The Business of Music Management

How To Survive and Thrive in Today's Music Industry

Tom Stein

• Publisher: Business Expert Press
• Year: 2021
• ISBN:
  9781953349675
• Topic: Media & Performing Arts
• Subtopic: Music & Business

Readers will gain vital and accurate knowledge about the music business, how musicians get paid, the legal framework for business, and will learn to recognize and leverage opportunities through overcoming the inevitable obstacles to success in a rapidly-changing industry.

The author offers valuable insights into the niche readers might fill with their career, and discover their unique path to success. Readers will come away with a greater understanding of the scope and demands of the music and entertainment industry.

CHAPTER 1

The Business of Music Is Still Business

Being good in business is the most fascinating kind of art. Making money is art and working is art and good business is the best art.

—Andy Warhol, from his book The Philosophy of Andy Warhol (1975)

Art Versus Business Art

When I visited the Andy Warhol museum in Pittsburgh, PA, I was stopped in my tracks by the preceding quote, which is prominently displayed in the entry lobby which leads to the galleries filled with his works. The idea of business as art or business art cut very close to my psyche in light of my own musical journey. As a young man I had been terrified of “selling out” by producing music that would be “commercial.” My idealism had pulled the wool over my eyes about what it really takes to have a career in music. I suffered from naïve misconceptions and prejudices about the music business and about business in general. Looking back, I saw these misconceptions had kept me from my goals. Standing in the lobby of Andy’s museum in Pittsburgh, I finally embraced my true calling as a musician. I saw clearly that to create great music, I would also need to create the business of my music. The business of music is business. There is music, and then there is music business. They fit together like a hand in a glove. Warhol’s quote made me see that. The music is the product, and the business is everything else that it takes to get the product to the consumer, like marketing, sales, management, finance, branding, products, services, packaging, planning, and organization. Andy Warhol was the consummate organization man, perhaps a quirky CEO, but a CEO nonetheless.

Andy Warhol (1928–1987) came from Pittsburgh, attended Carnegie-Mellon University, became a successful commercial illustrator in the 1950s after moving to New York City, and then became a leading figure in the visual arts movement known as Pop Art. He is credited with inventing the slogan “15 minutes of fame” and he was also a movie director and a music producer, producing and managing the influential psychedelic rock group Velvet Underground during the 1960s. Today, his paintings sell for millions of dollars.

Years before my epiphany in Pittsburgh, I picked up a copy of Special Events: Best Practices in Modern Event Management, a textbook by Certified Special Events Professional (CSEP) Joe Goldblatt (1997). As I leafed through the book, I noticed there was a chapter about music. Written from the perspective of an event planner, music was presented as a subfield of the events business. This made perfect sense to me, since live music is often used at all kinds of events, from weddings to award ceremonies. I had been working as a hired musician at events for years, and it had never occurred to me that I was in the events business. As I read the rest of the book, I couldn’t stop thinking about all the other industries that music is a part of.

Music Sectors and Subsectors

Music is everywhere—movies, video games, advertising, sporting events, shopping malls, stores, restaurants, elevators. Every time we hear a song in the background, some musician had to write, arrange, perform, record, publish, and license it. Music, as an industry, has its tendrils in many other industries. Music is not only a subsector of other fields; it also has its own subsectors. Recorded music alone is estimated to be an $18 billion industry globally. The live music and concerts industry is valued at around $13 billion. Then there are music products, such as instruments, amplifiers, microphones, studio recording equipment, and even band uniforms. Music education, music publishing, sheet music, music for films and video games, music for advertising (jingles), music for television, karaoke, and music streaming; music is a sizeable industry as a whole and is incredibly diverse in all its parts. As an industry, music is also projected to grow in the future, as the world economy also expands (See Figure 1.1).

Figure 1.1 Global music industry revenues

Like all businesses, music is competitive. There is no easy business, or everyone would be doing it! Everything about being in business is difficult, but that doesn’t mean it’s complicated. As we begin to describe the music industry as a sector, and as a subsector of other industries, and as we examine further the subsectors within our industry, you will see the layers unfold. It’s a fascinating business, with seemingly endless opportunities to innovate. It’s also a fun business—at least I’ve always felt this way about it. If you love music and care about bringing music to the world, you should also love the music business. There’s no reason not to.

Diverse Income Streams: Music Careerism

I used this idea of sectors and subsectors to design and develop my own professional music career. My framework is as follows. Combining my talents and skill as a writer, performer, producer, business executive, and educator, I earn my living by doing a combination of all these things concurrently. Taken together, they create a stream of income to support my living costs. While any one pursuit might not provide me with enough total income, in combination they do. I call this concept multiple income streams or diverse income streams. My analogy works this way: each activity provides a stream of earnings; together the streams turn into a river (of money) that flows into the lake, which is my bank account.

This concept was useful for my own career, and would later lead me to designing my own career matrix, as I will show you at the end of Chapter 2. My job title, or occupation, might be listed as musician, producer, or educator based on what I am doing at the moment. I call this concept music careerism. I could call myself a music careerist. Since most wouldn’t understand what this means, I normally just tell people I’m a musician.

Revenue Streams and Trends

This book helps you identify and learn how to access the many revenue streams for musicians. Since business is characterized by rapid change and constant upheaval, new opportunities and income streams continually appear while others disappear. Artists must look around corners to forecast new trends, adapt, and then move quickly to leverage new opportunities. Since change is all-pervasive and constant, we must plan for it and always innovate, correct course, and execute effectively in the new business environments. This precept applies to all businesses, especially music.

As change continuously unfolds, we should study the markets and look for patterns. For example, the use of music for visual media has been a growth area for many years. From 1999 to 2020, sales fell from physical copies of recordings, digital downloads came and went, and finally, streaming came into wide use, boosting revenues again.

