If there is a bible for the music industry, it’s Donald Passman’s book, “All You Need to Know About the Music Business.” Since the first edition came out more than 30 years ago, it has guided countless musicians and executives, and has prevented many of them from making decisions they’d later regret.
Passman, of course, is one of the most successful and experienced attorneys in music business history, with a client list that over the years has included Taylor Swift, Paul Simon, Stevie Wonder, Adele and many more. Here, he gets deep about AI, new streaming models, and what's next for the industry.
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Speaker 1 (00:08):
Welcome to Strictly Business, Variety's weekly podcast about the business
of entertainment. I'm jem Aswad, Variety's executive music editor, and
joining us today is veteran music attorney Donald Passman, whose
list of clients over the years has included Taylor Swift,
Paul Simon, Stevie wonder Adele and many more. That's actually
not what he's best known for. If there's a bible
(00:29):
for the music industry, it's his book All You Need
to Know About the Music Business. Since the first edition
came out more than thirty years ago, it is guided
countless musicians and executives and has prevented many of them
from making decisions they'd later regret considering the deep detailed
Passman gets into about contracts, royalties, and other complicated business arrangements.
(00:50):
His tone in the book is remarkably conversational, and he
makes sure the readers don't miss the important stuff. Section
on business managers, for example, begins with him saying listen
to me in italics in several exclamation marks. But that's
not how he speaks in the interview that follows, which
I have to say is the best podcast interview I've
ever done. We spoke a bit about his process of
(01:11):
writing the eleventh edition of the book, but mostly about
what's in it in the state of the music industry today,
everything from AI and the threat it brings to intellectual property,
to catalog sales, the new models for streaming services, and
lots more. Like a true lawyer with his eye on
billable hours, he answers the questions thoroughly but concisely, which
(01:32):
means we cover a lot of ground in a short
period of time. You can hear it after the break
you're listening to Strictly Business with Donald Passman, author of
All you Need to Know about the Music Business. What
(01:53):
is it like when you meet people? I mean who
you know who have read the book? And I mean
I've read it when I was a pupp thirty some
years ago.
Speaker 2 (02:00):
Go well, I mean, you know, a couple of people
are a little starstruck with it, I guess, But for
the most part, I just want to put people at ease.
I mean, for me, it's all about just telling, explaining
it and easy to understand terms, and you know, having
a conversation. I mean, I try to write the book
(02:20):
as if we were sitting across each other talking so
I don't like the idea of being on any elevated pedestal.
I just want to have a conversation.
Speaker 1 (02:30):
Well, that's very cool and very very humble as well.
What is it like revising it? It looks exhausting. How
do you have time to do the level of updating
and really modernizing that's required for something that moves as
quickly as the music business.
Speaker 2 (02:48):
It's a good question, you know. Look, a lot of
the is done nights and weekends just and I love
the writing part of it. The research is what's hard.
The writing is something I really enjoy and you know,
putting it all together. The research, though, takes a lot
of time because I have to talk to a lot
of people. You know, I don't know the details of
(03:11):
things and I and there's areas that I don't deal
in on a daily basis that I just have to
get educated about. But I love the fact that it
forces me to get to get well educated every few
years so that I can put in accurate information.
Speaker 1 (03:26):
Yes, take it from a journalist. The best way to
learn about anything is to write.
Speaker 2 (03:30):
About it exactly.
Speaker 1 (03:33):
Do you have much help in updating it? Do you
have like a team that assists you with the research.
Speaker 2 (03:39):
No, it's pretty much all me. And the reason is
is that I need to understand something before I can
explain it, and so I want to talk directly to
the person that I'm dealing with and ask questions, and
then if it's not clear to me, I need to
ask follow up questions and I need to go over
it a few times until I can get it right.
(04:01):
Particularly with complicated things or things that are way outside
my normal wheelhouse, I have to be sure I understand them,
and the only way I can do that is to
talk directly to the source and obviously read articles and
you know, generally get updated.
Speaker 1 (04:16):
I think I know the answer to this. But what
has been the most difficult and complicated part to update
for this new edition?
Speaker 2 (04:26):
Oh? Good question. I think probably the artificial intelligence section.
Because it's so new and so fast moving and so
much going on and so many issues around it that
you wouldn't think that I, you know, it's not like
there's a one place to go to get all that information.
(04:46):
I had to go to in multiple places and try
to synthesize it.
Speaker 1 (04:51):
No, I would think. So, I mean that feels like
an ideal jumping off point for that part of the conversation.
But let me ask you first, do you what more
would you like to say about the book before we
start getting into the topics that are actually in the.
Speaker 2 (05:05):
Book, Just that it's important to me to keep things updated,
and that, you know, no matter how complex the subject,
I want to break it down into easily digestible, understandable
chunks because I know my audience, I mean, and one
of the things that has always come easy to me
(05:26):
is the ability to take a complicated subject and explain
it in simple terms. But I have to understand it first.
So once I understand it, then I can put it
into words that I think make it easy to read,
because I'm you know, musicians are oriented to their ears.
There is an audio edition of the book this time,
by the way, as there was last. But you know,
(05:49):
I wrote this for people who don't like to read.
Speaker 1 (05:53):
Okay, fair point. One of the things, I mean, I
actually think you do a great job of that because
one of the things I love about it, and I
had kind of forgotten going along the way, things like,
you know, where you're talking about business managers and how
important they are, and it leads with listen to me
in italics in three exclamation marks, because you know, I mean,
(06:16):
you could say, in very dry lawyerly terms, this is
very important, or you can say listen to me with
three exclamation marks. So I think that's rather more effective.
Would you all right, we'll get to AI in a minute.
Would you advise young people to get into music law?
Is it too crowded a field or is it a
(06:38):
fertile place full of opportunities for a career.
Speaker 2 (06:41):
Well, I think it's both. I mean, just like any
other aspect of what you're going to do in life,
I wouldn't be dotted by the fact that there's people
already doing it, and that, you know, my whole advice
to anybody in any field is you've got to follow
your passion. And if you're passionate about being a lawyer
(07:04):
and doing music, please come on in. We want you.
