Exclusive Interview: BMG’s Laurent Hubert and Darrell Franklin—Part 2

Laurent Hubert and Darrell Franklin

BMG Rights Management President Creative & Marketing North America Laurent Hubert and Executive VP BMG Chrysalis Darrell Franklin sat down with MusicRow recently to discuss digital music services, growing a recorded music division, buying out KKR, acquisitions and signings. MusicRow Publisher/Owner Sherod Robertson and Sr. News Editor Sarah Skates conducted the interview. See Part 1 here.

MR: Let’s talk about the future of digital music services. 

Hubert: I’m an optimist about the business from that perspective. The idea is to engage at every level, to place as much music as we can. We’ve been very aggressive in the digital space to engage with Google, which has Android and YouTube. We were in negotiation for almost five years with YouTube and settled that earlier this year. Look at Amazon and Apple which are in the hardware business and technology business. They are market makers and it would be silly not to engage with them.

Since 1999 I have used a pre and post-Napster comparison. Pre-Napster, music was bought; post-Napster music is consumed. It is a profound change in the perceived value of music. It’s no longer an activity that you go and buy, it’s in the background of your life, it’s on your PDA, it’s on your computer, or satellite radio. The question is how to monetize it.

In the US, we are in a very unique situation. Under the copyright law we have a set rate, determined by a CRB [Copyright Royalty Board] process. So you don’t really have a willing buyer, willing seller environment yet, but I think eventually we’ll get to that point.

Look at precedents when you have a willing buyer, willing seller. Look at the sync market, you find that market rates are much more favorable than a set rate. Not only is it more favorable in terms of payment themselves, but also in terms of the parity between the label and the publisher: the master is 50% of the fee and publishing is 50% of the fee. That’s clearly not the case today. Look at an iTunes download, where we only get 9.1 cents.

I am convinced that adoption of streaming services will continue to increase, and the real challenge for the industry is how to monetize it. I want to be an optimist that we will ultimately bring those rights to market. In fact, if you look at the CRB, starting in January 2013 the rates have improved, not only in terms of the headline rate, but also in terms of the parity between publishers and master owners, so that’s good news.

MR: Are there any plans to develop a recorded music division?

Hubert: We created a division back in October 2011 where we have both publishing and master, and we work on the 75/25 formula with 75 in favor of the artist/writer. It is taking the concept of a co-pub split and applying it to a label model, where both the publishing and master are crossed. It is not advance driven, it’s project driven.

We commit an investment to a project and every project will have a different team. We have a traffic controller project manager, that handles some of the signings and then assembles the right team around each project. Some projects don’t need radio promotion, and others do, so obviously the investment would be different. We try to customize each project as much as we can. We’ve done a few deals, but we plan to accelerate that in 2013 and Nashville is one of the markets we want to be in.

If you look at [the traditional label model] the biggest issue for artists is number one, they have no real input in the project, basically the label takes control; and number two, they don’t own their masters. They may have those masters reverting at some point, but in most cases they don’t own them. Number three: the lack of transparency when it comes to accounting, in many cases, is appalling.

We looked at it and said, “how can we build an attractive alternative?” We’ve taken into account three pillars. When it comes to control they are going to be partners with us, and because they have 75 percent of every dollar, it creates a sense of partnership because they have skin in the game. If the project does well, the upside is so tremendous that they want to be partners. The second aspect is we don’t actually own the master, we work under an exclusive license for a period of time, typically 12-15 years, but we never really own the master. The third aspect is to provide clear accounting. We build a budget together and both parties approve it, so there won’t be any surprises when the artist gets the statement.

I’m not saying the label model is a bad business, but we don’t think it’s our business. This is an alternative and it doesn’t fit everyone, and we’ve seen that in some negotiations. Some managers who have grown up in the current label system, where there’s little input and you push all the responsibility to the label [don’t like this model]. We go to them and say, “you’re equally responsible, so come to the table and make these decisions,” some of them don’t want to do it, or they prefer a big advance. That doesn’t work for us. Obviously you can’t pay a 75 percent royalty rate and pay a significant advance, because we need to put that advance money toward the project.

