What They'll Never Tell You About the Music Business

by Peter M Thall

  I was recently reminded of the nightmare sometimes experienced by creative artists who sample long-forgotten works. The artists themselves are often ecstatic that they have been remembered, but their record companies put the kibosh on the use by overcharging or threatening copyright infringement were the artist to proceed with the sample. One artist’s solution? Do it without telling the record company that owns the sample. It probably has no clue as to what it owns anyway, let alone what it sounds like. Not a healthy situation when this is the most practical solution.

  Regrettably, you cannot usually rely on your (former) record company or music publisher to exploit your catalogues of songs and master recordings—especially if you don’t own or control them. The only way you can rejuvenate your catalogue is by being proactive, and designating capable people—whether your attorney or some combination of your attorney and the multitude of music supervisors and clearance houses that can be appointed—to take charge. In addition, there should always be a savvy accountant involved. But I have rarely known of an artist appointing anyone to take responsibility for managing a catalogue of music. Most artists think that their catalogues will be nurtured automatically. More magical thinking.

  The legacies of the great composers and artists of old—the Gershwins, Irving Berlin, even Leonard Bernstein—are all handled by “executors” who are charged with maximizing the estate and protecting the artists’ images. The lawyer for Cole Porter’s estate was instrumental in developing the Kevin Kline film De Lovely, which single-handedly regenerated that great author’s song legacy. Some music business professionals are uniquely positioned to coordinate the exploitation of both song and record catalogues—even if the artist owns neither the song copyrights nor the masters. If you can find someone to do this, even someone who is new to your life, you will be well served, as catalogue exploitation is a business in itself—whether accomplished by taking a song and getting it revived, by rerecording it or coupling recordings of it on compilation records, or by taking a master and finding a place for it in a film or commercial. The Buddy Holly catalogue was lying fallow until Linda Ronstadt recorded two of his songs. This was followed by the film The Buddy Holly Story and the musical Buddy, which remains a staple of the stock and amateur circuit and has had a ten-year run in London. And don’t forget Mamma Mia!, the “tribute” to ABBA. Or Smokey Joe’s Cafe, which gave new life to the songs of Leiber and Stoller. Or Moving Out, the musical featuring Billy Joel’s songs, or Jersey Boys, the Broadway show based on the story of the Four Seasons. Ray Charles’s last album, Genius Loves Company, was a singularly successful partnership between Concord Records and Starbucks. That album, together with the Oscar-winning film Ray, released around the same time, introduced Ray Charles to a new generation.

  Although there is no single person who can “wake up” a catalogue, your attorney, or someone operating under the attorney’s guidance, can play a kind of “central command” role. This person, working with an accountant, can also monitor the master recording licenses that will inevitably be authorized by the record company (which, through multiple sales and mergers, is most likely a successor to the artist’s original company). The income from these licenses should tie in exactly with the mechanical licenses issued by the music publishing company (which, like the record company, is most likely a successor to the artist’s original publishing company). Where they do not tie in, someone has either cheated or made a mistake—and the result is usually not to the artist’s advantage. This comparative analysis is best handled by a person who has the time and ability to scrutinize royalty statements as they come in (or track them when they do not come in).

  There is no reason why an artist or writer cannot seek permission to “work” a catalogue that he or she does not actually own or control; believe me, the record company and publishing company are likely to be thrilled, especially since in many cases they have long ago forgotten that they even own these works. Any number of deals can be worked out with them so that any income that is received can be shared with the artist and writer on the one hand and their “agent” for exploitation on the other, all the while providing unexpected new income for the record and publishing companies.

  But someone has to initiate it.

  As always, the best way to achieve a particular goal, in this case the optimal exploitation of one’s catalogues, is to assemble a competent team of persons expert in the music field and charge them with coming up with a strategic plan for accomplishing the goal. After all, there is money to be made.

  All managers bring with them their own backgrounds, prejudices, and paradigms of what they envision their role to be in the overall context of the artist’s life. And, as I have said previously, the different functions for which a manager is responsible beyond the abstract known as career planning—marketing, budgeting, scheduling, promoting, communicating, investing, and training—are all important and each requires a different degree of attention at one time or another. Yet practically, there will simply not be enough money going to the bottom line for either you or your manager to achieve perfection in all of these areas on any efficient or regular basis. This is not to say, however, that the issues should not be brought up frequently by you (or by your manager) and addressed in an ad hoc way whenever possible. A failure in any one of these areas can poison the entire financial and artistic program that has been designed so painstakingly by you and your team. This is all the more reason to be careful in choosing a manager and keeping that individual’s role under some contractual control. Of course, for some it will be difficult, if not impossible, to find a person who is willing to work for nothing now and a promise to be paid a percentage of some unknown sum in the future. The negotiating power—that is, the power to say no—is in the hands of the manager. Nevertheless, a few points of guidance should be useful for any artist, especially a beginning artist, in order to achieve some degree of control over how the relationship acts itself out.

