The Benefits of Owning Your Masters in A Streaming World: Conversations with Traci Thomas (Thirty Tigers) and Jack Stratton (Vulfpeck)

Artists: own your masters and streaming can work for you. That’s the message we heard in our recent conversations with Traci Thomas and Jack Stratton. Thomas, a music business veteran, works at Thirty Tigers, where she manages the likes of Jason Isbell and St. Paul and the Broken Bones. Stratton, a relative newcomer to the industry, is the mastermind behind the virtuosic and subversive Los Angeles-based funk/soul outfit, Vulfpeck.

Thomas has quietly established herself as one of the best managers in the business. She played a huge role in Isbell’s 2013 resurgence with Southeastern, a commercial success that topped a variety of critical year-end charts and received praise from the likes of John Prine and Bruce Springsteen. Not to mention Isbell’s 2015 release, Something More Than Free, which hit number 1 on the Billboard Rock, Country and Folk charts, and is nominated for two GRAMMYs this year. As for St. Paul? Within two years of partnering with Thomas, the band released a hot-selling album, Half the City, performed on CBS Sunday Morning, and toured with the Rolling Stones.

Vulfpeck first made international headlines with its Sleepify album, a silent record that was streamed 5.5 million times and raised $20,000 on Spotify before being pulled down by the service. The release was intended to fund a free tour for the band, but ended up drawing attention to the platform’s payment structure. Stratton has no qualms with bucking the system. He releases the band’s music through their own label, Vulf Records. He funds the projects using Kickstarter. (The latest campaign raised over $55,000. The goal was $1.) 95% of Vulpeck’s limited marketing outreach is via their cult following on Youtube, Reddit, and social media. (Their recent Colbert performance was shared on Facebook over 5k times.) And even though they’re a fantastic live band, they don’t really tour that often.

But Vulfpeck owns everything, so they can grow at their own pace. Stratton said on a podcast last year that he told his band, “We could be a fraction of the size of some of these groups we love, and still be getting the same amount of money after the split.” Thirty Tigers’ forward-thinking release model also allows the majority of its artists to control their masters, and so take a bigger piece of the pie. Thomas says the arrangement is extremely beneficial as we move into a streaming-dominated landscape.(“For my artists that own their masters [streaming] has affected their bottom line greatly.”) Read on to hear more from her and from Stratton. One manager leading the charge in the world of Americana, and one whip smart upstart trying to funk the system all up.

“If you’re in a position of owning your own master then it’s definitely a win.” — Traci Thomas on Streaming

Indie record labels have always played a role in championing music that might otherwise be overlooked by the majors. Has the rise of streaming services like YouTube, Spotify, and Apple Music leveled the playing field at all? Is it easier or more difficult for left of mainstream artists to gain exposure under the new model?

Thomas: I don’t know if they’ve leveled the playing field per se but I come from the mind set of the more the merrier. The streaming services offer everyone additional avenues to get their music heard. If you’re in a position of owning your own master then it’s definitely a win. I think it’s easier but everyone has to continue to be creative and most importantly only put out quality material.

How has streaming and the constantly evolving digital space changed your approach to releasing your artists’ music? Does an artist really still need 3 months to set up a record?

We’re not all Adele and can’t withhold our music from streaming services on release. I don’t think it’s changed the way we release our artists’ music.

Yes, I think to properly set up a release, it’s still smart to have that 3 month window….we’re all not Beyonce either.

Curated playlists on streaming sites have also gained influence as a marketing tool. How do you incorporate playlists into your promotional strategy? Do you see the power of playlists increasing as we move forward?

Our digital marketing team is alway asking for playlists from our artists and pitching for such curated playlists. Some are good at doing them…some are not. I don’t know that I’ve seen the needle move with those artists that make the playlists.

We’ve seen a lot of misinformation being thrown around regarding streaming payouts and streaming in general. How is the shift from ownership (sales & downloads) to access (streaming) affecting your artists’ bottom line?

Most artists don’t fully understand how the payouts work or they wouldn’t keep signing to labels. For my artists that own their masters it has affected their bottom line greatly.

Do you think streaming will produce a viable recorded music business? What needs to happen for it to work most effectively?

Yes, streaming services aren’t going anywhere anytime soon. For it to work more effectively they need to increase the payouts for songwriters.

“We own all our rights, so getting plays on Spotify is good for us.” — Jack Stratton

Vulfpeck has had a lot of success using Kickstarter to fund your releases. A lot of artists turn their nose up at the platform. Why do you think that is? Will you continue to utilize crowdfunding as the band grows?

