The Boy Who Knew Too Much… (AKA: how to almost ruin a music contract)

They say that a little knowledge is a dangerous thing. So, I guess that means that having a little more knowledge is more dangerous? I have been called an “expert” on music and digital media rights by people I consider experts. It has been said (by attorneys) that I know more about copyrights than many of my friends who are lawyers who get paid hundreds of dollars an hour to consul their clients. I have helped dozens of my consulting clients, friends and my college students get recording and publishing deals. However, 30 years of experience and knowledge didn’t help me when I was the client and the catalog under discussion was my own.

To begin this tale, we have to travel back in time to when I was doing my first commercially released recording way back in 1993 for Narada (UMG) [which was the soundtrack to the PBS series “Sea Power”]. It was a simpler time. You sold stuff. They counted the sales. There was a warehouse of CDs and there was “breakage”. You got a tiny royalty (after recoupment) and a piece of the mechanical payments. Not too bad. From these humble origins, I began to learn about the ins and outs of record deals. Then, Napster happened in 1998 and everything changed.

Fast forward 26 years and 32 albums later. I am talking to Real Music (a lovely independent label which is now owned by the Cutting Edge Group) about getting a record deal for my new release “Cupid Blindfolded”. After discussions, the label counter proposes that I sell almost my entire library of masters to them and that I would get my own imprint/label. They want to be “in the Michael Whalen business.” I was shocked by their idea and then soon afterwards, thrilled. But the question is: what are 13 masters by Michael Whalen worth in 2019? The odyssey begins…

In the “old” days (pre-streaming), you looked deeply at sales figures and how sales are trending and then you would take a deep discount for the inevitable end of the bell curve where a master recording becomes “deep catalog” or fodder for a music library. You might have given a 2X or 3X multiple to your discounted 1 year average sales figure and you were pretty close on the “value” of a song, album or catalog. Sorta’. People bought and sold catalogs emotionally in the “old” days.

In the streaming world, things a much more complicated. Much…

I have a song: “I Have Loved You For a Thousand Lifetimes” that has more than 36,000,000+ total streams on Spotify and hundreds of millions of streams combined on other platforms. My second most popular song is hard to say because my number one song is SO popular. Royalties from this song have been instrumental in paying my rent during the quiet times and it is a badge of honor to my “new age/ambient” colleagues to have a solo piano track that’s as popular as a hip hop song. That said, having a single song that is weighted so heavily in popularity compared to a pretty successful catalog (without it) makes valuation of my recorded output nearly impossible. The one song distorts the popularity of all the others by eschewing the data upwards. So, after months of close work with my new friend at Real Music (where I nearly blew the deal for not having my act together); here’s the building blocks of valuing your music catalog in a streaming environment:

  1. Indexing

“What’s this?” I said the first time I heard the word. It’s not enough to have a hugely popular song on YouTube, Apple Music or another platform when it comes to assessing value. You want to work to see how the song has indexed across all platforms. Indexing is a fancy word for music use with the addition of propagation. Yes, different platforms appeal to different audiences of different ages and social stripes. However, having a song be used as equally as possible across as many platforms as possible is the real goal. My investigations led me to see that I have serious holes in how my music is indexed on a number of platforms. Having success on one or two platforms can blind you to what is actually happening. Bathing in the glare of my success on Spotify, I took on a “it will take care of itself” attitude.

Musicians: it will not take care of itself. Your music lives as data. It needs to be moved, tended and manipulated. But now that I see these gaps, I can take steps to bolster myself on these platforms… I can hear musicians reading this last sentence asking: “how”? Most major music platforms have some way for artists to log-in, see their data and where their music is being used. Information like this is invaluable if you are proactive.

2. Playlisting

People talk endlessly about the importance of playlisting their music on “big” curated playlists in places like Spotify. But when it comes to value, we know that your placement on that one playlist that is driving your plays is not guaranteed. So, looking for the trend on how the catalog is playlisting is the smarter way to go. How many new playlists have you been added to this year? Who is the curator? How many of your songs are playlisted? (see “Indexing”)

The bigger problem with playlisting is that the majority of people do NOT playlist music and many other people do not seek out playlists. They have no time or inclination to do so. Therefore, the age of algorithmic playlisting is upon us where the expectation that our phones and computers will intuit our music preferences is a very real phenomena.

All of this puts an “x” factor on valuation because it is very hard to determine how or if a song from your catalog will become suddenly a “hit” because it was discovered by a curator. The playlist curator may be going the way of the Dodo bird and with it any clear pathway to have your music exposed.

