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Berklee College of Music
Music Business Journal
Volume 5, Issue 7
www.thembj.org
A Marketplace Like No Other
By Kerry Fee
Over the years, the MIDEM Music Convention in Cannes, France, has been
looked upon as a staple for emerging trends
and new business deals within the music industry. It is now in its 43rd cycle and this year,
between January 23-27, industry professionals from seventy-eight countries discussed
the business and networked together. Among
the attendees was Allen Bargfrede, a professor at Berklee’s Music Business/Management
program. We were able to get some insights
from him and gain perspective on the event.
MIDEM, often at the forefront of
new activity within the music industry, has suffered a drop in attendance. According to Bargfrede, “it was less crowded this year; this is the
fourth time I’ve been, and numbers were down
about 13% and
as much as 20%
from two years
ago.” Bargfrede
wondered
if
the explanation
was the state of
the industry, or the decline in the economy, with its resulting travel cutbacks.
MIDEM is also in danger of losing
relevance. Says Bargfrede: “MIDEM started
in the 1970’s as a way for people to license
their music across borders, so if you were a
US label who wanted to license your music
into Europe, Asia and South America, you
had to get on a plane and fly there…[The MIDEM organization] created an event where
everyone descended on Cannes to meet with
people from around the world and knock out
deals all at once; now, however, with MP3’s
and technology, the need to sit down and play
music for someone face-to-face has diminished.” For Bargfrede, current shows seem to
be more about learning digital technologies
and less about actual business deals--although
many do take place. The keynote addresses
have also transformed the venue into a forum
for exposing and exploiting new technologies.
The show had a few changes this
year, and for Bargfrede an interesting point
was the merger of Midem and MidemNet. “For
years there had been just Midem, and when the
digital stuff started getting big they started
MidemNet [a special conference on digital
music]. MidemNet used to be added on to the
main show, and you had to pay an extra 350 €
to get in. To compensate for the drop in attendance last year they combined them. They realized it doesn’t make sense to have a regular
music conference and a separate digital music conference, because music is digital. This
year we could get into everything, and discussions about digital were not segregated.”
Mobile music, downloads, and streams are of
course becoming the lifeline of the business,
and MIDEM did well to integrate expert presentations of new media into the full program.
Throughout the conference, three
main themes emerged in panels and discussions: (i)
branding,
(ii) social
networking, and
(iii) international
publishing/licensing. Says Bargfrede: “there
were several panels on branding and music-and not just for the sake of the music but for
the brand itself.” Executives of Converse, NASCAR, Carhartt, Nokia, and PepsiCo discussed their strategies for integrating music
into their products. The sense was that the
music business has not yet fully capitalized the potential of the market and that the
branding of music is still in its early stages.
Branding in sports, for example,
is going to be big business at the World Cup
this year. But in America, the Dallas Cowboys, NASCAR, Bristol Motor Speedway,
and the Kentucky Derby already have their
own “official” sound tracks. Most of these
recordings are done as joint ventures, with
shared ownership of the copyright, creating a possible source of steady revenues for
both parties. Loyal music fans can make
good corporate customers and vice-versa.
NASCAR’s website, for instance, apparently averages nearly seven million unique
users a month—a boon for music sales.
(Continued on Page 3)
February 2010
Mission Statement
The Music Business Journal (of the
Berklee College of Music) is a student publication that serves as a forum for intellectual discussion and research into the various
aspects of the music business. The goal is
to inform and educate aspiring music professionals, connect them with the industry,
and raise the academic level and interest inside and outside the Berklee Community.
Inside This Issue
The Warning Was On Your Desktop
p. 8
Tampering With The Supply of
Live Music
p. 6
Nations That Are Beating Pirates
p. 9
Where Google Fears to Tread
p. 5
The Business of Lady Gaga
p. 11
Volume 5, Issue 7
Editor’s Note
Table of Contents
Greetings from the MBJ!
It is with great pleasure that I introduce you to our first issue of 2010. Many things have changed
for the better since the beginning of this year--we now have our own room for meetings in 7 Haviland St. and a great new website. However, one thing that hasn’t changed is our interest in digesting
the latest goings-on in the music industry, while thinking critically about the issues at hand.
MIDEM certainly is a place where many of the most pressing issues facing the music industry
are discussed at length by our industry’s leaders. Kerry Fee writes a revealing update on MIDEM
with insightful input from MB/M Berklee professor Allen Bargfrede, who attended the event this
past January. In addition, Tim Woo gives a student’s look at the year’s biggest event in music products: the NAMM show.
Certainly, few narratives that emerged this past year were as potentially rich in implications
as the Live Nation-Ticketmaster merger. We include two perspectives on the duopoly, one by Amy
Mantis, with comments from industry veteran Jeff Dorenfeld, and the other by Andrew Chandler.
We’re glad to have a new series dedicated to profiling key artists today and their business. Mia
Verdoorn has us take a closer look at Lady Gaga’s career, whose over- the-top personality matches
her entrepreneurial wit. Sarah Beatty, on the other hand, discusses managing a country artist. We’ll
also get a complete analysis of Apple’s newly announced iPad, which debuts this March, by Jamie
Anderson.
In many countries around the world, it seems copyright holders are gaining valuable allies
in their fight against illegally downloaded media. Boem Hong writes for us about Sweden and
South Korea, which serve as examples of how government-mandated programs can combine with
private-sector market ingenuity to raise music revenues in what once were the file-sharing capitals
of the world. I will try to shed some light on the issue in the United States, where ISPs seem to
be warming to the idea of graduated response type programs to discourage illegal downloading.
China, however remains embedded in a market where illegal downloads make up the status-quo,
and even Google can’t seem to find a footing there--as Minden Jones shows. Lastly, and perhaps
most importantly, Silvina Moreno writes a vital piece on Haiti and the quick reaction of our entertainment industry. The power of music is spiritual and key to understand our common humanity, but
its convocational appeal remains steadfast—and you can help.
Business Articles
MIDEM 2010............................................1
MIDEM 2010 (continued)........................ 3
Apple’s Ipad..............................................4
Google China.............................................5
Live Nation Entertainment (I of II)............6
NAMM Trade Show..................................7
Managing a Country Artist.......................10
Artists and Thier Business.......................11
2009 in Review........................................ 13
Live Nation Entertainment (II of II)........14
Law Section
ISPs and Piracy in the US..........................8
National Power and Music Sellers............ 4
Music & Society
Crisis in Haiti............................................12
MBJ Editorial
Mission Statement......................................1
Editor’s Note..............................................2
Upcoming Topics.................................... 16
Sponsorship
Berklee Media........................................ 15
If you haven’t yet, please check out our much-improved website @ thembj.org - where with our
new search feature you’ll find a valuable resource tool for your research into the music industry.
Thanks for reading,
Michael L. Benson
Management
Editor-in-Chief............................................................................................................................................................ .Michael Benson
Webmaster..................................................................................................................................................................Itay Shahar Rahat
Finance...................................................................................................................................................................... Dr. Peter Alhadeff
Layout Editor................................................................................................................................................................... Ryan Driscoll
Faculty Advisor......................................................................................................................................................... Dr. Peter Alhadeff
Contributors
Editor’s Note................................................................................................................................................................ Michael Benson
Business Articles.................................................................................... Jamie Anderson, Sarah Beatty, Andrew Chandler, Kerry Fee
Business Articles.................................................................... Steven Gringer, Minden Jones, Amy Mantis, Mia Verdoorn, Tim Woo
.Law Section............................................................................................................................................ Michael Benson, Beom Hong
Music & Society.............................................................................................................................................................Silvina Moreno
2
www.thembj.org
February 2010
Volume 5, Issue 7
Business Articles
MIDEM at Cannes 2010 (cont.)
Converse and PepsiCo were especially engaged with music and had significant
budgets to spend. For Bargfrede, though, this
is but one of many ways forward. “There is
just so much use of music now [in TV commercials, TV shows, and movies] and the
discussion was also about music being ‘spent
out’.” Another key topic at MIDEM, perhaps
predictable, was the dwindling monetization
of recorded music, although little was apparently offered at the show as a palliative.
Digital and streaming media companies featured prominently in various presentations, and these included YouTube and
Sweden’s Spotify. Bargfrede reported that
“there was a lot of discussion about the licensing difficulties that Spotify is having
in the US. I had breakfast with its General
Counsel, and she seemed to act like they were
going to have a New York office opened by
the summer. Then I read other things about
Warner Music not wanting to do an ad-supported service, so I don’t know how this will
play out.” Spotify does not have deals with
the majors yet, so there is indeed little traction
in the US. Nevertheless, Spotify CEO Daniel
Ek was intent on communicating the business
profile of the company to his international
audience, while making it clear that he is setting his sights high here. There was speculation too that Spotify’s ad-supported streaming
would not be profitable, just like YouTube.
Bargefrede observed that “the problem is
that [Spotify] isn’t making making that much
money; they are paying the labels 10% of
their revenue, but their ad sales are still relatively small.” Bargfrede wonders if advertising revenue is at all viable as an alternative
model to traditional recorded music sales
“No one”, he says, “has figured that out yet.”