We want people who are enthusiastic and excited about it,
because that's the way the whole thing continues, and it's
good for all of us. It elevates the whole industry.
Speaker 1 (07:20):
And do you find that musicians and artists and young
executives in general are more savvy about the business than
they were ten or twenty years ago. Like enormously so
or just a bit more.
Speaker 2 (07:33):
I think somewhere between moderately too enormously. I mean, I
think people realize now, particularly in this world where artists
have to build their own buzz and get their own
things started before they can have a career, whether they're
going to go to a label or not, they have
to understand something about the business in order just to
(07:54):
get that going. The reality is that most artists are
not that interested in business, not that they wouldn't be
good at it. And by the way, some artists are
very interested in business and quite good at it, but
most of them, you know, want to spend their time
rightfully so making music. So but at the same time,
I find people far more educated and interested and knowledgeable
(08:18):
than they did ten or twenty years ago.
Speaker 1 (08:21):
No, I would think so, and I actually, to be honest,
I find that some superstar artists who get more and
more involved in their business their music suffers, quite honestly,
you know. I found that to be the case with
the Rolling Stones. I found that to be the case
with Prince. I found that to be the case with Queen.
You don't have to comment on that, but you know,
(08:42):
I mean, it is it is very, very time consuming.
And what is key to that is, you know, finding
someone who can watch someone's business. Is there are there
any like real quick bullet point tips you would give
young musicians when choosing their team, when choosing an attorney,
when choosing a manager.
Speaker 2 (09:04):
Yeah, I mean I actually have whole chapters on each
of that, how to pick a lawyer, to pick an agent,
how to pick a manager and a business manager and
so forth. But you know, the basics are number one,
just do your homework and find out who's who, because
there's very charming crooks out there. Then you don't want
to be with one of them. And two, don't be
afraid to trust your instincts that you know, if you
(09:28):
think you're meeting with somebody sleazy, you probably are.
Speaker 1 (09:32):
Okay, that is good, That is very good bold face advice.
All right, let's get to AI really quick. Where do
you see this going ultimately? Because you've got a better,
you know, three sixty view on this than most people.
Has there been anything like it before? And do you
think it'll end up being like treated like Sampling, you know,
(09:52):
which people thought was completely unmanageable but has ended up
being reasonably manageable.
Speaker 2 (09:58):
Well, you're talking specifically about music. I assume because ais
can has the potential to do disrupt and affect everything
in a much larger way, I think it will end
up being somewhat manageable. I don't think we can't put
the genie back in the bottle. It's here. It's going
to get more sophisticated and better as we go along.
(10:22):
But I think the issues around it are fairly straightforward.
One is, you know, artists having their their voice used,
you know, like the Weekend Drake, you know AI piece
that was using their voice and a new song that
was not involving them and being associated with that. You know.
(10:46):
Another one is what happens to music that's created by AI.
And there's a lot of issues around that that I
go into in the book, But sort of the big
picture is can it dilute what the human artists are
getting paid? Because the way streaming works is that you
take the total number of streams in a month and
you take the share of streams that was yours, and
(11:09):
you and your label will get that amount of money,
and you and your publisher get that amount of money.
A publisher meeting with your songwriting people, and if you
put AI in the mix, and they don't pay anybody
for it because at the moment you can't get it,
and I think it stays this way. You can't get
a copyright in material that's not created by a human.
(11:29):
Then the digital service provider could put that in the
fraction and instead of paying out one hundred percent of
the money, only pay ninety because if ten percent was AI,
they just keep it. And obviously that's going to get
negotiated by the labels and the publishers because they're already
all over it, and so I think it comes manageable.
(11:50):
A little harder is how do you know whether it's
AI or not? Because sometimes it's certainly in the future
it's going to be hard to tell. In theory it
ought to be identified in some way down the road.
There's no requirement to do that now, but I think
there should be.
Speaker 1 (12:08):
Wilby right back with Strictly Business. Welcome back to Strictly
Business with Donald Passman, author of All You Need to
Know About the Music Business. Last fall, AI is all
that anyone was talking about after chat GBT launched. Then
(12:30):
it was all anybody was talking about during Grammy Week,
and somewhere in that time David Ghetto released the song
that where he well actually he didn't release it, but
he recorded and played live a song where he had
generated a fake eminem That immediately got me thinking about
what all of this means, who gets paid, who gets
(12:51):
credit all those things, and what is even more fascinating.
And I learned this in the conversation with the Intellectual
Price party attorney. I mentioned you can't copyright the sound
of a human voice. So what actually is being is
the copyrighted, copyrighted material here, if it's artificially generated, And
(13:15):
where I've landed is that it is the recording that
is ingested by AI. You know, the material, the copyrighted
material that is used to train AI is where the
violation occurs. Is that accurate?
Speaker 2 (13:32):
That is accurate in the sense that it's ongoing litigation.
Getty Images filed exactly that case, both in the US
and the UK, claiming that you know it was an
infringement to use their material to do it. There are
also other rights under state law, for example, that you
can't use somebody else's name, likeness, or arguably voice without
(13:56):
their consent, And that's that's another way, but that there
would be approach, but that's under state law. I think
there's some talk of making it a federal law, but
I don't know the status of that if anything.
Speaker 1 (14:09):
And that's only the law in certain states.
Speaker 2 (14:11):
Right, yes, correct, And they're not all consistent.
Speaker 1 (14:14):
Either, right because and I don't actually know what.
Speaker 2 (14:18):
And it's also I think the European Union has a
privacy Act as.
Speaker 1 (14:22):
Well, right because I don't actually know what Universal cited
when they had ghost writers Drake and weekend sampling song
down they wouldn't tell me so, but in the past
sound alikes were legally defeated by Tom Waits and Bette
Midler and someone else, but that was under false advertising.
(14:45):
So it's it's very interesting to me that the way
that the legal the legal basis for this that's being
used is not really about the sound of a voice.
