How to Cash in on Cover Versions

Larry Mills walked into Sony/ATV chairman/CEO Marty Bandier's office three years ago with a slightly offbeat idea. He suggested that the company promote hundreds of young artists who had performed cover versions of chart-topping songs. At the time, says Mills, he had no idea what reception he would get from his boss. This was, after all, a phenomenon that big music outfits were more accustomed to policing than promoting.

But Bandier, a longtime believer that publishers should more aggressively develop new revenue streams, enthusiastically embraced Mills' pitch. As a result, Sony/ATV, the world's largest music publisher, launched We Are the Hits, a multichannel network (MCN) on YouTube, in 2011.

The gamble has paid off. By late 2013, We Are the Hits was amassing nearly 130 million views per month. Now, in an effort to lure other publishers reluctant to license their catalog to a service owned by a rival, Sony/ATV has spun off the company as a stand-alone venture, with Mills leaving the publisher and buying We Are the Hits for an undisclosed sum. "What became apparent was there's a ceiling on others participating," he says. "You have to give up something to get something done."

Here's how it works: Artists like Tyler Ward, Lindsey Stirling and Matty B have racked up millions of views performing hits like "Happy" and "Get Lucky." But because the covers are not original recordings, the only rights to be paid are those to the songwriters - and not labels. Because of its MCN model, We Are the Hits has been able to share ad revenue with the performers for the first time, while also charging a 25 to 50 percent premium for ads on its network.

In June, Mills signed up Kobalt Music, which has songs by Ryan Tedder and Dave Grohl, among others. And he has inked a deal with CBS-owned MetroLyrics, which will include videos of its cover artists performing alongside printed song lyrics. "The opportunity to basically never leave your home and make money from music is a pretty new concept," says Mills, "and lots of young independent artists want to do it."


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