Episode 85 - Lucas Keller (Music Streaming)
Show Notes:
Live with Matt Rad - Episode 85
March 8, 2022
w/ Lucas Keller - Week 1
Show notes by: Bradley Will
Editors Note: Lucas Keller is Matt’s manager and the President and Founder of Milk & Honey in Los Angeles
Matt:
Regarding recorded music, there are two main ways for an artist to make money off of their recordings:
1. Songwriting (aka publishing) - The credit for writing or co-writing the song.
2. Masters - The ownership of the recording itself
In the past a great deal of money was earned from Record/CD sales, being played on the radio and sync for TV and film.
Those first two options are slowly being replaced by streams.
As a result, those who earned the bulk of their money off of publishing are seeing their take diminish as streaming takes over. This is because streaming dominates and the tech companies that control it are able to disburse far smaller amounts of money per stream than these writers have been accustomed to receiving.
Lucas
The music industry didn’t really explode in sales until the 1970s.
From a consumer standpoint this is a golden age to be listening to music thanks to the ability to stream so many records for $10/month.
While I’m grateful for how Spotify has helped to save the record industry, we still need to change the percentages that artists are being paid by these platforms.
75% of the revenue at Spotify gets passed on to the major labels.
Of that 75% less than 1/4 are going to the songwriters and publishers.
Essentially the streaming services pay an inequitable portion to the songwriters. It’s our belief that they should pay out a higher amount.
While many people are pointing the finger at Spotify it’s important to realize that the major labels who set the terms for these deals are as or more guilty than companies like Spotify. They’re all complicit together.
There is no union of songwriters, and by federal law (as independent contractors) they are forbidden from unionizing. So we end up with fractured groups that try to advocate for change and it’s never sufficiently organized to make a difference.
What’s needed are major artists who will step forward to advocate for the bad terms that their fellow songwriters have to endure.
Spotify are a tech company. Not a music company. Many people fail to make that distinction.
Sony, Warner and Universal own the record companies and the publishing companies.
The value of music rights is now worth more than ever because of streaming.
One of the issues is that the people working at the publishing companies are unable to speak out on behalf of the rights of the songwriters.
We need the three presidents of the major publishing companies to speak out on behalf of the songwriters and try to normalize the rates of what songwriters are getting paid.
The streaming services and the record companies are the two entities with a seat at the table who can make a positive change on behalf of the songwriters, and they are incentivized against doing this.
As a new creator, you have to trust that the elders in DC are going to advocate for you and resolve this issue eventually
You should focus on being great and attaching themselves to things that are great and have value. It’s just an awkward time right now.
Streaming services have had a positive effect on the master owners and record labels, and a negative effect on the publishers.
But largely, if you’re a member of the Big 3 labels, it’s still good business.
As a songwriter a large part of your revenue is going to come from PRO’s. This is where a lot of the songwriter’s royalties come from.
We measure hit songs by familiarity and by audience.
FM Radio is going away and being replaced by streaming services.
If we can’t figure out how to share our PRO checks with labels in exchange for them sharing with us, then the industry as a whole is going to take a large hit.
NSAI - In Nashville. A songwriter’s advocacy group.
They are the reason that when someone sells their catalog that it is now eligible for capital gains tax. They put this in a tax class that is more advantageous for the songwriters.
When Covid hit they were the ones who lobbied for songwriters to be eligible for unemployment.
David Israelite is a huge advocate for songwriters and leading a lot of this work.
SONA - Los Angeles advocates.
NMPA - Advocates for publishers.
The Grammys - They are driving a lot of positive policy change right now.
Matt:
One of the interesting paradoxes of these times is that because so many people are now able to write, record, and publish their own music that it has made it harder for working professionals to get paid.
Lucas:
It’s important for creatives to have business-minded people in their corner so that they don’t have to think about it.
The moment creatives start thinking about money and the need to deliver a hit then that tends to go out the window.
Everything has to come from a place of inspiration and clear mind.
Every great creator needs a good team.
These giant catalog sales are now worth so much more for a few reasons.
In today’s world of streaming, the value of the master is worth more than the publishing. This is a temporary state.
In my opinion, the publishing is ultimately worth more because it’s capable of spinning off additional masters that can then all be licensed. For the long tail publishing is worth more.
The concept of arbitrage is where millionaires become billionaires.
For example, buying an asset at one value, allowing it to appreciate and then selling for a profit.
Music copyright in ten years is going to be worth so much more than it is now.
Masters and publishing are as consistently valuable as gold or oil, from a financial standpoint.
Thoughts on Independent Artists Gaining Access to the Major Playlists?
Lucas:
I don’t think people foresaw the amount of control that record companies have had over the streaming companies.
They absolutely have inside access.
They all own major playlists.
It also just comes down to influence and leverage due to the Big 3 Label’s track record of hit music.
For young artists: be tenacious and learn how to run a business.
“It’s like learning to pay your mortgage at the dollar blackjack table.”
It takes thousands of little wins to build a career.
You can still make relationships at streaming services.
Success should be given to the people who figure it out. Although it’s very challenging.