There was as well a sense of dejá
vu at MIDEM. Social networking and media
are part and parcel of modern direct-to-fan
communication, but talk about Facebook,
E-Mail, and Twitter was not significantly different a year ago. Better cross-platform integration (one click updates all) was discussed,
and artists like Pete Wentz, of Fall Out Boy,
and Pharrell Williams discussed their own
experiences with promotional aggregation.
An integrated package for all social and networking media could help musicians a lot.
Interestingly, MIDEM 2010 seemed
to take on an educational tinge, especially
targeting aspiring managers. The MidemNet
Digital Academy hosted four daily one-hour
sessions on building artist websites for under
February 2010
100 €, and establishing a presence online.
However, what separates Midem from other
industry events is the almost exclusive focus
on the business side of music. MIDEM is not
artist centric. Bargefrede notes that “there are
not a lot of artists who attend, nor many are on
panels. It is mostly business people, and access
[to them] is easy.” This year, special focus was
given to the various uses and benefits of mobile technology, the monetization of cellular
phone applications, and the use of geographically specific promotional strategies (not just
for the music industry). Trends in multiple
rights deals were also considered and attention was paid to the entirety of an artist’s value
chain for purposes of revenue maximization.
The complexity of the moment was
captured, in Bagfrede’s view, by an exchange
he had with an Orchard executive who, after
working exclusively on digital distribution,
was now contemplating a backwards expansion towards physical product releases. In
reality, this convergence of the various trading domains appears to be less paradoxical
to industry practitioners than to futurologists.
Bargfrede, who has just published,
with Cecily Mak, Music Law in the Digital
Age (Berklee Press, 2009), is mainly interested in legal issues, so his take in this regard is more than informative. He says that
at MIDEM there was much discussion on
Pan-European licensing and how to roll out
music across Europe. “The big deal now is
how to license music in all EU territories at
once, rather than going to twenty seven different countries.” iTunes in France, for example, has a different IP address than iTunes
in Spain, and access is by national license
only. Says Bargfrede, “despite a directive by
the European commission in 2008 meant to
standardize licensing for music across Europe, no one has really yet figured out how to
properly implement it.” Neither is there anything out there to bridge the different licensing requirements between Europe and the US.
There are other international legal
issues that need resolution. Many US based
companies are dealing with a different set
of issues when compared to European startups. “Business is often different because the
law is different….Europe is much more progressive about piracy, and much more progressive about new business models—and
consumers are much more receptive to new
ideas over there too.” Therefore, in Bargfrede’s view, Europe can be viewed as a
prime testing ground for new business mod-
els. Ringtones, for instance, were popular
in Europe before they took off over here.
Copyright protection, as discussed
at MIDEM, is also more effective. Bargfrede
himself believes artists “are a lot more protected in the EU as far as what they can restrict
labels from doing; the recognition of ‘moral
rights’ makes a real difference and creators
have more overall control over their works.”
Such comparisons with the US are
sobering, and MIDEM continues to provide
a valuable forum to air such differences and
seek a more ideal and supranational integration for all music sellers, regardless of
their nationality. While music rights are
likely to be traded more and not less in the
international music marketplace, social and
networking media can never substitute a
gathering of music elders. This bodes well
for MIDEM. If it stays profitable, the business of music will always be better off.
The MBJ wishes to acknowledge MB/M
professor Allen Bargfrede for giving
his time generously for this interview.
www.thembj.org
3
Volume 5, Issue 7
Business Articles
The iPad
By Jamie Anderson
After what seemed like an eternity of
rumors and release date push backs, Apple has
finally announced its revolutionary new tablet,
the iPad. This 9.7-inch, one and a half pound
device is intended to be the perfect bridge between a computer and mobile phone (ideally a
Mac computer and an iPhone). With multi-touch
capabilities, an LED-backlit screen and the 3G
network of AT&T powering this device, it’s sure
to turn heads in any market.
The iPad was officially announced on
January 27th 2010 by Steve Jobs of Apple during a press conference held in California.
In this conference Steve showcased many
of the distinct features and programs compatible with the iPad. On the software side
of things, the iPad can run virtually every
application you already have on your iPod
Touch or iPhone on its larger screen. In addition to this, there are also programs you
can purchase made specifically for the iPad
itself. For example, the iPad can be used as
a mobile workstation with iWork, the Apple
brand of Microsoft Office. One can write
documents, edit papers, create labels, write
outlines and so much more remotely from
any location. Apple also introduced its
new iBooks store, an online e-book store
to compete with the likes of Barnes and
Noble and Amazon.com. One can purchase
any book from a wide variety of genres that
range from classic novels to new releases.
In addition to the iBooks store, one feature
Apple threw in with the 3G models is that
not only can you buy books, but you can
also subscribe to your favorite newspapers and magazines through the iPad itself.
Whenever a new issue of a subscribed periodical is released, it’s automatically sent
directly to your iPad and stored there for
future reference. According to Allison Haislip
from G4tv, “The iPad is anticipated to be the
‘Kindle Killer’.” Of course we’ll have to wait
until it’s on the shelves to make that conclusion.
For those of you who don’t want to
spend the extra money for iWork or a $30 per
month 3G data plan, the iPad still has much to
offer. Apple completely reworked their mail application, making it much easier to write, send
and sort through emails. They also redesigned
the calendar (also known as iCal), contacts and
notes applications to be more user-friendly.
Searching through your contacts is as easy as
flipping through a page in a book or simply selecting your person from a table of contents type
interface. Access to the iTunes store is available
4 www.thembj.org
through an included application, and it appears on the iPad exactly as it would appear
on your home computer. The fact that Apple
hasn’t opened up the iPad to different gaming platforms could come as a blow to people
anticipating this device as a new gaming tool.
With that being said, application developers
are working on new games that would work
better with the iPad than any other device, so
first person shooter and tower defense games
such as Nova and Plants Vs Zombies can be
enjoyed with ease.
On the technical side of things,
Apple has stepped up its game in the mobile
device market. With the introduction of its
new A4 custom designed chip, the iPad is
able to run flawlessly with its 1GHz processor. The iPad also comes fully equipped with
an accelerometer, which senses how you hold
the device (for games and layouts), a 25Whr
lithium-ion battery, a dock connector, microphone, SIM card tray (for Wi-Fi+3G models),
Bluetooth capabilities, built-in speakers, an
SD card slot for importing pictures with ease,
and much more. Pricing varies depending on
what model you get. Models with Wi-Fi are
$130 cheaper than the models with 3G and WiFi. The 16GB model with Wi-Fi is only $499,
making the 32GB $599 and the 64GB $699.
For Wi-Fi and 3G models, the 16GB would
be $629, 32GB $729, and the 64GB $829.
For a device of this caliber, the fact that Apple
chose so little hard disk space is a bit surprising. However, everything done on the iPad
can easily be backed up onto a computer so
there shouldn’t be a significant storage problem even with the smaller models.
As far as using the iPad as a media
player goes, it’s not that much different than
playing songs through an iPod touch. The iPad
comes with built-in speakers, so any music
stored in your iTunes library can easily be
accessed and played through the device.
For streaming music, applications such as
Pandora and Heart Radio are compatible
with the iPad and are free to download on
the iTunes store. Despite the fact that Apple recently purchased the music streaming
service LaLa, nothing new and innovative
has been released for the iPad concerning
this issue yet. Apple spokesperson Steve
Dowling commented on this issue, “[Apple] buys smaller technology companies all
the time, and we generally do not comment
on our purpose or plans,”. According to the
New York Times “If Apple introduces its
own cloud-based streaming music service,
it would let people skip having to download music they buy or synchronize their
music collection between their computers
and mobile devices.” This idea seems like
it would be revolutionary if introduced to
the iPad, however no public announcements have been made at this point in time.
The announcement of the iPad by
Apple has stirred up critics and fans alike.
It’s sleek design and user-friendly interface
is an invitation to Apple’s “magical and innovative” world. The way the iPad integrates
your work environment with your personal life
through the use of iWork and iCal will prove
to be extremely helpful in a business environment. With the addition of the iBooks store,
Apple has expanded its market past music,
videos and applications into the world of ereaders. Unfortunately, no significant expansions have been released as far as streaming
music from the internet goes, but one can speculate we’ll be seeing that technology soon.
Overall, the iPad is an exciting new
addition to the prestigious line of Apple products, but consumers will have to wait until late
March to actually get their hands on one.
February 2010
Volume 5, Issue 7
Business Articles
China and the Nasty Google Effect
By Minden Jones
Google’s recent statement that it
would be withdrawing its search engine from
China will disappoint many Internet users
there. Additionally, a Google departure would
stifle its pioneering development of a budding
but legitimate digital music market based on
advertising revenues. Baidu, its main competitor, is the real threat to the monetization of
recorded music in China. Finally, the Google
Top100 chart is desperately needed in China
as a pointer of music success and artist performance.
