MusicDish At MIDEM: J-Music Distribution, France

MusicDish At MIDEM: J-Music Distribution, France

CD/DVD Distribution, Importer/Exporter, Wholesaler

by Anne Freeman,

MusicDish Network Sponsor

Company: J-Music Distribution

Type:CD/DVD Distribution

Importer/Exporter/Wholesaler

Genre: All Musical Styles

Location: Paris, France

Website: www.jmusicdistribution.com

E-mail: x.norindr@jmusicdistribution.com

J-Music Distribution describes itself as "the very first European distributor of Japanese music whose activities link Japanese artists and their management, Japanese record companies, and European distributors together to provide a stable framework of distribution from artists to music retail store."

Formed in December 2005, J-Music Distribution representatives brought their business vision to "MIDEM, The World Music Market's 40th Edition" conference in Cannes, France.

Traveling together by train from Paris to Cannes, we all enjoyed the lovely French countryside and talk of music, MIDEM and our respective businesses. Attending MIDEM were Xavier Norindr, sales manager, and Damien Marronneau, marketing manger. I followed-up with Xavier Norindr about their debut MIDEM experience.

[MusicDish] Xavier, your company, J-Music Distribution, was launched December 15, 2005, shortly before the MIDEM conference. Were you able to secure meetings and leads with companies despite the newness of your own company?

Xavier Norindr J-Music Distribution is the first European distributor of Japanese music. In spite of the newness of our company, Japanese companies have been curious about meeting us to see what kind of business we can offer. Our planning was full!

[MusicDish] What types of companies did you talk with at MIDEM?

Xavier Norindr J-Music distribution has three activities:

-Distribution

-Import

-Promotion

So, we tried to meet all Japanese labels and majors companies attending to the MIDEM to see with us what kind of business we can start together (artist's distribution and artist's promotion).

[MusicDish] How many artists are you now representing for distribution, and what's in the pipeline?

Xavier Norindr Our catalogue is still growing up! Europe and Japan are far away and the negotiations are longer. We hope to propose to our network of retailers (record shop, music stores, Japanese shop, online shop) a good catalogue with approximately more than 100 of Japanese artists.

[MusicDish] Did you attend any of the workshops, and if so, did they provide useful information?

Xavier Norindr Unfortunately, we didn't have time to go to workshops. Maybe next year.

[MusicDish] As a brand new company, did your investment of time and funds in attending MIDEM seem to be a good one?

Xavier Norindr Attending MIDEM has been very useful for us because you can meet a lot of people in four days. Going to Japan would be great, too, but it's more expensive for a new company.

[MusicDish] Do you intend to attend MIDEM next year, and if so, what will you do the same and differently? If not, why not?

Xavier Norindr Of course we will return to the MIDEM next year. For our first time here, we all have been grateful for the contacts, the meetings, the parties, the live performances. We think that we will do the same next year.

[MusicDish] Any suggestions for future MIDEM first-timers?

Xavier Norindr Be prepare to not sleep during four days.

Provided by the MusicDish Network. Copyright © Tag It 2005 - Republished with Permission

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Steve Howe
Steve Howe: Legendary Yes Guitarist
Steve Miller Band
Steve Tyrell
Steven Wright
Still Remains
Sting
Stone Pony Band
Strawberry Fields - A Tribute To The Beatles
Styx
Styx In Concert With Hand Honey
Subhumans (UK)
Subtle
Suffocation
Sugarland
Summer Jam
Summerfest
Sunday Night Local Music Showcase
Sunday Sunset
Super Diamond
Supersuckers
Susan Tedeschi
Sweet Honey In The Rock
Switched
Switchfoot
System of a Down
T.i.
Ta Ta Live in Concert
Taj Mahal
Taj Mahal & Mavis Staples
Take Action Tour
Taking Back Sunday
Tally Hall
Tampa Bay Blues Festival
Tampa Bay Blues Festival (3 Day Pass)
Tanya Tucker
Taproot
Taste Of Chaos
Taylor Dayne
Tchaikovsky Spectacular
Tchaikovsky with Fireworks
Teddy Afro
Teddy Geiger
Tempe Music Festival - 2 Day Pass
Tempe Music Festival: Jeff Beck, Eric Johnson, & More
Tempe Music Festival: John Mayer, Train, & More
Ten Tenors
Terri Clark
The 5th Dimention
The 88
The Academy Is
The Association
The Bacon Brothers
The Bangles
The Blues Brothers
The Books
The Broadway Musicals Of 1956
The Broadway Musicals Of 1968
The Broadway Musicals Of 1978
The Clarke/Duke Project
The Click Five
The Coasters, The Drifters & The Platters
The Comedians Of Comedy Tour
The Cult
The Cure
The Dan Band
The Dirtbombs
The Fab Faux
The Fish Scale Tour: Ghostface Killah
The Flesh Eaters
The Four Tops
The Fray
The Go-Go's
The Golden Boys
The Greyboy Allstars
The Hold Steady
The Killers
The Laff Pack
The Lettermen
The Liars
The Lincoln Center Jazz Orchestra
The Living Things
The Lord Of The Rings Symphony
The Machine - The Band
The Magic Numbers
The Mammals
The Matches
The Muffs
The Music Of Led Zeppelin
The Mutaytor
The Nadas
The Nashville Symphony: John Pizzarelli
The Network Crew
The New Cars & Blondie
The Oak Ridge Boys
The Old School Reunion: Lakeside & Rose Royce
The Orb
The Outlaws
The Platters, Coasters, & Drifters
The Roots
The Roots, Erykah Badu, Mos Def, & More
The Roots, Talib Kweli, Common
The Samples
The Slackers Comedy Tour
The Sounds
The Stars of Doo Wop
The Starting Line
The Stills
The Strokes
The Subdudes
The Subways
The Surrogate Band
The Temptations
The Temptations & The Four Tops
The Tragically Hip
The Tubes
The Ultimate Doo Wop
The Unholy Alliance Tour
The Violent Femmes
The Wailers
The Waiting Room
The Waybacks & Bob Weir
The Whispers & Friends
The Whispers & Michael Cooper
They Might Be Giants
Third Day
Third Day & David Crowder Band
Thomas Dolby
Three Mo Tenors
Thursday
Tim Conway & Harvey Korman
Tim Reynolds
To Live Is To Die
Toby Keith
Toby Keith & Joe Nichols
Tom Jones
Tom Jones & Tower of Power
Tom Rush
Tom Russell
Tommy Chong: The Marijuana-logues
Tommy Lee
Tommy The Clown
Toni Braxton
Tony Bennett
Tooth & Nail Tour: Emery & Anberlin
Toots & The Maytals
Tosca
Toto
Toubab Krewe
Tower Of Power
Tower of Power & Average White Band
Trace Adkins
Trace Adkins & Josh Turner
Tracy Gunn
Tracy Lawrence
Train
Trapt
Travis Rush
Travis Tritt
Travis Tritt, Marty Stuart, The Del McCoury Band & Eddie Stubbs
Trey Anastasio
Tribute To Frank, Sammy, Joey & Dean
Trick Pony
Trick Pony & Little Big Town
Triple Threat Tour: Blackhawk, Little Texas & Restless Heart
Trippin Billies
Trisha Yearwood
Ty Herndon
U2
Ub40
Uli Jon Roth
Umphreys Mcgee
Umphrey's McGee
Ununbiun
Utah Phillips
Ute Lemper
Vaisakhi Mela
Van Dells
Van Morrison
Van Zant
Vans Warped Tour
Vicente Fernandez
Vikki Carr
Vince Gill, Naomi Judd, Wynonna Judd, Kris Kristofferson, Loretta Lynn & Ray Price
Virginia Arts Festival: Ruth Brown Blues Festival
Viva Romance: Chayanne & Ricardo Montaner
Wanda Sykes
Wanee Festival 2006
Wanee Festival 2006 - 2 Day Pass
War
Warrant
Wayne Brady
Wayne Newton
We Are Scientists
We Fest 2006: Three Day Music Only Ticket
Weekend Spectacular
Ween
West Indian Girl
West Valley Symphony Presents Neil Sedaka
Westlife
What Is Jazz
What Is Jazz? With Bobby Previte, DJ Logic & Christian Mcbride
What Is Jazz? With Christian McBride & Charlie Hunter Trio
Whoopi Goldberg
Whose Line Is It Anyway
Widespread Panic
Wiggles
Wilco
Will Hoge
Willie Nelson
Willy Porter
Wishbone Ash
WKDF Birthday Bash
WMZQ Festival
Wolf Parade
Wolfmother
Woody Allen & His New Orleans Jazz Band
World Famous Lipizzaner Stallions
WSJT Smooth Jazz Fest
Wxtu 22nd Anniversary Show
Wynonna Judd
Wynton Marsalis
X -103 Mayday, Straind, Three Days Grace, 10 Years, Hurt, Flyleaf & Evans Blue
Yeah Yeah Yeahs
Years Of Fire
Yefim Bronfman
Yellowcard
Yellowjackets
Yellowman
Yo Yo Ma
Yolanda Adams
Yonder Mountain String Band
Yundi Li
Zakir Hussain & Masters of Indian Percussion
Zoso