MR: What do you want the Nashville music industry to know about BMG?

Hubert: We’ve taken a lot of flack for being a company that is all about acquisitions and I want to address that head on. Bertelsmann is the oldest media company in the world. They strategically exited the record business in 2008, and the music publishing business in 2006 and 2007, not because they didn’t like the business, but because they had to. Today, number one, there is a real commitment to be in this business. This is not about flipping an asset.

Number two, in 2011 we’ve started to invest heavily in talent signings. You can see this especially in Nashville, and not only in the U.S., but across different companies. The U.S. market tends to derive about 60% of our investment, and that’s the nature, the size of the U.S. market. We’ve also been hiring and putting in place a creative and marketing team that is fairly sizable.

Our business is the talent business and we believe in building a catalogue of tomorrow. The only way you can build a catalogue of tomorrow is signing today and taking risks on those investments. We’ve been taking our share of risks of investments and risks in our portfolio. Risks may be different from one market to another or one deal to another, but the idea is to build a business around talent and we’ve done that in Nashville. We’ve invested far more than our share of our market in Nashville and that’s starting to pay, if you look at those recent No. 1 hits we referred to earlier.

Franklin: We are also investing a lot of time, energy and money into developing new writers, because that is what’s so unique about Nashville. If you’re not doing that, if you’re not investing in the future, then you’re not in the game here.

Hubert: Because songwriting is so core to the Nashville business and the way the process works—which is essentially you have to create those opportunities—you can’t be a passive publisher here. You have to be an active publisher and therefore you have to invest, you have to put a team together, and you have to have the best material behind it, which is the writer.

Read Part 1. For more music publishing news, check out MusicRow’s upcoming print Publisher issue.   

Nashville Songwriters Hall of Fame Finds First Home

The Nashville Songwriters Hall of Fame will have its first home in the Music City Center. The space will be complete when the convention center opens in the spring of 2013. The Nashville Songwriters Hall of Fame will be located in the lobby adjacent to Sixth Avenue and facing Demonbreun Street. It will feature songwriting artifacts as well as three 55″ touch screens that will allow visitors to access sound, video, information on inductees and NaSHOF history. Tuck-Hinton Architects will handle the project.

The names of Hall of Fame members will be engraved in a special outdoor Songwriters Square at the corner of Fifth Avenue and Demonbreun, and on the stone steps leading from Fifth Avenue up to the interior display.

Mayor Karl Dean joined Hall of Fame songwriters Wayland Holyfield, Pat Alger and Kye Fleming and convention center officials today to make the announcement. “The music industry is a vital part of Nashville’s unique culture, and songwriters are often the ‘unsung heroes’ of the business,” Mayor Dean said. “This location at the Music City Center is a fitting space to honor songwriters and their creativity, and it gives both local residents and visitors from out of town yet another reason to stop by our new convention center.”

The Hall of Fame has a long-term agreement with the Convention Center Authority of Nashville and Davidson County that requires the Hall of Fame Foundation to be responsible for the cost of design, construction, installation, upkeep, repair and maintenance of its exhibit and related premises.

The Hall of Fame Foundation, a non-profit organization, will launch a capital campaign Oct. 7 at its annual Songwriters Hall of Fame Dinner and Induction Ceremony. Early contributions from board members, industry leaders, ASCAP, BMI, SESAC, Sony/ATV, Warner/Chappell and Universal have already laid the groundwork for construction. John Van Mol is chairman of the Foundation’s board of directors.

The Nashville Songwriters Hall of Fame will join the Omni Nashville Hotel and the Country Music Hall of Fame in the Music City Center. The 1.2 million square feet center is under construction on a 19-acre site.

Belmont Celebrates Concert Hall Opening

McAfee Concert Hall

A Grand opening celebration and ribbon cutting for the new McAfee Concert Hall at Belmont University will be held tomorrow (10/5) at a 10:30 am.

