Producer Compensation: Challenges and Options in the New Music Business

The music business is in a transitional phase as the emphasis moves from physical to virtual distribution. There is increased competition for consumer entertainment dollars from many sources including video games and inexpensive DVDs and most music is still available online for free. The industry continues to experience a serious downturn in revenues with US sales down 31% since 2004.[1] For these and other reasons record producers are also experiencing transitional challenges.[2] The required skill sets, work environments, sources and types of work, and the ways and means of remuneration are all in a state of flux. This article’s purpose is to focus primarily on the challenges that producers are facing in seeking out sustainable sources of compensation in this changing music business environment.

The partial collapse of the oligopolistic control[3] of the major record labels and the US radio industry has introduced a welcome diversity and opened up opportunities for many more independent artists but has also reduced, by a significant number, the amount of medium to big budget albums being made. In 2007, 570,000 albums sold at least 1 copy and nearly 80% of all albums (450,344) were purchased less than 100 times. The albums that sold 65,000 copies or more (1,000 albums) accounted for 50% of all album sales and fewer than 10,000 albums accounted for 80% of all album sales. The Top 200 albums accounted for 35% of all album sales in 2000 but in 2007, the Top 200 represented only 25% of album sales[4]. Albums that chart on the top 200 have, historically, tended to be the bigger budget, albums and the recording of these previously served to support the careers of a substantial number of producers. The President of World’s End Producer Management, Sandy Roberton, said “in 2006 we did 49 contracted projects, this year, same period, we did 23.  And, the money is even down.” [5] Many albums today are being made by both major and independent labels for less than the average price of a producer advance from ten years ago.[6] This is in part because technology allows recordings to be made less expensively but also because a diversified, more thinly-spread or ‘long-tail,’ marketplace will not sustain as many big budget albums. Overall sales may be dropping for the major labels but they are holding steady for the independent sector although independent sales are being spread across more releases.[7] Since 2004, unit sales from major label new releases declined 34% from 228 million in 2004 to 151 million in 2007. Sales from independent label new releases remained steady at 37 million since 1997 although the number of independent releases has increased drastically over the same period resulting in lower average sales per release. This situation presents opportunities for more artists and producers but realizes less income per project for all but a shrinking group of the most successful. From the nineteen-sixties through the turn of this century there was a steady flow of work from the major and large independent labels capable of supporting a substantial middle-class of producers and a smaller but very wealthy upper class of the most successful exponents. During this period the major and more successful independent labels presented clearly defined sources of work and income for producers. An established producer (one we can define for the purposes of this article as having a track record of multiple projects that have charted) could reasonably expect to be able to choose from a menu of major label artists for his or her next production. For example, through the eighties I could frequently pick from as many as ten major label artists for my next production. Sandy Roberton, who represented Tim Palmer[8] for around 27 years from when he was a tape operator, said, “Tim might have [had] a choice of 15 projects to choose from. You would go through the projects and think, “Who is the manager?  Who is the label?” trying to pick the best one.  Now, you don’t have a choice.  If there is a project and it’s a good band, you have to go for it. I went to a show last week in LA and I think there must have been about 10 producers there, chasing down this one project.  It’s very, very competitive now to get a gig.” [9] The business model for the middle-class producer has changed. To make a substantial living as a producer-for-hire is much more difficult than it was five years ago. The producer of today has to be more creative about finding work and more knowledgeable about potential sources of income.