I mean, although name and likeness would.
Speaker 2 (14:57):
Be yes, name and likeness would be and you can't
represent that it is the actual artist. You'd have to
but if it's identified as AI, it may not be
a misrepresentation there. But there are you know, there are
you know? And also contractually, all of the labels are
(15:20):
dealing with the digital service provider, so as a practical matter,
it can get solved that way too.
Speaker 1 (15:26):
Do you think we'll be at a functional point where
people can do that, where you know, somebody could release of,
you know, a song with a fake Mick Jagger singing
or something like that, or you know, AI generated Mick
Jaggers singing. Do you think we'll be at that point
within the next six months, year, five years.
Speaker 2 (15:45):
Well, I think we're already at the point where people
could do it. You mean, do I think there'll be
a mechanism place to do it? Well, I think you'd
have to clear it. I mean, I think you'd have
to go to them and see if this is okay
and if they want to endorse it, and probably pay
them something for it. But I think I don't see
a blanket thing happening like that because I think that people,
(16:06):
you know, artists want to control how their voices used
and how it's presented, and so I don't see it happening,
you know, like you can go in and get it
pre cleared. I think you'd have to do it. In
every instance.
Speaker 1 (16:18):
In your book, you're really quite bullish about streaming and
what it's done for the music industry, And I mean,
there's no question that it's single handed, well practically single
handedly saved the music business. You know, once Spotify launched
in the US, things really started turning around. I'm not
sure artists really feel that way as much, because I
(16:40):
was speaking with a fairly prominent artist just a couple
of weeks ago who said he felt that it the
new streaming laws because artists and songwriters make so much
less from streaming than they did from CDs, and I mean, yes,
everyone does. He feels like art really got sort of
(17:01):
left out in the cold of it. With streaming leveling
off and that being a concern, what's going to keep
the music industry growing?
Speaker 2 (17:11):
Well, it is leveling off in some territories but not all,
and subscription prices are going to go up, which is
going to, you know, be a huge boon to everybody.
There's no question that you get paid better if you're
selling an equivalent number of CDs. But you know, those
days are gone, so we're in the new reality. And
(17:33):
if you you know, when piracy hit, we were, you know,
sixteen years on either declining or flat and at half
of what it was when the CDs were booming. But
one of the things I talk about is that in
the heyday of CDs. The average CD buyer, you know,
spent you know, forty to fifty bucks forty some odd
(17:55):
bucks per year on CDs. But if you think about
what you pay for subscriptions, even adjusting for inflation, it's
much more than that. And also we're monetizing people who
would have never gone to a record store. Most people
stop going to record stores when they were in their
early twenties. Now you're selling streaming to little bitty kids,
and you're selling and preteens, and you're selling streaming to
(18:19):
you know, old people that want to listen to Frank Sinatra.
So we have a much broader pool and I am
optimistic about it.
Speaker 1 (18:29):
So do you think it'll still keep growing? You know,
maybe not at this rate, but growing significantly in the
US and the UK and Germany and you know places
that aren't Asia and you know, parts of Africa that
a lot of the record companies seem to be seeing
as having vast potential for growth. But streaming subscription costs
(18:50):
a fraction of what it costs in the Western world.
Speaker 2 (18:53):
Correct, I don't know. I mean, once you reach maturity
of streaming and then you've sort of hit the saturation,
what happened in Scandinavia. It definitely goes flat in terms
of the money, assuming you don't lose people, and it
stays about the same. But I do think that prices
are going to go up and that is going to
(19:13):
be significant in terms of how much more money comes in.
Speaker 1 (19:16):
The majors are talking about different streaming models, their experimenting
on different payment models with virtually every service. Artists seem
to be getting a slightly better cut. But one of
the ironies to me has always been the fact that
the songwriter is at the bottom of the equation in streaming.
And I mean, you've got nothing without a song. Do
(19:38):
you see solutions? Do you see ways that songwriters can
be better compensated by streaming?
Speaker 2 (19:44):
Well, the songwriter has just got a very good increase
thanks to a ruling by the Copyright Royalty Board, and
it's going to go up even more over the next
few years. And it is I'm going to get this
wrong because I don't have the numbers, so don't quote
me directly on it, but it is close to, if
(20:05):
not more than, proportionate to what they were getting on CDs,
and it may even be more than that. And so
you know, depending on how the calculations work. They're actually
getting paid pretty well in the streaming world to my understanding.
Now again I don't have the exact figures, but but
it's it's it's not bad.
Speaker 1 (20:27):
Well, it's getting better, you know. I mean, I still
hear from artists all the time how just how they
don't make money from recorded music anymore. And you know,
that's pretty, you know, a pretty incontestable fact. Do you
know they've kind of accepted that, like, Okay, I'm going
to make this album, but I'm not going to make
any money from it, but it'll bring people to shows.
(20:49):
Do you think that's the model going forward or do
you think it's possible for them to be better compensated.
Speaker 2 (20:55):
I think, well, I think that first of all, with
any new technology, and again I have a section in
my book on what happens when there's new technologies. The
artists are always paid less than they should be when
it first comes on board. And then as time goes
on and their deals expire and they negotiate, they get
bigger and bigger pieces of it. So that's one part
of the equation that artists will do better, will they
(21:19):
you know, it is not as big a piece of
their income as it was historically and may not be
in the future, although I don't know for sure, and
it depends on the artists. I mean, a touring artist
is going to make far more on touring and merchandise,
and a well known artist will have to make a
lot on endorsements and branding, and it will be much
(21:39):
more than they can make on recorded music, even the
most successful people. And so it isn't the same big
percentage of their income stream that it was before, but
it is something that drives the marketing and drives awareness
and drives consumer you know, interest and them, and so
(22:01):
it's an important part of the equation, even if it's
not the same dollars proportionally that it might have been
in the past.
Speaker 1 (22:09):
On a related topic, looking at the music catalog boom
of the last few years, do you feel like it's over?