The circumstances leading up to
Google’s latest stance, as well as the role that
Google, Top100.cn, and Baidu all play in the
Chinese music industry will be examined below.
state censorship and cyber attacks may not be in
its best long-term interest.
been Baidu. Baidu greatly reduced the market
for record labels.
Top100.cn, on the other hand, is a Beijing based, ad supported online music store that
offers music fans of mainland China the ability to “discover, listen, download and purchase
other products, including ringtones, CDs and
concert tickets”. EMI, Warner, Universal and
Sony BMG have cooperated with Google and
Top100.cn to provide users with free downloads
and streaming in exchange for a share of advertising revenues.
This Chinese site merits its own story. It is the largest search engine in China and
controls approximately 63% of search-engine
share, whereas Google controls about 33%.
Baidu’s success is largely due to its encouragement of intellectual property theft, and its effect
on the legitimate music business has been disastrous.
It works like this: Google directs the
majority of Top100.cn users to licensed music
sites through its google.cn/music page. When a
Google, cofounded by Larry
Page and Sergey Brin, was meant “to
organize the world’s information and
make it universally accessible and useful”. This mission was greatly compromised in January 2006, i.e. the date
Google launched its search engine under
Google.cn. Like others, Google went
into China understanding that it would
fall under the sway of its authorities on
all cultural and political matters.
On January 12 2010, nearly
four years later, Google took a public
stand and announced that it would discontinue the practice of self-censoring
its search results and pull out altogether.
This was the product of another development
as well--digital thieves had raided Google’s
citadel and hacked into the gmail accounts of
local civil right activists.
Google’s initial stance was then reviewed. By January 21, CEO Eric Schmidt had
this to say: “We’d like to [stay] on somewhat
different terms than we have, but we remain
quite committed to being [here].” The CEO
then retracted an earlier impression created
by his company, i.e. that the cyber hackers
had come from China. That matter, he said,
“was still under investigation” (currently, the
evidence points to the hackers coming from an
elite university and a vocational school within
China).
Google’s exit would undoubtedly
undermine China’s incipient music industry.
The evidence suggests, for instance, that the
collaboration of Google Music and the site
Top100.cn, has produced some revenue. Moreover, Google has pioneered an advertisingbased free music service model, the first of its
kind for the California based company. Therefore, reacting forcefully to the double threat of
February 2010
song is chosen from the search results a Top100
window opens along with an ad and prompts the
user to download or stream.
In a country where 99% of all digital
music downloads are illegal, the business plan
seems to be paying off. Approximately six million songs are streamed or downloaded to Chinese mainland users each day through Google/
Top100.
Gary Chen, the CEO of Top100.cn,
says that “[Google Music] is legal and benefits
every party including over 200 million China
users who want to use legitimate services.” It
is a boon, moreover, for all music creators and
the copyright holders—which is why Top100/
Google Music has brought hope to the record
labels in China, both foreign and domestic.
This is also partly because before
Google, widespread piracy in China caused billions of dollars in lost revenues. When Google
joined Top100.cn in 2007, the latter company
was struggling. Many search engines in China
link to sites where users can download music
files illegally, and the main culprit has always
For example, a six month investigation by the UK based The Register, one of the
world’s biggest online tech publications, revealed that a Baidu search returned unlicensed
music results most often, connecting users to
“deep-links” of unknown third parties. Presently, offending MP3s can de downloaded
directly from Baidu’s search window.
Liu Ping, Director of Legal Services
at China’s Music Copyright Society illustrated the problem: “If Google’s search
works as a guide by giving directions and
telling you the address while taking you
right to the door of your destination, Baidu’s search brings you directly through
the door, right inside the room and helps
you take away the CD from the shelves
without the owner’s permission.”
Indeed, Google provides results to
licensed providers only, while Baidu
doesn’t even link to the two top legal
downloading sites in China, i.e. Top100
and 9Sky. And there is more. In response to
copyright infringement warnings, unlicensed
MP3s seem to move to other domain names that
are all closely related and part of a convoluted
and fuzzy matrix of pilfered music.
It is unfortunate that Chinese law
does not see the benefit of protecting the local
music investor. Universal Music, Sony BMG
Music Entertainment Hong Kong, and Warner
Music Hong Kong were unsuccessful three
weeks ago, after litigating for almost two years
against Baidu. The court did not censor Baidu’s
practices, which will stifle as well domestic alternatives to the foreign record companies.
Only a fourth of China’s population is
online. Yet if censorship continues, intellectual
property rights are ignored, and the machinery
of state fails to adopt a more impartial role in legitimate trade disputes affecting cultural goods,
the significance of a possible and definitive
withdrawal by Google would indeed be a serious sign for everyone inside and outside China.
www.thembj.org
5
Volume 5, Issue 7
Business Articles
Live Nation Entertainment: A Cheer for Sellers - I of II
By Amy Mantis
Back in February of 2009, Live
Nation and Ticketmaster announced that they
were going to merge into one mega company.
On Monday, January 25th, after nearly a year
of investigation, the United States Department of Justice approved the merger of Live
Nation Entertainment.
Ticketmaster was founded in 1976
by Albert Leffler and Peter Gadwa, two staff
members from Arizona State University.
Alongside businessman Gordon Gunn, Ticketmaster sold its first tickets for an Electric
Lights Orchestra show in New Mexico in
1977(1). The small company grew rapidly and
soon became the world’s largest ticket vendor in the US. By 1983 they had expanded
into the UK, signing large deals with the Superdome in Louisiana, the NBA’s Utah Jazz
(known then as New Orleans Jazz), the Los
Angeles Philharmonic Orchestra and LA Forum, LA Lakers, and LA Kings(2). They had
deals with venues in Canada as well as Norway(3).
Ticketmaster never won a popularity contest, nor, it seems, artists’ hearts.
In 1994, Pearl Jam wanted to offer summer
tour tickets to fans for under $20 and asked
Ticketmaster to charge less than $2 in service
fees(4). When it refused to do so, Pearl Jam
cancelled their tour and took their case to
Congress. More recently, Bruce Springsteen
took Ticketmaster to task for putting concert
tickets on sale at the Ticketmaster auction site
TicketsNow--before making them available
to the public at face value(5).
6
Live Nation emerged in 2005 from
a buying spree by radio giant Clear Channel(6). As music industry veteran Jeff Dorenfeld remarks : “to Clear Channel, it seemed
to make the most sense to develop acts while
simultaneously growing attendance at their
venues.” But the synergy did not work, largely because program directors in radio didn’t
seem to work well with concert promoters.
The result was the new Live Nation spun off
from Clear Channel(7).
Live Nation is considerably younger than its new partner, but it too has been
heavily criticized. Live Nation recently
joined in the ticket-selling game. Problems
abounded. For example, the band Phish became Live Nation’s first real ticket-selling
test when they sold tickets to their 2009 reunion tour through Live Nation instead of
its former competition Ticketmaster. Roll-
www.thembj.org
ing Stone’s Daniel Kreps would write that,
“according to reports across the Internet, the
concert giant failed to deliver as countless fans
encountered a system unready for the throng
of Phishheads scrambling for tickets …[resulting] in users losing the tickets they were
in the process of buying”(8). Overall, consistently high and sometimes outrageous ticket
fees have also added to Live Nation’s negative
impression among avid concert goers.
Given this history, a merger between
the two companies is hardly welcome among
many music lovers. As Ticketmaster is the
world’s largest ticketing company and Live
Nation is the world’s largest concert promoter,
owning more than 140 major venues, the fear
of monopoly power always looms large. Together, Live Nation and Ticketmaster sell more
than 80% of tickets for seats at major concert
venues.(9)
Certainly, the logic of the union
made absolute economic sense to both companies. Dorenfeld postulates that if Ticketmaster
was already making money on the show, the
merger will certainly add value to the company. For Live Nation, the merger was part
of its struggle for survival, given a drop in attendance and a drop in box office revenues for
2009.
There were always obstacles to negotiate, and current proceedings recognize
much negotiation with anti-trust objections.
For instance, Ticketmaster now states that
“the companies have agreed to divest Ticketmaster’s self-ticketing subsidiary, Paciolan,
to Comcast-Spectacor and to license the Ticketmaster Host technology to Anschutz Entertainment Group, Inc. (“AEG”), as well as to
other terms that protect competitive conditions
in ticketing and promotions”.(10) CEO Michael
Rapino argues that this particular transaction
made the playing field more competitive, and
bowed to the pressures coming from the Department of Justice.
Irving Azoff , CEO of Ticketmaster,
says that the critics of the merger are “missing the point” and assures that “it would produce greater efficiencies in the music business,
which theoretically would benefit ticket buyers
and artists”(11). Jeff Dorenfeld seems inclined
to agree, and believes that the sheer volume of
competing shows will make it harder for the
new conglomerate to take advantage of higher
charges.