Brass and classical choral ensembles will greet guests at the unveiling of the 857-seat Hall, which received design consultation from architects and acousticians involved with the construction of the Schermerhorn Symphony Center. The 56-year old venue will provide the campus a new, large concert venue suitable for acoustic performances.

In summer 2011, Belmont began a $9 million renovation of the space, which has been owned by the university as part of Belmont Heights Baptist Church. According to the Tennessean, the congregation will continue to worship at the sanctuary on Sunday mornings, and Belmont’s College of Visual and Performing Arts will utilize it for performances, practices and other events the rest of the time.

The building is now named in honor of the McAfee family, who has supported Belmont for years and provided the lead gift for the project.

The University will host its annual “Christmas At Belmont” in the venue December 1, at 2 and 7:30 pm; and December 2, at 2 pm.

Redbox Ramps Up Ticketing Service

Redbox is entering the ticketing market. It is now selling event tickets at select Philadelphia-area kiosks and online, with plans to expand into other markets. The service will roll out to all 650-plus kiosks in the Philly area by mid-October. Regardless of the ticket price, Redbox Tickets™ will be sold at face value or below, with a $1 fee per ticket. This is much less expensive than Ticketmaster fees.

Among the tickets already available are Carrie Underwood at the Wells Fargo Center, NASCAR events, and the Philadelphia Film Festival.

Ticketmaster has exclusive contracts with many venues, so Redbox will also cater to smaller events such as fairs.

Tickets can also be purchased online at www.redbox.com/tickets. Consumers will have the option to print their tickets at home or in some cases, pick them up at the event venue.

Venues, event owners, attractions, team owners or ticketing companies that are interested in partnering with Redbox to make their inventory available to both a national and local audience can also go to www.redbox.com/tickets to learn more or email SellTickets@redbox.com.

Florida Georgia Line Headlines Sold-Out Shows

FGL performing for a sold-out crowd at Joe’s Bar in Chicago on 9/28.

Florida Georgia Line recently headlined five consecutive sold-out shows at Tin Roof Lexington (9/25), Tin Roof Cincinnati (9/26), Tin Roof Indianapolis (9/27), Joe’s Bar Chicago (9/28) and Bridge View Center Ottumwa (9/29).

“Joe’s hasn’t had a brand new band on their first single sell out in advance since 2005, and Florida Georgia Line sold out 6 weeks in advance!” said owner Ed Warm. “FGL delivered 90 minutes of country to crowd that knew every word to every song!”

Tyler Hubbard and Brian Kelley have been heavily touring in preparation for a full-length album release expected on Dec. 4. After this upcoming weekend of shows in the southeast, the duo will join Jake Owen for the 11th annual CMT On Tour kicking off on October 10 in New York.

FGL’s breakout single “Cruise” has sold well over 500,000 copies and has been certified GOLD in Canada. Superstar shout outs from Taylor Swift, Keith Urban and Jennifer Nettles have praised the duo’s music.

A 5-track EP produced by Joey Moi titled, It’z Just What We Do, is currently available for sale in addition to a 6-track 2010 collection titled, Anything Like Me.

For tour dates and more, visit FloridaGeorgiaLine.com.

Magic Mustang Inks New Writer

(L-R): BBR Music Group President/Owner Benny Brown, David Fanning, Magic Mustang Music Sr. Creative Director Juli Newton-Griffith

Magic Mustang Music has expanded its writer roster with the addition of songwriter, artist, and producer David Fanning.

As one of the members of Nashville-based production team New Voice (Thompson Square, Kristy Lee Cook, Parmalee), Fanning has songwriting credits with Thompson Square, Bonnie Tyler, Tracy Lawrence and more. He also co-wrote Parmalee’s current single “Musta Had a Good Time.”

“David is a fantastic songwriter, producer and artist,” said Juli Newton-Griffith, Sr. Creative Director of Magic Mustang Music. “He’s a triple threat and I foresee great things for him in the years ahead. We’re ecstatic to have landed him.”

