A Plan to Actually Fix The Music Industry – No, Really…

I’m well aware what a grandiose claim that is but I want to get people’s attention to actually read this, if only to try to shoot holes in it, but I’ll start by giving some legitimacy to my having an understanding of the way this industry currently functions. I will tell you that besides being their first Outstanding Guitarist of the Year as a student, and then an instructor at Musician’s Institute in Hollywood, I have a sizable catalog of compositions / recordings that are licensed for broadcast use around the world that generates royalties for me which have contributed to me now owning a paid for home, and have also had direct contact with all “3 letter broadcasters from a business point of view.

My purpose here is to explain both “where the money comes from and goes to” and “the nature of the problem,” so that anyone, from a budding (or already budded) musician to a bricklayer, can formulate an informed opinion on how the profession of ‘music creator’ can survive into the future – because under the current business model, you will see why that’s impossible.

I will explain both “how things were done” in 4-5 different decades of “the old days”, which I figured out so as to understand “the business” and the level of theft that would happen to me would be as little as possible. Notice that I didn’t say that it wouldn’t happen at all because that’s actually impossible. Under the current business model, the best you can do is minimize the level of theft inflicted on you as much as possible. So, let me illustrate how things have been done along the road of arriving at the current business model, so we can identify the major problems, and show how to fix them.

From what I have found, the two biggest problems in the music industry are greed and ignorance – the greedy perpetuate ignorance on the part of those that create the actual music product so as to keep financial control over those who I will just refer to as “creators”. This is done by, generally speaking,  making it a big secret as to what any accepted rate of payment is for the use of their “content” (which is what I will call the actual composition, recording, or other type of performance of their created original product), especially to the point that many young inexperienced creators will literally give use of their content away for some imagined unknown and undefined “pot of gold” that will magically come when they have had enough “exposure” – or maybe a better word for exposure in the current world would be “spins”, to use the terminology of one of the biggest content thieves.

Let’s take a look at how things have progressed to the point that they are at, and you will see exactly how both ignorance on the part of the creators and the  hiding of information about their contents’ use has been perpetuated over the decades to “steal with a suit and a smile” in such a way where the creators never knew it was happening:

The whole thing has always boiled down to hiding how much money there was and how much was rightfully owed to both the creators and who I am going to refer to by what might be an overly simplistic term of “middle men,” because that is exactly what everyone from a record label to a broadcaster to a radio DJ to the music supervisors who choose the “incidental music” that the principle composer didn’t write, to fill out all the music needs for a TV show, film or commercial is. They didn’t create ANY of it, and wouldn’t have a job if the creators didn’t create the music content in the first place, but through a truly impressive mental and legal manipulation, they have convinced the creators that they as the middle men are the all important ones that nothing would exist without. As to how this happened, it was always the same through the years, but only the technology has changed – and amazingly enough, technology (along with some legal changes) is exactly what will be used to fix the industry.

In the 1940-50s, a “record label” would “sign” a creator to a contract that was basically a loan against future sales of physical records, discs that spun around at 78, then 45, and then 33 1/3 revolutions per minute (RPM). Since the record labels put out the money, they would be the ones that would be the most likely to lose the most out of the money if the creator did not sell enough records to make a profit. They retained the right to completely monitor the quantity of sales and the distribution of “promotional only copies” given to radio stations to try to get the general public, or “consumers”, to purchase copies of the record and attend the creator’s live performances. This would include any, what would now be referred to as “cover versions” of a song by another creator, where the actual composing creator received what’s known as a “royalty” for doing a unique version of the song where there is one rate of payment that goes to the composer and another rate of payment that goes to the performing creator, who received less since they didn’t actually compose the song.

But, here’s where the fallacy starts: while the record label has an initial investment of DOLLARS in the attempt to sell the creators’ content, they do the best that they can to minimize the value of the creator’s time and inborn talent used to create content that consumers of music value enough to purchase, either as a physical copy that can be listened to again and again or a one time listening experience over the broadcast airwaves or a live performance. Because the creators have provided what is sometimes referred to as “sweat equity” – meaning, investment in something that will have future value rather than getting paid in cash along the way; defer their profit from investment to what is referred to in the industry as “the back end” – meaning, they only get paid after sales happen.