Still there are many that express
reservations. Lisa Madigan, an Attorney General for the State of Illinois, joined the federal government and 16 other state Attorneys
General in a proposed antitrust settlement relating to the merger of Ticketmaster and Live
Nation(12). Madigan says, “we have serious
concerns when a company that controls more
than 80 percent of the ticketing market seeks
to merge with its biggest competitor, which is
the largest entertainment promotion company
in the country and owns and operates 85 concert venues across the country. This sort of
merger bears close scrutiny because it can impact consumers nationwide”.(13)
A 300 pound gorilla, in short, has
doubled in size and is causing anxiety in the
trade and among consumer advocates nationwide. It certainly has independent promoters
like Seth Hurwitz, president of IMP Entertainment, worried. Uncertainty still looms
large over the repercussions of the merger,
but greater coordination among sellers of live
music is hardly a recipe to build trust among
the buying public, which is concerned as ever
with higher ticket prices.
(1) Ticketmaster. “Ticketmaster Company History.” Web. 15 Feb.
2010 <http://www.ticketmaster.com/history/index.html>
(4) Pickert, Kate. “A Brief History of Ticketmaster.” TIME Magazine. 11 Feb. 2009. Web. 15 Feb. 2010. <http://www.time.com/time/
business/article/0,8599,1878670,00.html>.
(5) Kreps, Daniel. “Bruce Springsteen “Furious” At Ticketmaster,
Rails Against Live Nation Merger.” Rolling Stone. 4 Feb. 2009.
Web. 16 Feb. 2010.
<http://www.rollingstone.com/rockdaily/index.php/2009/02/04/
bruce-springsteen-furious-at-ticketmaster-rails-against-live-nationmerger/>.
(6) “Live Nation History.” Live Nation Encyclopedia II. Web. 15
Feb. 2010 <http://www.experiencefestival.com/a/Live_Nation_-_
History/id/4930685>
(7) Interview with Jeff Dorenfeld. 4 Feb. 2010.
(8) Kreps, Daniel. “Phish Fans Furious As Live Nation Fails At First
Major Ticketing Test.” Rolling Stone. 2 Feb. 2009. Web. 17 Feb.
2009.
<http://www.rollingstone.com/rockdaily/index.php/2009/02/02/
phish-fans-furious-as-live-nation-fails-first-major-ticketing-test/ >.
(9) Pie chart from the Los Angeles Times. Source: Department of
Justice
(10) “Live Nation and Ticketmaster Entertainment Merger Receives
U.S. Department of Justice Clearance.” Ticketmaster News Releases.
25 Jan. 2010. Web. 16 Feb. 2010.
<http://mediacenter.ticketmaster.com/Extranet/TMPRArticlePressReleases.aspx?id=987>
(11) Morissey, Janet “Ticketmaster, Live Nation: Obama’s Antitrust Test.” TIME Magazine. 10 Jun. 2009. Web. 16 Feb. 2010.
<http://www.time.com/time/business/article/0,8599,1903447,00.
html?iid=sphere-inline-sidebar>.
(12) “Attorney General Madigan Joins Federal Government In Proposed Remedies For Ticketmaster / Live Nation Merger.” Illinois
Attorney General Lisa Madigan Press Releases. 15 Jan. 2010. Web.
16 Feb. 2010.
< h t t p : / / w w w. i l l i n o i s a t t o r n e y g e n e r a l . g o v / p r e s s room/2010_01/20100125.html>.
(13) “Attorney General Madigan Joins Federal Government In
Proposed Remedies For Ticketmaster / Live Nation Merger.” Illinois Attorney General Lisa Madigan Press Releases. 15 Jan. 2010.
Web. 16 Feb. 2010. <http://www.illinoisattorneygeneral.gov/pressroom/2010_01/20100125.html>.
February 2010
Volume 5, Issue 7
Business Articles
NAMM: A Student’s Perspective
By Tim Woo
Founded in 1901, the National Association of Music Merchants (NAMM) is the
trade association of the international music
products industry and boasts memberships
from 9000 companies. The NAMM show is
the music products industry’s trade show that
is held every January in Anaheim, CA at the
Anaheim Convention Center. It is a four-day
event that features around 1300 exhibitors and
87,000 registered attendees. The NAMM association works toward growing the music
products industry by taking revenue from trade
shows and putting it into industry charities
like advocacy and market-building programs
to increase public awareness, and ultimately
increase demand for music products. NAMM
supports music education through their “Wanna Play Fund,” a non-profit program founded
by the NAMM Foundation and former Arkansas governor Mike Huckabee which raises
funds to strengthen music education programs
and increase awareness about the importance
of music education in the lives of children.
NAMM also promotes scientific research into
the benefits of music making through grants
and scholarships from the NAMM Foundation.
Students focused on the recorded
music business sometimes forget that there is
an 18 billion dollar industry in music products.
Since I first heard about the NAMM show in
high school, I had been eager to attend, so I
signed up for a badge in the Music Business
Department at Berklee. After I finally arrived
at the show and picked up my badge from
will-call, I got my first glimpse of the energy
of the music products industry. The enormous
Anaheim Convention Center was completely
packed full of people bustling around the halls
and checking out all the new products from
each of the 9000 companies. They all varied
in size and extravagance. Some booths were
simply a table and a banner, whereas others
had ceiling high video screens and even upper
level structures to hold their business meetings.
Every booth was either buzzing with product
demonstrations or crowded with spectators
trying to get a glimpse of the celebrity that
was endorsing that company’s product. Most
notable of the endorsees that I watched were
Victor Wooten for Presonus, John Petrucci for
D’Addario Strings, and Weird Al for Shure Microphones.
At every booth I visited, every rep
was energetic about their products and ready to
show me everything that was great about it. As
a performing musician, I was looking at these
products for my personal use like most of the
people around me. A good number of attendees were in music retail and looking at these
products as possible inventory for their stores.
I even ran into the manager of my local Guitar
Center as he was meeting with Drum Workshop.
The NAMM show is extremely beneficial to business in the music products industry because it allows for maximum exposure to
the customers and the retailers. The NAMM
show is not just for checking out new gear, it
is also a place to learn how to adapt and grow
your business whether you are a producer of
music products or a retailer.
Find
us
online
at
www.
thembj.
org
The NAMM U aspect of the show
featured Idea Center Sessions that took place
on the main floor and started every 30 minutes. These “How To” sessions covered everything from presenting products to building
a rapport with customers. After this year’s
show, NAMM CEO Joe Lamond stated that
this year’s show was especially strong, which
signals for a strong 2010 and a comeback for
the music products industry after the economic
downturn.
I hope to be in attendance for NAMM
2011 with a few things in mind to maximize
the experience. I’ll bring a group of people so
we can all enjoy the show, a camera so I can
take pictures of my favorite musicians, and,
above all, I’ll wear comfortable walking shoes.
February 2010
www.thembj.org 7
Volume 5, Issue 7
Law Section
ISPs and Music in the US
By Michael Benson
On January 20, 2010, CNET news
reported that Verizon had acknowledged disconnecting the service of users who had repeatedly been accused of copyright infringement(1).
That same evening, Verizon spokeswoman
Bobbi Henson refuted the report, claiming she
was misquoted(2). In the ensuing days, Verizon
would claim that its practice of sending warning
letters to accused infringers had never resulted
in any service interruption.
While it is possible that CNET executive editor David Carnoy accidentally
misquoted Henson, it is more likely that
Verizon balked at the thought of the general public becoming aware of their cutting
services to repeated infringers. The event
seems to epitomize a lack of commitment
by Internet service providers (ISPs) to shuttering off infringing subscribers in the
US--even while that same idea seems to
be gaining ground overseas (see The MBJ,
cover article, Dec. 2009; available at www.
thembj.org).
Late in December 2008, the RIAA
announced that they would cease filing new
suits against accused file sharers(3). The
RIAA insisted that they had reached agreements with many ISPs to adopt a graduated
response strategy that could be enforced
outside of court. In effect, a graduated response
strategy is very similar to a three-strikes policy
(see The MBJ, op.cit.). The main difference is
that the graduated response is not relegated to
three offenses, and tends to be market-based
and not instituted by a governing body. The RIAA’s “subpoena, settle, or sue” process proved
to be tremendously expensive. While racking
up millions of dollars worth of lawyers’ fees,
the few examples brought to court only hurt the
RIAA’s reputation with the general public. That
public, after all, was a sought for ally in the fight
against piracy.
Despite this announcement, there
was no acknowledgement of any such agreement between the RIAA and the ISPs. In March
of 2009, AT&T and Comcast described their
plans to work with the music industry and fight
copyright infringement at the Leadership Music Digital Summit in Nashville, TN(4). During
the panel, their spokespeople acknowledged
that neither company had threatened to cut off
subscribers’ Internet access as part of a graduated response strategy. Instead, they outlined
their approach, which was to send letters to the
accused infringers, informing them that they
could be in breach of their agreement with the
ISP.
