Amazon

6.1.2018

Passive Income In Artist’s Revenue Generation

Mika Karhumaa Articles Amazon, Articles, Artist, Book, connections, Footwork, Grant, management, Manager, Music Business, Music Industry, The Essence Of The Music Business, The Idea Behind The Music Business

In an ideal situation the artist’s distribution network and prevailing popularity match. Each measure transpires effectively towards the goal and allows the public make positive purchasing decisions. When the artist give interviews, perform live, or otherwise appear in public, the public have immediate access to the artist’s products, but they also have a prior information where to find them. If the artist or management neglects this, the artist cannot take advantage of passive income, at least to its fullest extent.

When the artist’s distribution network is setup, it takes care of bringing the products to dealers – in both physical and electronic forms. It is completely up to the artist’s management to decide how this task is taken care of. Many artists, because of the small size of their activities, do most of these things themselves – however this is not always an ideal setting. The goal of many artists is to achieve such revenue that they are able to outsource these activities to the record company or some other relevant player – depending on the business area in question. Here we come to what was meant by the prevailing popularity and efficiency of the distribution network. The more familiar, the more popular, or the more promising the artist is, the greater is the likelihood of industrial cooperation with the artist. Here we come to what the another article here meant about footwork. It is the main task of artists to make their activities interesting – it’s about pop music.

Passive income doesn’t mean the goal is to desire a state of affairs in which the money should come without doing anything. Not at all – it is the complete opposite. The job has to be done, but in advance. Music business earning logic has been arranged so that it possible to enjoy passive results. The clearest manifestation is found in music publishing. Song-writers get remuneration for the use of their songs whenever their music is publicly performed, or music recorded to a phonogram – as it is simply expressed. Copyright collecting societies and collective management organizations monitor the use of copyrighted music and collects royalties of their use. These organizations pass on royalties to the artists, provided they have affiliated with the organization as a clients or members. Copyright collecting societies, for example, grant licenses to radio stations or TV-stations when they play music in their programs. They also grant mechanical reproduction licenses when music is recorded on a phonogram. In this way it is perfectly possible that after writing a song an author of such piece can enjoy the copyright revenue only by joining such an organization. After that moment, he or she may no longer need to do anything, as the organization takes care of the monitoring of use and distributing royalties from the users to its authors. This is the passive income referred to in this article. The money doesn’t come from nothing but requires a prior work.

Here we come to the need of external help and the justification of its cost. In order to make passive income, the artist usually delegates powers to those who make the production available to the public. It is also about acquiring strategic know-how making that happen. Many record companies and music publishers are able to gain more revenue to the artist, even though they take part of the revenue. The question here is the price an artist should sensibly accept – as well as how much it is wise to give up decision-making power.

No one can find a song unless they know of its existence or various playlists or other industrial mechanism push it through. In the industrial sense, music producers and/recording artists don’t go looking for music they want to use from the massive registers of copyright organizations. To this end, the area has its own operator – music publishers. On a professional scale, their job is to do the footwork on behalf of the song-writers they represent. In this context, we do not take a stand in the legitimacy of music publishing. No – we want to demonstrate passive income and the meaning of its accumulation. If the author and music publisher end up in a music publishing agreement, the publisher will participate in the ownership of the catalog, yes. Consequently, the publisher gets the other half of the artist’s catalog insofar when it is associated with the publisher’s share. At this point, it is good to point out that 50/50 is not the only method of calculation used. There are also other kind of arrangements. It’s common practice that the artist gets to keep the writer’s share in full, but the artist and publisher share the publisher’s share equally. However, you cannot rely for this main principle – read the contract carefully. It may well be that with some income types, the split is something completely else. If this income generates a main income for you, even a small deviation can be meaningful.

When it comes to rehashing old songs, we find ourselves at the heart of the passive income. Previously released piece starts to generate additional revenue for its rights-holders. Kate Bush’s Running Up That Hill is a perfect example. When it got connected to Stranger Things in its Season Four, the song skyrocketed to multiple charts. For such songs, the footwork has already been done and its authors are in the ‘public domain’. Not to mention that for younger viewers, this song is completely new.

If the authors themselves intend to find performers for their songs, this footwork becomes their responsibility, in which the existence of the songs and their elements are brought to the attention of potential artists and producers. If the authors want someone else to do it, they will likely have to convince music publishers of the excellence of their songs. In a nut shell, in order to enjoy passive results, you must first succeed in footwork.