  You have two principal goals. The first is to find the most effective people to represent you to the world. The second is to establish a system of checks among all the members of your team, which is the best safeguard against failure. Any system of checks must be tailor-made for the particular participants, but here is a brief list of some of the ways one can establish such a system.

  • A copy of every document signed on your behalf, whether by you or by your manager, under a power of attorney, should be delivered to you and to your attorney; if it is necessary for your accountant to have a copy, the attorney should be charged with that responsibility.

  • Establish regular get-togethers among all the key professionals on your team. Set up the meetings in the same way that organizations hold board meetings: Have each person review each area that person is responsible for. Introduce new business in an orderly fashion and delegate responsibilities and deadlines for accomplishing these. Have someone take notes and provide a summary of the meeting to all of the participants within a week following the meeting.

  • If the workload is getting out of hand or requires the addition of other participants, appoint someone to identify them, calculate costs, and set up a procedure and a timetable for completing the task.

  • As the workload grows, consider hiring a facilitator who understands how to flesh out a larger business; but in any event start expanding the organizational chart by setting up committees and subcommittees that can meet without the entire “governing board” and establish a timetable for them to meet, identify, and pursue their goals, and report back to the “board.”

  • Set up individual meetings with specific team members as appropriate. It is not necessary or desirable that all team members be at all meetings. For confidentiality reasons, for example, you don’t want your tour manager to know everything about your concerns about the financial viability of a planned tour because the information may seep down to hired staff who may make a run for it if they feel their jobs are not secure. It is perfectly appropriate for some people to be invited in
to a meeting and then excused after the need for their presence has ended. You should also establish regular meetings with your financial advisors, starting with your business manager; have your lawyer present at these meetings because it may turn out that you need to engage an outside financial advisor in addition to your accountant to serve your needs. (For obvious reasons, your accountant might not be the first to recommend this.)

  • Send your manager to business school. I’m not kidding. U2’s 2001 “Elevation” tour grossed $143 million from 113 shows in the United States and Europe. This is real money and a real business. How many businesses grossing that kind of money are run by people with zero business training? Prince Rupert Loewenstein, long-time manager of the Rolling Stones, was an investment banker. Many business schools have two-week, six-week, two-month, and longer programs specifically designed for managers of small companies, and the lessons learned can be invaluable not only as your company grows but also to ensure that your company grows.

  • Try to protect yourself from all possibilities, whenever they present themselves, for conflicts of interest between you and any of your professional representatives so that you are all in the same boat and what’s good for one is good for all and vice versa. As noted below, conflicts can arise when your manager, record company, producer, and music publisher, or any combination of these, is the same party. One of the successful ways to ensure open and honest performance by these entities, whether or not they are aligned, is by inviting their creative and administrative heads into some of your meetings to present their views of where you are and where you (and they) are going, and at the same time, to make themselves available to scrutiny and questioning from your professional team.

  • Finally, remember that trust is earned over a period of time; be prepared to loosen strangleholds over your manager as the manager’s worth to you is proved. Better still, don’t ever have strangleholds over your manager—just reasonable constraints.

  CHOOSING YOUR MANAGER

  How do you choose a personal manager? Slowly. Carefully. Openly. As you meet more people in the music industry—record company personnel, music publishers, agents, lawyers, other artists and musicians, recording studio personnel, and others—you begin to develop a sense of proportion and perspective. You learn about historical situations concerning other artists and you learn the parameters of trust. You learn to audition those who are auditioning you, to interview those who are interviewing you. Your instincts are useful, but obtaining concrete evidence of other people’s experience, willingness to help, and level of understanding of you and your music, plus cross-checking this information with others whom you have learned to trust, is the best way to choose an effective manager.

  At the outset, you need to consider in what areas you require the services of a manager. If you are a musical artist who aspires to become an actor, you should find a professional experienced in both fields—or, alternatively, two professionals, each of whom is expert in one of the fields. The contracts, contacts, relationships, and methodologies of these two fields are enormously different, yet the standard management contract typically blends them (as well as other fields) together. If you are interested in a theatrical career, once again you must consider the specific experience of the person whom you would have as your personal manager. Often the expertise of a given music business professional does not cross over into the areas of musical theater or drama. You certainly do not want to be in the position of having to find a manager for your manager. Rex Smith, the actor, was REX, the hard-rock band before his Broadway debut in The Pirates of Penzance. Kevin Bacon has a band! Kevin Spacey toured briefly when he directed and starred in Beyond the Sea, the Bobby Darin biopic. And don’t forget the Blues Brothers.