...and that's just the concerts, so check out the sports, show and other tickets available. Enjoy the show!

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"Flat Fee Music" & The Music Like Water Manifesto

"Flat Fee Music" & The Music Like Water Manifesto

MIDEM 2006, Cannes, France, January 23, 2006

by Gerd Leonhard,

MusicDish Network Sponsor

It's the 40th MIDEM (the music industry's annual gathering in Cannes, France) and the first few days of 2006, and so I figured it's a good time to throw these ideas into the mix, and present this paper for public discussion. Btw: I already published another paper on this, pretty much exactly one year ago, and there are various online slideshows available on this subject, as well. And, you can Search Inside My 2005 book "The Future of Music" using that fantastic tool Amazon offers.

The debate over the licensing of digital music is raging and growing exponentially every day. Around the world, calls for flat-fee, open and 'public' music access systems have been getting louder and louder (see the French Parliament, the German Indie Label Organization VUT, Martin Mills/Chairman of the Beggars Group in a recent Music Tank essay, Gilberto Gil in Brazil etc ).
And, despite the huge - and indeed very respectable growth of online music sales - 'legal' / paid digital music services are FAR from beating the ever-popular file sharing networks, darknets, and countless other digital music-trading methods. Will it be a cold day in hell before the legitimate offers are good enough to at least have a real chance of beating the shoddy experiences of the unlicensed p2p services?

In fact, rather than the universally desirable and much discussed 'monetization of conduct' and the 'flat fee licensing' of P2P networks (yep, this could have been done back in 1999!), the biggest thing to really happen in music in 2005 was Podcasting, for which most music is, once again, not made available or licensed at this time, with the exception of some recent and very laudable first steps by AIM in the UK.
What does that tell you? Imho, it confirms that indeed very few initiatives for significant change are coming from within the industry; almost every major change seems to be coming from the outside.

Now, despite the overall quite impressive number of approx. 830 Million downloads that Steve Jobs just announced at Mac World , I think ITunes (but not IPod!) sales will be flattening severely as everyone that has any economically realistic view of life is now realizing that they cannot continue to spend $ / Euro / GBP 1 per track, for yet another version of the same track, again.
On the other side of the digital music sphere the Janus- DRM'ed windows media-powered music services such as Napster and Real's Rhapsody are struggling with the heavy handicaps that their technology neither really protects anything nor is it really easy to use for anyone. In fact, all the ones I have tried have plenty of 'most likely does not play when you really need it' problems - no such troubles with EMusic,
which I like a lot; but... very little, if any, music from the major labels here.

The bottom line is that the SYSTEM, the OPERATING PARADIGM, is broken, at the core, and that truckloads of band-aids will not make it well again - these attempts at reviving an almost comatose record (but NOT music-) industry will just keep us going until we can get a full set of organ (and brain) transplants.
But of course, usually, big changes must simply play themselves out, and so for 2006, I predict that the PAIN of selling music the good old way (i.e. by the 'unit', whether online or offline) will become so severe that most incumbents will simply waive most currently mandatory must have's and finally throw their holy cows (such as not licensing anything in MP3 format, or maintaining territorial restrictions) into the digital meat-grinder, and will start heading for greener pastures, in droves. Good.
Along with this, in 2006, we will see various embodiments of "MLW" and the Flat Fee Music Fee - and I certainly hope to be able to contribute.