3. Metadata

Metadata is the lifeblood of monetizing your music for digital streaming and mine was a mess. It’s ironic that I have been preaching and coaching people for 15 years about metadata and mine was in terrible shape. For example: I had my name misspelled on two of my albums, no ISRC codes on several, etc. Long story short, be interested in how your metadata is inputted. When possible, do it yourself. Again, I was so busy preaching that my own house was not in order. Without accurate metadata, the use of your music cannot be tracked. Without tracking, no payments. No payments — no value. One of the reasons that the major labels are making more money than they ever have is that they have instituted a military level discipline with their metadata. It has paid-off by creating record-high profits for these companies. Since repairing the holes in my data, I have instituted my own controls. The battle for having your metadata correct is an uphill one.

However, here are some easy “best practices” that made a difference for me:

  • Get more than one pair of eyes double/triple checking your spreadsheets.
  • Where possible, input your own data. Nobody cares about getting it right more than you do.
  • Fill out metadata completely. Every column. Don’t have the answer? Figure it out… no, really.
  • Do you have collaboration agreements and agreed to “splits” on music that was co-written? Head off accounting and legal hassles now by dealing with this essential issue. Once its agreed, get the splits notated on your metadata accurately.
  • Are you complying with the metadata standards for each music platform that your aggregator will be sending your music to? Spotify has made their requirements on metadata very tight in the last few years. Pandora’s “music DNA” model is now coming into view as a forward thinking structure for creating algorithmic playlists.

“Anyone who has never made a mistake has never tried anything new.”
Albert Einstein

4. No Assumptions (AKA: the place where I really f-ed up)

For years, I have assumed that everything was “the way it’s supposed to be” with regard to my individual deals with the 10 or so labels I have worked with over the years. Humans are humans. They make mistakes, they lie, they are lazy and occasionally they even surprise you. Contracts can be dense and overly complicated. When I did my deal for the album “My Secret Heart” in 2004 with Narada (UMG) that contains the song “I Have Loved You For a Thousand Lifetimes” — I simply assumed that streaming royalties were not part of the deal.

I was wrong. Really wrong.

While going through all my contracts and statements for Real Music, I noticed that I got payments for some pieces of the publishing on “My Secret Heart” that came from streaming. So, what about the album itself? The recording? Even though I didn’t own the master to that album, Real Music needed to see how much money the title was generating to put the other 13 masters in context. The last actual payment I got from Universal from any of my Narada recordings was over 11 years ago. I simply had not addressed the issue. OK, I know. I’m a dumbo.

I finally contacted UMG a few months ago and I asked for a copy of my 2004 contract + I did an “audit” of my UMG account. They complied immediately and gave me my own log-in to their (slick) royalty portal. What was there? Tens of thousands of dollars for 11 years of royalties which included streaming (UMG bought EMI which had purchased Narada. A few years of EMI statements were included as well). Just. Sitting. There. Yes, I am 100% responsible for not being on top of this very costly error. But they didn’t contact me either. UMG’s policy is to retroactively pay up to 9 years of back royalties. UMG grossed $7.1 billion with a $1 billion profit in 2018 so cutting my check was no big deal. :-)

I had also assumed that the payments I was receiving from SoundExchange were correct as well. I registered for SoundExchange so long ago that I did through the US mail. My friend at Real Music was the one who raised a red flag by saying: “where are label royalties from SX? I think you’re missing out on some money here.” So, I checked thing out at SoundExchange and I never registered as a “label” with them. For all of these years, I only got my artist royalties. I submitted my registration and the spreadsheet with all of my titles — now I am a “label.” SoundExchange will pay only three years of royalties retroactively.

What I would like you to learn from these humbling stories is that assuming things are “right” is a brutal mistake. Also, if you have talked yourself out of contacting your label, publishing, PRO, SX, manager, agent or anyone else who handles your money because you don’t want to “rock the boat”, you are foolish. There is a way to address these inquiries without being a jerk. Many of these large organizations have very detailed dashboards and royalty accounts just waiting for you to access them. Going back and forth with their business affairs or legal departments can take more time — but in the end it is worth it to be sure you are receiving what you are supposed to be getting. Contracts are there to protect all parties and to stipulate clearly where monies are supposed to flow.

So, in the end, Real Music/Cutting Edge agreed on the value of my 13 masters. I was happy with the final deal and I learned much about the process of valuing music in general. Music has been a commodity since Napster came along in 1998 and shocked us all into the reality of trafficking music on-line. But there is a freedom at looking at music without the emotional drama that might have inspired the creation of that music. Data is data. For musicians, we are way past relating to “data” as a dirty word. Data is a lens which helps us to see the facts of where, how, when and how much of music has been used. We could all use a little transparency, focus and clarity, right?

“Cupid Blindfolded” comes out July 12th on Solace (a division of Real Music).

Watch a video about the making of the album HERE.

Emmy® Award-winning composer, record company executive, copyright expert, dad, dog owner and CrossFit newbie

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