Avoiding Liability Through Continued Education

     As a business professional in the entertainment industry one should remain a firm believer in, and constant practitioner of, continued education. This is especially true where there is opportunity to study cases that set precedent(s) in our industry or evaluate existing cases, laws, and statutes that still have a tendency to effect how we do business everyday. As a publisher, record executive, or producer, the information below can help to remind one to stay on the "up-and-up" when it comes time to do research, make promises, and handle agreements through not only the use of what most would consider standard industry practice, but also by knowing what is currently changing to protect oneself in/from the future. As a consultant on these matters, it becomes even more obvious why one should stay apprised on all possible matters relating to the law and how it may affect a party on "either side of the fence" ensuring proper advice is always delivered.

     Two of the podcasts used for analysis this week come from Gordon Firemark's "Entertainment Law Update" series. The first, titled "Lawyers, Libel, Logos, and Lolipops" covers some changes to infringement process through language clarification for ISPs, and the findings of the 9th circuit regarding clarification of language in the Eminem (FBT) v UMG/Aftermath royalty dispute case. Because this is a blog, and meant for a comfortable read, I will not get into the technical specifics of the cases regarding Viacom, YouTube, Veoh, etc, and just say there comes a time when companies, and individuals, need to know exactly what their responsibilities are, and why. In this case the question is, what (or how much) does an ISP have to know regarding the use of a service for purposes of infringement before they take action or send notice (and to whom) in order to be safe under the DMCA. This could also be worded the other way to ask, how much attention does an ISP have to pay to cases of infringement within their networks and how little can they know before they have to bother going out of their way? Thankfully the answer from the 2nd and 9th circuits reflects that ISPs have to alert copyright owners when an infringement complaint is filed. This is a good thing as the copyright owner is much more likely to act both quickly and aggressively instead of waiting on a mammoth ISP to drag their heels.

     Next we have F.B.T. Productions bringing claim in California to show that product sold digitally (iTunes, etc) are to be determined as "digital licenses" and not sales under the same terms as physical product. The difference is huge in terms of the royalty paid per the agreement made between Plaintiff and Aftermath, Interscope, UMG; digital licenses carry a 50% royalty in lieu of the 12% being paid on simple "sales." The case was handed off to the 9th circuit of appeals for clarification on the language and for a final determination as to whether digital product indeed qualified as license or sale, and thus carried a 50/50 split. The 9th circuit has concluded that products sold digitally are in fact a digital license per the terms of the agreement and are to be paid per the higher rate. This is where the case gets even more interesting.

     It could seem to anyone who has been in the industry for a while that this lack of proper payment was intentional, but now the judge has caught on and has accused UMG of trying to "bamboozle the court." It gets worse, F.B.T. now claims that not only has UMG intentionally paid a lower rate on product sold digitally, but that this revenue, from source, is then intentionally cycled through foreign subsidiaries to further lessen the pot that is available for Aftermath, and hence a much smaller pot from which F.B.T. may take their percentage. In other words, instead of getting 12% (now deemed to be rightfully 50%) of 100% (net) they are actually receiving 12% of 29%. Against the arguments of UMG, et al, the court has agreed to allow F.B.T. an amendment to their original claim. I urge everyone reading this blog to follow this case as closely as possible. Just try not to throw things while reading in public.

     In podcast #27 of Gordon Firemark's series there is interesting conversation regarding a case that serves as a reminder for how important it is to not only have a very firm understanding of copyright law, i.e. specific rights and lengths of term, but to also properly execute, as well as administer, the imperative forms and contacts required to implement these rights. Take for instance, the example given for discussion in this podcast regarding the song "Santa Claus Is Coming to Town." An Heir of the writer of this song claimed the writer had terminated the original grant of rights during the first "window" of availability in the early 80's but faced difficulties and the process was never fully completed. Since the Sonny Bono Act allows for a second "window" the family of the writer has once again tried to terminate the grant of rights and take the rights back for themselves.