'Music like water' (*MLW) - everybody uses, everybody pays

Simply put - as already touched on in my 2005 book, "The Future of Music",
co-written with Dave Kusek - it is the concept of music that is as 'freely' (but NOT for free!) available and as omni-present as water or electricity, with everyone paying and everyone using, and with ubiquitous coverage, accessed via a large number of entry-points (Net, Cable, Wireless, Satellite...), using many different devices, and in many different shapes and incarnations.
It is a system where all users, and / or their service providers (!), happily make small, 'feels-like free' payments to be able to access a large pool of music, without restraints, all-you-can-eat, anytime, anywhere. A system where the works of any creator and rights holder can easily be found and discovered, used and compensated for, simply by virtue of, BEING IN THE POOL and in the essence, proportionally to the actual use of their works. Sounds an awful lot like Cable TV or Radio... right?

Why do we need MLW and Flat Fee Music?

There are many good reasons - here are just a few.

1) Because MUSIC (and of course, Art in general) is as essential to our lives as water and as electricity -almost as much as air- and in a digital / networked society it shouldn't be, and needn't be, locked up and forcibly pellegrino-ed only because doing so used to create outrageous 'benefits of friction' for 4% of the players in this system, while the end-user must sacrifice at every turn, rather than getting to participate and - holy cow! - even be an active part of the music experience.
The current situation - the Orwellian law-suits, the hideously unclear and convoluted licensing situation, the DRM-booby trapped CDs and online services, the raging tides of incompatibility, and the never-ending user frustration - is simply unsustainable and is strangling the market. Instead of technology giving us MUSIC2.0 it appears that the music rights situation is pushing us back to a pre-jurassic Music 0.5 .

2) Because everyone should, and will (or does already ;), have access to music, in the connected, digital-natives-ruled world that is quickly coming upon us. Don't believe it? Well, what about Yahoo Music Unlimited, Napster to Go, Motorola's IRadio , XM-to-Go and the new IMesh? Call it a flat-fee based 'music renting' model but really it's the first precursors of FLAT FEE MUSIC - and if some of this reminds of the pontifications of the ill-faded, John Marie Messier ex-CEO of Vivendi-Universal (the former utility company!), I guess that would be no accident...

3) Because the user has won, hands down, in the 10-year old battle of "Us (the record industry) versus Them"; the system as we know it is bursting, the dam is broken , and everyone is looking elsewhere. Brazil is turning creative-commons,
Asia and African nations are pondering alternative compensation systems for music, France's parliament wants a flat-fee P2P license,
and meanwhile Apple is quietly (or rather... loudly) basically taking over the digital music business!

4) Because it's TIME and we've all been waiting long enough. 12+ years since MP3, 10 years since IUMA, 6 years since Napster 1.0... and 1.4 Million frequent flyer miles on my account :) - isn't it time to FINALLY give the user what they actually want, when and how they want it, rather than trying to TELL THEM what they should want? Time to take a page from Southwest Airlines, EasyJet, EBay, Google and Apple. How much pain does it take before you make serious changes?

5) Because it is technically and socially efficient, and effective. Even though it is likely that most music would initially come off central server banks in each territory, almost ubiquitous user acceptance would quickly create the perfect user case for authenticated and monitored p2p content delivery systems such as BitTorrent, or something like RawFlow;
allowing large numbers of large music files to be send around for a fraction of the bandwidth - this will eventually be a boon for broadcasters, of course - first music, then films...!

6) Because convergence is now FOR REAL, and convergence demands that we solve this problem NOW. Yes, sue, talk of convergence in media is 15 years old but THIS time it's real, and if we don't offer a real solution - not a fig-leaf, a token, or a band-aid - to how music will FLOW in convergent and bundled media networks, it simply won't have music, or at least... not our music. See podcasting, see social media, see P2P networks...

7) Because every music fan is now time-shifting,
space-shifting, and devise shifting, anyway, AND looking for a better deal for his $. The record industry wants more money per track, while the users keep exploring the cheaper, or free, options. But this time, just playing hardball is not going to bring in the bacon!

8) Because MLW and Flat Fee Music gives everyone the immediate and substantial benefit of having constant and more or less limitless access to music, anywhere, anytime, while at the same time it will gently and elegantly manage to get the necessary payments from each and every user pays.

The bottom line is that MLW and Flat Fee Music seems like the only approach that will really work, going forward. Just imagine a world where you need to insert your credit card into a reader to be able to flush the toilet at a restaurant, where a userID and password is required to fill your bathtub, and where you secretly trade water jugs of rainwater with your neighbors. This is basically what we have in the music business, now! Almost all of us indeed would be (or are?) bona-fide criminals in such a scenario because it would be next to impossible not to be. Unfortunately the fact is that almost all of us ALREADY are criminals: we have engaged in downloading 'unauthorized' content one way or the other (well.... yes, for research purposes only ;), and if it's not YOU, it's your KIDS! MLW is the only way to provide digital music amnesty, to offer INSURANCE, to afford compliance, to building a safe and stable system of music consumption and creation.

So how would it work?

The MLW idea would, of course require a large pool of music that will be made available, to everyone, on any and all digital networks, in return for making universally accepted payments that -imho- will very likely be bundled into other services such as general online access, wireless communications, club memberships, all kinds of online services, cable and radio, or other content subscription services, and that may well be included in some existing or new levies for hardware and devices.
This 'Pool of Music' is likely to cover the basic music needs of most music users in most countries, and will of course need to reflect the strong local preferences in terms of language, genres and the like; imho, somewhere in the neighborhood of 1.5 to 2 Million songs should be sufficient for most territories. This Pool of Music must be available in a format that will be universally supported, without exception (ok, I do have a hunch what that would be;), and that will always play on 100% of devices, without fail, and in practical terms, we will ultimately no longer really distinguish between performance listen or 'digital download' since the actual use of each piece of music will be measured each and every time, and as it happens.
Every single track will have a unique ID, a unique fingerprint, watermark, DNA, with a central registry maintaining the data (is that Snocap's mega-plan...?). Every use of every track on any and all digital network is therefore likely be tracked and documented, and - much like the stock market - rights holders and creators will be able to track these actual usage details pretty much as it happens; and payments for each use will be instantly trackable, transparent and more or less instantaneously transmitted, handled by software solutions have already been available for quite some time now.