The ISPs maintain that none of the
monitoring of illegal downloads should happen
at their end: it is the copyright owner who has to
be responsible for capturing Internet addresses
and making a request for a warning to be sent
8 www.thembj.org
out to the infringing sunscriber. The service
providers have most definitely been approaching this subject with a great deal of care, seemingly aware of the negative public connotations
of submitting to the will of the RIAA-- not to
mention the multitudes of potential problems
that could result from such a policy.
Privacy concerns seem to be at the
forefront of complaints about potential service
disruptions, while others see the access to information via the Internet as a human right that,
arguably, is inalienable. Most notably, a recent
story out of Pueblo, Colorado well illustrates the
potential complications of cutting off service to
subscribers.
Cathi Paradiso, a Colorado based
technical recruiter and 53-year-old grandmother,
was recently wrongly accused of pirating movies and her Internet service was subsequently
suspended(5). In a phone call with a Qwest Communications service representative, Paradiso
was told that if she were accused of copyright
infringement again, her account would be terminated. She was also told that she would have
a hard time acquiring a new service, as the other
ISPs in the area would have her name on file. In
a plea to a few of the movie studios that kept accusing her of downloading movies illegally she
wrote, “Take me off your list… You’ll need to
admit you made a mistake and move on to the
correct perpetrator…My computer is not a toy.
My livelihood depends on my ISP’s reliability.”
Indeed, as Ms. Paradiso works out of her home.
She would later be cleared of the accusations,
and a subsequent investigation after repeated
media inquiries by a Qwest technician indicated
that her network had been compromised.
If ISPs are going to slowly
warm to the idea of instituting a potentially
industry-wide graduated response policy, there
will need to be an advocacy group dedicated
to hearing complaints of the likes of Ms. Paradiso’s. In her case, she had no third party to
turn to, and no oversight committee or advocacy
group to defend her. With a secured connection,
none of this would have happened. However,
there seems to be no sure way to secure every
individual household’s Internet connection
without other legislation or industry-wide practices. Due process will continue to be a main
concern until some sort of standardized review
process is agreed upon and instituted accordingly.
Especially in the face of the recent introduction of three-strikes legislature in France
and ongoing talks in the UK, ISPs are proving
to be partners, albeit reluctant partners, with
rights holders in finding solutions to these
problems. ISPs and entertainment companies seem to agree that some sort of review
process should be put into place, and those
accused of downloading illegally should be
given fair warning before any service interruption takes place.
Some good news has surfaced with
regard to the effectiveness of the warning e-mails sent by ISPs. Verizon spokeswoman Bobbi Henson noted that the warning letters they have sent to their DSL and
FiOS broadband subscribers have worked
surprisingly well. “We don’t have to warn
most people a second time” she said, “Most
people stop, or they tell whoever is doing
it to stop.” She said it seems that many people
aren’t aware that someone using their connection is downloading content illegally. “You get a
teenager doing it,” she suggests, “and the parent
gets the e-mail, and they tell them to cut it out.”
Most of those who have received e-mails and
been interviewed afterwards have indicated that
it scared them straight. Even Ms. Paradiso, who
had never downloaded any illegal content, was
adamant: “I’ve never downloaded a movie or
song in my life…I’m so paranoid now, I won’t
buy music of movies online ever.”
The Internet service providers have
unwillingly been thrust in the middle of a battle
between rights holders and copyright infringers,
notwithstanding their reluctance to fully admit
their position. While a few ISPs like Qwest and
Cox Communications have started terminating
their users’ access in the case of multiple infringements, most ISPs are still too shy to commit publicly. It should be noted that at the very
least, ISPs seem well aware that a core utility
of the Internet connection they provide encapsulates media in all forms. Finding legal and
profitable solutions to the pervasive nature of
illegal content is, therefore, in everyone’s best
interest.
[1] http://news.cnet.com/8301-1023_3-10437176-93.html?p
art=rss&subj=news&tag=2547-1_3-0-20
[2] http://news.cnet.com/8301-31001_3-10439144-261.html
[3] http://www.wired.com/epicenter/2008/12/riaa-says-it-pl/
[4] http://www.billboard.biz/bbbiz/content_display/
industry/e3ic48b7a3a3eb3111d72b05ffcdd8d793b
[5] http://news.cnet.com/8301-31001_3-10444879261.html
February 2010
Volume 5, Issue 7
Law Section
National Power and Music Sellers:
The Case of Sweden and South Korea
By Beom Hong
Ever since the days of Napster, the
music industry has been combating illegal
downloading and file sharing—in the world
battlefield. Piracy continues to soar and remains a huge barrier to market growth, as is
suggested by the overall decline of about 30%
in global music sales between 2004 and 2009 .
Music labels have had to trim their budget and
the development of new artists has suffered.
In the US, moreover, targeted and draconian
lawsuits against particular infringers have arguably isolated the labels from their consumers, undermined their lobbying power in Congress, and resulted in high legal costs at a time
of retrenchment. Finally, in what appears to be
an uphill battle, they have sought the cooperation of the ISPs (see this issue of The MBJ).
The US recording industry is not
alone, however. In fact, currently there seems
to be more traction protecting intellectual
property rights abroad than in this country—
and it could be an indication of things to
come. The 2010 Digital Music Report of the
International Federation of the Phonographic
Industry (IFPI), released early in January, reports on two country examples which are encouraging: South Korea and Sweden. In both,
legally sold music is apparently making gains
against pirated product, and this article will
examine their story. As has been reported in
earlier issues of this journal, France and Britain are already in the process of implementing graduated response laws, also as known
as three-strike laws, to combat piracy (see, for
instance, our December 2009 release at the
www.thembj.org).
It appears that the anti-piracy efforts of recording labels around the world are
becoming national rather than trade-based,
with greater reliance placed by the industry on
governmental and legislative support. Rather
than the individual lawsuit, the preferred route
now is to seek government support through an
act of congress or otherwise. The objective
is to enlist the purveyor of local broadband
connections as a potential ally supporting the
struggle for the defense of intellectual property.
In South Korea, a high-tech infrastructure allowed the early and massive adoption of digital music, but the IFPI report notes
that government intervention was the key to
the industry’s success last year. Two major
infringing services, Soribada (a P2P system)
and Bugs (a free streaming service) made their
February 2010
mark early in the millennium. The result was
a high rate of piracy, and a dramatic decrease
in CD sales. Legitimate digital sales in downloads and ringtones did not make up for the
loss. Sadly, the trend of remaking songs from
old repertoires became popular due to a lack of
investment in the sector.
An effective step by the South Korean government was to announce a strong
graduated response law. It came into effect on
July 2009. Korean web portals and search engines that hosted vast user-generated contents,
as well as private blogs that contained copyrighted materials, alerted their users. This
generated much public awareness of the law
and enabled consumers to fully understand the
penalties involved in the three-strikes system.
A survey found that more than two-fifths of all
file sharers reported less illegal downloading.
Statistics showed that digital sales grew by 53
per cent in the first nine months of 2009, and
so did physical CD sales—the latter, for the
first time in five years. According to the IFPI,
there has been an encouraging growth of label
revenue which has led to a recovery of investments in local repertoires and more consumer
choice in the music that is released. Even if
the IFPI is not an unbiased observer, corporate
revenues cannot easily be fudged, so this is
an encouraging phenomenon. It should be remarked as well that South Korea is one of the
most wired nations in the world, consistently
topping international rankings.
Sweden, on the other hand, was
once known as “the world’s largest facilitator
of illegal downloading”. This was largely due
to The Pirate Bay, a website that indexes BitTorrent files, and whose host server is located
in the capital city of Sweden, Stockholm. Jonas Sjöström, head of independent label Playground Music proclaims that Swedish independent labels have been extremely damaged
by illegal file sharing in the last few years .
In an online-driven market like Sweden, the
increase in the number of BitTorrent users in
2007 contributed significantly to limit market
growth. In May 2006, Swedish police raided
The Pirate Bay and shut down all the host
server. However, after few days later, the Pirate Bay’s server was restored, and relocated in
the Netherlands This led to a sudden increase
of the file sharer base, negating the statement
of US based Motion Pictures Association of
America (MPAA) that “Swedish Authorities
[had sunk] The Pirate Bay”. In fact, pro-piracy
protests “sparked” in the streets of Sweden,
apparently with the veiled encouragement of
the media--who seemed to take it as a civil
right that was being denied to users.
Against that background, it is perhaps surprising to find how well the Swedish
market performed last year. While the rest of
Europe suffered a significant decline in sales,
the music market in Sweden improved by
10% in value, driven hard by an astonishing
rise of 99% in the legal digital market .
In 2008, moreover, Sweden had
given birth to the Spotify platform, a growing
ad-supported music streaming service that
began to compensate record labels regularly
a year after (see TheMBJ, October 2009 at
www.thembj.org), In 2009, moreover, sales at
the Swedish iTunes store increased. Finally,
and perhaps most significantly, the Swedish
government also publicized the implementation of the Intellectual Property Rights Enforcement Directive (IPRED), a European
Union anti-piracy mandate that regulates the
enforcement of intellectual property rights,
separate from each European Union member’s national law.
