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Making $$$ with Original Music

Presented byKeith Hatschek,

University of the Pacificwww.hatschek.com

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Session Objectives Attendees will leave this session knowing:

How music licensing/acquisition works What creates value to music buyers Who are the key players & their roles What steps are necessary to jump start

opportunities to profit from an artist’s songs and compositions

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Hitting a Licensing Home Run

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Four Key Themes G = Ground Rules V = Value as Perceived by the Market B = Buyers, in most cases aka Licensees C = Connections, what you’ll need in addition

to artistic talent to develop opportunities to earn $$$

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Prelude - Role of Counsel

Artists love to create new art, many create commercial art

Business and legal advice is needed throughout their career – most detest paperwork

Example: Red Hot Chili Peppers

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Part One - Ground Rules

Knowing music acquisition and licensing practices allows you to be in the conversation

Educating writers about © is essential In the beginning, there is copyright, the basis

for getting paid anytime someone wishes to use your original music.

“Grenade” - Two ©

7Song ©

Sound Recording ©

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Long & Strong . . . © The copyright duration for a copyrighted song or music

cue is the life of the author/composer plus 70 years! By registering your song © with the US Library of

Congress (LOC), you gain maximum statutory protection for your works while they are under copyright - $35 per song to eFile

“Puff Daddy Hit with $4.3MM Judgment for Unauthorized Sampling of Ohio Players Song”

Thicke/Williams Face $7.4 MM Judgment for Infringement

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Road Map to Revenue 1 TV Show Synch License

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Road Map to Revenue 2 Background Music Service

Road Map to Revenue 3 Mechanical License

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Road Map to Revenue 4 Work-for-Hire

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Public Performance RoyaltiesBonus Earnings - PROs

$2.5 Billion+ annual

revenue (US)

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Ground Rules Summary

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Part Two - Value Value (noun) – 1. a fair return in goods,

services, or money for something exchanged 2. the monetary worth of something, aka “market price,” that is a price actually given in market dealings

For original music, certain qualities will help determine the relative value of each piece of music.

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Valuation Parameters Popularity/recognition Originality or Freshness Branding Needs Price/affordability

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Does Your Music Fill a Need?

Your original music has to fill one or more of the previous needs, situations, parameters outlined in order to be considered for license or purchase

The only way to know for certain is to test your music on persons working in this part of the business (Part Four)

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Talking Market Prices On the Low Side

“Gratis” (free) license to use single song in video game in exchange for on screen credit and link to band’s FB page

Indie film project – classic rock song, 1 year license for Canada, art house exhibition only - $500

“Bumpers” on late night live variety show – major network – short excerpt performed live by house band from well known pop song - $400 per use

Instrumental theme song for local cable TV show – work-for-hire, one time fee $500 - plus credit

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Talking Market Prices In the middle:

The Voice – live performance of a song by a contestant up to 1:05 in duration - $2100

Video game (music centric) add on song available to download to original purchaser of the game – 15% of retail price of the download

Parenthood TV show – use of a lesser known song by a classic rock artist - $20K per “side”

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Talking Market Prices Higher and higher:

Classic rock song used in major motion picture produced by Disney - $50K per side; separate option for playback use in theme parks, cruise lines, etc., $3K extra, per side if exercised

Jazz standard – master usage for retail chain covering national TV, cable, in store, Internet for US and Canada – 1 year use - $50K (song rights cleared separately)

Classic rock song used by major retail chain as audio “signature” for 12 months TV, radio (40 TV and 85 radio ads) - $400,000; option for second year would increase

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Defining License Fees How much of the song is needed? What is the audience? What territories? Term of license (13 weeks, one year,

perpetuity) ? What forms of media are requested

(TV, Internet, radio, DVD, film, etc.) ?

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Other Factors How critical is this particular piece to the

project? How popular is the song

or artist today? Are there other pieces that

would work just as well and are more easily or inexpensively available?

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Part Three - Buyers Who are the actual buyers that may want to

use your music in their product or service? Note – we’ll refer to buyers since a monetary

transaction takes place, but the usual terminology is “licensee.”

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12 BuyersMotion pictures (theatrical, DVD, streaming, etc.)

Television (broadcast, cable, web)

Radio (terrestrial, web, cable, satellite)

Commercials (TV, radio, film, theatrical, web)

Video Games Broadway musical (ex. Green Day)

Record labels (mechanicals)

Live events (sports, trade shows, annual meetings)

Sheet music publishers

Music libraries for TV, film, sports, etc.

Background and foreground music services (retail, hospitals, music on hold, etc.)

Special Products (music CDs or downloads for Hallmark, Victoria’s Secret, Cracker Barrel, Acura, etc.)

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12 Foreign LicenseesMotion pictures

Television Radio (terrestrial, web, cable, satellite)

Commercials

Video Games Broadway musical (ex. Green Day)

Record labels (mechanicals)

Live events (sports, trade shows, annual meetings)

Sheet music publishers

Music libraries for TV, film, sports, etc.

Background and foreground music services (retail, hospitals, music on hold, etc.)

Special Products (music CDs or downloads for Tesco, Burberry, Audi, etc.)

Songwriters will normally partner with a US publisher and various foreign subpublishers to leverage their songs overseas.

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Deadlines Time is money in TV, film and advertising production Licensing a song and master can be complex, esp. if

there are multiple “owners” in the © (see “Grenade”) Fewer people required to say “yes,” the more attractive

licensing your song & master may be Rise of “one stop” music licensing solution – one firm

administers the song and master © Some artists are now working to hold on to both “sides”

to allow easier deal-making (Big Machine, Nettwerk, Concord, etc.)

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Part Four - Connections

Connecting Buyers with Creators is the job of a varied array of industry professionals – middle men

To break into the licensing revenue stream, you must build relationships with them

They must affirm that your music has value (Part Two)

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Some Examples Motion picture middle men

Music supervisor, music editor, sound editor or designer, label A&R rep, PRO or publisher staff (song plugger)

Advertising middle men Advertising agency creative director or staff, commercial

director or editor, video post production team Recording artist, record label middle men (A&R)

Record producer, recording engineer, studio personnel, PRO or publisher staff (song plugger)

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Moving Forward Three Steps to Success

Have artist join a national and a regional songwriting organization Benefits: conferences, workshops, webinars, 1-to-

1 mentoring, co-writers, building your network, referral to music licensing attorney, music supes, publishers, etc.

Have artist join a PRO – ASCAP, BMI or SESAC Benefits: help you learn, connect and earn money

as your songs are performed, mentoring, national and international connections

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Moving Forward Start Researching Various Music Publishers

Benefits: nearly all successful songwriters affiliate with a music publisher to help maximize exposure and earnings

Music publishers have many more writers interested in signing than they can serve

Not all music publishers are the same As you build your connections, ID the ones that

best fit your artists and their creative direction

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Wrap Up Ground Rules – you must know them to enter the

field of play and be taken seriously Value – understand what creates market value

Buyers – they pay to use your music, study them, what they use and learn how such deals come together

Connections – pledge to connect now to songwriter organizations, then begin to evaluate PROs and publishers

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Resources Books

Music, Money & Success – Todd and Jeff Brabec All You Need to Know about the Music Business –

Don Passman “Hey, That’s My Music” – Brooke Wentz

Websites Nashvillesongwriters.com or

Songwritersguild.com Westcoastsongwriters.org