Stratton: Kickstarter is fantastic. It is backwards that it’s uncool to raise money on Kickstarter and cool to take an advance from a corporation. People who think it is uncool should look inward. I will use Kickstarter for future releases. It also happens to be the cheapest method of doing preorders (cheaper than iTunes and Bandcamp).

Youtube has been another great platform for Vulfpeck, especially considering your videos appear to be produced for next to nothing. How does Youtube stack up as a promotional tool vs. revenue source for Vulfpeck? How can the platform improve?

Promotional. That said, hosting large videos that playback reliably would be expensive. Youtube is fantastic. I don’t know what it could do to improve. In fact, better is stay a little janky so that it doesn’t wipe out all the real music services.

You made a lot of noise with your Sleepify album, which you released as a way to raise money for a free tour, and to draw attention to Spotify’s payment structure. What benefits and challenges does streaming present for a band like Vulfpeck? What are some realistic changes would allow the system to work for artists of all shapes and sizes?

I wrote a short article about their payment structure. I don’t think any changes will be made. Spotify is fantastic. I go back and forth. They don’t seem to care about independent musicians. I’ve tried to get in touch a few times. We own all our rights, so getting plays on Spotify is good for us. If you don’t own your masters on streaming you will never make money. As far as changes, get the word out to musicians to keep all their rights. That would change the backlash against Spotify.

It seems like the most press you’ve ever gotten as a band is for that “album.” But you sell out of pretty much any physical product you manufacture and seemingly all of your live shows. What’s does the overall Vulfpeck marketing strategy look like?

Our marketing strategy is very Jewish. There is no outreach. It is my view that Vulf fans already exist and will find us. This approach has led to a fantastic group of fans. I want Vulf to be it’s own thing. Like Radiolab or Tim & Eric.

What are the advantages and disadvantages of running your own label in 2016? What would it take for Vulfpeck to sign a traditional label or publishing deal?

I enjoy running the label. It’s just me. If you have a working knowledge of Gmail and Excel, you can achieve incredible productivity alone. What type of deal would we sign? I have no idea. Once you get a taste of owning everything you can’t go back.

John Strohm, Senior Counsel at Loeb & Loeb, on Streaming and the Bright Future It Presents for Unconventional Artists

The last 15 years have been a wild ride, but the dust is finally starting to settle, and we’re on the brink of a more efficient, transparent, and sustainable music business. All Together Now is a series of Q&As with some of the best and brightest minds in the music business regarding the changes they are experiencing and the steps they are taking to adapt. We interview influential artists and songwriters, as well as leaders from labels, management teams, publishers, and streaming services to hear what they think it takes for us to come together to build a faster, smarter music industry. All together now. Subscribe here to receive our roundup of notable music business news and ideas — delivered by email weekly.

“I want major labels to continue to be healthy and to continue to find their way in the new industry, but even more so I want for there to be viable alternatives and opportunities for artists who exist outside the commercial center lane. If everything goes as it should, there will be more opportunities than ever for all sorts of artists to have careers and sustainable livelihoods.”

John Strohm means it when he says that he cares about the musicians operating to the left of the dial. He spent half of his career playing in critically-acclaimed and criminally underappreciated alternative bands like the Blake Babies, Antenna, and the Lemonheads, before moving on to get his law degree in the early 2000s. These days, Strohm is Senior Counsel at Loeb & Loeb in Nashville, TN. He represents artists like GRAMMY-winning singer/songwriter, Justin Vernon aka Bon Iver, and Gold-certified rock ‘n rollers, Alabama Shakes, whose Sound and Color is nominated for Album of the Year at the upcoming GRAMMY awards. Both demonstrate Strohm’s knack for finding unorthodox artists and helping them go on to achieve massive commercial success on their own terms.

Most recently Strohm was a part of the team behind Sturgill Simpson’s 2014 breakout album, Metamodern Sounds of Country Music. That record eschewed the sounds blasting from the genre’s current mainstream. It was cut for next to nothing (Simpson told American Songwriter it was “Around $4,000”), and it was released via a non-traditional partner (Thirty Tigers). But an impressive online campaign allowed Metamodern to reach wider audience, and it eventually rose to #8 on the Billboard Country charts. Simpson, who is also nominated for a 2016 GRAMMY (Americana Album of the Year), went on to sign deals with Atlantic Records and Downtown Publishing.

