WINDS OF CHANGE
Sep 1, 2005 12:00 PM, By Cecily Deane Freyermuth
Five years ago, it was difficult for unestablished artists or bands to get content into mainstream music-retail outlets, no matter how many fans they had or how brilliant their work was. It's commonly known that talent alone rarely enables artists to make a living off of their work but rather a combination of relentless self-promotion, refusal to give up, networking, excellent timing and pure luck. But many emerging artists are now enjoying the benefits of a new paradigm that enables them to distribute their work right alongside mainstream, big-label content without the major-label deal.
This isn't to say that you shouldn't ever get signed. Despite all of the “big bad wolf” talk of record labels, they are, in fact, wonderful (albeit sometimes greedy) assets to an artist. They can get you gigs with bigger acts, elevate you in the eyes of future fans, negotiate distribution contracts and so on.
However, if you're an unsigned or independent artist nowadays — and people can find your work online and like what they hear — you can still get paid for making music. I know this to be true because I'm a San Francisco — based attorney serving as corporate in-house counsel for the Internet-based, high-tech entertainment company RealNetworks Inc. At Real, I handle a broad range of matters in connection with the Rhapsody digital music service. My background includes representing independent artists, three years at a top-tier corporate law firm and the founding of a nonprofit organization. With my experience, I can answer questions and give advice on how to get royalties for your music on digital music services.
What's happening with labels and file sharing?
According to the Recording Industry Association of America, unit shipments of recorded media (CD, vinyl, DVD) have fallen from an all-time high of 1.2 billion units in 1999 to just shy of 800 million in 2003. The chances of getting that sweet record deal (an advance, contract, tour support, promotion and marketing for a fixed term) have significantly weakened in recent years. The most obvious reason is due to the increased use of online distribution of content, legal or not, which is lowering sales of recorded media — plain and simple.
The vast majority of online music distribution is through unlawful peer-to-peer (P2P) file-sharing networks such as Limewire, Morpheus and Grokster. Although these illegal services expose a greater network of listeners to new content, they cut the exchange of money (royalty payments) out of the equation entirely. As the RIAA pursues legal action against these copyright-infringement-facilitating services, the market is becoming increasingly populated by legitimate, legal digital music companies that distribute millions of tracks in a variety of ways and for a range of different fees.
How can independent artists get royalties?
The digital music services out there — Rhapsody, iTunes, Napster, MSN Music, Yahoo (to name a few big hitters) — are in a vicious content-and-feature competition. They are licensing tracks, creating innovative offerings and touting their accomplishments. When users arrive at these online services to explore and purchase music, they are met with recommendations for top artists and most popular tracks, much as they would encounter music displayed for sale in a physical retail store. The critical difference is that it is just as easy for a user to access a track from a local band that has never been signed to a label as it is to hear the latest mainstream hit.
The convergence of technology, user comfort and increased use of Web-based services is broadening the platform from which new artists may release, distribute and collect royalties for the sale of their content. The digital music services are a significant part of this revolution and are helping artists from smaller labels (or no labels at all) thrive in a whole new model. Over time, these features can expose thousands of users to music they may never have otherwise heard. In most cases — if it is a legitimate service distributing the content — artists gain exposure on a more level playing field, and each time users listen to tracks “on demand” or purchase a download, the artist, label and aggregator (if the artist is with one) get paid.
How do I get my music on digital music services?
An important component of this system is the body of aggregators that help connect the dots. Whether unsigned or on a smaller label, artists can get their content into the mainstream digital music outlets, without a lot of expense or hassle, by going through an aggregator. Aggregators take your tracks (in CD or digital format), negotiate the content license agreement with the digital music services, collect royalties, make sure the services pay up and send labels and artists royalty checks with sales reports.
There are countless options; new aggregators are popping up every week. If a small label is seeking digital distribution, Digital Rights Agency and Independent Online Distribution Alliance are solid, well-reputed options. If you're unsigned, both CD Baby and Reap and Sow can get you going, too. Find these operations online, contact them and determine if they will include your content in their catalogs.
Aggregators have master agreements with major digital music services and can help you open doors. Remember that, like a label, you make money if they do, so you are in a partnership of sorts. You should be able to review the terms of their distribution of your content, so don't be afraid to ask. Give them your electronic press kit, URL and other materials to be distributed with your recorded works. The next challenge will be getting on that “front shelf” of the music store when people (virtually) enter, but that can come with time.
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