Sunday, October 7, 2012
Saturday, October 6, 2012
Friday, October 5, 2012
Sunday, September 23, 2012
SoundExchange Is Now Trying to Double Sirius XM's Royalty Obligations...
Friday, September 14, 2012
by paul
by paul
The question isn't whether artists deserve to be paid. It's whether companies that are more than willing to pay are being asked to burden royalties that will either kill them, or force them to adopt extreme licensing and programming alternatives.
The sad part is that the recording industry seems determined to milk this cow to death. The majors are notorious for prying unworkable advances that ultimately suffocate well-funded startups, and SoundExchange - a former label appendage - seems determined to ratchet royalties as high as humanly possible. That is, irrespective of market forces, and at the risk of accelerating adoption of licensing alternatives that would greatly reduce the need for SoundExchange itself.
The latest developments reaffirm this assessment. According to details tipped by investment journal Seeking Alpha, SoundExchange is now pushing for royalty rates that would run as high as 20 percent of total Sirius XM Radio revenues by 2017, up from roughly 8 percent currently. So, more than double the current rate and a dramatic increase from current levels.
Immediately, Sirius is pushing for something in the range of 5-7 percent, while SoundExchange wants a schedule that immediately starts at 13 percent and escalates to the 20 percent marker. These rates are negotiated and determined by the Copyright Royalty Board (CRB), in processes that are complicated, time-consuming, and often produce inflexible results (but great for lawyers and bureaucrats). And according to details shared by Sirius, the resource and time costs required to arrive at these rates are stunning:
Both Sirius and SoundExchange participated in the CRB proceeding that set the statutory rates for the 2007-2012 license period. That proceeding involved over 26 trial days, 230 exhibits, 7700 pages of transcripts, and over 400 pleadings, motions and orders. ... In a lengthy written opinion affirmed by the D.C. Circuit, the CRB set the rate for 2007 at 6% of a satellite radio provider's gross revenues, rising each year to 8% in 2012.
And if all this seems ludicrous to Sirius, it's absolute insanity to Pandora, whose royalty obligations represent roughly 60 percent of total revenues. These are two of the largest streaming music services on the planet, and as you'd expect, both are taking affirmative action to fix the situation. Pandora - seemingly mired in permanent financial losses - is stumping to change royalty rates on Capitol Hill, while Sirius is moving aggressively to strike direct licenses with various labels and largely diminish SoundExchange's role in the process.
But don't whip out a violin for Sirius quite yet. The company now has considerable free cash flow, and is one of the largest entertainment subscription services on the planet. Which means they can probably afford it, but like most corporations, are uninterested in any massive cost increases and will fight them aggressively.
Which brings us back to direct licensing. The acrimonious backdrop in all of this also involves a major lawsuit from Sirius against both SoundExchange and A2IM, both of whom are accused of scuttling Sirius' direct licensing attempts. The technology now exists for one-to-one, direct-licensing arrangements, including accommodations for innovative uses like time-shifting and tethered storage. Those aren't permitted in more generic SoundExchange licenses, and starting in 2011, Sirius partnered with Music Reports, Inc., to craft individual deals that would eliminate the middleman and allow for a broader range of uses.
And, reduce a bureaucratic morass at SoundExchange that takes the form of massive unpaid balances and failures to distribute to many of the largest of artists alive. Sadly, a large chunk of collections never make it back to the artist, a situation that would only be exacerbated by increased royalty amounts.
Indie Band Figures Out How to Raise Money Without Using Kickstarter...
Friday, September 14, 2012
by paul
by paul
There's an obvious reason for picking Kickstarter, Indiegogo, Pledge Music, or any other crowdfunding platform to raise funds. They handle the all the details and financial aspects, but they also take a sizable cut for the privilege and make you play by their rules. Which is why LA-based indie folk band A House for Lions decided to build their own crowdfunding platform, and determine their own parameters with their own fans. That includes the ability to use money even if you don't reach a self-created goal.
The campaign used an already-created software package, is currently in motion and going pretty well. And it didn't take months - or even weeks - to set up. Here's a decription from the group's manager, Allie Shaw.
Even after jumping on the phone with people from Pledgemusic and Indiegogo, we still weren't convinced. Just look at the numbers and this is the percentages each takes from the campaign:
Kickstarter: 5%
Pledgemusic: 15%
Indiegogo: keeps 4% (or, if you don't make goal you keep the money and give 9%)
artistshare: 15%
Sellaband: 15%
Rockethub: between 4% and 12%
A House for Lions also wanted to give 10 percent to charity (Music Cares), so add that to the percentage and it becomes a serious chunk. Granted, there's the chance that you will get more eyes on your project on one of the bigger platforms, but that can be a crapshoot.
We also did some predictive analysis, and found out that reaching goals can be difficult - and perhaps more difficult on an established platform. Less than 50 percent of projects meet their goals, and other than Kickstarter I had a hard time finding stats. It didn't look good.
So everyone got together, and the decision was made: we had to roll our own.
Once we made that decision, things started falling into place. Mike the guitar player and graphic designer went on a whim Googled "crowdfunding wordpress plugin," (!!) and he came across a small number of possibilities. Ultimately, Ignitiondeck was definitely the most robust, easy to use, and well designed.
We were convinced we had to do this on our own, but getting attention was going to be difficult. This was a real problem for us: A House for Lions only has 1,100 friends on Facebook and realized that they would be relying heavily on friends and family.
We had to brainstorm. One idea was to make an engaging pitch video that could perhaps go viral and offer great rewards, then they would get the outside eyes on their own.
We're feeling happy with our decision, largely because we're playing on our turf. Because without the all or nothing model, we still get to make the album no matter what. Yes, there are models like Indiegogo that allow you to keep the funds that you raise without hitting your goal, but if you choose to go that route they take 9% (!!) of what you raise.
So it was on to creating the perks for the campaign.
Ahead of the campaign, A House For Lions released a free download cover of Tina Turner's "What's Love Got To Do With It" a couple weeks before the campaign to start some buzz and raise awareness of the band going into it.
And of course the guys are being creative as possible with the rewards. Many of the lower rewards include t-shirts and posters designed by the guitarist Mike. Oh, and what's a pledge drive without totebags? ;)
The response to the video and campaign has been pretty good! A lot of people have been sharing/Facebook'ing/tweeting it around the web. As of today (Friday), we've reached 63% of our goal with 77 backers and 7 days to go. I feel this gives hope to baby bands all over that this can be done with a little research, creativity and motivation.
And here's the link where you can find and help donate to the campaign. We kept it simple: ahouseforlions.com/debut/
Thanks for reading!
-allie.
Subscribe to:
Posts (Atom)