Gerald V. Casale, co-founder and chief strategist of the seminal new wave band Devo, has more experience than most when it comes to the ins and outs of the music rights licensing market.
As co-writer of many of Devo's songs - including consistent earners "Whip It", "That's Good" and "Beautiful World" - he's seen sync rights contribute significantly to the band's bottom line. Early in their career, the group saw the opportunity to expand their revenue streams beyond label and publishing deals into merch, sync, endorsement, touring, multimedia and production, taking a more businesslike, corporate outlook towards their band and brand -- one that many perceived as tongue-in-cheek at the time, but turns out to have been prescient.
And, as a producer and director of TV ads (Miller Lite, Nintendo, World Health Organization) and music videos (Foo Fighters, Rush, Soundgarden), he's been involved in both buying and selling of music rights and is a witness to the (d)evolution of the marketplace. We caught up with him earlier this week to get his take on Devo Inc. and today's music business.
Q: What's your take on the state of the music licensing market today?
A: Let's start by going back a bit. Up until the 1950s, artists had almost no power, no control over their rights, and almost all of them got ripped off. Starting in the 1960s, this all changed for the better: Artists started to get an idea of the power they possess as hitmakers, and started to use that power to make sure they owned and would get paid for the music they created.
Add that to the fact that for many years, labels thought that sync rights, at least until Napster came along, were "pie in the sky" they left to the artists and publishers. Licensing became more important to how artists make a living outside of label deals, alongside touring and merchandise.
Q. And what about after Napster?
A. Now you've got a situation where this source of artist revenue is being squeezed on all fronts, especially since 2008. Labels, publishers, music supervisors and the public have put the artist in a position where they feel their music has little to no value except for promotion. At the same time, artists are being asked to give up a bigger piece of what little revenue is left from sync licensing by signing 360 deals, given the labels now get a cut of everything the artist does, including merchandise, live shows and sync licensing, while getting none of the traditional marketing and promotional benefits they used to get from a label. So what happens is that the artist gets less of a share of a shrinking pie - and the market comes full circle.
Q. But the sync market seems to be growing if you look at the bottom line - how is the artist's pie shrinking?
A: It's pretty simple, most artists today have grown up in a world where they have to beg to get paid for their IP, and in some cases giving it up totally for some hope of future return. In the industry, this line of thinking works in the minds of newer artists that have been programmed to think that it's okay to give up their rights for some sort of promotion, exposure or an audience -- at least for the short term.
Q. And for the long term?
A. The reality is this kind of thinking makes them completely disposable. Later on down the line, if they are lucky enough to make a hit, they own nothing. They have nothing to show for all of their efforts and can only sit and watch while people who had nothing to do with the creation of the hit make millions in perpetuity.
It happens like this - a band breaks when their song is featured in a national ad. Then they sign to a 360 deal, give up their rights and never realize their true artistic or revenue potential while other people profit. It happens all the time.
Q. So new bands are getting the short end of the stick. What about more established acts and sync -- like Devo?
A. As I said before, when we were signed, labels really didn't care very much about sync or take it seriously. When we wrote those songs and were on shows like "Saturday Night Live" and "Fridays" in the 1970s and 1980s, sync was an opportunity... if anyone was interested.
With Devo, since the beginning, we've always looked for new and different revenue sources outside of our label deals - we were one of the first bands to take merchandising seriously, along with sync, touring and endorsements. In general, most music licensed for film, ads and TV was not rock and roll, and as a result, no one thought it would lead to a great deal of revenue, so they left it to us for the most part. Starting in the 1990s that changed, and our music was in demand, and we knew it had real value. For Devo, there was so much value in sync rights that we made more money from sync licensing starting in 1993 than we made from our label deals. [The group's back catalog under is a co-publishing deal with EMI; catalog beginning with 2010's "Something for Everybody" is under an admin deal with Warner/Chappell.]
If that doesn't illustrate how important sync rights are to musicians, I don't know what does. Sync, alongside merchandising and touring has become one of the main ways that Devo gets paid for its music these days as the music business had evolved. Anyway, even if we do know our rights and we do get paid, we're getting squeezed too, on all fronts.
Q. How so?
A. No matter who you are, the process and the percentages that an artist has to pay off the top of a deal are onerous: 50% right off the top of the deal before you're paid a penny. 50%! All for the promise of getting your song out to the market. Add to that the fact that it takes anywhere from six to 18 months to get paid for a sync deal once it goes down; that the statements of payment are so unfathomable you need a lawyer and an accountant to go over them; and you can see that most artists are hard pressed to make any real money from sync when all is said and done. Everyone seems to get a payday but the artists. The system has to get better.
Q. What do you think can be done make things better? Do you think technology can help?
A: Yes, I think that the idea of a digital solution to this problem is a good one. In the digital world, none of this byzantine Kafkaesque bullsh-- needs to exist. It can be very clean and simple… and believe me, artists and buyers would appreciate a simpler way of doing business. What I think what would be nice, and I know it's laughable to talk about fairness in a business predicated on onerous contracts, is that everyone gets their fair share if they do their job. The current system, where the rights aggregator makes 5X-10X more than an individual band member on a sync deal is anything but fair. Maybe a digital system could change this system for the better.
Q: So if you had your way, what kind of sync market would you like to see, digital or otherwise?
A. I'd like to see something that gives the artist a fair deal and makes it easier for the artist to connect their work directly to the buyer. This means things like dealing with artists on a non-exclusive basis: if you do a good job for the artist, you get paid, and if you don't, the artist is free to go to someone who can do a good job with placement.
Q. And what about the financials?
A. As it stands, the percentages just don't work. 50% is just way too much money to take from their artists. I think that something along the lines of 25% is much more fair since the artists took the lion's share of the risk to make the work, and they should get the lion's share of the return. And when a deal goes down, the artist should get paid quicker, and the breakdown of payment and fees should be more clear-cut so the artist knows what exactly what fees they paid off the top to get their music placed. Now, when it comes to the publisher, either this type of service effectively becomes the publisher of record - working proactively to sell rights on behalf of artists, or working with publishers and the artist to more fairly divide the pie.
Q. How about the way artists get placed?
A: You have to use both tastemakers and technology to help buyers find the music they need. That means hiring people who understand both the music they're selling and what buyers need, and using technology to help them along. So that instead of churning through 100 songs to get to what they need, the music supervisors only have to go through 10 songs that are right for their particular need. They also already know that the rights are not a problem because the terms have been pre-negotiated more or less. This will lead to better placements, happier artists and happier music supervisors. My only hope is that if a company like I have described is created, it becomes the model rather than another onerous situation. And, if you did create it successfully, what artist would not go with that company? And what buyer would not want to use it?
Q. Any final thoughts?
A. Everyone from plumbers to artists wants to get paid for their work. Who doesn't? When it comes to artists though, instead of getting paid, many of them end up making other people rich, getting critical acclaim and dying in a poorhouse or relying on the good graces of friends - and it shouldn't be that way. Since it is the artists who take the risk of making a fool of themselves for their art and the chance to win big, when they do win big, and they should get paid what they deserve.
[Billboard.biz welcomes new contributor Mark Frieser, founder of Disconic.]