     EMI, the current holder of the rights says they have paid out considerable sums of money since the early 80's, after having paid the writer not to terminate. Further, EMI states that a writer or heir can only use the termination process one time, even if there are two windows, the termination can only be attempted once thereby rendering the second termination attempt void as they are no longer entitled to terminate. This case is a great reminder of how important it is to read carefully, and to have a great entertainment attorney or consultant who can help sift through the language and offer an educated and experienced interpretation. Indeed, it should be a part of any professional's original business plan to find and retain the absolute best entertainment attorney or consultant one can afford, as well as continually keep close eye on the court opinions provided on the Internet through direct findings, or even the press.

     Finally, in a talk given by a Duke University School of Law IP concentration professor during a visit to Suffolk University, we find a great conversation on net neutrality, as well as brief descriptions of trade, patent, copyright, and trademark laws. Also discussed is what is needed to properly back these rights up in an ever-changing, digital world. This podcast is titled "What is net neutrality, regulating the onramp to the Internet." Because this talk covers in great length what net neutrality is, the philosophical and reality-based harms that could be done if too much power is given to only a few large companies, as well as the previously mentioned backgrounds and defenses of patents, copyrights, etc, I encourage you to follow the links provided within this text to listen to this podcast and educate yourself on any parts of this you do not yet fully understand.

     I have included this information within the context of this blog because as mentioned in the opening statements, this article has been written as a reminder to keep up with current cases, expert opinion, and any situations, which may arise that allows for precedents to be set within our industry. As publishers, representation, entertainment business consultants, or even producers, we become liable in the way of civil law, contract law, and even infringement when we do not stay at the forefront of what is going on in our industry, and have an established entertainment attorney woven into the very fabric of our business plans. It would be a shame for any professional in this industry to wind up severely in the red for never properly following through on processes set by statute or setting up deals that can later leave one liable for damages.

Can’t Win’em All

Case 1 - AVELA v. Estate of Marilyn Monroe

     This is a case dealing with publicity rights, which are protected at the state level and are different in each state. This is no different for the publicity rights of the deceased and the laws of the state in which you died govern your post mortem publicity rights. (Butler, 2007, p. 128) Apparently the estate of Marilyn Monroe has been sending cease and desist letters over the years to several companies and in the most recent case sent one to AVELA, a company licensing images to a manufacturing company, Silver Buffalo that slaps the images of celebrities on cups, key-chains, etc. Now AVELA is suing the estate of Monroe for "tortiously interfering with its contracts."  (Gardner, 2012)

     Further, AVELA claims that the Monroe estate has already been dealt with by federal judges in both California, and New York who "previously determined that Monroe's estate was estopped from claiming an enforceable post mortem right of publicity." (Gardner, 2012) Consequently, New York is also where Marilyn Monroe died, so any ruling regarding her post mortem publicity rights here should be paid close attention.

     Here, is my opinion regarding post mortem publicity rights in the case of a celebrity such as Marilyn Monroe. I believe there should be some sort of mechanism that provides royalty to the estate where another seeks to profit from the likeness of the deceased. I would agree there should be a limit on time, or number of generations that control this right, however, and it should generally apply where the estate actually holds copyright for the image used.

Case 2 - Black Keys Sue Pizza Hut and Home Depot

     It is hard to imagine being the artist or manager who is going about their normal everyday business when something in the background, say television noise, catches your attention, and it is one of your songs a company is using without your permission or previous knowledge. I imagine that even more shocking is the irresponsibility; some may say stupidity, of those who know better. Now imagine that you are The Black Keys and it happened twice, in instances not so far apart in time.

     Both Home Depot and Pizza Hut are being sued for infringement by The Black Keys for using parts of their songs in advertisements without any permission whatsoever. According to an article by Anthony McCartney on Billboard.biz, the two songs in question were both featured on the duo's most recent album titled "el Camino" that has since sold almost 900,000 copies. The band is seeking both damages and asking that the ads be taken down permanently. (McCartney, 2012)

     I say that if it is in fact blatant infringement, then good for The Black Keys for standing up for what they believe in and protecting their art. I have no tolerance for outright theft, especially when the companies involved have ample resources to put licenses and permissions in place.