So-called copy protection and DRM (as we currently define it) will simply not be needed, since there is no real reason to snag content from somebody else that is also tapping into the very same pool of content that I have access to - but user authentication, tracking, monitoring, scanning, playlisting, programming and recommendation will be.

A quick side-note to VCs: consider investing in companies that aggregate content and rights, and put your $$$ in media searching / playlisting / recommendation, advertising insertion technologies, and digital marketing tools - that is where the action is. DRM will become CRM, aka Customer Rights Management, and rootkits will become marketing kits ;). In a ubiquitous system of MLW, nobody would bother to 'steal' music from anyone, since everyone already has their own access.
And even if you could not afford to pay for that access (as little as it would actually cost you), somebody else would be very likely to pay it for you; either to be able to market to you in return, or to simply make sure your are taken care of, much like the social service agencies in many countries make sure that everyone has power and water - simply because it would create too much friction in the system if you did not have it. The real danger of stealing, in a MLW world, is people stealing your DATA, and infringing on your privacy! Indeed, the MLW system really means that the users, themselves, are the content and create the real value for companies that offer services in this turf.

How would music be licensed in this system?

The flat fee, 'music utility' license needs to be as compulsory as the radio license and the good old 'public performance' license - following the release of your musical work, you simply can't refuse to make your music publicly available, at least to some minimal degree; it's all part of, quite literally, 'releasing' it. I picture this compulsory license as the result of ongoing negotiations over tariffs (and yes, let's be real - this will probably require government 'participation' in some form or the other), but ideally this license would mean that all new releases are automatically included in the 'Music Pool', and a certain amount of catalog repertoire (say, the last 2-3 years) would be, as well.
Everything else could be handled on an opt-in scenario; but of course, ultimately, who would not want to have their entire catalogs on this system, since 'being part of it' would pretty much be the starting point and prerequisite for everything else, and it therefore would be foolish not to opt-in with all of one's assets. Tariffs would initially be set by country, or better yet, by regions (such as EU-wide), and maybe the current rights societies (PROs and MROs) could possibly administer the flow of the payments (but of course, for a fraction of their current rates :(.

Why would Music Like Water benefit the creators, and their agents and representatives?

The answer is obvious: a bigger pizza makes for more slices. More money to spread around, a much fairer way of splitting it up, and a more leveled playing field of distribution that would create very powerful 'smarter-marketing-wins' opportunities. In its essence, this system would imply that Artists and rights-holders would have nobody to blame but themselves and their service providers, if they could not attract the attention of consumers - transparency and accountability would be 'king'.
Having said that, this may also create some possibly very extreme forms of what I like to call digital Darwinism, in that the effects of 'only-a-mouse-click away' - competition would be extremely palpable: millions of tracks in a flat-fee, open format-, ubiquitous and universal access system would create huge competitive pressures as far as the consumer's SELECTION process is concerned, i.e. on what the users would actually pay attention to, given that all of them will have less time but exponentially more media and entertainment options than ever before. But... I suspect that there are clever entrepreneurs out there that are already working to alleviate this very problem (time for a de-darwiniser...)

Who would get what?

The MLW payment logic could encompass something like this: non-interactive radio would be free or almost free; interactive / on-demand radio would be subject to a small license fee; tethered downloads (i.e. downloads that could not be moved from a given system that receives them, but that would play 'offline') would cost a bit more; and free/play-for-absolutely-sure downloads that can be moved anywhere anytime would cost the most. And of course, physical media orders would all be extra (CDs, DVDs, pre-loaded storage mediums, and other yet-to-be-invented fixed media formats - and there will be quite a few!). The most important thing would be, of course, the user / fan / consumer would not even know the difference, since any form of consumption of any song in the system would be covered with his / her music flat fee, anyway - the difference in mode of consumption would only matter for splitting up the pool of money (to quote my fellow visionary Jim Griffin's favorite term), and making the payments to the rights holders.

Doing the math

Assuming that almost all users in most countries would 'pay' this MLW 'music fee' - or, more correctly, that someone would pay it for them, or bundle it into another product so they wouldn't even know they are paying for it - , this is a first take of how I would envision these fees to be split up. After deducting the 'operating costs' such as the registry operation, file analysis / fingerprinting and / or watermarking, hosting, bandwidth, accounting, and general administration (all of these could indeed be minimized drastically, so in my view they should not make up more than 8-10% of the total), the remaining income from the total pool of 'Music Fees' in each country or territory would be considered Distributable Music License Fees that would be paid to the content creators and / or their representatives.
What's more - and this is where it gets really interesting - I think that other revenue streams that would be derived by any of the music services that would tap into this 'Music Pool', such as income from advertising, should also be subject to paying a small commission fee to the content owners. From the 100% of the remaining license fees, my first thoughts are that something like 60% could be paid for all downloads (in the aggregate), 25% could be paid for all so-called tethered downloads (if that will even continue to be a viable offering, given the nature of the MLW system...), 12% could be paid for interactive / on-demand radio, and 3% for regular, non-interactive, digital radio.
I am aware that this is a very contentious issue but a 50-50 split between the artist / performer (master recording rights holder) and the songwriter (composition rights holder) seems like a good approach, in principle. Beyond this, every track used on the system would simply be tracked according to it's actual use (beyond a 30 second trial or preview, maybe), and would receive the exact amount of royalties on a pro-rate basis to all actually used tracks on the network, e.g. if during a single day of accounting, a single track accounted for 5% of all downloads in a given territory, it would receive the 5% of the 60% allotted for download-license fees for that day (i.e. pro-rata from the per-month or per year 'music fees' paid into the system. More on this in my upcoming book ;)

MLW / Flat Fee Music is only the Tip of the Iceberg!

It is very important to realize that the Flat Fee Music concept described here would only be the very tip of the iceberg of what would happen in digital music commerce if we truly embraced; this new ecosystem in fact, I would venture to say that while MLW-derived fees would be quite substantial (and of course, recurring!!) they would still represent less than 30-40% of the total revenue potential that this new approach would unlock. Some of the other revenue streams could be things such as on-demand live show recordings, interactive webcasts, exclusive pre-releases, catalog re-issues, special products and many different kinds of new audio-visual products - the list of options is getting longer every day.

How much would this cost the consumer?

