By George Howard
(Follow George on Twitter)

One thing’s for sure: people love lists.  Looking to get some traffic to your blog? Make a list.  In a few months, as the holidays approach, we’ll even see lists of lists (e.g. “ten best top 50 songs of 2011” lists).  So, it stands to reason that at some time the TuneCore blog would include a list; that time is now.

Herewith, The Top 10 Most Inaccurate, Erroneous or Irrelevant Things Being Stated about the Music Industry.

10. SoundExchange Sucks. This erroneous statement is a classic case of how a good PR campaign can trump truth.  Several years ago, while the Copyright Board was frantically trying to establish rates paid to rights’ holders for digital transmissions, SoundExchange and (most visibly) Pandora got into a battle royale.  SoundExchange represents performers and master holders (labels), and collects performance royalties when their copyrighted works are digitally transmitted in a non-interactive manner (as Pandora does).  Pandora argued that the rates SoundExchange was recommending that they and other non-interactive digital streaming services (web radio, etc.) pay were prohibitively high; so high, in fact, that Pandora essentially accused SoundExchange of attempting to put them out of business.  Pandora argued this case so effectively that not only did they call to question the rate structure, but also SoundExchange’s very existence.  Because of this, many, many artists were erroneously convinced that SoundExchange was anti-artist.  While we can debate whether or not SoundExchange’s proposed rate structure was/is too high, what shouldn’t be debated is the importance of SoundExchange to performers and master holders.  The reality is that if you’re a performer and/or master holder (for instance, if you release your own music), and you’re not a SoundExchange member, you’re forgoing your public performance income any time your music is streamed non-interactively.

9. Music is crap and cluttering.  This argument that has been put forth by any number of people who should know better, essentially states that because it’s easier than ever to create music, we have a marketplace full of bad music that distracts consumers from the so-called good music, and, thus, less music is selling (more on this below).  This is the “gate-keeper” argument.  It basically states that only “qualified” people with “discerning” ears should have the power to dictate what music gets released.  The great fallacy of this argument is, of course, that long prior to the vast amount of music being released that there is today, these “discerning gatekeepers” (A&R people, program directors, etc.) were wrong with their picks far, far more often than they were right.  In fact, the democratizaion of not just the creation of the music (via ProTools, etc.), the distribution of the music (via TuneCore, natch), and the promotion of music (via Social Media and Direct to Fan methodology) has allowed for far more artists to break through and find an audience that enables these artists to have sustainable careers — on their own terms — than ever before. Not to mention music sitting on Apple’s hard drive that can only be found if searched for, stops nothing else from selling.

8. Less music is selling. The above-mentioned gatekeepers tend to toss this inaccuracy around in conjunction with their spiel about clutter.  What’s most interesting is that even with the underreporting of music sales provided by the old industry sales monitoring system of  Soundscan, numbers are still being reported as up.  The spin of the old guard here is is equating fewer album sales with fewer music sales which is simply false.  By unit, music sales are up each and every year.

Then of course add on top of this all the music sales occurring outside of the Soundscan system (drop cards, CD sales at venues, data they do not get etc).  And now add on top of this streams and accessing music via the forthcoming iCloud service.

We hear 8-Tracks aren’t selling much anymore either, it certainly doesn’t mean music isn’t selling.

Here are Nielsen’s reports from the last five years…

Nielsen Music 2006 Year-End Music Industry Report 2006 U.S. Music

Nielsen Music 2007 Year-End Music Industry Report 2007 U.S. Music

The Nielsen Company 2008 Year-End Music Industry Report 2008 U.S.

The Nielsen Company 2009 Year-End Music Industry Report 2009 U.S.

The Nielsen Company 2010 Year-End Music Industry Report 2010 U.S.

7. The way to determine the success of an artist is via how many records the artist sells. This I blame on sloppy/naive journalism, but it does perpetuate a really bad myth. To understand why this is such a wrong-headed and troubling statement, you must realize that historically, artists haven’t owned their records — the record labels have.  There are typically two copyrights involved when a record is released: (1) the copyright for the songs on the album, which are owned by the songwriter (and/or publisher), and represented by the (c) symbol; (2) the copyright for the collection of songs as released by the label (the master), which is owned by the label, and represented by the (p) symbol.  As you might guess, when the record is sold it’s the label that derives the lion’s share of the income from the sale.  However, as the copyright holder to the song, the writer has vastly more earning opportunities than those derived from the sale of records.  For instance, when a song is played on radio, streamed online (Pandora, web radio, etc.), used in a commercial, used in a movie, covered by another artist, offered for interactive stream (Rdio, Spotify, etc.), sampled in another work, translated into another language, etc. it is the songwriter (holder of the (c)) who gets paid.

In today’s era where the actual sale of a download or physical copy of a song/album has become such a small part in the overall spectrum of ways in which music is used, it is simply crazy to judge the success of an artist based purely on the number of albums an artist sells.

As more and more artists are also their own label and publisher, it’s imperative to understand these rights associated with copyright, and how they have a direct impact on the different uses of — and, therefore, income derived from — your music.  Happily, we’ve created a free downloadable PDF that articulates these concepts.