Much of what I am going to discuss in this article does not apply to established superstar producers who work exclusively for the major labels on big-name artists. In the big leagues of multi-platinum selling artists recording budgets are still healthy and so are producer advances. But, with overall US music business sales down more than 28% since 2000[10] and with the major labels taking the brunt of the drop in sales, membership in the superstar club is shrinking and the term shortening. Sandy Roberton said that in major labels in America right now “there are probably only 20 people who can authorize the signing of an act.  So you imagine if you are starting off as an act and trying to get a deal how difficult it is. Producers now have to find eggs, and develop eggs and not think they are coming into the business to be hired.  I think producers have to go back to the way they were perhaps in the ‘50s and ‘60s and be entrepreneurs.”[11] Finding work even for the most successful producers, today, is rarely a passive process of sifting through a list of available artists, major label or otherwise. In order to make a living the producer of today needs to be proactive in seeking out work, very often performing A&R duties in scouting new artists or reviving older ones. This is akin to the way the early producers such as John Hammond, Ralph Peer and Alan Lomax operated, utilizing networks of contacts and proactively seeking out talent in all manner of settings. Signing acts and becoming an entrepreneur as opposed to  being a hired gun means that the sources of remuneration for the producer are not as clear-cut as they have been. From the mid-sixties to the turn of this century established producers and even first-timers could expect a substantial advance against production royalties (paid to them by the record label but deducted from the artist’s royalties) and then a royalty as a percentage of either suggested retail list price or published price to dealer/wholesale price. In addition, producers earned a contractually defined share of licensing income realized from tracks produced. These were very simple, stable and standardized revenue streams. The advance times the number of projects that a skilled producer could reasonably expect to do in the course of a year provided a pretty decent income for even a moderately successful producer and, of course, royalties from sales of hit projects made a number of producers quite wealthy.

In its basic principles producer compensation still breaks down much as it ever did, into upfront monies (the advance) and backend monies (royalties) but advances have been paralleling the downward trend in recording budgets.[12] Rob Finan, Atlanta based attorney with Greenberg Traurig who represents producers said, work “is not as vigorous as it once was.  The days of the 150,000 dollar track are probably gone, they are gone, and as crazy as it sounds it was not too long ago, probably 5 years ago where there were quite a few $100,000 or $150,000 tracks that were being produced.  That doesn’t happen much anymore.” [13] Of course, only the very top producers were ever realizing the kinds of advances Rob spoke of and that was mainly in the Hip Hop and RnB genres. Even given a major hit record the math establishes that there is unlikely to be much chance of a producer recouping such an advance, it was always a ‘take the money and run’ scenario albeit a profitable one. As Jimmy Douglass said, “When they get the 150, they never see any money again because they took it all up front.” [14] More common, until about five years ago, were advances to producers (if they produced the whole album) in the range of $30,000 to $100, 000 (with recording budgets of $100,000 – $250,000 on upwards) and, today, it is a greatly reduced number of producers receiving even that level of advance excluding recording costs. It is not uncommon now for an entire recording budget including producer and engineer fees as well as all recording costs to be below $30,000 and even the majors are making entire albums including producer and engineer fees and advances for well below $100,000. A sustainable business model for most record producers today looks very different than it has for the past forty years.

Since the advent of Pro-Tools/computer-based recording and the increasing cost effectiveness of the home or project studio most producers now have some kind of facility of their own. There has been a strong trend towards the engineer-producer or at least the producer who can engineer somewhat.[15] Owning a facility and being able to engineer as well as produce can reduce a budget significantly as long as you ignore the capital cost of setting up the facility, and the overhead of running and maintaining it. If it is a home studio the producer has the added inconvenience of having artists in his or her house. If a production can be self-contained, between the artist and the producer, the entire budget can be paid to the producer to include his services as producer, engineer and possibly musician/background singer, as well as for the use of his facility. The only additional cost might be the legal fees to negotiate a contract.