Do you feel like it's just crested and you know
it'll continue, but at not the rate that it has been.
Speaker 2 (22:23):
Well by rate, what do you mean? Do you mean
prices or do you mean the number of transactions?
Speaker 1 (22:29):
Well? Both, really, I mean it seems like prices are
prices seem to have topped off don't they?
Speaker 2 (22:35):
Yes, And I think rising interest rates have something to
do with that too. But there's still a lot of
money chasing catalogs, and also a lot of the premier
catalogs that are already even sold, so to some degree
that affects the marketplace, but I wouldn't I'm starting to
see a softening in the market in the terms of multiples,
(22:57):
but with really good catalogs, you can still get an
extremely good price.
Speaker 1 (23:03):
Have you done any of those deals?
Speaker 2 (23:06):
I have, although I mostly try to talk people out
of them, I think, and again I have a section
of the book on this in the sense that you know,
most everybody historically who soldar catalog has regretted it that
you need to do an exercise that goes like this,
(23:26):
take the amount of money you're getting, pay your expenses,
pay your taxes, and look at what you have left
and invest it and can you make as much as
the catalog was making? And do you have the upside
the catalog might have? And so for younger people, I've
been pretty successful in talking them out of it. I
do think it makes sense for older people if, for example,
(23:47):
their heirs don't know what to do with the catalog
or they'll kill each other trying to deal with it.
Or if you you know, having a state tax problem
because you're going to have to pay state tax on
the value of the catalog and you may not have
the cash to do it and be forced into a
fire sale. And obviously there's always the issue of someone
who desperately needs money. I may have to sell all
(24:09):
or part of it, but for the most part, I
and it's not particularly my self interest, by the way,
I'd like to make a large fee for selling a catalog,
but it's but I think it's the right thing for
most people.
Speaker 1 (24:22):
One line that has always stuck with me is, you know,
when you're talking about assessing managers, and you know you've
got the powerful manager at the at the high end,
you know who like might look after you as well
as Beyonce and Taylor Swift or whoever they have, or
you've got the young manager who will kill for you.
What are the I mean, what are the factors that
(24:42):
you think would help determine one or the other or
whether you go in the middle.
Speaker 2 (24:47):
Well, if you're talking you're talking about a new artist now.
Speaker 1 (24:51):
Yes, yeah, yeah, promising new artist.
Speaker 2 (24:54):
Yeah, with a new artist. Look, if you can get
a powerful manager who really is, you know, committed to
you and really season you. That's a great thing to do.
But a lot of times that's not the case. They
just don't have the time for you, or they're not
going to put any energy or effort into you unless
they have somebody young in their company that happens to
be excited about you. It's good to have the cloud
(25:16):
of a powerful manager, but if that's not an option,
or you know, somebody young and hungry and you know
who's going to kill for you and spend every waking
hour worrying about you, is a really good alternative. You know,
every manager started out like that. They all started out
with no cloud and brand new, and then you know,
(25:36):
got an artist and work themselves to death and got
the artist successful, and then all of a sudden they're
a powerful manager.
Speaker 1 (25:44):
Okay, you see you. Also, I was surprised at how
many of the deals that you talked about, management deals
in particular, are actually handshake deals. And you didn't you
didn't seem particularly bothered by them. But they can work
out disastrously right.
Speaker 2 (25:59):
Well, well, what do you mean by disastrously? All? Right?
Speaker 1 (26:04):
For one example, the Smiths never signed a management deal
with anyone. They had very few contracts of any kind,
and their drummer ended up suing the two main songwriters
multiple times for six figures, getting more money, and it
kept being decided in his favor because nothing was written down.
Speaker 2 (26:25):
Well, that wouldn't be a management agreement, that would be
an interpose, that would be an eternal agreement.
Speaker 1 (26:31):
Couldn't something similar. Couldn't a manager pull a similar attempt,
a similar kind of move.
Speaker 2 (26:38):
Yes, but the artist is far better off without a
written contract because it's not clear what the terms are.
And by the way, handshake doesn't necessarily mean you don't
negotiate the terms. It just means that you could leave
anytime you want. We usually at least do an email
exchange saying here's the terms of what the deal means.
The term is such that we can leave any time
(26:59):
we want.
Speaker 1 (27:00):
Okay, So it's not like nothing is written.
Speaker 2 (27:02):
Down correct, not usually sometimes, but not usually.
Speaker 1 (27:06):
Is that email legally binding?
Speaker 2 (27:08):
Yeah?
Speaker 1 (27:09):
Okay, all right. I will conclude with probably the biggest question,
what's the biggest threat to the music industry right now?
Speaker 2 (27:22):
Oh? Interesting, I probably have to go with the AI
and how that's going to play out. And I don't
think it's an existential threat. I think it's something that
we're going to work out and manage. But overall, I
think we're in pretty good shape. Let me answer it
(27:44):
a different way, though. The biggest problem in the industry,
if I can slightly change your question, is how do
you break through the noise? There's over one hundred thousand
tracks uploaded every day every day, and so how do
you ever get heard? How do you ever get above
the noise? How do you ever get anybody to know
about your music? That's the biggest thing that's going on,
(28:08):
and weirdly it's to the artist's advantage because the ones
that figure out how to break through and get traction
suddenly have multiple companies chasing them, and they get deals
they could have never gotten in the past, and such
as ownership of their masters or share of profits and
huge advances, and so it's sort of shifted. That's the
(28:30):
reason artists now have more bargaining power than they've ever
had before.
Speaker 1 (28:35):
And a lot more artists now do seem to own
their masters, because I mean, thanks in no small part
to Taylor Swift, they've become aware of the value of it.
And even that it's an.
Speaker 2 (28:45):
Option exactly exactly. You need a fair amount of cloud
to get them right.
Speaker 1 (28:52):
Is there anything you would like to address or anything
in the book you'd like to talk about, because every
single thing that we've talked about in this conversation is
explored in great detail and with considerable intelligence and insight
in the book. Are there any other things I haven't
asked you about that you would like to address or
would like to just put out there now?