Case 3 - Developments in Eminem (FTP) v. Universal Royalty Case

     For those of you who are not aware of this case (if you're in the industry you should be) then here are the most basic and general points in a long and technical case. FTP productions is the company that originally signed Eminem and they have taken Universal/Aftermath to court over contract language that deals with percentages of revenue regarding sales and licenses of songs online. There is large money at stake and many other artists have taken notice, are watching closely, and others have already similarly filed against their respective handlers/labels. (Gardner, 2012) FTP argues that a digital sale is a "license" and as such should carry a 50/50 split instead of the mere 12% earned on sales of physical product(s). (Gardner, 2012)

     Beyond this, many other technical details such as container fees have been disputed that UMG has wrongfully applied to digital sales though there is no packaging to speak of. Elements of this case was passed to the 9th circuit for a final ruling as to whether or not digital sales qualify as licenses instead of sales and the 9th circuit agreed that digital sales should be considered licenses. (A.P., 2010) With this clarification both side have headed back to court where the judge has essentially accused UMG of intentional dishonesty and trying to "fool" the court. (Gardner, 2012)

     Further, the judge has allowed FTP to amend their original complaints against UMG to include details that UMG has not only been paying 12% where they know they should be paying 50%, but that the revenues from which these percentages are taken have been routed through foreign subsidiaries so that only 29% of the original dollar amount is left. This forces FTP to take 12%-50% of 29% instead of 29% of the "whole pie." UMG argues that they have already reached a summary judgment on the words "our net receipts" in a prior hearing and that the word "our" is to apply to Aftermath. (Gardner, 2012)

     UMG says since this summary judgment is "clear" that FTP knew they were only getting a percentage of what made it to Aftermath and that FTP should not be able to raise this question or be granted an option to amend. In my opinion UMG is desperately grasping at straws in an attempt to avoid having to pay out millions of dollars they know they kept wrongfully, and that's even if one only wants to consider the "container charges" being taken from digital sales. I am glad that in this case there is a judge who not only sees straight through UMG and the tactics taken, but that he also takes personally being lied to and used as a tool to cover up lies to other people, not to mention there is theft involved here. I look forward to a final judgment, and hope beyond hope that all involved get exactly what is coming to them.

Don't Flood The Gate: Find the best time to fish!

     Anyone who is active in social media, whether it is Facebook, Twitter, Myspace (yeah right), or even territory specific pages like Nexopia, IRC-Galleria, etc, is done being bombarded with the same exact messages everyday. We will not begin to get into the fact that the messages asking you to actually buy are largely ignored (see previous post below) but we should talk about the actual timing of these messages and how they might be most effective, and most importantly not completely annoy one's target audience.

     First of all, please if you have not already, please do try and keep your direct marketing by e-mail if you are selling anything or trying to gain any kind of true response and growth (again, see previous post below). This goes double for contacting those within the industry. While one does obviously make new connections and does have the opportunity to go "viral", social media is for interaction and fan "support", not sales and not true "support" in terms of longevity and product movement in the long tail.

     According to musicthinktank.com's Bobby Owinski there is an actual "Science of Email Timing” that can help you to take this one step further to make sure that your campaign is not wasted and your analytics actually move whilst you stare at them for any signs of life in the universe you are working so desperately to create.

     No? Okay, so if your analytics are showing growth this is perhaps even more important for you, because there are techniques one can employ to begin making sure that growth becomes exponential, and not just on your social media pages, but also next time you check the $ page of your distributor. For one, after looking over the "timing" list provided in the article, consider the suggestion added in the last paragraph. If your already experiencing a bit of success and have fans in different places in the world consider dividing your contact list by time zone and setting up automated services like Fanbridge, Reverb Nation, and the like.

Long-Tail 101: Create Your Own End Cap, And then Leave It There

     I find that while there are plenty of independent artists that naturally understand, or have become familiar with the practice of long-tail marketing, there are still a number of independents who insist on taking down an "old" single, CD, or product when "making room" for the new. As a professional in the industry I come across many artists and management teams each week and I have heard just about every excuse for this practice; I stand firm in my opinion that this is the absolute worse choice one could make. Of course, there are exceptions for very new and beginning artists whose prior work was complete garbage and needed to be taken down to make room for a polished product handled by a producer, etc, but outside of these cases of truly poor production/content, the product needs to stay, forever.

