NARM Presents Music Startup Academy @ General Assembly
June 23
Tales from the Trenches

Digital Hollywood Spring 2011
May 5
Music Apps for SmartPhones, Tablets & Social Media – Reaching Millions – Monetization

Billboard Music & Money Webinar
June 2010
Valuations in Recorded Music, Music Publishing & Digital Platforms

I went to the NAMM Show this week with MakeMusic.  The NAMM Show is the international annual gathering of musical instrument manufacturers and tech companies, their distributors and retailers.  Finale is sold through music stores, so NAMM is an important show for them.  I was struck by the sheer size of the show:  95,000 attendees and 1500 exhibitors covering the whole Anaheim Convention Center.  This industry did $6.6 billion in 2011 with 3% growth over the prior year.  The music education business is difficult to value, but suffice to say that the value of the musical instrument and education businesses together easily eclipse the value of the recorded music which slipped below $7 billion in the US this year after losing 60% of its value over the last decade.

MakeMusic has lots of room to grow, especially in its SmartMusic education business.  Today SmartMusic is offered to students and music teachers under an annual subscription.  But in addition, wouldn’t it be cool to offer contemporary pop titles for music students to learn with their favorite songs through SmartMusic on an a la carte basis?  We think so, and we think music publishers will agree.

John Simson, Executive Director of SoundExchange is leaving the organization he helped found at the end of this year after a decade of dramatic growth.  A search is underway for his replacement.  According to the SX site, about 45,000 artists have registered for payment along with 6,000 record companies.  $417 million in royalties have been paid out to date.  Pretty impressive, considering there was no rate or payment mechanism in place at the time SX began operations in 2000.  It is an enormously difficult task to match usage reports from webcasters and satellite radio operators with artist registrations and make appropriate payments.  I commented this week in Digital Music News that the tenor of the debate over SX’ stewardship has turned rancorous.  Why all the venom?  One commenter made unsubstantiated allegations of fraud.   As most readers of DMN know, SX began collecting royalties for non-interactive digital transmissions in 2000 after passage of the Digital Performance in Sound Recordings Act of 1995.  The DPSRA gave record companies and recording artists the right to collect income for public performances of certain digital uses including the then-emerging businesses of webcasting and satellite radio.  The Librarian of Congress designated SX as the best and only organization authorized to collect those new royalties.  Interested parties have been arguing about the correct rate ever since.   SX has done a commendable but imperfect job building out the legal and technical framework to get tens of thousands of artists and labels paid under difficult circumstances.  Is there room for improvement?  Absolutely yes.  The same commenter who yelled fraud also commented on the need to protect terrestrial radio, the record industry’s traditional symbiotic “partner” from paying a royalty to use the music that drives their business.  Terrestrial radio has historically paid nothing for public performance of music in the United States, uniquely so among civilized nations.  Should record companies and artists be given the right to collect public performance income from their “partners” in terrestrial radio in the US?  Yes.  Should there be a fair rate established for that use?  Hell yes.  The notion that SX has perpetrated fraud while exercising its mandate is disingenuous and inflammatory.  Artists, their managers, advisers and labels will all be better served by providing constructive input, letting the professionals do their jobs, and getting out of the way.  Who should lead SX to higher levels of  performance and accountability?  Time will tell, and now is an excellent time for constructive comment.  But leave the decision making to the board and professionals.  And as a stakeholder in digital performance royalties for sound recordings, one more thing:  Thank you, John.  

By Luke Torn

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CBS Sunday Morning – March 26, 2006

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By Gavin Edwards

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By Michael Paoletta

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