As the IPRED came into effect on
April 1st, it allowed copyright holders to obtain the name and the address of copyright
infringers from ISPs. Research conducted by
GfK shows that 60 % of illegal file-sharers
stopped or at least reduced their activities online due to the introduction of IPRED. In addition to this, the Swedish court ruled against
the Pirate Bay in a trial that was held in February 2009, finding its four founders guilty.
World wide, the example of South
Korea and Sweden suggests that anti-piracy
efforts require the emergence of new and
practical music services (such as Spotify),
well-enforced legislation (especially in South
Korea but also in Sweden), and the recognition that government sponsored initiatives
that favor sellers and display the use of political power to educate and limit the prerogatives of the consumer can work (this was the
case in Sweden, eventually, and in South Korea).
(1)Page 6, 2010 IFPI Digital Music Report
(2)http://www.latimes.com/entertainment/news/la-ca-webscout29apr29,0,1261622.story?coll=la-home-entertainment
(4)Country Report IFPI on Sweden 2008
(5)“Swedish Authorities Sink Pirate Bay.” A press release from
MPAA in May 31, 2006.
(6)http://www.wired.com/science/discoveries/news/2006/06/71089
(8)http://thembj.org/article.php?article_id=56
www.thembj.org 9
Volume 5, Issue 7
Business Articles
Managing A Country Artist:
Nashville’s Larry Fitzgerald
By Sarah Beatty
One cannot imagine traveling to
Nashville without being exposed to country
music. And Nashville is indeed a “Music City”.
Artists like Garth Brooks, Shania Twain and
Vince Gill have made country music universal.
This paper will examine the role of a manager
of a country artist in Nashville.
Another element of country music
is that everything is essentially done through
Nashville. Larry Fitzgerald describes for us the
Nashville scene. “You really have to be integrated into the [Nashville] society. It’s a small community, and music row is kind of small. [You
must] live in Nashville.”
The management of a country music
artist poses distinct challenges at every level,
including radio promotion, touring and marketing. The example of Larry Fitzgerald is instructive. He is an experienced manager that began
his career at the William Morris booking agency
and continued working in the music business in
various positions. Eventually Fitzgerald started
up a management company with Mark Hartley
in 1977. The Fitzgerald-Hartley Company has
since become one of the most well established
management companies in the business. Their
roster includes an amazing assortment of artists
including LeAnn Rimes, Kellie Pickler, Brad
Paisley, Vince Gill, Colbie Caillat, and Olivia
Newton-John. The Company has three locations throughout the United States: Nashville,
TN, Ventura, CA and Houston, TX.
Country’s audience is different too,
for it is mostly US based. As Larry Fitzgerald
says, “you don’t really have a world market;
country music is pretty American and doesn’t
translate to many other countries.” Marketing
and touring strategies are therefore domestic.
Often people are unsure of what a
personal manager does. For Fitzgerald, a manager is a coach who guides and oversees a
team. “The players in the team really are the
record label personnel, the business managers,
the accountants, and the touring staff (including the road manager, the tour manager, the
musicians, and the sound technicians).” The
bigger the artist”, he says,” the more personnel
there is.”
While Fitzgerald emphasizes that
“experience is a major plus for a manager since
this really is a business of relationships”, there
is a need too for such qualities like long-term
vision and patience, organizational and decision-making skills, and an ability to spot talent
Having a passion for the job and artist is also
key, (Howard).
Yet, what is different about managing country artists? Marc Oswald, artist manager for such country acts as Big & Rich and
Gretchen Wilson, describes country music. “I
would say the difference in country, as a genre,
is that first off, it’s got 2,100 radio stations dedicated to it. There are more radio stations than
any other format. It’s a fairly organized format,
with the Country Music Association, for example. So it’s an organized genre with a lot of
penetration and distribution.”
10 www.thembj.org
When managing a country artist there
are many barriers to cross before breaking into
the industry. Having a presence in country radio
is vital, but it poses quite a challenge for any aspiring manager. As Tony Brown once explained,
“Radio manipulates us [all], we react to it; that’s
the nature of our genre.”(Foehr). Even with internet and satellite radio, downloadable music,
and audio streaming--hits on terrestrial radio are
key. Says Fitzgerald: “We need radio because
when you get a ‘hit record’ that means you get
a couple thousand radio stations playing your
song across the United States x number of times
a day in peak hours. In order to really break an
artists you need radio. Radio has become more
and more difficult because they aren’t in the
music business…they really are in the advertising business. So all they care about is ratings.
They are going to do whatever they can to get
the most listeners. Many of these stations now
have changed. The might have one person that is
programming a hundred radio stations. They are
very, very hard to deal with. They ask for a lot
and give very little. They hold record companies
and artists hostage, in my opinion. They want
you to play free shows and come in and go in the
air for drive time and do interviews and photos.
They promise you nothing. So the artist devotes
all this time and energy and a record company
develops a lot of money to purse all these ‘favors’ for radio. They won’t guarantee radio play.
But we still will need them, unless we find another way. It is our main way for getting music
out in large numbers all at once.”
Radio is concerned with quantity,
which in country music means targeting the 3545 year old demographic. Record companies, on
the other hand, tend to target a younger audience
because that is usually where record sales are.
Radio play thre usually affects the sale of an
artist’s album because hits translate into sales.
Artist manager Marc Oswald explains this is not
always the case in country music. “You have to
have an organic, creative product that does more
than just get radio airplay, it has to translate
into sales. Country music’s biggest challenge
is there’s a number one record every week and
most of them don’t sell albums. You have to figure out how to have an impact on the radio and
have an impact that’s going to be [more than] a
number one record…[it has to be] a call to action. The action has to be buy the CD”.
The duo Bi & Rich are an exception.
Although having songs played on the radio is
still critical for most country acts, they have
good record sales and fans buy tickets to their
concerts without there being a hit at radio. But
this is because Big & Rich draw in an unusually younger crowd, and radio tends to play
less of them (Kosser).
Touring has its own challenges in
country music. It provides one of the biggest
pieces of an artist’s revenue pie, and a manager
has to tread with care in this area. “ You only
have the United States. You have to be really
careful, particularly when you get to be a major
touring act, [not to] burn markets. You can’t go
out every year. So when touring is the only basis of the business, it makes it more difficult in
the long-run”, says Fitzgerald. Touring is about
getting the fan involved with the music. Fans
involved with an artist are generally willing to
spend money on them, whether through tickets,
records, merchandise, or all of the above. And it
is up to the manager to make the marketing and
advertisement of the tour exciting.
However, making a tour an event that
fans are willing to pay $50 or more is not an
easy task. The advice Larry Fitzgerald gives
on this is simple: “add an event artist.” There
are several approaches to this, but no easy solutions. When a headlining artist that has fans that
are willing to spend a decent amount of money
on his tour is your competition, maintain the
same level of “eventfulness”. Fizgerald adds
that “if Brooks and Dunn had twenty-foot blow
up cowgirl balloons, dancers on stage, and (sic)
shot autographed memorabilia out of a cannon
on their last tour, chances are your artist needs
to do that and more…You want to make sure
they are entertained. It’s not only about playing
great music...”
As the music industry changes with
the Internet, so does the role of the manager.
Websites such as YouTube and Myspace have
opened up a whole new world. Any person can
surf websites and discover artists. Listeners no
longer need radio to tell them which music is
good. Music fans no longer need to go to a record store to browse for music. As Fitzgerald
February 2010
Volume 5, Issue 7
Business Articles
comments, “the Internet has [allowed us to]
deal with people [i.e. audiences] directly and it
has changed everything [I do].”
He continues: “managers are becoming more important in the mix…[they are] almost partners with their artists, because now
we are looking for new ways together to market
our music.”
Moreover, the business of management is no longer just about recording an album with a major record company and selling
it. Taylor Swift is an example of a country artist
who helped create a huge fan following by connecting with people online. As a manger, it is
about branding your artist and there are more
ways now than ever to do that
Finally, managing an artist isn’t all
just business. It’s not always about creating the
best tour, or releasing the number one album.
Neither is it just about the music. Managers
work so closely and on such a personal basis
with artists that they really become involved in
their clients lives.
Fitzgerald describes this in a painfully honest way [abridged for this article]. “It’s
really funny how most performers—artists, actors, singer-songwriters—anybody…I mean
it’s really amazing how so many of them have
such a low self-esteem, such a low self-image
or are so totally insecure. Which is why they
get onstage, it’s a way of masking [who they
are] and having security and reaching out to
people. It’s really hard, because Mark Hartley,
my business partner and I constantly are joking
that it’s ‘Dr. Larry [and] Dr. Mark’… I’ve been
through births, deaths, divorce, drug and alcohol abuse… It’s really hard to separate personal
issues [and still be professional about it]. I think
any manager in any kind of business ultimately
has to deal with supporting people. And life, a
lot of times, just gets in the way. It is a really
important part of my job…It takes its toll on me
too …. I have lost three or four clients over the
years to drugs or overdoses or whatever…I’ve
had nervous breakdowns because of divorce,
[and] I’ve had parents and children die. … [I
see my job as] being a caretaker. “ That this
happens in country music, just like it does in
rock, pop, as well as in other more alternative
genres, may not surprise.