So given that this wealth creation agreement is completely based on trust on the part of the creators, one would think that the middle men would want creators to always be able to check on things like quantity of sales or anything that would contribute to that “back end” whenever they wanted – but in reality this “transparency” to use a modern term that these days many times means anything BUT, the middle men do everything possible to keep the ability to audit the inflow of money, etc from the creators. And, the creators know this, but because they don’t have the money that it takes to do what the middle men do to get the product to market, and because their artistic natures cause them to make it that they usually have little interest in thinking about the business side to the music business,, which explains the steady stream of stories of managers etc finding ways to steal huge amounts of the creators’ portion of their products’ sales before it becomes clear that it’s gone.

HOW DIGITAL CHANGED EVERYTHING

So along came the “digital age” and the internet. This is when a major event happened that should have been a huge wake up call to creators, but they didn’t watch the middle mens’ actions or take the time to figure out what it  meant for the future of music: This event involved “DAT Tape”, which was short for Digital Audio Tape, and because it could copy music EXACTLY from one physical form to another, it terrified the middle men as well it should have,  because of its’ being an obvious way to make as many unpaid for copies of content as anyone wanted.

The record labels’ solution was to lobby congress for a tax on the sale of DAT tape which was supposed to make up for the lost sales from bootlegging of existing records, and the tax was approved, yet it’s always been unclear to me how much of this tax went to who, and how the music creators ever received any of it. I assume that, theoretically, the labels passed a portion on to the publishers, who in turn got the money to the creators directly through their royalty checks or indirectly through what’s called the Performing Rights Organizations, or PROs. These entities collect and distribute broadcast fee monies from the broadcasters and every composer and publisher belongs to one, the oldest and biggest being ASCAP and BMI.   

So this all sounds great in concept for its’ time for the data collection means available then. Speaking of that, let’s look at how it was determined exactly WHAT music was broadcast and when. The formal agreement was that all broadcasters had been obligated to keep paper records of the broadcasted music called “Cue Sheets,” likely due to the short instrumental music that had been written as scene changes etc in film etc. and rarely given titles but referred to as numbers as in “Scene 3m, cue 47” so the just came to be known as Music Cues or just “Cues” for short. But, typically last minute had been the way things have always been done in broadcast situations, so a lot of this cue sheet creation was pushed to be done later if at all, which resulted in considerable lost revenue for both creators and middle men. 

Up until fairly recently, one of the main ways that the PROs used to attempt to identify the music that had been played was by having “survey days” throughout the years, where people that they hired actually listened to radio and TV and identify through their listening skills and knowledge of pop songs etc. If this seems ludicrous, of course it is. On the other hand, the PROs had an valid issue that short of forcing the broadcasters to accurately provide them with lists of what music they played, this seemed to be the best solution available – but I will show how that could and should have changed but probably the reason it didn’t.

Opportunity Lost: 

As the world entered the Internet age and the emergence of the Compact Disc (CD), it could and should have been an absolute Renaissance for music creators. I say this because a digital music file, which is the form that music takes on a CD, has a LOT of room for numbers that 100% ACCURATELY identify music which can include the names of the composers and the “splits” of how that money is divided, their PROs, the publishing companies and their splits as well as what is called an ISWC code, which is short for “International Standard Musical Work Code” and is a unique, permanent and internationally recognized reference number for the identification of musical works.” Hold this in your mind after I first explain what DID happen and why I think it went down like it did:

Most people have at least heard of the company who got sued out of existence (as I believe it should have and worse) called NAPSTER, arguably the dirtiest word ever uttered in the music business in the short time it existed. Here is what SHOULD have happened with the advent of digital music files:

Instead of leading the way into the sales of digital music files in the form of custom CDs burned at record stores  – and for those too young to know, yes, there used to be stores that only sold music on CD, vinyl records and tape, and they THRIVED and were a place people got excited to go to to find new bands and music. A method for adding IDs to the file, that showed where it was purchased and which would have to be licensed to sell the song and exactly who the lawful purchaser was, could have been added at the point of sale. In terms of music that was broadcast, if the middle men were willing to lobby congress to tax a DAT tape, they should have lobbied congress to mandate that all broadcasts of music be issued a “black box” that would “read” all music being broadcasted with all the information I listed before, as well as the broadcaster, date etc that was collected in any number of methods that existed back to the 1980s.