Speaker 2 (29:13):
Jim, these are great questions and very insightful and thoughtful
and smart, and I appreciate your taking the time to
do it.
Speaker 1 (29:26):
You've been listening to Strictly Business with Donald Passman. Please
check back next week.
Welcome to Strictly Business, Variety's weekly podcast about the business
of entertainment. I'm jem Aswad, Variety's executive music editor, and
joining us today is veteran music attorney Donald Passman, whose
list of clients over the years has included Taylor Swift,
Paul Simon, Stevie wonder Adele and many more. That's actually
not what he's best known for. If there's a bible
(00:29):
for the music industry, it's his book All You Need
to Know About the Music Business. Since the first edition
came out more than thirty years ago, it is guided
countless musicians and executives and has prevented many of them
from making decisions they'd later regret considering the deep detailed
Passman gets into about contracts, royalties, and other complicated business arrangements.
(00:50):
His tone in the book is remarkably conversational, and he
makes sure the readers don't miss the important stuff. Section
on business managers, for example, begins with him saying listen
to me in italics in several exclamation marks. But that's
not how he speaks in the interview that follows, which
I have to say is the best podcast interview I've
ever done. We spoke a bit about his process of
(01:11):
writing the eleventh edition of the book, but mostly about
what's in it in the state of the music industry today,
everything from AI and the threat it brings to intellectual property,
to catalog sales, the new models for streaming services, and
lots more. Like a true lawyer with his eye on
billable hours, he answers the questions thoroughly but concisely, which
(01:32):
means we cover a lot of ground in a short
period of time. You can hear it after the break
you're listening to Strictly Business with Donald Passman, author of
All you Need to Know about the Music Business. What
(01:53):
is it like when you meet people? I mean who
you know who have read the book? And I mean
I've read it when I was a pupp thirty some
years ago.
Speaker 2 (02:00):
Go well, I mean, you know, a couple of people
are a little starstruck with it, I guess, But for
the most part, I just want to put people at ease.
I mean, for me, it's all about just telling, explaining
it and easy to understand terms, and you know, having
a conversation. I mean, I try to write the book
(02:20):
as if we were sitting across each other talking so
I don't like the idea of being on any elevated pedestal.
I just want to have a conversation.
Speaker 1 (02:30):
Well, that's very cool and very very humble as well.
What is it like revising it? It looks exhausting. How
do you have time to do the level of updating
and really modernizing that's required for something that moves as
quickly as the music business.
Speaker 2 (02:48):
It's a good question, you know. Look, a lot of
the is done nights and weekends just and I love
the writing part of it. The research is what's hard.
The writing is something I really enjoy and you know,
putting it all together. The research, though, takes a lot
of time because I have to talk to a lot
of people. You know, I don't know the details of
(03:11):
things and I and there's areas that I don't deal
in on a daily basis that I just have to
get educated about. But I love the fact that it
forces me to get to get well educated every few
years so that I can put in accurate information.
Speaker 1 (03:26):
Yes, take it from a journalist. The best way to
learn about anything is to write.
Speaker 2 (03:30):
About it exactly.
Speaker 1 (03:33):
Do you have much help in updating it? Do you
have like a team that assists you with the research.
Speaker 2 (03:39):
No, it's pretty much all me. And the reason is
is that I need to understand something before I can
explain it, and so I want to talk directly to
the person that I'm dealing with and ask questions, and
then if it's not clear to me, I need to
ask follow up questions and I need to go over
it a few times until I can get it right.
(04:01):
Particularly with complicated things or things that are way outside
my normal wheelhouse, I have to be sure I understand them,
and the only way I can do that is to
talk directly to the source and obviously read articles and
you know, generally get updated.
Speaker 1 (04:16):
I think I know the answer to this. But what
has been the most difficult and complicated part to update
for this new edition?
Speaker 2 (04:26):
Oh? Good question. I think probably the artificial intelligence section.
Because it's so new and so fast moving and so
much going on and so many issues around it that
you wouldn't think that I, you know, it's not like
there's a one place to go to get all that information.
(04:46):
I had to go to in multiple places and try
to synthesize it.
Speaker 1 (04:51):
No, I would think. So, I mean that feels like
an ideal jumping off point for that part of the conversation.
But let me ask you first, do you what more
would you like to say about the book before we
start getting into the topics that are actually in the.
Speaker 2 (05:05):
Book, Just that it's important to me to keep things updated,
and that, you know, no matter how complex the subject,
I want to break it down into easily digestible, understandable
chunks because I know my audience, I mean, and one
of the things that has always come easy to me
(05:26):
is the ability to take a complicated subject and explain
it in simple terms. But I have to understand it first.
So once I understand it, then I can put it
into words that I think make it easy to read,
because I'm you know, musicians are oriented to their ears.
There is an audio edition of the book this time,
by the way, as there was last. But you know,
(05:49):
I wrote this for people who don't like to read.
Speaker 1 (05:53):
Okay, fair point. One of the things, I mean, I
actually think you do a great job of that because
one of the things I love about it, and I
had kind of forgotten going along the way, things like,
you know, where you're talking about business managers and how
important they are, and it leads with listen to me
in italics in three exclamation marks, because you know, I mean,
(06:16):
you could say, in very dry lawyerly terms, this is
very important, or you can say listen to me with
three exclamation marks. So I think that's rather more effective.
Would you all right, we'll get to AI in a minute.
Would you advise young people to get into music law?
Is it too crowded a field or is it a
(06:38):
fertile place full of opportunities for a career.
Speaker 2 (06:41):
Well, I think it's both. I mean, just like any
other aspect of what you're going to do in life,
I wouldn't be dotted by the fact that there's people
already doing it, and that, you know, my whole advice
to anybody in any field is you've got to follow
your passion. And if you're passionate about being a lawyer
(07:04):
and doing music, please come on in. We want you.
We want people who are enthusiastic and excited about it,
because that's the way the whole thing continues, and it's
good for all of us. It elevates the whole industry.