Also on the Magic Mustang roster are Jason Aldean, Thompson Square, Steve Bogard, Sherrie Austin, and more.

Weekly Register: Has Chart Edict Armed Retailers With A New Weapon?

The big sales news this week (according to Nielsen SoundScan) was Mumford & Sons’ monster 600k debut, Babel. The group scanned an incredible 70% in digital format (420k). It was the highest first week album tally since Drake’s Take Care in Nov. 2011 which logged 630k. Also the largest digital debut since Lady Gaga’s Born This Way in May 2011 (662k). Also significant was Taylor Swift’s new track “Begin Again,” downloaded over 299k times this past week which earned it the top chart position across all track charts.

Overall the country album sales chart remained tepid as it slipped a wee bit deeper into the minus column. But there is activity on the horizon and possibly some new wrinkles on the sales chessboard.

It’s purely speculative at this point, because no one is talking, but Billboard’s recent chart pricing rule may have created a few unintended consequences. You’ll recall last year digital retailers such as Amazon and Google began offering deep discount sale prices on superstar releases such as Lady Gaga, and the chart publication responded. According to Billboard’s Nov. 21, 2011 policy, “Unit sales for albums priced below $3.49 during their first four weeks of release will not be eligible for inclusion on the Billboard album charts and will not count towards sales data presented by Nielsen SoundScan.”

When a digital retailer decides to sale price a new superstar album at 99¢ or $2.99 it is a calculated move. In most cases they must still pay full wholesale price to the label and therefore lose money on each unit sold. The retailer accepts losing one or two million dollars on this “loss leader” promotion because, in exchange, it gets bona fide customers who set up accounts and get their credit cards into the system. Actually, it turns out to be pretty powerful advertising for the retailer when the album/artist is powerful enough to bring in new customers. Upcoming country music releases from Taylor Swift (10/22) and Jason Aldean (10/16) might just be the kind of product that would fit that profile.

Deep price discounts devalue music in the long term, but short term no one gets hurt, because labels, artists and songwriters are getting paid their regular rate and the pricing boosts unit sales.

But wait.
With the introduction of the new chart rule, units priced below $3.49 won’t count. Not on the chart and not on the SoundScan numbers. For a superstar, wanting to show great sales numbers, losing some possibly large chunks of digital sales could make a very strong launch look less successful. Ouch!

So I can’t help but wonder if this well-meaning, but badly worded $3.49 chart edict has armed retailers with a new weapon, possibly setting off a new round of back room negotiations in the process. The risk of uncounted chart sales could pressure labels to offer incentives that previously weren’t necessary.

Frankly, I don’t support cut rate pricing, especially on great, proven music. But, when it comes to charts it’s also a dangerous precedent to start messing around with reality and arbitrarily count some sales while ignoring others. A better solution might be to gather pricing information and report how many units were sold at various price points.

What are your thoughts? Leave ‘em below or email me at dross@bossross.com.

On The Charts
Jake Owen bounded onto the No. 2 position on this week’s Top current Country chart with his Endless Summer 4 song EP (17k; 94% digital; $3.99 at Amazon and iTunes). Little Big Town retained its firm grip on the Top spot for a third week adding almost 34k new units to an RTD of 197k.

Overall the Top 75 Current Country albums total, was about 268k, representing the new wave of lowered expectations. For example, corresponding weeks over the past few years were 2011-369k; 2010-493k; and 2009-400k.

Stay tuned….

Scott Stem Lands New Gig

Scott Stem

Founder and owner of Kaleidoscope Media, Angie Gore, announced today (10/4) that veteran publicist Scott Stem has been hired as Senior Director of Publicity and New Accounts at the public relations and marketing company.

Most recently, Stem served a 10 year tenure with the Country Music Association (CMA) as the Director of Media Relations, where he oversaw PR for the trade association and all of its events, television specials, and initiatives including the CMA Awards, CMA Music Festival, the annual announcement of the Country Music Hall of Fame inductees, and more.