6. The music industry is dying. Here’s one for all of you who might feel your place in the business is on the business side, rather than the performance side.  Look, to paraphrase the prophet Chuck D, “The CD business is dying, the music business is thriving.”  While Mr. D may want to update that to state that “The CD business and the download business are dying,” the essential truth remains: the music business is thriving.  Importantly, it’s not the music business that we traditionally think of (major labels, cover of Rolling Stone, etc.) that’s thriving; that business is in trouble.  Rather, it’s new models that are still emerging that are thriving.  There is entrepreneurial opportunity in disruptive times, and these are some disruptive times.  Music isn’t going away, and as with anything that plays a large role in peoples’ lives, there is money to be made in doing so.  Your job as an aspiring (or active) music business person is to stop thinking of it as the “music business,” and start thinking of it as business involving music.  Throw out the old paradigms, and instead begin thinking about how to build value (and multiple revenue streams) around the music/artist you (and hopefully others) feel passionately about.

5. The job of the artist manager is to get a band signed. No, the job of the artist manager is business development. Artist managers must realize that they are in charge of increasing brand equity for the artists for whom they work.  They must create value propositions between (directly between) the music creator and constituent.  If this results in a label coming along (and if you do it well, it will), the manager will be in a far better negotiating position if he or she decides that doing a deal with a label makes sense.

4. Music Business Programs are jive. Another one for those on the non-performance side of things. Are some music business programs jive? Sure. But so are some computer science programs or medical schools; it doesn’t mean they all are.  In fact, music business programs that teach you how to effectively create value around art, and find ways to sell something that is able to self-replicate, positions you incredibly well to sell just about anything else.  It’s sort of like taking the donut of the bat; once you’ve learned to sell music, when you get to sell something else.  It’s important to realize that the skills you learn are portable and applicable to other business, but, like anything else it’s up to you to see where the opportunity to apply these skills lies.

3. With the rise of the Internet/social media I can build an audience online. No. You can amplify the authentic connections you make offline via online tools, but you cannot create real connections online.  Think about why Facebook worked and MySpace didn’t.  MySpace was (odd that we speak of it in the past tense) a purely online experience; you “friended” people online and communicated with them online.  Facebook, on the other hand, from day one was about amplifying your offline experiences.  It’s essentially a photo sharing site, where the photos you take (took) offline can be viewed, commented on, and shared online.  The same is true with music.  You must build the connections offline through live shows, etc., and then use the social tools to amplify and spread these connections.  A pure online strategy won’t work any better than a pure offline strategy. And one other thing with respect to your online strategy: never, ever forget that you’re competing with porn.  Take a look at your site; is it going to beat out porn for the attention of your fans/perspective fans?  Make sure that your site is social, fun, and competitive and you might at least distract people from the porn for a while (I’m sort of kidding here…sort of).

2. Musicians are bad business people. This drives me crazy.  The windmill I’ve devoted my life at tilting towards is to try to convince musicians (and other creatives) that they can be good business people (and, unlike Mr Q, I’m hitting some). I’m not sure at what nightmarish stage musicians are convinced/convince themselves that they can’t be good business people, but you gotta stop thinking this way.  The reality is that most musicians lack any type of training to give them not only the skills, but, more importantly, the confidence to believe that they can be good business people.  It’s like asking some dude to operate on your knee without first making sure he went to medical school. The difference, of course, is that there are boundless resources out there (many for free) where you can far more easily give yourself the knowledge that will lead to the confidence to begin believing (and thus becoming) a good business person. We desperately need more artist cum entrepreneurs.  We desperately don’t need any more VC/bankers “dabbling” in the music business.

1. Never sell your publishing. I’ve saved the hoariest of music business fallacies for last.  I’ve had so many non-conversations that resulted in artists missing out on tremendous opportunities because somewhere along the way some “wizened” old music veteran took them aside in a smoky roadhouse, and said to them in an avuncular manner, “Son, I have only one piece of advice for you: never sell your publishing.”  This “wizened” dude needs to die.  Let me say this loud and clear, “No one wants to buy your publishing!”  Sure, there are many, many deals out there where you will have to share in the revenue generated from a song you wrote, and, with some frequency, you may have to share in the revenue of this song in perpetuity.  However, there is a spectrum of publishing deals out there — from full pub deals to admin deals to copub deals to admin plus deals — and none of them require you to hand over 100% of all of your rights in your song(s).  Now, undeniably there are scammers out there of all stripes, and you shouldn’t enter into a publishing deal (or any other type of deal) without an entertainment lawyer (not your Uncle Steve, the real estate lawyer) reviewing the document.  But you should also not dismiss publishing deals out of hand.  As above, you must look for any and all opportunities to generate revenue, and in an era of streaming and music placement, you really need to make sure that this particular part of your house is in order; a good publisher will do this for you.  Remember, if you’re not able to unlock the value of your song and you insist on holding on to 100% of it, that 100% of nothing is nothing.

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George Howard is the former president of Rykodisc. He currently advises numerous entertainment and non-entertainment firms and individuals. Additionally, he is the Executive Editor of Artists House Music and is a Professor and Executive in Residence in the college of Business Administration at Loyola, New Orleans. He is most easily found on Twitter at: twitter.com/gah650

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