Speaker 1 (07:20):
And do you find that musicians and artists and young
executives in general are more savvy about the business than
they were ten or twenty years ago. Like enormously so
or just a bit more.
Speaker 2 (07:33):
I think somewhere between moderately too enormously. I mean, I
think people realize now, particularly in this world where artists
have to build their own buzz and get their own
things started before they can have a career, whether they're
going to go to a label or not, they have
to understand something about the business in order just to
(07:54):
get that going. The reality is that most artists are
not that interested in business, not that they wouldn't be
good at it. And by the way, some artists are
very interested in business and quite good at it, but
most of them, you know, want to spend their time
rightfully so making music. So but at the same time,
I find people far more educated and interested and knowledgeable
(08:18):
than they did ten or twenty years ago.
Speaker 1 (08:21):
No, I would think so, and I actually, to be honest,
I find that some superstar artists who get more and
more involved in their business their music suffers, quite honestly,
you know. I found that to be the case with
the Rolling Stones. I found that to be the case
with Prince. I found that to be the case with Queen.
You don't have to comment on that, but you know,
(08:42):
I mean, it is it is very, very time consuming.
And what is key to that is, you know, finding
someone who can watch someone's business. Is there are there
any like real quick bullet point tips you would give
young musicians when choosing their team, when choosing an attorney,
when choosing a manager.
Speaker 2 (09:04):
Yeah, I mean I actually have whole chapters on each
of that, how to pick a lawyer, to pick an agent,
how to pick a manager and a business manager and
so forth. But you know, the basics are number one,
just do your homework and find out who's who, because
there's very charming crooks out there. Then you don't want
to be with one of them. And two, don't be
afraid to trust your instincts that you know, if you
(09:28):
think you're meeting with somebody sleazy, you probably are.
Speaker 1 (09:32):
Okay, that is good, That is very good bold face advice.
All right, let's get to AI really quick. Where do
you see this going ultimately? Because you've got a better,
you know, three sixty view on this than most people.
Has there been anything like it before? And do you
think it'll end up being like treated like Sampling, you know,
(09:52):
which people thought was completely unmanageable but has ended up
being reasonably manageable.
Speaker 2 (09:58):
Well, you're talking specifically about music. I assume because ais
can has the potential to do disrupt and affect everything
in a much larger way, I think it will end
up being somewhat manageable. I don't think we can't put
the genie back in the bottle. It's here. It's going
to get more sophisticated and better as we go along.
(10:22):
But I think the issues around it are fairly straightforward.
One is, you know, artists having their their voice used,
you know, like the Weekend Drake, you know AI piece
that was using their voice and a new song that
was not involving them and being associated with that. You know.
(10:46):
Another one is what happens to music that's created by AI.
And there's a lot of issues around that that I
go into in the book, But sort of the big
picture is can it dilute what the human artists are
getting paid? Because the way streaming works is that you
take the total number of streams in a month and
you take the share of streams that was yours, and
(11:09):
you and your label will get that amount of money,
and you and your publisher get that amount of money.
A publisher meeting with your songwriting people, and if you
put AI in the mix, and they don't pay anybody
for it because at the moment you can't get it,
and I think it stays this way. You can't get
a copyright in material that's not created by a human.
(11:29):
Then the digital service provider could put that in the
fraction and instead of paying out one hundred percent of
the money, only pay ninety because if ten percent was AI,
they just keep it. And obviously that's going to get
negotiated by the labels and the publishers because they're already
all over it, and so I think it comes manageable.
(11:50):
A little harder is how do you know whether it's
AI or not? Because sometimes it's certainly in the future
it's going to be hard to tell. In theory it
ought to be identified in some way down the road.
There's no requirement to do that now, but I think
there should be.
Speaker 1 (12:08):
Wilby right back with Strictly Business. Welcome back to Strictly
Business with Donald Passman, author of All You Need to
Know About the Music Business. Last fall, AI is all
that anyone was talking about after chat GBT launched. Then
(12:30):
it was all anybody was talking about during Grammy Week,
and somewhere in that time David Ghetto released the song
that where he well actually he didn't release it, but
he recorded and played live a song where he had
generated a fake eminem That immediately got me thinking about
what all of this means, who gets paid, who gets
(12:51):
credit all those things, and what is even more fascinating.
And I learned this in the conversation with the Intellectual
Price party attorney. I mentioned you can't copyright the sound
of a human voice. So what actually is being is
the copyrighted, copyrighted material here, if it's artificially generated, And
(13:15):
where I've landed is that it is the recording that
is ingested by AI. You know, the material, the copyrighted
material that is used to train AI is where the
violation occurs. Is that accurate?
Speaker 2 (13:32):
That is accurate in the sense that it's ongoing litigation.
Getty Images filed exactly that case, both in the US
and the UK, claiming that you know it was an
infringement to use their material to do it. There are
also other rights under state law, for example, that you
can't use somebody else's name, likeness, or arguably voice without
(13:56):
their consent, And that's that's another way, but that there
would be approach, but that's under state law. I think
there's some talk of making it a federal law, but
I don't know the status of that if anything.
Speaker 1 (14:09):
And that's only the law in certain states.
Speaker 2 (14:11):
Right, yes, correct, And they're not all consistent.
Speaker 1 (14:14):
Either, right because and I don't actually know what.
Speaker 2 (14:18):
And it's also I think the European Union has a
privacy Act as.
Speaker 1 (14:22):
Well, right because I don't actually know what Universal cited
when they had ghost writers Drake and weekend sampling song
down they wouldn't tell me so, but in the past
sound alikes were legally defeated by Tom Waits and Bette
Midler and someone else, but that was under false advertising.
(14:45):
So it's it's very interesting to me that the way
that the legal the legal basis for this that's being
used is not really about the sound of a voice.
I mean, although name and likeness would.
Speaker 2 (14:57):
Be yes, name and likeness would be and you can't
represent that it is the actual artist. You'd have to
but if it's identified as AI, it may not be
a misrepresentation there. But there are you know, there are
you know? And also contractually, all of the labels are
(15:20):
dealing with the digital service provider, so as a practical matter,
it can get solved that way too.