Backend income relies upon having a solid, enforceable contract in place that now has to embrace the multiple sources of revenue that accrue to the artist many of which are understood even if not proven to be profitable and some of which are currently unknown. In order to maximize the chances of making a living and to ensure a fair share of the success that may be generated by their work producers need to be aware of the new business models that are in place and those that are still forming. The producer contract of today needs to provide for a fair share of all revenues that are associated with the sale or use of the recordings. These revenue sources include but may not be limited to:

  • Physical sales, as always, which include CDs, vinyl and any other physical format that may become popular such as loaded USB drives, preloaded digital players/phones etc (is that a download or a physical sale?) or augmented CD or DVD products.
  • Virtual sales – downloads
  • Streaming audio – both interactive and non interactive
  • Free models, name your own price, or others that accrue income in some indirect way such as advertising or a lump sum payout from sponsorships or settlements such as the MySpace settlement.
  • Blank media levies
  • Sales through the producer’s own label or production company
  • Sales through the artist’s own label
  • Publisher and writer royalties
  • Other sources such as monies raised by producer from investors, label deals, publishing deals etc.

Physical sales can be dealt with much as they always have been by a contractual royalty based on either retail or wholesale price. What this model usually does not take into account is when there is no third party record label. Even when there is a major or independent label involved it behooves the producer to make sure that he or she is entitled to a fair share of profits if the rights should revert to the artist. The established producer/mixer royalty model of somewhere between 1% and 4% (in general) of suggested retail price is based upon the major-label artist royalty model but no longer remains fair to the producer when the artist is releasing via their own label where, instead of realizing a gross royalty of between 10% and 20% of retail (approximately $1 to $2), they will earn much greater gross revenue, which could, after manufacturing costs and publishing royalties amount to something like $3 to $10 per unit or 30% to 60%+ of the retail price depending on the avenue of sale. As a general rule even superstar artists expect to sell less on their own label but the business model works because their profit per unit is greatly increased. Likewise producers need to make sure that new contracts accommodate such eventualities and entitle them to a fair share of profits.

The industry standard for downloads, by default, became the iTunes $0.99c per track $9.99 per album model.  Now there are other download models such as Amazon (full DRM free albums can be priced at $4.99c, $6.99 etc) and the subscription services such as emusic where the per-download rate can be much lower per-track (such as $0.30c or possibly less). These variations indicate that the producer royalty would be best expressed as a percentage of that due to the artist including the additional income received where the artist is also the label and is receiving the label share.

Streaming audio is divided into two categories: interactive (on-demand) and non-interactive (radio style). There is currently no statutory rate set for interactive streams in the US which reinforces the need for the producer to ensure that his or her contract covers all income related to the recordings produced so that he can access this revenue as negotiated by the label or the artist. Non-interactive streams are particularly tricky for US producers in that artists now receive 45% of performance revenue due via SoundExchange under the Digital Millennium Copyright Act or DMCA.[16] The rest of the digital performance pie is divided 50% to the label and 2.5% each to non-featured side musicians and singers. There is no allowance in the DMCA for producers and the only way that producers can get their entitlement from this digital broadcast income is to get a letter of direction from the artist so that SoundExchange can pay the producer directly from the artist’s share.