Passive income occurs also in record sales and streaming. All royalties received by the artist can be classified as passive income. When the artist has recorded the music and made it available to the public, the artist no longer needs to do anything. The operation is over. The popularity of the album determines the amount of revenue. If the artist succeeds in the promotion and gains popularity, this usually results in additional revenue. At this stage it is good to point out that communicating music to the public via radio and television or online is also a subject to copyright remuneration, not just album sales and streaming. Both the artist and the financial producer of a phonogram are entitled to earnings when the recording is played public. Just as it is the case for song-writers and music publishers, the recording artists also have their own copyright collecting societies. All the revenue gathered here is also classified as a passive income.

It is possible for an artist to become involved in passive income through other contexts than recording or music publishing. For example when their merchandise is sold on the internet by authorized dealers, or their music is associated with the film or other moving images. Passive income therefore concerns all activities that no longer require the artist’s physical presence.

As a comparison, live performances usually require a full show. Active income requires a physical presence and real-time performances by the artist before it becomes topical. It should be noted that passive income does not exclude income from active sources. Consequently an artist, acting as a performer of their own music, not only receive compensation for the show, but also as a copyright remuneration when their music gets performed publicly. The set information of the show, especially in festivals, can be a valuable thing. If the artist performs music created by others, then the authors of the musical piece will acquire passive income from that same public performance – and the performer will obtain direct premiums for the show.

Passive income has a meaningful plug-in to the artist’s business plan. The artist must be able to organize their activities so that it matches the prevailing popularity and physical presence of the artist. Otherwise there is a risk the artist’s promotion is done in vain. However, at the beginning of a career, when still making name for themselves, this is not always possible.

31.12.2017

Transferred Rights And Contract Types

Mika Karhumaa Articles Agreement, Amazon, Assign, Contract, Contract Types, Copyright, Grant, management, Mika Karhumaa, Music Business, Music Industry, Options, The Essence Of The Music Business, The Idea Behind The Music Business, Transfer

Here is the article on the transferred rights and contract types that I promised. Without further ado, let’s cut to the chase. And start with reality!

Oftentimes the artist has no choice but to transfer some of their original rights in pursuit of their business goals. In the implementation and organization of their business, the artist management (whether or not outsourced) is the responsible player when granting these rights, or licensing them.

This article is about assigning, granting or transferring the rights – depending on the term we want to use. And how this concerns to the artist’s private life, decision-making power and economic conditions. Each transfer of rights restricts the artist’s position to some extent. A minimum requirement when exercising these rights should be its counterweight, a royalty. Copyright is the most important trading good in this industry.

The artist management’s mission is to create and develop the artist’s business so that it serves the needs and the goals of the artist. The artist’s merchandise is their presence, the performances both live and recorded, and of course the music that lies under their performances. All of these activities are associated with respective copyright dimension. This usually means that the artist’s explicit consent is required.

Because success cannot be predicted very well, one must be careful when it comes to assignment of rights. The content, strength, duration or the scope of these granted rights is of importance in assessing the motives and commitment of each transaction and/or the partner that the artist is willing to have. To counterbalance the transfer of rights, it would be good to have a margin, something in return. The transfer of rights, thus, must never be free of charge. The artist’s business plan and current popularity is the thing that tells you what rights are relevant and which one of them should be excluded. The main rule could be that no rights should be granted in vain, just as an option without the implementation.

The rights to be transferred are either fixed term, indefinite or permanent. The most intense giveaway relates to the in perpetuity occasions. The music publisher’s right can be identical to that of the author (song-writer) – their right to the copyright will last the entire lifespan of copyright. However, the publisher’s right isn’t original as it is with the author, but a derivative. It will be born by the correctly signed music publishing contract. This agreement transfers to the music publisher significant rights – originally belonged to the authors themselves. The contract does not restrict the artist only for the duration of the agreement, but also in fact. In order to be justified, the artist has to make sure that the publisher plays their part. Otherwise the music publishing agreement is difficult to justify. The music publishing agreement grants the publisher to as much as 50 percent of the copyright-related revenue of the songs. It should also be noted that the termination of the music publishing contract does not always end the rights of the publisher to those songs that have been included as a part of the contract during the term of the agreement. Even if the active part of the parties’ agreement is terminated, the relevant rights of the publisher will remain in force.