Performing rights organizations (PROs) collect royalties from music used in television, movies, videogames, and advertising, which is a highly complex task. There is no central clearinghouse for collections of all royalties (yet), so performers and composers rely on the various organizations to collect royalties for the use of their music. As sales from recorded music fell, artists worked to replace that income, from sources such as licensing and concertizing.

Recently, new legislation in the U.S. Congress sought to protect musicians’ rights. The Music Modernization Act of 2018 (MMA) attempts to update copyright laws in the United States to apply to the digital age. At the end of this chapter, I’ll discuss this further.

As far as future trends go, the use of blockchain technology holds a promise for better tracking of music revenues, but is likely a decade or more in the future as of this writing. It’s important to pay careful attention to the changes occurring in the music business, to discern and stay on top of trends. Nobody can see the future, but that doesn’t prevent us from trying to look around the corner to see what might be coming.

Monetize Your Music, Expand Your Business

Musicians find ways to monetize their music and image beyond recorded music and performances. Like many other female artists, pop star Katy Perry has perfume, shoes, clothes, and makeup lines, as does Rihanna. Although Jay-Z cut his teeth as a rapper, the bulk of his income comes from nonmusical ventures. He owns a clothing line, and he’s expanded into sports management, founding a high-end boutique agency and earning certification to represent athletes to Major League Baseball and the National Basketball Association. On a smaller scale, independent musicians and bands often earn the bulk of their revenues from selling merch, short for merchandise—T-shirts, hats, and other items—before and after their shows.

Many accomplished musicians find careers in teaching. Music education is part of the music industry, though not everyone would immediately recognize it as such. There are celebrity music professors, and a good number of session musicians and orchestra performers also teach privately or at a school or university. There are online courses and subscriptions to music tutorials. Don’t ever let anyone tell you there is no money in teaching. It’s not unusual to find millionaire professors at top schools.

Then there’s the musical instruments business, music software, music production and engineering, sound design, karaoke…when we combine all aspects of the music business we start to see a vibrant industry offering wonderful career opportunities for so many. Music is a sustainable engine of economic activity which for the most part doesn’t use excessive raw materials or degrade the environment. Music has the power to reach across cultures, languages, and borders. As famous guitarist and composer Frank Zappa once said: “Art is making something out of nothing, and selling it.”

Intellectual Property

The legal framework for music (in the United States) was originally proscribed by the Constitution. Clause eight says: “Congress shall have power to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” Over the years, Congress has passed laws to protect these rights of creators, most recently the Music Modernization Act of 2018, which was passed by a unanimous vote. (Disclaimer: I am not a lawyer and therefore cannot dispense legal advice.) Musicians don’t need to be trained in law to understand their rights to ownership of their intellectual property (IP). These rights are covered by copyrights (literally: the right to copy), sometimes called soft IP, versus the patents protecting inventions, known as hard IP. Whether soft IP or hard IP, the laws protecting ownership of rights to revenues from IP are very similar, and protect creators from infringement and outright theft.

Professional musicians and others in the music industry should understand how to protect their IP, register and publish a work, get a copyright, license to others, and properly calculate and distribute earnings from their works. While these things are not especially difficult to understand, artists usually retain a qualified entertainment attorney to ensure that laws are adhered to, and the application of the laws and their own understanding of them are thorough and up to date. As with most laws, there are many areas that are open to interpretation. As just one example, there is currently a split in the U.S. federal courts between the 6th and 9th Circuits (Nashville and California, respectively), about how much of a previous work from another artist can be used in a digital sample without compensating the original artist. This split will eventually be settled by the Supreme Court, but to date nobody has yet brought a case on the matter to the highest court.

Copyright protection and payment of royalties can get a bit complicated. For example, a recording or video of a work has a separate copyright from the composition of the work. Copyrights on recordings are sometimes called mechanicals or master license and may be shared by the producer, engineer, recording label, or others involved with the recording process. Who gets what is decided by special written agreements which are not always properly in place. Disputes over ownership of recorded music have led to numerous legal battles which have often served mainly to enrich entertainment attorneys. Additional layers of complexity may come into the picture when commercialization of a work occurs globally, as each country may be governed by a different set of laws, and there is no central clearinghouse to keep track of all proceeds from musical works. As mentioned earlier, blockchain technology seems to have the potential to change this, but any solution is still years in the future.

Protecting legal rights of artists through publishing, licensing, and syndication deals can feel daunting for the uninitiated, but what you need to know isn’t limitless, and the knowledge is accessible. Since change is constant, even the professionals struggle to keep on top of how things are handled with their music rights. Performing Rights Organizations (PROs) such as ASCAP, BMI, and SESAC help composers, songwriters, arrangers, and producers understand the law and collect their royalties. We will discuss music publishing, licensing, and syndication in more specific detail later on.

Music Modernization Act of 2018

The Music Modernization Act of 2018 was the first major legislation to affect music royalties passed since the Copyright Act of 1976. If you consider how much has changed since 1976 in how music is created, sold, and distributed, new legislation was long overdue. It’s notable that this law passed both houses of Congress without a single opposing vote. The law regulates how musicians are paid from digital sales and streaming, and sets up a clearinghouse for mechanical rights for engineers and producers. It also affects how royalties are paid for music produced before 1972. While there was unanimous support for the law’s passage from musicians and creators, not all the music labels and distributors were happy, since the law potentially impacts their revenue streams.

The new law makes it easier for songwriters to get paid for their work, creates a clearinghouse for digital mechanical royalties called the Mechanical Licensing Collective (MLC), funnels new money to older “legacy” artists who weren’t getting paid for...