Prior to CMA, Stem headed his own PR company working with artists including Ty England, Peter Frampton, and Trent Summar. Previously, he worked with FORCE Ink handling publicity for Alan Jackson, Jennifer Knapp, Brad Paisley, Travis Tritt, Trisha Yearwood, and others; and as Vice President of Publicity for Capitol Records Nashville. For eleven years, he served as publicist for superstar Garth Brooks through Pam Lewis & Associates, Doyle/Lewis Management, Bob Doyle & Associates, and GB Management.

“I’m looking forward to the value and experience Scott Stem brings to our team at Kaleidoscope and the clients we represent,” said Gore. “He is very well-respected in this town and our industry. We look forward to working with him.”

Stem can be reached at scott@kaleidoscope-media.com or (615) 321-3211.

MC Hammer To Host IEBA Awards

It's Hammer time!

MC Hammer will host the 42nd annual IEBA conference award dinner on Tues., Oct. 9. The ceremony will honor IEBA Hall of Fame inductees Charley Pride, Ray Pilszak and Joe LaGuardia (posthumously). Also, IEBA Industry Awards and CMA SRO Awards will be presented. Set to appear are David Cassidy, Peter Noone, Mike Love, Bruce Johnston, Ronnie Dunn, Neal McCoy and surprise guests. Set to perform are Melinda Doolittle and Belmont University School of Music students Reid Johnson, Charles Rogers and Rayvon Owen, under the direction of Henry W. Smiley. Tickets are sold out.

In more IEBA news, Paradise Artists Agency will present classic rock and pop at its party Tuesday afternoon (10/9) at War Memorial Auditorium, including Herman’s Hermits starring Peter Noone, Burton Cummings and David Cassidy.

WME’s Monday night party (10/8) will feature hit makers Dustin Lynch, Thompson Square and Gary Allan.

The IEBA Indie Showcase will unofficially open the conference on Sat., Oct. 6 at 12th & Porter. Jessica Frech will host and perform. Also on the bill are Breaking Laces, Von Grey and Evan P. Donohue. The music industry is invited to attend this free showcase. Doors at 8 PM, show at 9.

See previously announced showcase and panel line-ups here and here. IEBA runs Oct. 7-9 at the Sheraton Downtown Nashville. Details at www.ieba.org

Exclusive Interview: BMG’s Laurent Hubert and Darrell Franklin—Part 1

Laurent Hubert (L) and Darrell Franklin (R)

BMG Rights Management President Creative & Marketing North America Laurent Hubert and BMG Chrysalis Executive VP Darrell Franklin sat down with MusicRow recently to discuss sync licensing, communication, single strategy and more. MusicRow Publisher/Owner Sherod Robertson and Sr. News Editor Sarah Skates conducted the interview.

MR: How is the music business in Nashville different from other cities?

Hubert: Nashville is a unique place, because songwriting is core to the music business here. That’s not the case anywhere else in the world. For BMG, being in Nashville is absolutely critical. Nashville’s song community is attractive to publishers and writers. In the past five to ten years, Nashville has become less of an island and more cosmopolitan from a songwriting perspective. It is much more open because Nashville writers are starting to write outside of town, and outside writers are coming in.

Franklin: After going back and forth to LA, I see how much control Nashville publishers have, especially getting our own cuts and pitching songs. It’s kind of the last town where that is the main focus.

MR: How does BMG facilitate interaction between Nashville and its other offices?

Franklin: Communication is number one—we are an internationally thinking company. We have an international call every two weeks where for 30 minutes we go through every major act, discussing when they are going in the studio, and what types of songs they are looking for. I started out at Almo Irving, and the strength of that company was the fact that they linked all the international offices together and it was constant connection. BMG is the first place I’ve been since then that has that same focus. It’s all about communication and focus.