Speaker 1 (15:26):
Do you think we'll be at a functional point where
people can do that, where you know, somebody could release of,
you know, a song with a fake Mick Jagger singing
or something like that, or you know, AI generated Mick
Jaggers singing. Do you think we'll be at that point
within the next six months, year, five years.
Speaker 2 (15:45):
Well, I think we're already at the point where people
could do it. You mean, do I think there'll be
a mechanism place to do it? Well, I think you'd
have to clear it. I mean, I think you'd have
to go to them and see if this is okay
and if they want to endorse it, and probably pay
them something for it. But I think I don't see
a blanket thing happening like that because I think that people,
(16:06):
you know, artists want to control how their voices used
and how it's presented, and so I don't see it happening,
you know, like you can go in and get it
pre cleared. I think you'd have to do it. In
every instance.
Speaker 1 (16:18):
In your book, you're really quite bullish about streaming and
what it's done for the music industry, And I mean,
there's no question that it's single handed, well practically single
handedly saved the music business. You know, once Spotify launched
in the US, things really started turning around. I'm not
sure artists really feel that way as much, because I
(16:40):
was speaking with a fairly prominent artist just a couple
of weeks ago who said he felt that it the
new streaming laws because artists and songwriters make so much
less from streaming than they did from CDs, and I mean, yes,
everyone does. He feels like art really got sort of
(17:01):
left out in the cold of it. With streaming leveling
off and that being a concern, what's going to keep
the music industry growing?
Speaker 2 (17:11):
Well, it is leveling off in some territories but not all,
and subscription prices are going to go up, which is
going to, you know, be a huge boon to everybody.
There's no question that you get paid better if you're
selling an equivalent number of CDs. But you know, those
days are gone, so we're in the new reality. And
(17:33):
if you you know, when piracy hit, we were, you know,
sixteen years on either declining or flat and at half
of what it was when the CDs were booming. But
one of the things I talk about is that in
the heyday of CDs. The average CD buyer, you know,
spent you know, forty to fifty bucks forty some odd
(17:55):
bucks per year on CDs. But if you think about
what you pay for subscriptions, even adjusting for inflation, it's
much more than that. And also we're monetizing people who
would have never gone to a record store. Most people
stop going to record stores when they were in their
early twenties. Now you're selling streaming to little bitty kids,
and you're selling and preteens, and you're selling streaming to
(18:19):
you know, old people that want to listen to Frank Sinatra.
So we have a much broader pool and I am
optimistic about it.
Speaker 1 (18:29):
So do you think it'll still keep growing? You know,
maybe not at this rate, but growing significantly in the
US and the UK and Germany and you know places
that aren't Asia and you know, parts of Africa that
a lot of the record companies seem to be seeing
as having vast potential for growth. But streaming subscription costs
(18:50):
a fraction of what it costs in the Western world.
Speaker 2 (18:53):
Correct, I don't know. I mean, once you reach maturity
of streaming and then you've sort of hit the saturation,
what happened in Scandinavia. It definitely goes flat in terms
of the money, assuming you don't lose people, and it
stays about the same. But I do think that prices
are going to go up and that is going to
(19:13):
be significant in terms of how much more money comes in.
Speaker 1 (19:16):
The majors are talking about different streaming models, their experimenting
on different payment models with virtually every service. Artists seem
to be getting a slightly better cut. But one of
the ironies to me has always been the fact that
the songwriter is at the bottom of the equation in streaming.
And I mean, you've got nothing without a song. Do
(19:38):
you see solutions? Do you see ways that songwriters can
be better compensated by streaming?
Speaker 2 (19:44):
Well, the songwriter has just got a very good increase
thanks to a ruling by the Copyright Royalty Board, and
it's going to go up even more over the next
few years. And it is I'm going to get this
wrong because I don't have the numbers, so don't quote
me directly on it, but it is close to, if
(20:05):
not more than, proportionate to what they were getting on CDs,
and it may even be more than that. And so
you know, depending on how the calculations work. They're actually
getting paid pretty well in the streaming world to my understanding.
Now again I don't have the exact figures, but but
it's it's it's not bad.
Speaker 1 (20:27):
Well, it's getting better, you know. I mean, I still
hear from artists all the time how just how they
don't make money from recorded music anymore. And you know,
that's pretty, you know, a pretty incontestable fact. Do you
know they've kind of accepted that, like, Okay, I'm going
to make this album, but I'm not going to make
any money from it, but it'll bring people to shows.
(20:49):
Do you think that's the model going forward or do
you think it's possible for them to be better compensated.
Speaker 2 (20:55):
I think, well, I think that first of all, with
any new technology, and again I have a section in
my book on what happens when there's new technologies. The
artists are always paid less than they should be when
it first comes on board. And then as time goes
on and their deals expire and they negotiate, they get
bigger and bigger pieces of it. So that's one part
of the equation that artists will do better, will they
(21:19):
you know, it is not as big a piece of
their income as it was historically and may not be
in the future, although I don't know for sure, and
it depends on the artists. I mean, a touring artist
is going to make far more on touring and merchandise,
and a well known artist will have to make a
lot on endorsements and branding, and it will be much
(21:39):
more than they can make on recorded music, even the
most successful people. And so it isn't the same big
percentage of their income stream that it was before, but
it is something that drives the marketing and drives awareness
and drives consumer you know, interest and them, and so
(22:01):
it's an important part of the equation, even if it's
not the same dollars proportionally that it might have been
in the past.
Speaker 1 (22:09):
On a related topic, looking at the music catalog boom
of the last few years, do you feel like it's over?
Do you feel like it's just crested and you know
it'll continue, but at not the rate that it has been.
Speaker 2 (22:23):
Well by rate, what do you mean? Do you mean
prices or do you mean the number of transactions?
Speaker 1 (22:29):
Well? Both, really, I mean it seems like prices are
prices seem to have topped off don't they?