None of that happened – here’s my theory as to why not.

Remember that I said earlier that the two biggest problems in having a music business that can support everyone involved in a fair manner were GREED and IGNORANCE. Greed is obvious as to its source since that’s been around since the first business deal, but ignorance, in this case, exists in both the middle mens’ part and virtually everyone else down the line. All anyone knew about the internet was that it was going to change everything. That set off the fear alarms in the greedy who feared that they wouldn’t be able to control the creators and events as they did before. Rather than actually sit down and hash out the plan for a brave new music industry world, the middle men were involved in a frantic effort to keep anyone from doing the things that were to be obvious new opportunities. And, this is where NAPSTER came into play.

Since the music industry didn’t run with the ball of selling music via the digital methods, Napster said “No problem, we will just go into the business of giving away the music, and just make money on the pushing of the files” – which they somehow rationalized as not being theft because they didn’t get paid for the actual music, just the moving of files.

Of course that argument went as well a a child’s cry that what they did was OK because little Johnny down the street did it too, so that legally was ended. But, the financial genie was out of the bottle how there was so much demand for a way for people to get music (purchased or otherwise) via the internet, so enter Spotify and the whole legion of “streaming services” following in Napster’s footsteps. Various “creative” ways to justify the business model that these “services” came up with served everyone BUT the people creating the music – since the creators never agreed to the models regardless of any “deals” that the middle men made in their name. Believe it or not, clauses are routinely put into in creators contracts that state that the middle men have a right to “exploit” their work in anyway they deem for both parties’ advantages, regardless of any specific agreement.

Summary of the problem:

So what we have is a situation that’s the equivalent of a truck pulling up to a farmer’s barn, emptying out the barns’ contents, and saying “here’s what we can afford to pay you for it, we’ll be back for more later” with zero negations or agreements on the part of the creators as to any actual purchase price, split between them and the (often numerous) middle men – it’s literally “you’ll take what we give you and like it”. If this sounds like a 1940s black and white mob movie when the new crime family in town shows up to shake down all the businesses in the neighborhood for their “cut” to pay for their “protection”, then you have a firm grasp on the reality of the current situation. In whether the money comes from selling advertising or actual music files is irrelevant, it’s still a scenario where someone is taking someone else’s’ property and giving back an un-agreed-to amount to give the illusion of legality, and I don’t think that many music consumers would accept this kind of business arrangement in their own line of work, nor do they think music creators should as well.

An outline of the solution:

I’m going to start with an assumption. I’m going to say that the reason people decided to not pay for music anyone after it left the vinyl (78, 45, 331/3) record world  where it was difficult to copy wasn’t that they didn’t value music  – that couldn’t be true, at it’s peak Tower Records and other ”brick and mortar” music stores were the equivalent today of at least a billion dollar industry – nor was it that they were just a bunch of thieves looking for a way to steal; it was that because there was no simple plan on how to get music quickly and easily.

But, what if there was a way to – let’s say for around what the “average citizen music consumer” probably spends for their weekly lattes (or I bet way less, given Starbucks’ prices) – have all their music consumption paid in such a way that everyone is taken care of up and down the supply chain, and all the broadcasters had ZERO cost of music reporting for who should get paid in terms of listing composer/publisher splits, web /cable / film etc (type of use), duration of broadcast, even performers – all of this and more happens “transparently”; the magic word always promised but so rarely delivered for the last couple of decades? Is that even possible, and what would it take for a Utopian Unicorn Land like that to actually exist?

Well, it actually can because of the technology that currently exists today, but it would have to START on the agreement that a problem exists – I would think that anyone that’s read this far would have to agree that it does. This is probably the most difficult part of this whole thing since there are so many people paying so little and don’t want to pay more, but I think that the first thing that MUST happen is an agreement of WHAT a reasonable value is that can put on a piece of music in all the various ways it’s “consumed”. I will say that given the GREED that the existing big players who have decided this in the past have shown, letting them decide this is a classic exercise in futility.