     One of the very first things a true artist should be concerned with is their repertoire and total catalog. How many times have you been to a concert or watched an awards show and the songs by any particular artist have come from multiple albums? How many times have been to an online store or merchandise booth only to see 20 different designs for shirts, key chains, USB drives, and the like, some of them from three tours ago? Artists have websites, social pages, mobile pages and apps… each with never-ending shelf space and the front page is their very own end-cap. If shelf space is unlimited why not have all of your products listed for sale, and since it never goes away, why not keep it there forever?

     The benefits of this are not only that you will undoubtedly gain new fans in the long run who happen to like an older song better than a new one or perhaps just happened to hear that one first, but this will also tremendously help sales numbers over the long-tail as older products continue to sell along side the new ones. This also gives you a chance to actively promote older product or even group the older product with even better performing product to gain numbers for those that have fallen behind. What if an advertising agent or music supervisor heard about a song you did and came by that page looking for something very specific? You’d better have it there for them! Get the picture? It is all about the long-tail kids. 

Points on Negotiations for Independents: Special guest Jeramie Kling

     I first met Jeramie Kling years ago while putting together the very first music festival I ever attempted. We will say I learned many lessons from that first experience, but I also made what was to become one of my best and dearest friends. Since then we have shared a stage many, many times, toured the east coast together, negotiated terms of many deals, as well as produced a ton of music together between our respective studios, here in/on opposite sides of, Florida.

     Jeramie is a National/International touring musician best known for his drumming work with The Absence on Metal Blade Records, but he also plays on tours for many other large and well-known acts, occasionally handling studio duties for them to fulfill deals with their respective labels as well. Jeramie is a heavily sponsored artist, was for quite a while the face of D-Drum, is known to travel and book/manage tours for well-known acts, and owns his very own media studio where he records others and his own studio projects. Many an agreement comes to my dear friend Jeramie, and often we discuss the terms of these deals together. When the opportunity to ask a few questions about how he tends to handle certain circumstances in an industry as, ahem, murky, as the entertainment industry arose, I grabbed it.

     Here are a few things that any independent artist can understand. I will spare you a rapid Q&A session and rather explain the questions I asked and the general philosophy presented to handling certain situations as given by a professional with years of direct experience juggling insanity in a topsy-turvy industry where not everyone has your best interest at heart. Dig? Let’s go…

     Firstly, given the state of our industry and how stiff negotiations can be over pay I asked Jeramie if he finds that more often than not he finds himself pointing to “standard” rates for other acts that are on the same “level, or “status” within the industry or if he finds he simply bases his stance on the actual costs of doing business, travel, time of performers, etc. I think this to be important information for an independent that wants to know the best way to go about being paid and negotiating their point. Jeramie says that “The latter always… There is no way to put a "standard" stamp on it. There are too many variables that have to do with our current economy.”  So while you may know that there are certain acts that make a certain amount, perhaps you should try basing your negotiations on what it will cost you to perform unless you can equally “guarantee” a certain draw for that promoter or venue.

     When it comes to things like “working toward mutual benefit” during the negotiation and being willing to make certain concessions, Jeramie cautions that it really depends on whom you are dealing with so this is really “on an instance-by-instance basis only.” “Sometimes you can bargain more than others. I always try to negotiate a better deal for my side of course.” Taking this into consideration with a bit of my own advice I would say that he hit the nail on the head regarding your stance sometimes being determined by with whom you are dealing. In other words, always come to the table willing to play ball, but don’t be afraid to make your concerns and interests clear and to bargain hard for what you came for.