Hubert: Internationally, we might have 25 to 30 people on the call. We also have a weekly call here in the US with about 12 to 15 people. We are in about 10 markets, 10 territories, but our goal is to operate as one when it comes to the creative aspect. It starts with philosophy, which is focusing on music. After that, it’s about putting the organization in place that buys into that philosophy and executes on that philosophy. Communication is one part of the equation. The second part is having someone in LA who is dedicated to our Nashville repertoire and interacts with both offices as the ambassador. It started as an experiment this year and is working really nicely. It creates opportunities, and creates a different atmosphere in the LA office, so it’s not purely pop driven. We may create a similar position in New York.

Franklin: It helps with film and TV too; just having that person that’s in their face constantly.

Hubert: I find that Nashville’s sync revenue is typically lower than other catalogues, and I don’t think there’s any good reason for that. I think that [the initiative] starts internally, when somebody realizes this is music that we can place. Perhaps initially, the scope is limited, but it starts with a couple of placements, and then you gain traction.

MR: Has sync licensing become an increasingly important revenue stream in recent years?

Hubert: Generally speaking, you will find that revenue is one-third mechanical, one-third performance, and one-third sync, so sync is definitely a focus, not only for publishers, but for writers. Writers are realizing the record markets are not what they used to be, and will never come back. It’s changing expectations, which puts a greater burden on us to deliver on those expectations. I think some writers are being very clever in the context of writing songs. They are saying, “hey, perhaps there’s a way that I can write songs with a greater potential for TV or film placement.” You want to make sure that you meet that demand.

A lot of people talk about sync when they talk about marketing in the context of publishing, but I think it’s much broader than that. It’s about branding opportunities in this marketplace. Look at digital opportunities, the app world is untouched by music, at least legally untouched by music. What other opportunities are there? We have to start thinking in a more proactive manner in finding other vehicles to promote our music.

MR: What is a specific example of how this has worked for your songwriters?

Franklin: The Civil Wars would be a good one. Their main focus when the band finished their record was to hire a publicist, and then do lots of really discounted licenses, just to get the music out there. They were flexible with the rates so they could grow the brand. Once they built the fan base, the money followed.

Hubert: The film world has not grown if you look at the number of productions. The TV world is where things are happening. But you are competing with a whole host of music for placements. So how do you get through that clutter and place your music? You have to be flexible and creative. You may have to take a lower rate, but out of that you will develop a relationship. You have to be relationship minded as opposed to fee minded, and the relationship element will ultimately bring the fee, or at least give you a competitive advantage over other publishers in licensing your music.

MR: Tell us about your recent string of recent No. 1s. (“Somethin’ ‘Bout A Truck,” “Banjo,” “Home,” “Reality,” “Red Solo Cup”)

Franklin: All publishers go through the same process of pitching songs and trying to make sure that you are on every project, and also being strategic. If you pitch a brand new great song to a new artist, maybe you have a better shot at the single. Going to the big acts, your competition is so tough. You can only control getting on the album to a certain extent. Singles are where the stars align and it all works out.

We are very strategic about going for singles. When a new song comes in, we look at the pitch list and see who is cutting, and where they are in the process. Then we go for the best single chance. With “Red Light,” David Nail’s project was winding down, but the song came in. It felt like the right song and they were looking for a big single. It was a no brainer: let’s take that shot rather than go through the hoops of trying to get it on every other big act.

Hubert: You have to be in the singles business and have the radio performances. It starts from the very beginning of the creative process. I think writers are acutely aware that they have to think about singles themselves. But I don’t think anyone has the magic formula. At the end of the day, it’s about the music and you have to be able to push it through. I think we’ve done a great deal this year and expect to continue that way.

MR: Who are some of your new writers to watch?

Franklin: We have a writer/producer, Brandon Hood, I think he’s going to make a big splash next year. Kylie Sackley has been around town for a little bit, but she has the momentum to really take off. And Jonathan Singleton, who has had some success, but is really coming into his own now, so we’re excited.

The interview will conclude tomorrow (10/4) with Part 2. For more music publishing news, check out MusicRow’s upcoming print Publisher issue.