The answer is that it would of course vary widely depending on territory and size of population, but overall the price to the end-users is very likely to fall quickly (no, NOT the resulting license fees!!) once the system is truly 'liquid', and once it starts generating huge amounts of potential opt-in, targeted and customized advertising opportunities which imho will be the major source of entertainment monetization going forward. Personally, for the 'rich' nations, I am thinking that a 3-5 EURO / $ / GBP price range for the end user would be a good range, since I believe that kind of figure would result in almost ubiquitous buy-in from the consumers. I will get into detailed examples on the math behind this, in my book, but do consider this quick preview:
if 85 Million Germans paid a monthly 'music fee' of 4 Euros, we would yield a whopping 340 Million Euros / months, or 4.08 Billion Euro per year - not bad for monetizing what people already do (;), and as a starting point, I would think, since there would still be CD sales and all the new revenue opportunities listed above. At this rate, I think that we would very quickly have ISPs, telco's and mobile operators absorbing the user's fees for the privilege of selling other services to him / her. The result: the price goes down, AND the service level goes up ­ the digital content paradox.
And then: enter UP-SELLING, and enter ADVERTISING 2.0 which I think will yield a multiple of the Music Fees described above. Keep in mind that, as evidenced by Google's latest move, targeted, customized advertising-in-media is an explosive growth market that some analysts have described as 100x as powerful as the current advertising market - this would dwarf any money that we could make just selling 'copies' of songs.

The role of government

Unless the rights holders and the music services (i.e. retailers) can agree on a flat-fee music rate that also makes sense to the user, SOON, and start to provide a level of service that actually works for anyone without an engineering degree, it looks like the government and other public policy organizations will need to step in and catalyze (or... force?) a deal. Right now, I think it looks like that is likely to happen within the next 12-18 months, starting in Europe (your guess where exactement).
I don't think the government should RUN or even regulate a Flat Fee / MLW system, and I don't think it should be a tax or a levy, but still, this of course is nothing new to Europeans, who already pay approx. $150 per year per resident to have the right to use their TVs and radios, so let's see how things do play out in that context. Rather, I think the government (in particular, the European Commission) should be involved with setting the rates, and then get out of the way and let commercial services blossom that are based on that rate (see Radio, and Cable TV).

Anyway, that's it for now.

Over to you -talk to me! mail@aol.com

Gerd Leonhard

Basel, Switzerland, January 23 2005

Usage Notes:

** I am neither the 'proprietor' or sole originator of these concepts and ideas; I have simply been very busy learning from many others (see below), collecting, incubating on and remixing ideas, collating thoughts from 1000s of web-pages, RSS-feeds, books and conversations. All those before me and next to me deserve the credit - I am just the remixer. Please note my list of influencers, below (this is NOT a complete list)

***This is only a preview and very basic overview of the "MUSIC LIKE WATER" concepts; many examples and more detailed arguments that will be covered in my book have been omitted. If you need more... ask me.

Credits (more to follow)

Among many others, my work is influenced by:

All the smart people on The Pho List, in particular Jim Griffin, John Parres, and Josh Wattles

Larry Lessig

Chris Anderson and his Long Tail Blog

Provided by the MusicDish Network. Copyright © Tag It 2005 - Republished with Permission

WorkshopLive Launches Online Learning System With 600 Internet-based Guitar and Keyboard Lessons

WorkshopLive Launches Online Learning System With 600 Internet-based Guitar and Keyboard Lessons

WorkshopLive, which produces the most dynamic and engaging music instruction content on the Web, launched the company's first 600 online lessons for guitar and keyboard. WorkshopLive is a unique online educational platform that delivers personalized music lessons through a broadband Internet connection.

Unique among e-learning systems, the company's patent-pending technology determines how each student learns best, then delivers the teachers, lessons and learning environment that best suits the student's needs.

"Because school systems are under increasing budget pressures, private instruction has become a welcome supplement to the overburdened public school teacher," commented Clem De Rosa, co-founder and past president of the International Association for Jazz Education. "And now, WorkshopLive represents a unique way to give personal attention, providing lessons and advice on-demand, anytime. In the spectrum of instruction book to human experience, Workshop Live is a most important innovative technology to assist both students and teachers."

Educator and author June Stride, EdD, commented, "Finally someone has brought together the elements that really get to the core of success...building on student passion and skill level while matching student learning styles with excellence of teaching. WorkshopLive's marriage of education and technology with music gives all of us the opportunity for customized learning in an exciting, affordable, manner that can't help but succeed."

David Smolover, founder of National Guitar Workshop, Workshop Arts, and DayJams has assembled a team of seasoned executives to assist him in taking WorkshopLive to national and international prominence. Today's launch brings that dream a major step closer to realization.

"Online education has been embraced by individuals, schools, leading universities and corporations across the country," said Smolover. "Broadband Internet access has experienced unprecedented growth." Greater home broadband use is driving entertainment and lifestyle purchases totaling $413.5 million in 2004, he added, almost double the $217.6 million total of 2003. "The need is there, the market is there, and now, WorkshopLive is there."

Subscriptions to WorkshopLive can be as inexpensive as $4 per week, for complete, unlimited, any-time access to hundreds of lessons. Students may practice and review lessons at their convenience, at home or wherever a high-speed Internet connection is available.

Provided by the MusicDish Network. Copyright © Tag It 2005 - Republished with Permission

'Financial Management for Musicians' Author Offers Tax Tips for Songwriters

'Financial Management for Musicians' Author Offers Tax Tips for Songwriters

Workshop Hosted by Songwriters Guild Office, Nashville, TN

by Doak Turner,

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The Songwriters Guild of America Nashville Office recently hosted a tax and accounting seminar with Certified Public Accountant Cathy McCormack of Nashville, TN. Cathy McCormack is co-author of the book, "Financial Management for Musicians," (Hal Leonard) by Pam Gaines and Cathy McCormack. Many of McCormack's clients are musicians and songwriters. "Financial Management For Musicians" is the title of the book, but she says it is really more about organizing your financial life for what she calls this business of music. She offered to speak to the Songwriters Guild seminar participants about accounting, bookkeeping and money, and asked what the attendees would like to have covered in the seminar. Below is a summary of her presentation:

Cathy McCormack Let's talk about the myths of money management and audits, to start the event. The definition of a hobby has several factors, and includes a test to determine whether there has been a loss in three of the proceeding five years. That is just one of the criteria in determining whether or not you have a hobby. A hobby can exist with respect top raising horses, painting, writing or anything that you can get involved in. They could be considered a business or a hobby. There are a lot more criteria to consider, and one important and significant issue is whether you have intent to make a profit.