A similar permanent right can be associated with the recording agreements. In these contexts, the permanent rights relate to the phonograms and other recorded material that the artist has recorded to the company – during the term of the contract. The record company obtain, under the terms of the agreement, the status of the financial producer which entitles to the producer`s right to the legitimate period of protection. The record company usually receives the decision-making power over the phonogram as well as the music publisher gets to the catalog they administer through the music publishing agreement.

This, for example, affects the artist’s position through the possible non-competition clause of the agreement. In general, the artist cannot record any songs to other labels during the term of the recording contract. The protection period is, according to established practice, five years. So, nothing prevents the artist from recording the same songs, as long as five years have expired since the end of the contract. Such a ban aims at the company to obtain a motivation for their investment – or at least it should. Hence, the main rule is that you shouldn’t grant these rights wider than necessary.

We are dealing with two fundamental concepts, a composition and its recording. These two concepts must never be confused with each other. This is also the point where we get to the point of this article. The term of the music publishing contract is not a synonymous for the terminology of the recording contract. Yet these two things are closely related. In where the music publishing agreement concerns the song, the recording contract is in connection with its recorded performance. The object of protection is therefore different to the same thing. For those artists, who also perform the music they have made, this division is extremely important.

The artist may also use fixed-term grants in order to implement their business plan. Honestly, this is something that’s embraced among the modern artists. The artist doesn’t forfeit their rights more than necessary.

For example, the booking agreement gives the agency a right to convey performances to the extent specified in the contract. As has already been mentioned, the transfer of rights is often long-term, geographically broad and exclusive. As we can see, the artist has to deal with the contracts in several interconnected business areas at the same time. This is an uncertain situation that causes headache while networking with contracts. The artist’s business areas are closely tied together. If some of the sub-areas do not function properly, it has effects on the other the areas of activity. It is therefore advisable to have various exits for this opportunity. The artist is certainly not happy with the situation where the performances would be and streaming takes place, but no continuance for some reason. If the artist cannot match the current demand or demand isn’t in anyone’s agenda, the artist will not want to adhere to the contract that, through exclusivity, prevents their forward in other occasions. Each agreement should have an exit, if the parties intensify so that the co-operation is no longer possible, or cooperation simply does not work. This is a manifest of why each transfer of rights should be conditional, if only possible.

When designing the artist’s business plan, the risk management is extremely important. Where the business plan focuses on the maintenance and improvement of the artist’s economic conditions, the agreements should address the possibility that things will not go as planned. Therefore, mixed-type contracts should be avoided. It is not uncommon to be enthusiastic in the negotiation phase. The artist’s interest groups (record companies, music publishers, booking agencies, external financiers, merchandising holders etc.) may have a willingness to participate in the artist’s business in the areas outside their heartland of competence. In an ideal situation, everything would remain in the hands of a competent, committed and trusted group, and there would be no disagreement between people over time. But this is rarely the case. It requires no more than one key player to change the organization, industry, or retirement and the operation gets a whole new direction.

In the middle of all this it is easy to forget what this is all about. Due to the copyright dimension and its relation to the business plan, it is about the transferring the rights and the consideration paid to meaningfulness of it. Each business area needs to be organized separately, even if the same operators take care of them. Every business area must also considerate as a separate unit. They must not be dependent on each other if something goes wrong. This way you can easily get rid off the vain parts and leave the functional parts just to be.

The contract-type boundaries will come out well in the following example. The parties end up with a wide-reaching collaboration that tangents more than one artist’s business areas. In such a situation, the parties will almost certainly have to resort to the types of the contract that the industry is familiar with. If some of those agreements resemble a recording contract, it may automatically hint an impression of the exclusive right is present in all of these agreements. If this isn’t the case, it requires reservations.

When you grant the rights originally belonging to you, do not grant them more broadly than the relevant business plan requires. Never give up rights unconditionally. If the promised performance of the counter party falls short, you must have a chance to react. With the utmost care you should be with the music publishing contracts, as they can be eternal. Each song that is considered to be a part of the agreement under the music publishing agreement will give publisher a status that entitles them to administrate the songs and to receive up to 50 percent of the copyrighted turnover.