Speaker 2 (22:35):
Yes, And I think rising interest rates have something to
do with that too. But there's still a lot of
money chasing catalogs, and also a lot of the premier
catalogs that are already even sold, so to some degree
that affects the marketplace, but I wouldn't I'm starting to
see a softening in the market in the terms of multiples,
(22:57):
but with really good catalogs, you can still get an
extremely good price.
Speaker 1 (23:03):
Have you done any of those deals?
Speaker 2 (23:06):
I have, although I mostly try to talk people out
of them, I think, and again I have a section
of the book on this in the sense that you know,
most everybody historically who soldar catalog has regretted it that
you need to do an exercise that goes like this,
(23:26):
take the amount of money you're getting, pay your expenses,
pay your taxes, and look at what you have left
and invest it and can you make as much as
the catalog was making? And do you have the upside
the catalog might have? And so for younger people, I've
been pretty successful in talking them out of it. I
do think it makes sense for older people if, for example,
(23:47):
their heirs don't know what to do with the catalog
or they'll kill each other trying to deal with it.
Or if you you know, having a state tax problem
because you're going to have to pay state tax on
the value of the catalog and you may not have
the cash to do it and be forced into a
fire sale. And obviously there's always the issue of someone
who desperately needs money. I may have to sell all
(24:09):
or part of it, but for the most part, I
and it's not particularly my self interest, by the way,
I'd like to make a large fee for selling a catalog,
but it's but I think it's the right thing for
most people.
Speaker 1 (24:22):
One line that has always stuck with me is, you know,
when you're talking about assessing managers, and you know you've
got the powerful manager at the at the high end,
you know who like might look after you as well
as Beyonce and Taylor Swift or whoever they have, or
you've got the young manager who will kill for you.
What are the I mean, what are the factors that
(24:42):
you think would help determine one or the other or
whether you go in the middle.
Speaker 2 (24:47):
Well, if you're talking you're talking about a new artist now.
Speaker 1 (24:51):
Yes, yeah, yeah, promising new artist.
Speaker 2 (24:54):
Yeah, with a new artist. Look, if you can get
a powerful manager who really is, you know, committed to
you and really season you. That's a great thing to do.
But a lot of times that's not the case. They
just don't have the time for you, or they're not
going to put any energy or effort into you unless
they have somebody young in their company that happens to
be excited about you. It's good to have the cloud
(25:16):
of a powerful manager, but if that's not an option,
or you know, somebody young and hungry and you know
who's going to kill for you and spend every waking
hour worrying about you, is a really good alternative. You know,
every manager started out like that. They all started out
with no cloud and brand new, and then you know,
(25:36):
got an artist and work themselves to death and got
the artist successful, and then all of a sudden they're
a powerful manager.
Speaker 1 (25:44):
Okay, you see you. Also, I was surprised at how
many of the deals that you talked about, management deals
in particular, are actually handshake deals. And you didn't you
didn't seem particularly bothered by them. But they can work
out disastrously right.
Speaker 2 (25:59):
Well, well, what do you mean by disastrously? All? Right?
Speaker 1 (26:04):
For one example, the Smiths never signed a management deal
with anyone. They had very few contracts of any kind,
and their drummer ended up suing the two main songwriters
multiple times for six figures, getting more money, and it
kept being decided in his favor because nothing was written down.
Speaker 2 (26:25):
Well, that wouldn't be a management agreement, that would be
an interpose, that would be an eternal agreement.
Speaker 1 (26:31):
Couldn't something similar. Couldn't a manager pull a similar attempt,
a similar kind of move.
Speaker 2 (26:38):
Yes, but the artist is far better off without a
written contract because it's not clear what the terms are.
And by the way, handshake doesn't necessarily mean you don't
negotiate the terms. It just means that you could leave
anytime you want. We usually at least do an email
exchange saying here's the terms of what the deal means.
The term is such that we can leave any time
(26:59):
we want.
Speaker 1 (27:00):
Okay, So it's not like nothing is written.
Speaker 2 (27:02):
Down correct, not usually sometimes, but not usually.
Speaker 1 (27:06):
Is that email legally binding?
Speaker 2 (27:08):
Yeah?
Speaker 1 (27:09):
Okay, all right. I will conclude with probably the biggest question,
what's the biggest threat to the music industry right now?
Speaker 2 (27:22):
Oh? Interesting, I probably have to go with the AI
and how that's going to play out. And I don't
think it's an existential threat. I think it's something that
we're going to work out and manage. But overall, I
think we're in pretty good shape. Let me answer it
(27:44):
a different way, though. The biggest problem in the industry,
if I can slightly change your question, is how do
you break through the noise? There's over one hundred thousand
tracks uploaded every day every day, and so how do
you ever get heard? How do you ever get above
the noise? How do you ever get anybody to know
about your music? That's the biggest thing that's going on,
(28:08):
and weirdly it's to the artist's advantage because the ones
that figure out how to break through and get traction
suddenly have multiple companies chasing them, and they get deals
they could have never gotten in the past, and such
as ownership of their masters or share of profits and
huge advances, and so it's sort of shifted. That's the
(28:30):
reason artists now have more bargaining power than they've ever
had before.
Speaker 1 (28:35):
And a lot more artists now do seem to own
their masters, because I mean, thanks in no small part
to Taylor Swift, they've become aware of the value of it.
And even that it's an.
Speaker 2 (28:45):
Option exactly exactly. You need a fair amount of cloud
to get them right.
Speaker 1 (28:52):
Is there anything you would like to address or anything
in the book you'd like to talk about, because every
single thing that we've talked about in this conversation is
explored in great detail and with considerable intelligence and insight
in the book. Are there any other things I haven't
asked you about that you would like to address or
would like to just put out there now?
Speaker 2 (29:13):
Jim, these are great questions and very insightful and thoughtful
and smart, and I appreciate your taking the time to
do it.
Speaker 1 (29:26):
You've been listening to Strictly Business with Donald Passman. Please
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