It’s not surprising that Strohm is also fan of streaming. “It’s been my prediction going back a decade that streaming would dominate,” he says. Read on to find out why the lawyer thinks the medium creates promising career opportunities for artists working outside of the box.

There’s a lot of buzz about artists being able to grow and break independently, especially with strong management teams. What’s does an artist’s ideal team look like in 2016? Do you still see advantages of partnering with a traditional label or publisher?

Strohm: This depends so much on the type of artist, and what their individual goals are. It would be very rare to find a commercially successful artist who didn’t have a personal manager, agent, attorney, and business manager accountant; however, what makes sense in terms of label and publisher will vary greatly. It usually comes down to balancing the need for resources against the artist’s willingness to let the label or publisher have a seat in the creative process.

If an artist doesn’t need expensive resources such as access to commercial radio or extensive “song-plugging” support, then it often makes sense for the artist to keep the label and publisher relationships fairly bare-bones, such as a label services or distribution deal on the label side, or an administration deal on the publishing side. But minimizing the role of the label or publisher also means increasing the role of the manager, or the artist taking on more business responsibility. Every successful artist “team” is tailored to the specific needs and goals of that particular artist.

How has the growth of streaming affected the label and publishing deals that cross your desk?

I think at this point most everyone in the business has accepted that subscription streaming is a big part of the current business and an even bigger part of the business going forward. It’s been my prediction going back a decade that streaming would dominate, and we’re seeing that. We’re also seeing artist careers made through streaming, and labels using services as valuable A&R resources. Publishing deals haven’t been affected too much, since the deals are based on percentage splits of mechanical income that would include streaming monies. These splits have remained constant despite the rise of streaming. Nevertheless, there is a lot of focus on the proportion of master to publishing payments for streaming on the policy side, with the publishing industry generally unsatisfied with the portion of streaming revenue that is paid to the publisher.

On the label side, streaming has become a term that can tip the scales towards artists doing indie deals over majors. Majors have been fairly aggressive in negotiating the streaming rate, typically pushing to keep the rate consistent with the artist’s all-in royalty rate (which is typically between 15–20%). Indie deals are often based on a 50/50 net profit split, including streaming monies. Everyone realizes how valuable this piece of the deal is, so it becomes a major focus. The industry standard is still developing, and deals will probably look a lot different in coming years. I predict that net splits will become more common as the retail/wholesale royalty based on a unit of physical product becomes less relevant to the economic reality.

We talked to Paul Roper from Dualtone about Spotify’s problem with misinformation re: payouts. What are some of the biggest issues that you see holding back the streaming services at this point? How can they improve the situation?

It’s such a huge challenge, with billions of streams and millions of rightsholders. It seems almost inevitable that there will be some serious growing pains. I would like to think that the services are doing their best to pay the appropriate amount to the appropriate parties, and they’ve seemed to be responsive to criticism. We’re already seeing lawsuits, and there will be more. I’m hopeful that the future will be a selection of user-friendly subscription services that give consumers access to all recorded music and pay an appropriate split to rightsholders in a reliable way. We’re getting closer to that reality. Competition will force the services to maintain a quality product, and the pressure of rightsholders and their negotiating bodies such as the RIAA and NMPA will force the services to account and pay as they should.

On the other hand, there is so much misinformation about how artists and writers are paid, and so much emotion as they try to comprehend the new system. There is a danger of “devaluation” as we switch to an entirely new way to making music available; however, some people assume that going from a product-based system to one of micropayments for performances is a devaluation by definition. I’ve seen how the scale can work to artists’ benefit, and I’ve seen the opportunities that can come through streaming. There’s plenty to work out in how the system will work, but a great deal of it is a matter of time and exposure. I’ve seen plenty of streaming converts once people see how much money can be generated.

There’s been a lot of recent discussion about potential changes to copyright, consent decrees, rate courts, etc. By design, it takes a lot of time to update laws, but technology is exponentially changing how intellectual property functions in the market. Will the legal protections for music rights ever be able to keep up with the pace of technological progress?

We’re all hoping for an overhaul of the copyright act, and it will happen eventually. But Congress has a lot of important issues to address, and copyright law isn’t their first priority. But since we’re dealing with a copyright law that precedes digital, and amendments drafted decades ago to address specific issues, it’s clear the law is strained to deal with current issues. We’re able to protect rights largely through private contract; but as the technology continues to develop and evolve, we will need a new copyright act in the next few years. Then, I’m sure, we’ll need another one right away.

Moving forward, what do you see as a viable model for the music business as a whole? What can music creators and the folks who represent them do to move towards that?