Outside the US there are encouraging new figures from the IFPI[17] showing that distributions from performance income have grown by 54% in the past five years and increased 11% in 2007 to $660 million.[18] Qualifying producers in the UK and some other countries now have access to performance royalties collected (in the UK by PPL[19]). But it must be pointed out that unlike the US situation PPL collects not just from digital radio but also from terrestrial radio, television stations, clubs, shops, pubs, restaurants, bars and grills and thousands of other music users who play sound recordings in public. Currently the only type of performance income that exists in the US for artists and performers that producers can get a share of is non-interactive digital streaming income (internet and satellite radio) and only then by obtaining the letter of direction referred to above. Music publishers and writers in the US have had legislated access to similar performance monies for compositions and considering the growth of performance income for featured and non-featured artists and producers in the rest of the world the fact that this money is not collected and distributed represents the loss of a lucrative source of income for US producers, artists, musicians and labels. This is not only because performance monies are not collected domestically but because international collection agencies won’t pay US based performers and producers because the US does not have the means to reciprocate. Even outside of the US producers have not always had easy access to performance royalties. In the UK, to qualify for this income, the producer has to be deemed a ‘performing producer.’ This means that they either contributed an audible performance (such as playing an instrument or singing); or they conducted or musically directed another performer’s live performance as it was being recorded. Edits or remixes do not qualify unless the new versions involve new audible performances. It’s an imperfect compromise but one that was hard-fought and won by the Music Producers Guild in the UK. There are various related but different royalties available to producers in other countries from performing rights organizations such as GVL in Germany and GRAMO in Norway and each society has different qualifying parameters and different calculations for the payouts. The musicFIRST coalition is currently lobbying to remove the exemption from US copyright law that allows terrestrial (including high definition) radio to play music without compensation to the labels, featured and non-featured artists, and performers. The current proposal, if this exemption is removed, is that the split will be the same as the DMCA — 50% to the label, 45% to the artist and 2.5% each to background singers and musicians. DMCA royalties are statutory, not subject to recoupment or cross-collateralization and paid directly through SoundExchange. All labels and featured or non-featured artists have to do is sign up with SoundExchange to receive this income from digital broadcasters. Should the musicFIRST campaign succeed and a terrestrial right be established in the US producers will have the same problem as with the DMCA in needing a letter of direction to be able to claim their share of this revenue. A letter of direction can be very difficult to obtain in retrospect so it is essential for producers get one drawn up with their contract. There is some talk about using existing contract language to direct SoundExchange to pay producers, which would help legacy producers, but this discussion is far from resolved. There has also been some debate about the possibility of getting a statutory percentage of the terrestrial right for producers but as the proposal stands the American law will not provide for a statutory percentage for producers and at the time of writing there is no body lobbying for this on behalf of producers. This emphasizes the point that producers need to ensure that they have a contract and that the contract is specific as to how performance royalties are to be paid to the producer. Even if the terrestrial radio exemption is removed and the law is written to allow SoundExchange to use basic producer contract percentages to pay the producer share of performance royalties it may well be that access to digital income streams will still require a letter of direction. Producers without contracts are going to be completely unable to access these terrestrial performance royalties just as they currently cannot access DMCA generated revenue. This is an unfortunate consequence of producers not having a strong body representing them in the way that labels, artists, musicians and singers have. As a result of this US producers will not enjoy the kinds of benefits and protections as labels, publishers, writers, artists, and side performers.

There is much talk in the industry about “free” as a business model and of course this is a well tested business format with broadcast radio, television, and some magazines and papers being free albeit supported by advertising revenues. An artist or label can strike co-promotionals deal with a third party not unlike the [British] Daily Mail – Prince giveaway. There are the name-your-own price deals and the stepped-pricing deals such as Radiohead and Nine Inch Nails. These are some of the many creative business models that have appeared in the marketplace recently, and they may well disappear just as quickly but it is likely that there will be other variations and a period of experimentation before it becomes apparent whether these kinds of business methodologies are viable. It is not clear how artists will get paid from these types of models but producers need to tie their royalty income to the revenue received by the artist from any source associated with the produced recording and, where applicable, get a letter of direction for payment at source.

Blank media levies are collected in a number of countries and they vary as to which media and equipment they are collected from. These monies are usually paid out to the artist on a prorated sales based formula. This is a source of income which may disappear over time as digital delivery becomes the dominant format but once again producers should make sure that the income from blank media levies is covered by language in their contract.

Producers in the Hip Hop genre frequently use the production company model. The producer finds and signs artists to his or her own production company, produces the tracks or album and either sells the artist, album or tracks on to a major or independent label or releases and distributes the materials under the production company’s label. The production company model works well but it presupposes that the producer has the skill-set, time and money to discover and develop artists and then either place or release the materials. As Sandy Roberton said,