Most people who launch into something that takes eighty percent of their time obviously have a profit motive. Your job is to prove that you have a profit motive and to keep good records to show how much time that you spend on the business. The time issue is extremely important. Keep your calendar in outlook or a manual calendar or on post-it notes, whatever that you do to document your schedule. It is one of the leading ways to prove that you have spent substantial time in trying to produce profit.

[Question] Should you keep track of time and expenses after your first two years of losses?

Cathy McCormack This is something that you should have for every year you are in business. When people first start to write, they do not think of it as a business so they don't track time or expenses very well. Some people knew from the minute that they are born what they wanted to do and immediately launched into it. When people get started in songwriting and have a different career "day job," they tend not to keep good records. Then they hear they cannot take losses for three years in a row, so they do not even bother with keeping the records.

I encourage you when you first start writing songs to keep track of your expenses, keep a good calendar, and track of everything that would help your accountant to support what you are doing for your songwriting career. You can show losses your entire life. Many people fear of getting audited and will not deduct their expenses. Don't lose opportunities for fear of the audit myth. Take your losses every single year.

I have had clients get audited because they have taken losses over a period of years. I represented them, proving profit motive and everything was fine. Two years ago a client was audited. He has a studio in his home, has been writing all his life. He has a wife who has made money and she off set her income with his losses. He had a big hit and is going to start showing substantial profit, which solidified the fact that he is a writer with profit motive. In addition, he had a calendar and sufficient data to show that he spent his life trying to launch this business.

There was a court case about ten years ago with respect to a painter that was audited and the IRS agent ruled the painter had a hobby. The painter had very good records; they went on to tax court and the painter won, as the judge ruled it was a proven fact that many artists did not become famous until after they died. (Laughter in the room.) One time is all it takes to put you on a map after all the years of working toward that goal. That court case has been used several times in the music business and other creative industries.

[Question] So you are saying that you need a calendar to prove a profit motive?

Cathy McCormack You need a calendar to prove the amount of time that you spent on your craft.

[Question] Is there a minimum amount of time to prove you had a profit motive?

Cathy McCormack It is about you being a member of organizations that support your efforts, keeping brochures and pamphlets of seminars that you have attended, keeping records of your co-writing appointments or interviewing people to get ideas. You calendar is a support for the other things that you do with your songwriting career.

[Question] The point of the profit motive is for your taxes?

Cathy McCormack No, the profit motive is to prove your songwriting is not just a hobby. It shows you are very serious about it and you want to make money at the songwriting. Make sure that you do act like a business, keep good records of your time and expenses.

[Question] What happens if you have many years of no income in the songwriting business?

Cathy McCormack That happens and that is OK. You deduct it on a schedule C with your tax return and show your losses against other income that you make during the year.

[Question] Is there any rule about how much money that you can make and still have a loss on your taxes?

Cathy McCormack You can have negative income, but the thing that triggers an audit is to show an income below the standards that the IRS has set that they feel you can live on. To continue to show poverty level income on your return can trigger an audit. They will audit you because they believe that you have an income that you are not showing on your tax forms. I have represented people in those categories. They ask how can you live and eat in the kind of house and survive making this low amount of money? They come in to make sure you are reporting all of your income.

[Question] I have been living on inheritance in the past year. Is this going to trigger an audit?

Cathy McCormack If you have inheritance money, you likely have it invested, and can show investment income. If I were looking at your tax return, I would look to see how you have been able to sustain those losses. If I saw that you had interest and dividend income, then I would say this person has money saved up that has sustained your lifestyle during the process of trying to launch your business. Those kinds of things are taken into consideration when the IRS triggers audits.

You would not get audited because you continue to have losses. If you had no income at all and you showed losses and carried those losses forward, then you would probably get triggered for an audit because it looked like you had unreported income. If they audit you, come in and find you clean, they put a note in your file that says this was a clean audit. That establishes a good track record for you. If you come back with those ratios mentioned previously about audits, then they will probably skip you from an audit. If they audit you and find errors, they can recommend that you be audited in the future.

[Question] What about forming your own publishing company for business and tax issues?

Cathy McCormack The type of entity is very important and heavily debated of whether you should incorporate. When you incorporate or form another entity, you are complicating your life. It does supply a limited liability, which should be the only reason that you incorporate. Joint relationships require a second entity, and that can be complicated if there are substantial dollars at stake. Then you need to incorporate.

[Question] What about self-publishing. Do I need a separate entity?

Cathy McCormack No, you don't need to incorporate. It is best if you keep it simple, not incorporating or forming other types of entities. Even as you start to make money, people think they should immediately set up a business and incorporate. Unless you accumulate substantial wealth and in a risky business, there is really NO reason to incorporate. It would make your life more complex. There is this myth out there that it will save you taxes if you incorporate and it is absolutely false - it will cost you more money! You would also have to prepare more tax forms. It would involve more income for us accountants, but it is not in the best interest of the clients.

[Question] To collect royalties, you have to have a name for your publishing, but you do not have to have a separate business - right?

Cathy McCormack Yes - you could have a "dba" (doing business as) and that will work for you. You are a sole proprietor and it does not add an extra level of complexity.

[Question] I started getting royalties in about 1990, was doing my own taxes, and filed my royalties under schedule E. I even called the IRS and the agent said what I was doing was OK. Later when I hired an accountant, they said that was wrong. Could you explain a Schedule E?

Cathy McCormack Schedule C is where you report self-employment income, an activity that you are involved in as a business like your publishing company. Schedule E is for passive activities such as activities that you are not heavily involved in or rental properties. If you were a passive owner of an oil well, then royalties would get reported on a Schedule E. It is not subject to self-employment tax - social security and Medicare.

If you are a songwriter, you are actively involved with the production of royalty income and as a result, that is considered an active activity, not a passive activity. You will not win in an audit if you put it in a Schedule E. If you inherit a song catalog from someone and you were not the one who generated that money, then it is correct to report royalties on Schedule E. If you are involved in the writing of the songs, then put it on Schedule C of your tax forms.