Recommended Reading and Bibliography
Fitzgerald, Larry. Phone Interview. 19 November 2008.
Foehr, Stephen. Waking Up In Nashville. London: Sanctuary, 2002.
“Grand Ole Opry.” Country Music Hall of Fame. 12 December 2008.
http://www.countrymusichalloffame.com/site/explore-history-opry.
aspx
Howard, George. “The Three Essentials of Management.” Artistshouse Music. 21 May 2007. 12 December 2008. http://www.artistshousemusic.org/articles/the +three+essentials+of+management+the+i
mportance+of+connections
Kosser, Michael. How Nashville became Music City, U.S.A. Milwaukee: Hal Leonard, 2006.
Marcone, Stephen. Managing Your Band 4th ed. Wayne: HiMarks,
2002.
Oswald, Marc. “Managing Country Artists.” Artistshouse Music. June
2006. 12 December 2008. http://www.artistshousemusic.org/videos/
managing+coun try+artists
February 2010
Artists and Their Business: Lady Gaga
By Mia Verdoorn
Lady Gaga knows how to write
a catchy tune. She is also irreverent and
provocative in her choice of fashion while
prone to convey serious meaning in her
lyrics. Her music videos pass as examples
of burlesque, but their aesthetic quality is
high and, artistically, they seem fresh and
original with a universal appeal. Her overt
sensuality draws the viewer in, but crosses
genders. She might be the next consummate
entertainer, but seems intent on stretching
the boundary between craft and commerce,
and art.
So far, and in one year, she has
managed to generate four concurrent number 1 hits, win two Grammy awards in 2010
(for best dance recording and best electronic/
dance album), and release the best ranked
selling album of 2009, “The Fame”. In the
UK, her song “Poker Face” was the most
downloaded. There, she also performed at
the Royal Variety Show and was introduced
to Queen Elizabeth—wearing only a skintight red PVC dress. This is an artist with a
strong business sense too. She made her music
available for free before the release of her album, and has gone on to break sale records at
iTunes and MySpace.
Lady Gaga’s profile is, to some
extent, intellectual but she has experience in
the music business. She started piano when
she was four, and was accepted by the Tisch
School of the Arts at New York University
when she was seventeen. At about that time,
she started performing in different venues
around New York City. Before her first album
was released, she was employed as a writer
for other artists and groups, including The
Pussycat Dolls. This led to collaboration with
RedOne, a producer who worked with Michael
Jackson and who is now one of the keys to Gaga’s futuristic sound
.
Lady Gaga has a multiple rights
contract with Universal’s Interscope, a major. She understands too the wider context in
which music is leveraged today. For instance,
she recently accepted a position as creative
director and inventor of specialty products for
the Polaroid brand. She has also become the
spokesperson for M*A*C Cosmetics. Within
the music trade, she is a poster child for viral
promotion, crossing over from dance and electronica music into pop, and so redefining the
boundaries of the genre.
Creatively, she insists on being absorbed in every aspect of her productions.
Rather than relying on hired hands, she appears to complete all her projects herself, using
other producers or writers only for their talent
and input. Interestingly, the musical aspects of
her work are not sufficient in her mind. To
her, the performance, inclination, and temper
of a song have to replicate everyday life. It is
ultimately there where she makes a connection with her fans.
More than a musician, Lady Gaga
sees herself as an artist. In fact, she is arguably the best example of a modern DIY (DoIt-Yourself) performance artist. Undoubtedly,
hers is a class act. Yet as she conquers the
industry, and trades her name, she will need
all her intelligence to balance her business
endeavors and her creativity.
www.thembj.org
11
Volume 5, Issue 7
Music & society
By Silvina Moreno
Haiti, often labeled as one of the
poorest nations in the Western Hemisphere,
was perhaps most memorable until a month
ago for its dire economy. That likely changed
when the brutal images of a devastating
earthquake permeated our consciousness
forever, highlighting unimaginable suffering
and reminding us all about our common humanity.
On January 12 2010, at 4:53 PM,
the Richter scale shot up to an almost absurd 7.0 just 10 miles west of Haiti’s capital,
Porte-au-Prince. Mike Godfrey, an American
contractor at the US Agency for International
Development, would say that “a huge plume
of dust and smoke rose up over the city within minutes of the quake, and a blanket of
dust completely covered and obscured it
for about twenty minutes.”(1)
By February 10th, the Haitian
government had revised the death toll to
upwards of 230,000 (initially, the Red
Cross had put it at 100,000). The most
populated area of the country had been
felled. Many landmark buildings were significantly damaged or destroyed in Portau-Prince, Jacmel and other settlements in
the region--including the Presidential Palace, the National Assembly building, the
Port-au-Prince Cathedral, and the main
jail. Haitian authorities estimated one million
Haitians were left homeless instantly, while
a total of three million lives were seriously
jeopardized by the quake. Aftershocks had
not helped: the United States Geological Survey (USGS) recorded eight of them only two
hours after the main earthquake, with magnitudes ranging between 4.3 and 5.9; there
would be many others to come.(2)
In economic terms, according to
the Inter-American Bank, the cost of rebuilding could reach nearly $14 billion, proportionately the most destructive natural disaster
in modern times.(3)
The world reacted quickly. Appeals for humanitarian aid were issued by
many aid organizations, the United Nations,
and president René Préval. Raymond Joseph,
Haiti’s ambassador to the United States, and
his nephew, singer Wyclef Jean, also pleaded for aid and donations. The neighbouring
Dominican Republic was the first country to
reach out to Haiti, sending water, food, and
12 www.thembj.org
Haiti On Our Mind
heavy-lifting machinery. Many nations in Europe, Asia, and America, and especially the
United States, have reacted generously too.
Within the entertainment industry,
celebrities joined together. Among the big
donors to Haiti were Lance Armstrong, Tiger Woods, Wyclef Jean, Brad Pitt, Angelina
Jolie, Oprah Winfrey, Sandra Bullock, and
Giselle Bundchen. Another roll call of stars
that included Wyclef, Madonna, Beyoncé and
Tom Cruise, joined host George Clooney for a
telethon. Clooney recruited about one hundred
and forty of the biggest names in music and
entertainment. For him, the tragedy in Haiti
reached “across all borders, and all boundaries” (4).
Internet collections abounded and
were mostly made via text messages or followed a streamed two-hour live global broadcast that also blanketed twenty-five regular TV
channels, including the major networks, across
the US. MTV would make that content available in more than half a billion homes worldwide. So far, “Hope for Haiti Now” has raised
sixty million.
A few days ago, taking advantage
of the Grammys, producer Quincy Jones gathered a galaxy of pop stars for a re-recording
of “We Are The World”, first released with
Michael Jackson in 1984. More than seventy
famous artists lent their voices for this project.
In the UK, American Idol host Simon Cowell
convened a similar group of stars for a recording of a cover of REM’s “Everybody Hurts”.
Musicians in the world music community inside the United States will continue
performing benefit concerts. Many of them
are putting out compilations to raise money.
Recent live events that stand out for their size
include The World Stands for Haiti (New York
City), Haiti Mizik Relief Benefit Concerts
(Miami) and Hearts Haiti (San Francisco).
There is movement to help Haiti
within our local community, but more is
needed. Hundreds are suffering and still dying
because of debilitating injuries, poor medical
conditions, respiratory infections, malnutrition, intoxication and dehydration, and diarrhea from waterborne diseases. Among infants, a lack of nutrition is a serious concern.
There is also a new generation of orphans
who have lost their families and have no one
to turn to.
At Berklee, we should realize that
Haiti is still in chaos. We should redouble
our efforts to help. There have been several
fundraising shows already by the college,
on Monday, February 15 at the Hard Rock
Café, and Tuesday, February 23 at the Berklee Performance Center. Talent gave to a big
cause. Also, many of our students have been
playing at different Boston venues in benefit
concerts, such as Club Passim, Middle East,
Precinct Bar, and the Lizard Lounge.
Hopefully, all this will continue.
Outside of Berklee, you should be aware of
the following addresses to send contributions or stay informed. They are:
www.haitirelieffund.org
www.worldvision.org/haiti
www.samaritanspurse.org/Haiti
www.redcross.org
www.google.com/relief/haitiearthquake
A new website called Music For
Relief, www.musicforrelief.org, is taking uploads of unreleased music to aid Haiti’s victims.
Finally, I would specially like to
dedicate this article to our fellow student
who witnessed the ferocity of the earthquake
in Haiti firsthand and lost his mother. Our
thoughts and prayers are with him.
