Press Clipping
05/25/2018
Article
Music Biz Conference 2018 Download: How Artists Can Avoid Getting (Financially) Screwed (And Data Can Help)

How many ways can artists lose money? Let us count the ways. Bad management, promoters and/or agents; spending on unnecessary services; poor or no legal advice; failure to register with the proper collection agencies; failure to determine ownership splits early in the songwriting and recording processes; not having a solid business manager; and, a more recent addition to the long list: incomplete metadata.

The music market’s shift to streaming, as this year’s Music Biz Conference in Nashville made abundantly clear, has magnified the impact of these mistakes. The music business has very much become a data business. Incomplete or inaccurate data can cause legal disputes and hamper accurate royalty payments. Time-tested missteps still exist. Bad contracts rob artists of royalties. The typical artist contract can provide little income.

Take Silentó, a 20-year-old rapper from Atlanta whose song “Watch Me (Whip/Nae Nae)” became a viral sensation in 2015 and hit No. 3 on the Billboard Hot 100. However, Silentó says he signed an unfavorable contract with his producer before getting signed to Capitol Records. As the video racked up hundreds of millions of views, the producer was taking the lion’s share of the royalties.

Silentó now has a manager who reviews contracts and makes sure ownership is clear before music is released. For his upcoming eight-song EP, Straight Outta High School, Silentó says he’s moving slower and not making the same mistakes. His advice, he told Pollstar: “Before you even start the process you’ve got to write down the checklist, write down your resources, make sure they’re solidified.”

More advice in this vein was heard throughout the Omni Hotel in Nashville at the May 14-17 Music Biz, formerly known as NARM (the National Association of Recording Merchandisers, which changed its name to the Music Business Association and broadened its scope in 2013 – a potent symbol of the digital music revolution and physical’s retail downward spiral).

Many of the dozens of panels offered practical advice for aspiring musicians, established artists, young record label owners, and other music professionals who carry the risk inherent in their chosen occupation.

Attending a panel stacked with lawyers and a Q&A session may provide advice that either saves money or prevents a financial disaster. (A familiar refrain: “No, there’s no need to spend that much money recording and mixing a demo. Just write good songs.”) A panel can also provide guidance on the seemingly mundane and often overlooked aspects of being an entrepreneur. Do your own books or hire an accountant. Build a team with clear objectives. Have financially sensible contracts that protect your ownership of master recordings and music publishing rights.

Ownership disputes can be lethal. Entertainment attorney Ash Kernen told Pollstar he advises his clients to get the splits – each party’s share of songwriting credits – solidified as early as possible. “There’s nothing worse than if you’re fortunate enough to have a viral hit, and then get into a dispute with a joint author, or a co-author, because nothing will kill momentum like a lawsuit or a claim on the master and the publishing, or an infringement claim.”

Now that the recorded music business has become predominantly a quantifiable technology and data business, the absence of metadata can hurt an artist. If the songwriting credits are not attached to the recording, streaming services may not know which compositions need to be licensed in order to pay publishing royalties – this happens often and has led to lawsuits claiming copyright infringement.

Other credits should be attached to recordings, too: the producer, engineer, and musicians who performed on the recording. Artists simply can’t be paid without proper recognition. Information that once seeemd unnecessary takes on new importance in the streaming era. Listeners aren’t able to learn about a recording’s history without credits and liner notes (remember back in the day pouring over LP liner notes?). Users of smart speakers like the Amazon Echo can’t delve into music by requesting the music of a particular producer or recording studio; voice commands like “Who’s playing on this?” or “Who produced this?” for many would create a far better user experience.

A number of solutions already exist to fix data issues. VEVA Sound allows metadata to be recorded in the recording studio. Jaxsta has built a database of music credits to supply digital services correct information. SoundExchange has built its Music Data Exchange to connect the metadata of recordings with the song’s songwriters.

Many challenges exist outside of data. After leaving Warp Records, musician Jamie Lidell released his latest album, Building a Beginning, on his own Jajulin Records imprint with Kobalt handling distribution. Lidell worked with the label services company – Kobalt is known primarily as a publisher and administrator – because he retained ownership to his recordings. Releasing an album through a record label means “you’ll be in the hole if you work with [a label],” Lidell said in a panel titled “Empires of their Own: Artists as Business Owners.”

Self-releasing albums are fraught with dangers and the panelists warned artists to get a team in place before having success. Going solo may require a lawyer and accountant or business manager in addition to a publicist and marketing consultant. “You start down, let’s say, $100,000,” Lidell continued. He’d have a press person – probably the most valuable role, he said – but wouldn’t necessarily get value from a marketing team.

“People will take your money [and] throw them at things that aren’t arguably going to make you more money.”

Laurie Jakobsen of Jaybird Communications would agree.

The veteran publicist warned artists of having unrealistic expectations.

Jakobsen told a story of a well-to-do father who expected national print and television coverage for his unknown musician daughter.

She passed knowing full well another publicist would accept.

“There will be somebody to take that money for the work,” she said.

Ownership and the freedom independence presents are constant lures for artists.

Owning rights to master recordings can mean keeping a far more significant share of royalties than a recording contract pays.

Fewer sales of a self-released album can result in more money in the artist’s pocket. Ironically, Lidell says he made more money on two songs he uploaded to DIY digital distributor TuneCore than on his Kobalt-distributed record. Lidell’s example doesn’t apply to every release, however.

Artists who start a record label will encounter problems if they lack fundamental business knowledge.

Imagine artists that signed to a small label, received a modest advance that funded the recordings and didn’t receive royalties for years in spite of steady sales – it’s not hard if you try. Justin Buencamino from Prager Metis CPAs said the label roster will eventually want to know if they’ve recouped and will seek royalties.

“There will be people who depend on you … who have as much right to the money as you do.”

Success can be a double-edged sword for the independent artist. Think of a musician as a startup. Startups struggle to scale, or reach a critical mass, or struggle to scale when keeping up with high-speed growth. Artists have different problems with mass adoption. When artists shoot from near-zero to popularity, the business practices of a mom-and-pop shop can be inadequate.

“Don’t wait until you have a problem,” attorney Erin Love recommended. An artist might not need a team in place from step one. However, one should start having the right conversations and building relationships – with a business manager and a lawyer – to be able to put a team together when the times comes.

All that said, a financial disaster need not ruin a career. Silentó’s contractual problems have made him an experienced, knowledgeable musician less than a year after his high school graduation.
His past mistakes have fueled surprisingly strong confidence and optimism. “I’m not ready to lose,” he said. “I’m ready to win.”