If you have had income in the past and you generate what we call a net operating loss, that loss can be carried back to years where you had revenue and you can recover taxes for years past. You may be a candidate for loss carry back. If you had a loss in the 2002 year, you can go back to 1997 though 1998, 1999 and up to that particular year. For losses in 2003 and later, you can do a two-year carry back.

If you are looking at your 1040 and have a negative number on that bottom line, you have what is called a net operating loss, and that loss can be carried back - use that loss against income in the future, forward or against income tax that you have already paid. You can go back to previous years, report the loss against the income you reported that year, and get a refund for the tax you paid for that particular year. You can carry the loss forward for many years before those losses expire.

Someday, when you have income, you can use your current losses to offset those incomes. You have three years to amend your taxes and show those losses that you were afraid to show in the past. You can carry your loss forward and tell the government that is what you are doing, if you do not want to carry it backward. As soon as I see a client that has an operating loss, I stop right there, call the client and ask what is going to happen next year. If they are expecting to make money the next year, as they may have a song on a popular CD that will make money next year, they may want to carry the loss forward.

[Question] Deductible equipment - for instance software that comes with a rebate - can I use my credit card record as proof that I purchased this equipment or do I need the original receipt?

Cathy McCormack You have to have a receipt. The government is getting very sticky about using credit card receipts. They accept if you can show that those deductions are legitimate in other ways, but they prefer you use a receipt. If you get an agent that is rigid, he or she may not take the credit card as a receipt.

Many times I have clients who buy equipment at a garage sale and need a receipt. We have the garage sale owner sing a piece of paper for documentation, or the client will note in their calendar that they bought a piece of equipment at a garage sale. Cut out the clipping in the paper about the garage sale to prove there was a sale on that date.

[Question] What about using your computer to keep track of your records for the year?

Cathy McCormack One of the best computer software programs is Quicken for keeping up with your personal business. You can use it to even just keep track of your checkbook and credit cards. At the end of the year, you can print out the report for your accountant to do your tax return. I just recently represented someone in an audit that used Quicken and because the client had great records, it really went very smoothly and quickly.

[Question] What kinds of receipts does the IRS want to see when they do an audit?

Cathy McCormack They want to see the actual receipts. In Quicken, you can import your credit card records. The client I referred to had gotten rid of several of their receipts, but luckily, still had some of the receipts. In the end, the agent let us use the receipts that we had to justify expenses for the year. The IRS wants actual receipts from the stores where clients buy their products. A statement form the checkbook or credit card company doesn't meant anything to the IRS.

[Question] What kind of receipts does a songwriter need to keep?

Cathy McCormack If you deduct it on your taxes, you need the receipts. Money in a parking meter is a deduction; you need to write it down somewhere to show how it is an expense. I keep a log in the side of my car door with an ink pen in the middle. If I am somewhere and pay an expense like a meter or something, I write it down beside my mileage and total it up at the end of the year.

[Question] What does it cost someone to get audited - fees for an accountant?

Cathy McCormack The better your records are, the less the cost. Sometimes we have to find court cases to prove the IRS does not know what they are talking about with our clients.

[Question] Whether you are acquitted or not, those fees are your responsibility and not deducted from your taxes- right?

Cathy McCormack It is tax deductible if you have to pay an accountant to represent you. Cost versus benefit - nine out of ten times you are better off with an accountant on your side. You are not going to know how to negotiate or what to look for when dealing with the IRS.

I had a client recently that if he would have represented himself and not know the laws about schedule E and Schedule C, he would have owed the government about $25,000. Instead, he owed them $1,000. My fee was nominal in comparison of how much I saved him in the audit. I try hard to make the client do the legwork so they do not have to pay me to calculate their receipts, mileage and expenses. You do not want to have to pay me $200 an hour or my staff at $60 plus an hour to run a calculator when you can do that yourself. I am very conscientious about keeping fees down for my clients. It is my job to save you money, even on accountant fees.

[Question] I use Quicken and have my receipts. What do you need to see for my records if I came to you?

Cathy McCormack I do not need to see your receipts unless there is an item that I need to break down, such as equipment that you buy. We sometimes make what we call section 179 election. The tax code that allows you to write off equipment for the full purchase price in the year that you buy it. It is a wonderful thing as they have been increasing the limits as we go along. The limit is getting ready to go up to $100,000.00 a year that you can write off, as long as you have earned income to write off against it.

We have to have the details of your equipment, whether we make that election or not. If you put good details in your Quicken, the report will tell me what it is that you are deducting from your taxes. If you know you are going to have a nice income coming forward, you can go ahead and make the election, knowing it is not going to benefit you until next year. I have clients going to buy these big SUVs that they use for at least 50% business and writing them off on their taxes.

[Question] When I show a positive Schedule C income, what percent of that can I apply to my IRA?

Cathy McCormack There is an algebraic formula when you are self-employed. It is 25% of your income, but because you have to subtract from the income, it actually becomes 20% of your net profit on Schedule C. It used to be 15%, which actually algebraically became 13%. It has recently changed to the new figures on Schedule C.

You can now do a one-person 401K. If you see that you are going to make a lot of money the next year, you may want to go ahead and set up a 401K. That law was new in 2002. If you had up to $12,000 profit for the year, you can put that amount in your 401K. This is ideal when you know you are going to have a huge year.

[Question] Auto expenses: what should we know about them and the records that we keep for them?

Cathy McCormack That is probably one of the area that most people are the weakest in keeping records - everyone hates to keep mileage logs. Unfortunately, the mileage logs are the only perfect way to support you in an audit. You do not have to write down your odometer reading every time you are in and out of the car -- just the business miles for the trip. You do need to write your odometer reading on January first and December 31st.

For your business miles, use your trip counter to track the daily miles. If you are going to 10 places in one day, just write the list and your mileage for the day. Write down where you went and the business purpose of the trip. I keep my business purpose written in my calendar and where I went in my mileage log.

There are two ways to expense your car. You can use the standard mileage rate in effect for that year or your actual expenses at the time of your business percentage usage. The problem is you still have to keep a log either way, because you have to calculate how much you are using your car for business. I use credit card for expenses, and import those charges and records to my Quicken program. It can get you in some deep debt too, so be real careful. I pay my credit card off every month and download my transactions enough to know what I am spending to make sure that I do not overspend. You have to monitor yourself or you will get in trouble with the credit cards.