  Once you have pinpointed the kind of experience you need your manager to have, you need to consider other crucial areas:

  Does the manager work for other artists, and, if so, how many and in what genre? While you will agree to be exclusively represented by your personal manager, your manager will be free to provide similar services to other artists. (There is at least one positive aspect to the fact that your manager is working for other artists: the fact that he or she will be dealing with an array of other industry people. The broader your manager’s access to these people, the greater that person’s ability to utilize this network on your behalf.)

  Of course, this brings us to a frequently disturbing fact: that a manager who is working for more than one artist may have a time-availability problem. Ironically, the one-act manager of today, partly because of his or her success with you, may be a multiple-act manager (with a record label) tomorrow. This is an issue not just of time availability, but also of genre of music. If you are a heavy-metal artist, for example, and all your manager’s other artists are cut from the same cloth, a legion of conflicts of interest can arise. (You have just learned another lesson about clout: You want someone with it, but you also want to be the only star on the clout-master’s roster. If you are the only star on the roster, where is the clout? Hint: It is you.)

  THE QUESTION OF CLOUT

  There seems to be a syndrome characteristic of recording artists and songwriters that encourages them to blame others when things are not the way they want them to be.

  Why has your five-album publishing deal not been renegotiated even though you have only recorded one album? It has been five years, after all, since you received your first (still unrecouped) advance! Why did your record company refuse to finance a second video? Release a second single? Invest more money in independent promotion? Finance your tour to Europe?

  Call it greed. Call it desperation. Whatever the problem or dissatisfaction is, it could have been avoided if your manager, or accountant, or lawyer had CLOUT. Then you would not have had to deal with these issues because the person with clout would have just gone in and simply fixed the problems or made them disappear.

  Sometimes the idea that there is such a thing as clout is sold by some professionals—who, of course, claim to have it—to uninformed artists. It eases the artists’ insecurity and relieves them of having to take responsibility for their own careers. But mostly, I hear the term clout bandied about by artists, not managers. The truth is that there is such a thing as clout, but that having a manager with clout is not always the road to success. In fact, persons with clout can even have a negative effect on an artist’s career by disrupting relationships that have been carefully built over years. On the other hand, many personal managers can make a difference. Their clout works. My concern, however, is not that you should ignore power, status, prestige, contacts, or proven results from top personal managers. Obviously, sometimes, the right call to the right people can make a difference. My concern is that there is an overreliance of artists on others due to the fear that only through managers—or lawyers or accountants—with clout will the difference in a career be achieved. I don’t believe it will, and if you follow the guidelines in this and other chapters, you won’t either. What is forgotten in the mix is that the only real clout is the artist’s, through his or her songs and recordings.

  You must therefore be careful to question both the time availability of the manager and his or her career intentions with respect to other artists or other functions. You need to make sure that the managerial services reasonably expected to be provided to you will not be materially hampered by your manager’s other commitments. An important exception to the above has seen a great deal of growth in recent years and deserves mention: the conglomerate management company. Several successful management companies such as Front Line and Red Light have not only grown enormously in ways that used to be enough to cause artists to jump ship for lack of attention, but they have solved this inherent problem within a large, often faceless company, by acquiring small, successful, independent management boutiques. These managment boutiques have been given autonomy to continue to act as they have in the past, but they now have the clout and the experience and roster of the largest such companies in the world. Reco
rd labels are renowned for doing this (and more often than not absorbing the smaller companies, dismantling their staffs, and effectively annihilating their identities and all that made them effective in the first place (see Virgin, Chrysalis, A & M). Other management companies that followed this model, some more successfully than others, are Vector Management, the Sanctuary Group, and The Firm. The latter is a lesson in what can happen when power overtakes purpose. Mass resignations of The Firm’s most important agents left the company a shadow of its former self, and the two people who founded The Firm and ran it in its heyday in the 1990s are long gone. Sanctuary is defunct. And Vector has joined Front Line. So it goes.

  And what if your manager puts all of his or her efforts into your career—full-time? One of the concerns many managers have expressed to me is that if they do so, and are fired without cause, they will be worse off than they would be in a canoe without a paddle. They won’t even have the canoe. The manager who has formally contracted to manage an artist should be able to have some confidence that the professional relationship with that artist is stable. This will, in turn, allow him or her to commit more and more time to the artist as the artist’s career expands. Traditional contracts that provide a term of representation and a reasonable income participation are eminently enforceable, and an artist who tries to replace a manager in changing circumstances such as those noted above will be immediately reminded of this fact. That’s why they call them contracts. So have discussions about your concerns with respect to your manager’s availability early and often. Once you sign the contract, the issue is closed.