posted by admin
Friday, March 14, 2014

Fear and Greed!

Ever since the first two agents exchanged promissory documents at Lloyd’s coffeehouse in London in 1688, markets have operated on fear and greed. This continued through the founding of Wall Street and right up until modern times with the real estate bubble. The concept is simple: “if you don’t do it now, and in this manner, you fear you will lose out. If you do it now, you will reap the rewards.” Sales reps in every industry from used-car sales to stocks and bonds have always understood the concept of fear and greed. That is the reason that so many people buy high and sell low. This concept flows into the music industry as well as it does any other. And it can have the same devastating effect on our industry as that sales model has had on all others.

The nonexclusive/re-title business model is such an example. Let’s look at the fear side of this equation. “Your music is only placed with one library, you must be missing out on many opportunities. So, I can re-title your work and register it with your PRO, and expose you to many more clients than your other publisher will alone. Otherwise you will miss opportunities.” On its face this seems like a logical argument, albeit not an ethical one.

Let’s examine what really happens historically. Library “A” is placed in the same production environment as library “B”. Before library “B” came along library “A” offered its client a reasonable sync license for use of its music. Library “B” on the other hand now offers the composer’s piece of music to the same client for a much smaller sync fee. The composer feared he might be missing placements, so placed the same piece of music in two libraries under different titles and cost himself the greater sync fee which probably would have exceeded the new sync fee plus total royalty. The composer’s fear actually caused him to sell low.

Greed: the composer thinks to himself, “wow, I got a placement” convincing himself that he should now approach other nonexclusive/re-title libraries, and he does. Now the same work is represented by library “C”, and others. Library “C” offers a blanket license for their entire catalog at no charge to the client. Now instead of a smaller sync fee the composer’s pieces are placed with no sync fee whatsoever. Library “A” was in the same production house, but unfortunately so were “B” and “C”. In these scenarios the composer was not served by either his fear or greed. The only winner in this situation is the nonexclusive/re-title publisher who really had little or no skin in the game and the production company. Simply stated, the composer is the unquestionable loser. The nonexclusive/re-title library owner built his catalog standing on the shoulders of those who came before with minimal effort. The composer traded reasonable sync fees plus royalties for minimal or no sync fees plus royalties. And most often composers don’t understand that these lost sync fees most assuredly always exceeded the royalties for single placement. This is what we mean by “a race to the bottom”.

There is some light at the end of the tunnel. A number of networks have stated very clearly that they will no longer work with nonexclusive/re-title libraries. This is a fact that has been stated by their music supervisors publicly in a number of venues. Some claim that they make these statement publically but do otherwise in reality. I have a bridge for sale. It’s not because they’re excited to be paying higher sync fees. It has much more to do with the legal complexities of music clearance. Additionally; with the onset of fingerprinting this practice of nonexclusive/re-titling is probably entering its final days of placements outside the most local and minimal markets. It is my opinion that the concerns expressed by the major networks are indicative of a trend downward through the cable networks and production companies. The alpha dogs always lead the pack.

There is a substantial push back from composers who refuse to believe that these trends are real. There is a serious case of “nobody’s going to tell me what to do” or worse, “someone has told me what to do”. That may cause many to find their portfolios; if not worthless, nearly worthless in the future. The reason to believe that this may be true is that once fingerprinting is in place many nonexclusive/re-title libraries will find themselves moving in an exclusive direction. This is already happening. This will naturally force some libraries out of business therefore stranding re-titled works in the ether, with nowhere to go. Those pieces are branded.

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