[Question] I use a Day Runner to write down every day where I am going, the mileage logs and gas expenses. Is the OK?

Cathy McCormack There are a million ways you can keep track of your miles and expenses. I have a lot of clients that spend a lot of time and miles on the road. They may get one of those expandable files to keep their expenses and I have some that just won't keep the records. I just give them an envelope and at the end of the year, someone will spread the expenses out. Put them in stacks by category and pile them up. You have to find the method that works for you. The key is keeping the receipts and the proof of your expenses. You have to think that if this is in any way a business expense, that you are keeping that receipt. It is lost money if you throw the receipt in the trash and it can add up over the course of a year!

[Question] Working out of your home office, what should we look for in writing down expenses?

Cathy McCormack Using your home, you can deduct a percentage of your rent and all the expenses in relation to where you are staying. You must have a room that is designated 100% business, cannot be multi-use, and you cannot have a bed in the room. You may also write off a percentage of your utilities, insurance and rent. Those items are what we call operating expenses. If you do not have profit, they are not deducted, but they are carried forward.

With respect to your telephone expenses, they go right on your schedule C for business deduction. The government says that the first phone line in your home is personal because all households have one, and you will have it whether you have a business or not. Any features that you add to the phone are tax deductible 100%. Your cell phone is considered a second phone, even if it is multi-use. It is your second telephone and 100% write off. If you do not have a landline phone, just your cell phone, you will have to allocate it based on business and personal calls. You can ask the cell phone company to give you detailed billing. You go through and highlight the business calls. The key to taxes is keeping records as organized as possible!

[Question] Are there other home office deductions that we can claim for our taxes?

Cathy McCormack If you own your home, the property tax and mortgage interest is deductible regardless of whether you have a loss on your schedule C. There are several reasons that you want it on your Schedule C. One in particular relates to medical expenses. Some of the expenses, such as medical that you deduct on your return the limits, are based on your adjusted gross income. When you have Schedule C, that income or loss impacts your adjusted gross income on page one of your 1040. You want that number to be as low as possible. Whenever you can put something on your Schedule C, you want to do it.

[Question] I have a one-bedroom apartment. Do I need to partition it off to write the deductions on my taxes?

Cathy McCormack Some people use their dining room or a little nook that can be written off as you have your computer and desk in the area. Measure off the space, even though you rent it.

[Question] If you have a DSL line or cable Internet, can you write those off?

Cathy McCormack I have cable and Internet and write 100% off on my taxes. Your cable for your TV is NOT going to be 100% deductible. Most musicians write off 50% of cable and those in the TV production business tend to write of more than 50%. We us usually categorize Cable as research - MTV, CMT, GAC - and those types of programs. The cable for your computer is a 100% write off. Also - if you buy CDs of other artists for research, you may write off 100% of the music purchases. A musician's CD collection is ten times what a normal person would have, and is most definitely used for research.

[Question] Where do you list CDs as expenses?

Cathy McCormack On the second page of Schedule C there is a place to put "other deductions" that do not fit into any other category - write down research.

[Question] Demo costs are astronomical and I list them as professional services. What do you recommend that I list demo cost in what category?

Cathy McCormack If they are not much money, I write them off as demo costs under the "other categories." However there is a rule that demo costs are supposed to be capitalized and amortized over the revenue stream. A lot of people have no revenue stream or no determinable revenue stream. There is what we call a Safe Harbor election that you can make to amortize those costs over a three-year period. You get 50% of the demo cost in the first year, then 25% and 25% the following years.

[Question] What is the category "Professional Services" used for in the tax forms?

Cathy McCormack They are used for a lawyer, accountant, songplugger, or consultant that you hire for your business. You do not want that number to be astronomical or it will go into another category.

[Question] Do you 1099 the songplugger and your accountant?

Cathy McCormack You are actually supposed to 1099 your accountant, lawyer, and song plugger. If you hire someone to fix equipment, you are supposed to give him a 1099 form if he makes more than $600.00 from doing business with you.

[Question] How much is the Quicken program?

Cathy McCormack I just got the 2004 version personal version for about $60.00. Something else that I should mention regarding credit cards. When you charge the item, it is deductible when charged, not when you pay the bill. This applies if you charge an item in November, and maybe pay the bill in January. Write it off for the previous year - when you bought the item. Go shopping on December 31st, put it on your credit card, and pay for it the next year. Health insurance is also deductible if you are self-employed and that comes off before your adjusted gross income. However, you must have profit on your Schedule C or it will have to be reported on Schedule A as medical deductions.

[Question] I have paid my quarterly tax bill late this past year. How does that affect my reputation with the IRS - do they flag me?

Cathy McCormack They do not flag you, but charge you interest for late payment based on the number of days that you are late. I always check the IRS penalties, as I have caught them using the wrong figures to penalize some of my clients.

[Question] If I go to lunch with a co-writer, can I deduct our lunch off my taxes?

Cathy McCormack Yes, you deduct half of it, but keep the receipt, even for meals under $25.00. The only time you do not have to have the receipt is when you are on a per diem. Per Diem is deductible for overnight travel only. Travel days are included if it takes you overnight to get to your destination. The IRS website has downloadable per diem amounts for you to use. Each city has it's own per diem rate, so be sure to use the IRS information. Hotels are fully deductible and meals are only 50% deductible.

[Question] I have events for songwriters at my house. What do I need to show that this is not ordinary household expense for the extra food, paper supplies, and beverages?

Cathy McCormack Keep a record of your invites, print out of the invitations, and take notes on how many you are planning on having for the events. That is fully deductible, it is not entertainment. Call it a networking meeting event. It would go under "Other" on your Schedule C, and call it whatever creative name you want to call it.

[Question] What are the most common mistakes songwriters make for their taxes?

Cathy McCormack Probably not keeping good records. I have one client that it is difficult for her to keep receipts. I tell her that if she does not have a receipt, it does not exist and I cannot pull it out of the air. We dig through her wallet, purse and pockets to find receipts. It is the hardest thing to get clients to do - receipts. You need to develop those good habits to keep your records of your expenses. Seek qualified advice to make your decisions. Peers are good to help conjure up questions, but make decisions from advice of a professional.

Provided by the MusicDish. Copyright © MusicDish LLC 2006 - Republished with Permission

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