I think it is the only way forward for producers.  It is so easy now to put out your own records. Why sign to a major? You can put records up for nothing on iTunes, eMusic, Amazon, and the only money you will need to promote those records is the marketing money. Now, you can probably get that from the band playing live or an investor, but to sign away on some of the deals we were talking about today, these 360[20] deals that labels are making you sign, I think it’s probably better for producers to try and find acts, develop them and produce the records themselves. Just thinking that the phone’s going to ring and he’s going to get hired, I think that is over.  The producer has to think on his feet, he has to find a band, develop it, and shop it.  Work out a deal with a band, become a partner with the band, and shop it.  Or, put it out yourself.  I’ve got two labels now, which are just digital, and through those labels, any producer I represent can put out records and we market them ourselves.[21]

In the past funding for these production companies or producer labels has often come from major or independent record companies as an endorsement of the successful producer and a way of locking him or her in to working exclusively or semi-exclusively for the funding label. This model could be a way for major labels to survive: by acknowledging that they are effective marketing machines and outsourcing the development of new artists to smaller labels and production companies. This is not a new concept; production companies or labels have been investing in artist development then selling on to a major in order to move an artist to the next level, a perfect example being when Sun Records sold Elvis Presley’s contract to RCA in 1955. If funding is not forthcoming from a larger label and the producer does not have, or want to risk, his or her own resources it can be possible to find angel investors, venture capitalists or, in certain genres, grants. The music business is a high risk investment, to be sure, but it is an exciting business for the right investor and brings a high return with success. A solid business plan and effective networking in the investment community can produce good opportunities for entrepreneurial producers.

Writer producers have formed an important part of the industry for a very long time. Holland, Dozier and Holland with their unbelievable run of sixties Motown hits may be one of the most famous examples but writer-producers continue to enjoy success particularly in the pop and urban genres. Writer-producers who publish their own compositions clearly have greater backend potential and striking co-publishing or administration deals can realize upfront monies from larger publishing entities and avoid the administrative burden of registering songs, and collecting, accounting and distributing royalties. A non-writing producer can participate in this income stream and build a potentially valuable catalog by signing an artist’s publishing in lieu of upfront money or as otherwise appropriate.

Maureen Droney, Executive Director of the Recording Academy’s Producer and Engineer Wing recently commented that whilst the music producer’s role has traditionally been equated with that of the film director the new circumstances of the business are increasingly pushing record producers into a hybrid job description somewhere between that of the movie producer and the director. Increasingly, record producers are funding projects. They are doing this in many ways: either with their own money, their resources such as their studio time and their expertise, or by raising money via third party investors, or even the more managerial method of placing an artist with an established label which then funds the project. Since each deal and type of deal may be unique the producer’s share has to be negotiated. Producers who are working in this way can often justify an additional or increased share above the usual producer percentage and advance based on the additional work and skill set required. An additional credit such as executive producer may also be called for to reflect the these circumstances

Front-end monies can come from a number of sources. The traditional advance from the record label is normally recouped by the label from the producer’s royalty share before he or she receives royalty payments and all payments to the producer are normally deducted from the artist’s share by the record label. Payments that are non-recoupable from the producer’s royalties can be negotiated upfront. Usually these payments are made to the producer for engineering, equipment rental, performing as a musician or singer on the project or studio costs. Producers are increasingly experimenting with other models and are sometimes willing to take no initial upfront payment; this is known as a spec deal. Sandy Roberton explained how The Matrix landed the 16 million-unit selling Avril Lavigne album by starting out with a spec deal, they wrote the first two hit singles in one day and secured the album production and although they only received a $35,000 advance the back end production and writing royalties more than made up for that. [22] Jimmy Douglass made the point that there are advantages to not getting a lot of money upfront.

When you have…big advances you make a lot of money now, you have to pay Uncle Sam a lot of money now, as opposed to when you have an album …which is going to go on and sell for however long, you have money coming to you …for quite some time. And I say with the new age you have to sacrifice something and I think that professional or non-professional, you have to give up something now to get something later. You have to work hard, get in there, put your skin in there and believe in yourself because if you believe that you are really that great and that it is going to be that good, you will win somewhere along the line. [23]

Of course not every producer has the resources to work for nothing upfront in which case it will be necessary to find some kind of investor or backer whether a record label or a private individual who can be convinced to either invest in the artist’s career or the producer’s career and who can benefit from potential backend income from the project(s).