(1)http://www.cnn.com/2010/WORLD/americas/01/12/
haiti.earthquake/index.html
(2)Database search at USGS: Lists earthquakes recorded
from January 12th until January 30th
(3)http://www.msnbc.msn.com/id/35423512/ns/businessworld_business/
(4)http://www.telegraph.co.uk/news/worldnews/centralamericaandthecaribbean/haiti/7059577/George-Clooneyleads-Haiti-telethon.html
February 2010
Volume 5, Issue 7
Business Articles
2009 In Brief
By Steven Gringer
Music seems to be present
everywhere today.
We frequently notice iPods, iPhones, Blackberrys, and
identify ringtones. However, the statistical record continues to disappoint.
The Nielsen SoundScan annual
summary for 2009 is a good example. Music transactions appear to have increased
by 2.1%, totaling 1.5 billions. But the data
only tracks units sold and does not provide
information on the total value of music
sales. This is likely to fall again in 2009,
and should be confirmed when the RIAA
releases its numbers in the next couple of
months. Like prior years, purchases of single
songs and digital albums do not make up for
the overall decline in physical album sales.
Lada Gaga, however, continues
to inspire. She was one of the major movers in digital sales, and became Top Selling
Digital Artist of 2009. She also had two of
her songs listed in the Top Selling Digital
Songs of 2009. In December 2009, we saw
the rising pop star Ke$ha, break the digital downloads record with her single “Tik
Tok” that was downloaded over 1.5 million
times, selling 611K downloads in one week.
This past year, the labels finally
incorporated a new way to sell the highly
demanded digital download. They chose
to implement variable pricing for songs
distributed through Apple’s iTunes, after
signing off with Apple’s CEO Steve Jobs.
Songs whose demand was deemed ”inelastic”, or firm, were raised in price to $1.29,
in a quest to maximize label revenue (you
can track the history of this new policy
February 2010
by searching “variable pricing” or “price
elasticity of demand” at www.thembj.org).
Variable pricing is only a palliative
for the labels, but it helps. Useful too is the
appearance of new online business models
that stream music. Spotify, in Sweden and
the UK, offered most hope. Spotify garners
revenue from advertisement, not music sales,
although the figures it has collected so far
have been small. US labels, in particular, will
need more reassurance if they are going to license their catalogs to an unproven prospect.
Music in the Lala “cloud” may
have a future. Lala allows the user to stream
once for free and then, for just 10 cents, invites song streaming from anywhere. Apple’s
acquisition of Lala has led to speculation
that iTunes will be launching a similar service. As wireless Internet is becoming more
readily available, Lala could look better.
While the recorded music industry
is struggling to be stay afloat, the live music
scene has been moving along with some ease.
Live Nation saw incredible growth throughout 2009. The company’s revenue in the third
quarter of 2009 increased by 13.8% over the
previous year, and it ended up grossing over
$1.8 billion. Through its creative promotions
and its overall control of the live music scene,
Live Nation has become one the most successful companies in the music industry. It is now
merging with Ticketmaster, and the details of
the merger are explained elsewhere in this issue.
Contributions
welcome!
Please write to
[email protected]
Finally, as far as new artists go,
2009 may be memorable for Lady Gaga, Taylor Swift, Susan Boyle, and Ke$ha. But with
a fragile economy and recorded music still
being used as an accessory product to sell other goods and services,
the prognosis has to be
guarded. Alas, neither is
Michael Jackson going
to be around in 2010.
www.thembj.org
13
Volume 5, Issue 7
Business Articles
Live Nation Entertainment: A Cheer for Sellers - II of II
By Andrew Chandler
Now that the Ticketmaster/Live
Nation merger has received the blessings
of the US Department of Justice (albeit with
certain amendments to the original proposal), the well-publicized and debatably
over-dramatized ordeal barrels forward into
reality much to the chagrin of industry prognosticators, indie promoters, and consumer
advocacy groups. Even before the ink from
the DOJ’s approval stamp could dry, the teeth
gnashing over the issue reached a deafening
level by many of these same industry intermediaries whose professional livelihoods are
now in jeopardy of being squeezed out by the
new media giant. Much of the criticism being leveled at Ticketmaster and Live Nation,
or now known simply as Live Nation Entertainment, isn’t without merit. Ticketmaster’s
infamous reputation for monopolizing ticket
sales and providing a woefully unsatisfactory
ticket-buying experience helps propagate the
general public’s objection to the world’s largest ticket broker becoming an even larger and
more controlling media behemoth. This article will provide a pragmatic analysis of the
post-merger aftermath and attempt to predict
the industry landscape.
The first order of business for President/CEO Michael Rapino and executive
chairman Irving Azoff will be dealing with
the secondary ticket market. The brokers of
this multi-billion dollar sub-industry have adopted a different approach to ticket valuation
than the tradition, flat, “face value” model.
They believe a ticket’s true value is subject
to a fan’s willingness to pay top dollar for it,
which quite often yields a ticket price many
times the original face value. While there’s
some valiance in maximizing profit in a free
economy -- truly there is a decent argument
to be made that an object’s worth IS only
what someone will pay for it -- the fan ends
up suffering higher prices.
Shortly after the merger, Live
Nation Entertainment will implement the
dynamic pricing model they’ve been touting since before their consolidation. This
model will replace the archaic flat rate and
often-suboptimal pricing scheme currently in
place and will lead to a clearer, truer ticket
value based on, among other things, seat
location and proximity to stage. This measure will help stymie “off-brand” secondary ticket brokers and will work to increase
ticket availability to fans. However, “name
brand” ticket-resellers, namely Ticketmas-
14 www.thembj.org
ter’s own TicketsNow, have curiously escaped
the Justice Department’s interest for oversight
and will continue to resell tickets for inflated
prices.
The eventual abolishment of the
dreaded “convenience charge” will receive a
positive reception and lead to a drastic change
in the public’s valuation of live music. Live
Nation will proclaim the changes as efforts to
promulgate a more fan-friendly experience, all
the while increasing parking fees, merchandise
prices, etc. in order to generate higher ancillary revenue. The entire concert experience
for fans will cost more.
The roles certain industry intermediaries play in the current business structure
will also change. The operative singularity of
Live Nation Entertainment is a double-edge
sword offering increased consolidation and
convenience but, on the other hand, the risk
of marginalizing certain once-inalienable segments of the business (READ: independent
promoters). With a single entity controlling
and managing artists, their touring, their tour’s
ticketing, the venue, and the associated merchandise, independent promoters will indeed
find themselves wholly disadvantaged when
competing with Live Nation’s new and formidable vertical integration.
But this is not the death of all things
independent. To the contrary, independent
segments of the industry will survive through
strategic partnerships and consolidation. Independent venues will provide a stage for popular acts not associated with Live Nation Entertainment and offer an opening to local ticket
brokers. Independent record labels will maintain their role as a vital channel for upcoming
talent and continue to offer better long-term
artist support and development options than
their corporate counterparts, which, thanks to
the recent affordability of recording and ease
of distribution, have been facing mounting
insignificance over the past decade. In reality,
the once-predominant major labels weren’t
even included in the DOJ’s dialogue about the
merger furthering solidifying their sheer irrelevance to the industry.
Despite the opportunity to cut out
agencies like William Morris and Creative
Artist Agency (CAA) by dealing directly with
artist management, Live Nation Entertainment
will avoid direct expansion into booking realm
and remain resolute in preserving the status
quo. In fact, many artists signing with Live
Nation Entertainment will reap the benefits of
the strategic relationship with William Morris
and Clear Channel Communications thanks to
the CEO and Chairman of the Board, respectively, serving on the Live Nation Board of
Directors.
However, several years after the
merger, mounting public and legal pressure
will prompt Congressional inquiry into the
company signaling the death knell for what
many executives will deem the “Golden Age
of Touring.” Based on the Supreme Court’s
Paramount Pictures decision of 1948, a monumental legal precedent against similar vertical integration of the motion picture industry,
Live Nation Entertainment will suffer eventual divestiture at the hands of a Republican
administration.
Ultimately, the merger will prove to
be a brilliant business move providing muchneeded streamlining and improved efficiency
to the live music/touring machine. The cost
of live music will waver and ultimately rise.
But how close an eye does the Department of
Justice plan to keep on Live Nation Entertainment? How will Live Nation and the large talent agencies co-exist in the future? Most importantly, does the merger possess long-term
sustainability? These answers are not clear
yet.
February 2010
Volume 5, Issue 7
Business Articles
Volume 5, Issue 7
February 2010
www.thembj.org
Upcoming Topics
• Mechanical Rights and
Government Apathy
Some of the topics we will tackle in
next month’s issue of the Music Business
Journal:
• Mobile Music Trends in Japan
• The Grammys Revisited
The Music Business Journal will be released
three times in the Fall, three times in the Spring,
and once in the Summer.
For more info, please contact any core
member of the editorial board. The journal’s
e-mail address is [email protected]. Also,
our website is www.thembj.org, where we have
not only our current issue (as well as all back
issues) available, but also, much more.
Visit the MBJ online!
To subscribe, please contact us
www.thembj.org
[email protected]
c/o Dr. Peter Alhadeff
1140 Boylston St. FB-359
Boston, MA 02215
MBJ
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