No matter how enthusiastic you are about your new partner, do not mix the plans and agreements with each other. The terminology that goes beyond that scope should be critically addressed. To avoid an imagination that could infer that the rights would be extended more broadly than the original purpose. The same applies to the options. To be justified, its realization should be in some way realistic. If the artist accepts an option that goes beyond the resources and willingness of the partner, their whole career may be at risk.

Mixed-type contracts can also pose problems – even with a functioning relationships. The management agreement between the parties may work flawlessly, but the prospective cooperation in production precipitates. If the agreement is principally in the exclusive domain, the productive parts may also be considered as exclusive. In such an imbalance, the management party hardly hesitates to withdraw from the production side of the plot, but if the disputes for some reason will arise, the contract and its contents will certainly have to interpret. Although some of the examples in this article are far-fetched, it is sensitive to keep contracts apart – even for your own peace of mind. When the obsolete parts of any cooperation are easily removed, it is easier to plan the future.

The purpose of this article is not to comment on how the artist should organize their background organization and business. The purpose of this article is to demonstrate the significance of copyright. It is as important to understand that they are not identical in all areas of activity. The artist’s business plan tends to live and transfer. A joint business plan and related agreements should safeguard the position of all the involved so that it is able to focus on the essentials. If the parties have chosen a cooperating model in which, for example, the other party to the contract carries out both the artist management and the actual booking, each task has to be the subject to a different contract. If the management decides to abandon the booking, or booking the management, this part can be terminated and continue with what the remaining cooperation is going to be. If the artist’s record company and the music publisher are the same, these issues should not be agreed upon in one agreement only. If such a crazy situation has happened, a special attention must be paid to the publishing rights. Particular attention must be paid to the artist’s ability to change the record company or even to terminate the agreement. If the publishing rights are tied to the recording agreement, the publishing part of the agreement should also be terminated to that extent. Consequently, only those songs that are recorded by the artist during the term is then included in the publisher’s domain. All the new songs cannot then be included in the catalog.

The main rule is that if the rights are to be transferred, they should be granted as narrowly as possible. These rights can always be expanded in the future, if there comes a reason to do so. However, the artist is the party who needs proof that there is an economic justification for each transfer of rights. The other half of the artist’s freedom is the exits. Although the music industry contracts are often long-lasting and include options, you must be realistic with them. The artist has to be able to get rid of the contracts if the business plans behind them do not correspond to the reality.

30.12.2017

The Idea Behind the Music Business

Mika Karhumaa Articles Amazon, Articles, Artist, Assign, Book, Celesty, Cold Reality, commercial, connecting, Contract, Copyright, exploitation, Footwork, Form, Grant, Granting Rights, immaterial, Level, management, Manager, Mika Karhumaa, Music Business, Music Industry, production, Profitable, Reach, RIght-Holder, Terms, The Essence Of The Music Business, The Idea Behind The Music Business, Transfer, Vendetta, Winterborn

When we are approaching the music industry as a business, we are dealing with quite an ingenious revenue generation model and logic. The strong role of copyright or the meaning of ’footwork’ plays a significant part in it. To an unacquainted viewer, this can be a challenge. The idea behind the music business is present beneath the surface. Instead of monitoring by eye, the focus should put more into tactics and strategies behind them – and even more to the core intentions that each operator truly is aiming for. The idea of everything is to get produced material along with immaterial elements into the profitable form for consumers to listen and watch.

People consume products of music for many purposes and reasons. More there are possibilities to enjoy music – more roaring each prospect may turn to. Music industry is known of its ability and willingness to drive new technology in to its own systems. Every new invention enables a new way to listen music.

The production of the master tape is a two times expense. The process should entitle the licensee to produce music into different formats or products for sale or to be streamed. Booking a studio, hiring the personnel or a pre-production is the physical part – a ’courier service’ to record a specific amount of performances to be released in future. However, the production cannot be exploited without the relevant grants for its immaterial content – the composition and its recording.

The twist comes along with copyrights and other immaterial property rights. It is good to make a distinction between one-time expenses (cost-items of physical recordings) and recurring expenses (authorization of exploitation) while building a business around it. Compensation for these rights-transferring agreements is the cost-item which entitles the exploitation in a granted territory to the extent that is specified in the licensing agreement. All commercial use of music requires a notification of copyrights in order to be exploited and used. It is usually considered as royalties and other copyright compensations to the relevant rights-holders. It is natural that copyrights reduce the profit of every manufacturer and operator who wants to exploit the music in itself or as a part of their own commercial operations. For the industry this share is an important cash-flow-channel, a reason to produce music.