Because of that, I would recommend that the first thing to do is find some good economists to determine that amount out with the help of some knowledgable advisers for consulting along the way. Of course, most every party involved will want at least as much as they are getting now, but I would recommend that before you can decide how much you can charge for the milk and how you’re going to split it up, you better FIRST AND FOREMOST start with the cost of feed for the cows – yes, the first thing should be to decide what it will take to keep the creators eating and being able to produce MILK OF MORE MUSIC CONTENT, not what the people in the distribution side of things want.

After that is agreed upon, then it’s time for the government to be used to show the public the nature of the problem and possible solutions. Look at it like a sci/fi movie where the authorities interrupt a broadcast to tell everyone the scary news that a giant asteroid – lets call it “Arts Assassin 666” since all good asteroids need a name and a number – will wipe out music as we know it unless something is done. Everyone is terrified and aghast, but there is some hope after the plan is explained as are the weapons to be used to implement it.

The weapon to be used is digital system that does the following:

• Adds the information of the songs unique ID number and title, all its creator and publishing information, and who either bought a music file or broadcast it tor the actual file that “lives” with it wherever it goes, with legal reuse/broadcast info added where applicable.
• Anyone creating music gets a unique ID at no cost to them that identifies the unique work and all collaborators (there are already such plans being developed – see a recent Rick Beato YouTube interview) All sales of individual music files happen through a multi tier system starting with creator level and moving up to whoever is licensed to resell it in any way, and any unauthorized moving of these files are subject to fines.
• All music use – and potentially any kind of “digital intellectual property”, which is the fancy name for any type of copyrightable creative work – is tracked through a sort of “Black Box” feed that stores it all on the master database. Potentially, any creator up the line should be able to see the current sales and broadcast figures on any song at any moment, and given privacy laws permission, even see the activity on any other song, with many potentially different levels of access etc.

ONE BIG THING THAT THIS SYSTEM WOULD DO TO FIX THINGS FINANCIALLY

I’m sure that most are familiar with the saying that every system breaks down at its weakest point. Here’s the “weakest point” at least in terms of broadcast music, the “bible” of what actually actually goes to air, and the thing that is usually allocated to the lowest person on the totem pole at a broadcast facility: the intern who is given all the jobs that no one else wants to do. Because they don’t understand how that job helps anyone, it becomes something that is done when and if they have time to do it. Consequently, there are probably more shows going to air with NO CUE SHEETS – and no cue sheets means no money to the creators or the publishers.

With the system I am proposing that sends out the information on the music in a show automatically as it’s broadcast, no human being – especially an intern – would ever create or even touch a cue sheet again, all the information that needs to be in it would be automatically spit out into the master tracking system when a creator’s music plays as the show is broadcast – in fact, it would be hard to change the information once it was in there, and would take a lot of proof that it was wrong to be changed.

When this system is fired against “Arts Assassin 666”, it is deflected from collision, and if it needs adjustments, those can be agreed on whenever it’s deemed necessary. The boy scientist kisses the girl scientist, roll credits, DONE.

OK, it’s not QUITE that simple, there are some other details to think about, but they are actually the most exciting part:

Let’s talk about value added incentive for the consumers

One of the big things that happened to the music world was the invention of CDs, which you’ll recall, their being digital is also part of what caused all of this. Here’s how digital could completely revolutionize music to make this whole scheme into a new Renaissance for everyone, creator to consumer:

The reason that relatively few consumers bought 8 track tapes or DAT or even cassettes to replace their records was that they really didn’t bring that much additional value to make it worth purchasing. The tapes jammed in your car and no one really made a DAT player for your car anyways, so what was the point?

Enter the compact disc: it was small, lots could fit in your glove compartment, rarely skipped if you took care of them, were affordable, and mostly THEY SOUNDED BETTER, at least to the point that they didn’t accumulate surface noises and and scratches (let’s just agree to the “warmer / brittle sounding” comparisons with vinyl argument out for now).

So because of this, pretty much EVERYONE RE-PURCHASED their favorite LPs, etc as CDs; even though it was a bit of an expense, because they could see that they were really getting something worthwhile out of the deal. At this point, I would think that some very savvy readers would have said to themselves “wait a minute, how do these magic new digital files with all this information on them get into my existing music collection? None of this can work if there’s no way to ID the music”. Well, besides the way that iTunes, etc has now to identify all the added song info to your digital music collection by recognizing its unique wave file, any missing data would be gladly be given by the publishers etc because of the value they would get from all of this: imagine this brave new music world.