With respect to the back end monies or royalties most producer contracts in the US provide for payment from the first record sold but royalties are not disbursed until the label has recouped all recording costs from the artist. The producer may have little or no control over those costs and can find him or herself in the position that Rob Finan describes, “We have a producer-client who is watching his royalty, he gets his statements and it shows…a very large royalty just accruing.  But, because the costs on the album were tremendous, he will likely never see that…this guy is going to get hundreds of thousands of dollars the day that another 150,000 units are sold…but he did not receive a big up front advance.  The band sold millions of records, but not enough to recoup those recording costs.” [24] Outside of the traditional record label-artist-producer type of deal producers will have to make sure that they are contractually able to receive a fair share of all income streams as discussed further in the next paragraph.

Contracts continue to be an essential part of the producer’s business practice especially when it comes to back end monies and they may become even more important given the disparate revenue sources from which income is increasingly being derived. Producer contracts can be as extensive and expensive as an artist’s contract. The cost of generating a watertight (if there is such a thing) producer contract was relatively uncomplicated in the nineteen seventies and early eighties when producers produced whole albums for major labels involving substantial recording budgets and producer advances. A top line music business attorney charging at an hourly rate or on a monthly retainer or even a percentage would charge what amounted to 5% or less of the producer’s advance. This situation began to change drastically in the eighties when multi-producer albums started to become the norm. The cost of generating a single track producer agreement is no different than that for a full album. Consequently attorney’s fees could easily represent 50% or more of the producers advance for a single track contract. With the downturn in major label fortunes and the advent of project and home studios, budgets have, in many cases, fallen to a fraction of what they were ten years ago. When a typical album budget was $250,000 and often much higher it was not difficult for a whole-album producer to get an advance of $50,000 or more. The attorney’s fees could be in the $2500 to $5000 range and whilst expensive it was not uneconomical. These days it is not uncommon for an album budget to be $50,000 or less. Clearly the producer cannot get paid the entire budget unless he or she is a one person band, producer, engineer and studio owner (and this does happen). Assuming the percentages stayed the same as in the prior example where the producer got an advance of what amounted to 20% of the recording budget; in this case the producer would receive $10,000. Now the attorney’s fees have shot up from 5% of the producer’s advance to between 25% and 50% assuming the attorney still charges in the $2500 to $5000 range.[25] Many producers and producer managers mitigate this problem by putting all their work through one, usually less than top-name, attorney who will issue a fairly standardized contract in exchange for a lower fee that would still represent a reasonable percentage of the producer advance. Keeping attorney fees down depends on either standardization of the contract or some sort of bulk deal with the attorney. Of course producers could generate their own contracts based on wording they find online or in a previous contract that they have modified but there is always the risk that such an agreement might not stand up under the scrutiny of a court-bound dispute. It is necessary to keep attorney costs in line with the overall budget of the project but it’s also important to use an attorney who has expertise in the music business and specifically in production contracts especially in the rapidly developing environment we are living in now. Rob Finan, [26] “the worst thing to do is to negotiate a deal with a non-entertainment attorney or even a music lawyer, because it will take you four times the amount of time because they do not understand the different areas, and what is important, what is customary and what is not.”  However the contract is drawn up, what is essential is that it be legally binding and that all potential revenue streams that accrue to the artist are split in the same proportion as the producer’s basic deal, so if the artist has a 16% deal and the producer is getting 4 of those points 25% of all revenues that accrue to the artist from the sale or use of the produced recordings should be accounted and paid to the producer. This should include licensing, split profits deals, ring-tones, bulk-payouts from P2P sites…whatever the source, if the monies relate to the produced recordings the producer should participate. Finan also indicated, with regard to the legal costs of drawing up a contract, “A lot of times you can get the record company to pick up the producer costs as well.  Often a lot of the independent labels will build that in as a part of the overall compensation, the majors you can finagle it out of the budget. . .”[27] Of course, as budgets shrink, attorney’s fees can become an unrealistically high percentage of the total financial pie that is available to make the record irrespective of who pays them in the first instance.