Footwork in turn, that non-profitable activity, is something to be addressed. Footwork is something that starts all. It is the way in. Everyone has heard about connecting and its meaning for career. This is one of the most misunderstood issues. It is – as usually associated – not ’connecting’ at all. Connections are the consequence. They happen while working together for the joint destination. It all starts from the little circle and the bubble grows bigger – at the same time the operative environment gets larger. There are no short cuts in building your network. Meeting people at the parties and in other similar events is not so meaningful as people often tend to think. The initial meaning of networking is to get know each other via actual work, activity or common business, not only in Person. While working in that stage, it is easier to develop and learn. This is what the word footwork basically means. The same applies to business. True connections are always earned. Usually the release is the moment that fulfills the said requirement.

If every accomplished session is taken as an acquired connection, each release is then counted as a resource. Discography or back-catalog is comparable to money. The same happens with every accomplished and notified business. It is all about the release and results. From that moment it is not possible take that achievement away. After the release, also the vital copyrights will be activated and all the potential input can be channeled to its makers in a way the rights are originally, or as a derivative, established.

The idea of the music business is to get that immaterial substance into the physical, profitable form. It is important to make a distinction between direct and indirect goals. Direct goals occur when money change hands. If you sell your album to your fan, you will receive the payment. If your recording gets streamed online, you will get royalty. All this happens due course. Direct goals are something you can more easily affect. You may convince your fans to buy your record. Or you can get people stream your music on Spotify. The end user has made a decision to listen to your music.

Indirect intentions are the other side of the matter. You now need to convince the gatekeepers first. If they like what they hear, they probably place your music available. For example, if some radio station decides to play your music, you will receive performance royalties.

It is the copyrights and related rights which have an elementary role in pricing. The physical production of the recording isn’t necessarily an expensive operation. The use of its commercial exploitation can be. If you get an offer to place your music with the next Marvel movie, you will probably receive a substantive compensation for it.

An artist’s total income or turnover is a combination collected from the different sources. Availability is dependent on how largely the artist and their production have been distributed and made available for the public. This is always a choice and affected by many things. Not all the artists want to be present everywhere, when with some artists, this is exactly their goal.

At its most authentic form music industry introduces itself when the artist is having a show in front of the audience.

Popular music is a phenomenon that breaks customary barriers whenever it is possible. The origin of a song and its performer have no longer same role it used to have. Nowadays, there are no requirements to born or move to the United States to become a world-known artist, manager or producer. At the same time the technology reduces the margins, distribution have become easier and cheaper. That progress is a double-edged sword. Some artists benefit of this and others don’t. The fact is that none of this changes the essence of the music business. Supply and demand goes the same way it has done for last 50 years. There has just came new ways and technologies to consume music. It is all about how the fans and listeners want to hear it. This is the request for which the industry have to answer – everyday.

The songwriters are the production units of this branch. They either by themselves or jointly bring forth the substance for the performers to record. Technically this production is provided by composers, lyricists, arrangers, producers and sound engineers. They create the facilities for the performing artist.

When the artists then make themselves known with the footwork and make their music available to the public, we are reaching the level of artistry in which the enjoyment of passive income is enabled. The turnover and its magnitude are not relevant here. The main goal is to get something released. What it ultimately generates, depends on the reception of the audience.

to be continued..

21.2.2016

Quotations

Mika Karhumaa Articles Amazon, Articles, The Essence Of The Music Business

Here are some leftovers from the writing process. I will leave them exposed before I find a context or another use for them. Consider them quotations.

Make sure you are willing to accept the by-products of your achievements.

Don’t advertise yourself out of the game.

Success is really a desired state of mind.

Know-how isn’t a synonymous to desire.

Whatever you are about to close, do it in a way there is no need to return to it.

Be the part of your story.

Hearsay is not a substitute for experience.

They’ll give you prospects. You’ll give them history.

The turning point is the moment at which all that you’ve completed will start to work for you.

Good thing about education and experience is that it lays down with the fact that not all is necessary.

Discipline is a virtue. It is always better if today’s decisions will not ruin tomorrow’s opportunities.

It may begin with art, but always ends up with money. – Cynical attention to the management :).

Writing a non-fiction is like figure skating. First, a compulsory program must be completed, followed by a free program.

More quotations is coming in the future as the writing process continues.

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