Have you heard about all the companies that have been buying the rights to the future royalties of a lot of famous artists (I believe Elton John sold for at least his song catalog)? Why did these companies spend all of this money if supposedly “there’s no money in music”, as I have heard one “suited snake” after another tell me for years. There’s actually some VERY BIG reasons why:

Welcome to the coming Metaverse of The Music Industry – Assuming You Haven’t Already Sold Your Share….

I believe that lots of musicians have not only sold their audio songs to big companies, but also their Digital images, and it’s because there is a big world coming in literally seconds. In it, people will be able to (probably for a subscription fee) to be the cutest Avatar version of themselves and be a musical genius that sings and dances along with Michael Jackson and Frank Sinatra at a Digital Neverland floating off the edge of Alpha Centari to a legion of adoring fans.

There are LOADS of potential here for people to make money, but there’s another player that will need to be stirred into the whole thing now, and when that happens, it’s a goldmine for EVERYONE. I am talking about the HARDWARE/SOFTWARE people, and I will name Apple as the most obvious contender because they are already further down the road of what needs to happen to pull this off. Here’s what I’m talking about:

What if the “value added” features that are offered to people is from buying a box from the “H/SV” (“hardware/software value added” component), they could get all their existing music files in the new format that would include a lot of other goodies, including:

• Video performance files, bios on the artists, etc that can play with the audio.
• Additional unreleased tracks, like different guitar solos or brand new vocals with other lyrics, and the ability to change the rhythm track from the classic rock original to club disco groove to any mixture of feel that your own creativity desires – that can be saved as your OWN unique version of the song, that can be shared with anyone that had this H/SV system who can do the same with you.
• How about adding a Holographic video display of the video content that can always be updated with new things as they are available as well, to make your home theater into the ultimate party location?

This is what’s coming and why these companies have spent this money, and one of the major reasons I am writing this solution is to wake the starving creator up that what they own has a HUGE earning potential in the very near future if all the players are willing to not be greedy but instead see each part of the chain as needful for all to thrive.

SORRY, HERE’S THE SCARY PART THAT WOULD WRECK EVERYTHING

If big corporations have a religion, it’s gotta be reducing costs, no matter who pays the price. If you’re paying attention to the world of Artificial Intelligence (AI), you should be seeing that  one of the main ways many want to use this in the world is to replace humans with. Currently, there is a BIG PUSH to get people to decide that music created by AI is just fine to listen to rather than music created by human beings. Even if it currently ISN’T, don’t think that they won’t keep working on this to the point that many will say “that’s fine” and say they can’t hear the difference. There are already composers who write instrumental music that goes into film and TV that are seeing that they are the next cut in the digital age, and have said that they will have no choice to find new professions when it does. It’s not outside of the realm of possibility that there will be a hugely popular band that is completely AI with some corporate entity owning all creator royalties from anything the AI “creates”.

Should this happen, it would literally be the demise of the profession of artistic creator, because it would happen in all fields. But as a fan of humanity and its unpredictability and ability to keep finding new and unique things to do with it time, I don’t think that this will ever happen -we would just find SOMETHING creative to do that somehow the machines can’t re-create.

I think that what I’ve said here could just as easily inspire people about the future as to make them want to give up every doIng anything in the arts for a profession – I certainly don’t possess the ability to predict the future, or maybe it’s a different combination of both in some way. But, I hope I have shown what the POSSIBILITIES are both good and bad, giving people a way to attempt to steer themselves and others away from the outcome that they don’t want to happen and ways to move towards the outcome that they DO want.

I don’t profess to think that I have any of this all figured out, but I think I have a few of the big pieces set in the right places, If any of this is something that you think is of value, please feel free to share this, I don’t have any need to somehow profit from this other than being along for the ride, watching what it could produce for all the other creators etc should anything like this ever be implemented – but something had better be implemented soon, because the AI clock is ticking louder than the one in the belly of the crocodile in Peter Pan. Happy New Year and New Music Era.

Doug Perkins

(Written over Christmas through January 2, 2024)

Doug@dougperkinsmusic,com