There has been much talk about the bottled water model for the music business with respect to how to deal with the fact that music is, to all intents and purposes, now free for those who choose to take it. Since in the US bottled water is an $11billion business and yet perfectly drinkable water comes out of the tap for free the thinking is that if it’s possible to tout a special, added value, benefit for packaged music, physical or virtual, that should convince enough consumers to buy it as opposed to getting it free. [28] Historically the music industry seems to have been better at giving away something that it could charge for than charging for something that the consumer can get free; terrestrial radio and MTV being prime examples. In these cases substantial businesses were built on the free use of music and music videos respectively. The music industry also markets at retail in a very odd way by heavily discounting new releases and then gradually increasing the price as demand lessens. This flies in the face of the basic marketing principle of supply and demand. Most industries work in the opposite fashion by charging a premium for new products and dropping the price as the market achieves various stages of saturation. Even the film industry doesn’t begin a campaign with lower ticket prices for a new release and they are just as chart (box-office) driven as the music business. But if recorded music does remain free to the consumer and if artists and labels use it primarily as a promotional device to sell tour tickets, merchandise, and licenses then record producers are really in a bind. Larger record labels have introduced the so-called 360 deal to offset their losses that they blame on piracy[29]. This means they are now taking a piece of the artist’s touring, merchandise, and licensing income ostensibly because the label investment is building the brands of the artists and elevating them to a position where they can make money from these other sources. If the market does move further towards free ‘promotional’ music, in order to survive, the record producer will have to make a similar argument in order to partake in the other income streams. Hopefully the industry will not come to this. There is a massive proliferation of the use of music happening. The music industry has so far failed to monetize this increase of use. If the pie that is the music business can be grown and the financial model refined to accommodate lower prices to the point that everything is available, everywhere, at all times, for a fraction of a penny per play, then ownership of music may become meaningless. For this to happen, mechanical copyright royalties in the US will have to move from the current penny rate to the European percentage model. The concept of an album is already weakening in a 99c per track download world and may well all but disappear in a model that rewards use rather than ownership. A use model would reflect actual public taste on a track by track basis much more accurately than the heavily marketed album-purchase model. Consumers no longer have to buy a whole CD, cassette or vinyl LP in order to get the one hit single they like. An all you can eat subscription download model cannot work for US labels, as long as the penny rate mechanical royalty remains in place, but it’s easy to see the appeal for the consumer if their service of choice has enough diversity of music.

It is not yet evident whether paid for downloads or other virtual models can replace lost physical sales and the future role of major and large independent labels is still unclear. It seems unlikely that US producers will benefit from any kind of statutory protection when it comes to the new streams of performance income making the importance of a well thought through and watertight contract greater than ever. For whatever myriad reasons, the music industry is in the state that it is in, it is abundantly clear that most producers are going to need to evolve a new modus operandi in order to survive this next phase of the music industry.

Notes

[1] Neilson ‘State of the Industry’ report delivered at NARM 2008 San Francisco 5-6-08

[2] Sandy Roberton, “if a producer is going to survive in the business right now, he’s got to think of a different way.  Just thinking that the phone’s gonna ring and he’s going to get hired, I think that is over.  The producer has to think on his feet.” [2] Producer and Engineer Wing of the Recording Academy/Smithsonian Folkways seminar on producer compensation at The Baird Auditorium, Washington DC. April 24th, 2008. Sandy Roberton is the owner of the World’s End producer management company

[3] Christopher May issue 2 Oct 2007 Journal of The Art of Record Production

[4] Neilson ‘State of the Industry’ report delivered at NARM 2008 San Francisco 5-6-08

[5] Producer and Engineer Wing of the Recording Academy/Smithsonian Folkways seminar on producer compensation at The Baird Auditorium, Washington DC. April 24th, 2008.