     Lastly I thought it may be important to cover how to deal with professionals in the industry who you absolutely know are trying to pull dirty tricks during the negotiation, especially for a deal you really need. Remember folks, they say “it’s a small world” but in the world of entertainment, it gets even smaller. So I asked Jeramie how he handles situations like this and he says he finds the best way to deal with this type of thing is to call them on their crap. Point out that you know what they are up to and that it isn’t going to work. The most important part of the advice comes next, and that is to be amicable about it and work through it as quickly as possible so they know you mean business and are not at all unreasonable. I think this is excellent advice. It is important to continue to work through issues and simply be willing to move past them to ensure a good deal on both sides.

     I’d like to thank my good friend Jeramie Kling for taking the time to offer some insight into daily negotiations for all independents that search out this information eagerly.

How To Market To Your Fans Effectively: Research shows their preference

     Only in a perfect world would every "Like" equal a sale, and every “Share” a guarantee of more fans who sat and read your information with earnest. It is just not happening. You're a manager, a promoter, or an independent label owner, you have all of your analytics setup for various blogs and web-pages and perhaps your mobile landing pages as well trying to figure out what content is making fans respond and ultimately earning a few more. But there is a problem. As all of the likes and shares stack up and the fans are even clicking play on the button for your attached media player, no one is buying or even seems to be talking specifically about you are promoting. We all put so much of our resources and belief into these projects that we even check back frequently thinking this has got to be the one that grabs them, nope.

     A little bit of research can help you find reports such as this one from Exact Target's 2012 Channel preference Survey found on marketingland.com. This report shows quantifiable numbers based on polls taken from fans and consumers after being asked a simple question, how do you like to receive permission-based messages and marketing materials? Email was the chosen channel 7.7 out of 10 times. Direct mail and text messaging came in second and third at nine and five percent respectively. This doesn't seem to be a fad or present anomaly that is expected to change. The report shows that the preference for permission-based email marketing over any other type has actually grown from 72% to 77% since 2008. So as they state in the article, "there is no close second-place channel."

     Here's a shocker, Social Media barely even made a blip on the radar. The report shows that consumers love to "Like" and "Follow" brands but don't respond in a way that will produce sustained sales numbers or even free download numbers as the report shows that Facebook and Twitter come in at four and one percent respectively as the channels that costumers respond to when receiving promotional messages. I can personally speak from experience that since using automated email collection and newsletter services like Fanbridge, and tying them together with promotions on other sites that allow for free mass-mail and messaging like ReverbNation and others, we have seen tremendous growth in numbers for both dedicated followers AND Sales.

    Increasingly our email list has grown as our "tried and true" fan-bases actually do forward the messages to their address books and then they buy. We have web and social pages in every country in most languages for our artists, and we did amazingly well in the beginning, but not until we tied in automated, and consistent messages, and targeted emails did we start to see real sustainable and large growth in numbers across all of our networks. Give it a try, let me know how it works for you, perhaps we can learn from each other.

Move To Where The Food Is: Setting Up Shop In Foreign Territories

     As new artists, managers, and industry professionals emerge in a world full of digital distribution points, kiosks, and mobile retailers I find it myself reminding clients more and more of foreign licensing and sub-publishing by territory instead of by store and platform. Though it is true that not every product, album or song is going to find interest in markets far from home it is still a very important strategy to attempt if for nothing else than to make sure those professionals far-away are familiar with you or have at the very least heard of you and what you have to offer. Depending on the genre and territory, consider that your IP could be worth anywhere from $1.5-6k+ for a limited amount of time and will leave you with not only the rest of the rights not licensed in that territory, but also free to explore and collect on other territories as well. Also consider that even if that one market is the only one landed, you can sill fall back on your chosen distribution method simply bypassing the single territory sold and use the money from that sale to market that endeavor anywhere in the world.

     A funny thing is that this is something every independent who "doesn't want to be signed" and/or independent labels and managers should be learning as much about as possible. The simple sales of songs and/or albums are truly not enough; licensing deals must be sought. Having a team far from home that can look after not only the commercial placement and sales of the existing material in that region but also possibly arrange for other well-known artists to perform a translated version only expands possibilities with the right agreements in place. There are tried and true money-making deals that exist, and if you can do it for yourself, then you are truly in a position to call yourself an independent. Otherwise you are just throwing your money and art into the hallway with everyone else's and hoping on hope.