Music, while continuing to be a label and publisher for artists such as Mythos, is re-tooling to become a full service music consulting company. Adagio is able to provide full “business and legal services”, marketing and promotion, online distribution through IODA, grant application drafting, registrations with royalty generating organizations and other services needed for forward thinking artists, labels and managers.

Kurt Dahl has recently joined the organization and we are pleased to be able to offer two knowledgeable and experienced lawyers to help anyone in the music business navigate the sometimes bewildering mine field that is today’s music business.

One of the most important and affordable agreements a band or group of musicians can have is a Band Agreement. Whether you are just starting your career, or are on the verge of taking things to the next level, you need this simple agreement.

It deals with: who owns the songs, who owns the band name, how decisions are made, how money is split, and much more.

Many of the legal disputes that come across our desk could have been avoided with a solid Band Agreement.

Have a look at Kurt’s article on Band Agreements here to find out more.

With the first FACTOR application deadlines for 2011 coming up soon, we have posted an article about the application process. You can read it here.

We are going through some changes here at Adagio Music, so stay tuned for more news on what we have in store. And we will be posting more articles under our Resources section that we hope you will find useful and informative.

Here is some information on starting your own record label or publishing company. You can read the full post here.

This is the first of many articles we will post in our Resources section that aim to help artists, managers, producers, labels, and others working in music.