[6] “Recording Studios Squeezed As Labels Tighten Budgets” Christopher Walsh, Billboard, 2-15-2003

[7] Neilson ‘State of the Industry’ report delivered at NARM 2008 San Francisco 5-6-08

[8] Tim Palmer has worked with Pearl Jam, U2, Ozzy Osbourne, Michael Hutchence etc.

[9] P&E Wing/Smithsonian Folkways seminar, Baird Auditorium, Washington DC. April 24th, 2008.

[10] www.riaa.com

[11] P&E Wing/Smithsonian Folkways seminar, Baird Auditorium, Washington DC. April 24th, 2008.

[12] Sandy Roberton said “in 2006 we did 49 contracted projects, this year, same period, we did 23.  And, the money is even down”

[13] P&E Wing/Smithsonian Folkways seminar, Baird Auditorium, Washington DC. April 24th, 2008.

[14] P&E Wing/Smithsonian Folkways seminar, Baird Auditorium, Washington DC. April 24th, 2008.

[15] Jimmy Douglass “’Production, engineering, mixing, all this stuff…its all the same job.” P&E Wing/Smithsonian Folkways seminar, Baird Auditorium, Washington DC. April 24th, 2008.

[16] www.copyright.gov/legislation/dmca.pdf

[17] www.ifpi.org/

[18] Billboard.biz May 16, 2008, Global, Lars Brandle, London

[19] www.ppluk.com/

[20] The label takes a piece of the artist’s touring, merchandise, and licensing income as well as the revenues from music.

[21] P&E Wing/Smithsonian Folkways seminar, Baird Auditorium, Washington DC. April 24th, 2008.

[22] P&E Wing/Smithsonian Folkways seminar, Baird Auditorium, Washington DC. April 24th, 2008

[23] P&E Wing/Smithsonian Folkways seminar, Baird Auditorium, Washington DC. April 24th, 2008

[24] P&E Wing/Smithsonian Folkways seminar, Baird Auditorium, Washington DC. April 24th, 2008.

[25] Rob Finan, “I have heard of some lawyers charging $2500 flat, which I think is tough to do.  I think I would lose money on any $2500 deal no matter who you are dealing with because the time to go back and forth and draft and even if it is plugging in everything, the percentage of just plugging stuff in and little negotiations, I mean there’s a [significant] amount of time to work with a 30 page document.” P&E Wing/Smithsonian Folkways seminar, Baird Auditorium, Washington DC. April 24th, 2008.

[26] P&E Wing/Smithsonian Folkways seminar, Baird Auditorium, Washington DC. April 24th, 2008.

[27] P&E Wing/Smithsonian Folkways seminar, Baird Auditorium, Washington DC. April 24th, 2008.

[28] Slate.com, Evian Criminals: The new snob appeal of tap water. Daniel Gross, Thursday, April 26, 2007

[29] A new study in the Journal of Political Economy by Felix Oberholzer-Gee and Koleman Strumpf has found that illegal music downloads have had no noticeable effects on the sale of music, contrary to the claims of the recording industry. Reported on ARS Technica By Ken Fisher, February 12, 2007

Bibliography

Gross, Daniel. 2007. Evian Criminals: The new snob appeal of tap water. http://www.slate.com/id/2165124/ (Accessed Oct. 2008)

May, Christopher. 2007.  A Multi Tiered Music Industry? Intellectual Property Rights, Open Access and the Audience for Music. Journal on the Art of Record Production. Issue 2 (Oct, 2007). http://www.artofrecordproduction.com/content/view/64/107/ (Accessed Sep. 2007)

Walsh, Christopher. 2003. Recording Studios Squeezed As Labels Tighten Budgets. Billboard Magazine, 2-15-2003