One thing I like about subscription streaming is that, once it’s firmly in place, it’s tough to think what will disrupt that system. The business and laws are always scrambling to adapt to new formats that become possible via technology — wax cylinders to vinyl discs to cassette tapes to CDs to digital files — and it seems that once everyone can stream at CD quality at home, in their cars, from their phones, that we’ve arrived at a potentially stable place. If the industry isn’t constantly disrupted, then we can really get things right for once, with a fair system of licensing and payment. But we’re not there yet, and there’s so much yet to work out. But I’m optimistic we will get there.

For creative artists, the Internet provides opportunities to connect commercially without having to give up copyright ownership or creative control, which is fantastic. I hope this continues to be the case, as major labels figure out how to effectively market music in the digital space. I want major labels to continue to be healthy and to continue to find their way in the new industry, but even more so I want for there to be viable alternatives and opportunities for artists who exist outside the commercial center lane. If everything goes as it should, there will be more opportunities than ever for all sorts of artists to have careers and sustainable livelihoods.

David Lowery leads $150 million class-action lawsuit against Spotify

Happy New Year?

Last Tuesday, Cracker and Camper Van Beethoven frontman David Lowery jumpstarted the New Years Eve fireworks with a $150 million class action lawsuit against Spotify, claiming that the streaming service "knowingly, willingly and unlawfully reproduces and distributes copyrighted" music.

That music includes songs written by Lowery, a known artist rights advocate, such as "Almond Grove", "Get On Down the Road", "King of Bakersfield", and "Tonight I Cross the Border." Statutory penalties can be as high as $150,000 per occurrence of willful infringement.

Spotify responded that it is "Committed to paying songwriters and publishers every penny," but that "Unfortunately, especially in the United States, the data necessary to confirm the appropriate rightsholders is often missing, wrong, or incomplete."

In an interview with Complete Music Update, Lowery's legal representative, Sanford Michelman, rebuked the statement, calling it "the worst excuse in the world." Stay tuned...

Pandora CEO: Music Shouldn't Be (Completely) Free

As Pandora preps to enter the on-demand streaming battle royale, CEO Brian McAndrews is taking jabs at the freemium business model espoused by Spotify and YouTube.

In a recent op-ed in Business Insider, McAndrews explained the somewhat obvious challenges the transition from physical to digital has created for music companies.

Years ago, if anyone could have walked into a record store, legally taken every record home for free, and listened to the exact songs they wanted for as long as they chose, the music industry model would have completely broken down. But that is exactly the situation the music industry faces today.

Free-to-the-listener on-demand services are driving down music’s intrinsic value by creating a “gray market.” By that I mean a market where listeners can perpetually access licensed, free, on-demand music. An ever-growing number of listeners are happily lingering in music’s gray market, enjoying full access to all music without paying for the privilege and with little incentive or intention to convert to a full-paying subscription.

It's a very public hint at how Pandora might leverage its massive base of listeners to monetize a forthcoming on-demand streaming service, and most certainly a peace offering as the company preps to negotiate new on-demand licenses with labels and publishers.

Coldplay: To Stream or Not to Stream?

Coldplay out, too? Bloomberg reported yesterday that the British rock band hasn't said if its new album, A Head Full of Dreams, will be available on Spotify and Apple Music tomorrow. The news comes just a few weeks after Adele decided not to stream her latest, 25.

This isn't a huge surprise from Coldplay. Both last year's Turn Blue and 2011's Mylo Xyloto weren't available to stream for the first few months after their release.

Both singles on the upcoming release are currently streaming via Spotify and Apple Music, though Coldplay used a similar strategy with Turn Blue.

Frontman Chris Martin has ownership in TIDAL, which could also play a factor in the decision.

Read the full Bloomberg article here.

What Does The Success of 25 Mean?

Adele's third album 25 is shattering all sorts of records, and is now officially the most successful first week release of all time, selling 3 million copies in the US alone.

This historic, irrefutable success is challenging conventional wisdom and fueling a tired, but fascinating conversation over the future of the recorded music business. The Adele camp's decision not to initially release 25 to streaming services has only intensified the discourse.

Is there still a place for ownership and album sales in an increasingly access-driven streaming world? Or is Adele's 25 simply an outlier, the dying gasp of a moribund business model?

Here are two reasoned, divergent opinions to consider:

Don't dismiss Adele's success as a miracle. You're better than that.

Music Business Worldwide

Music Business Worldwide Editorial Staff

Instead of being emboldened and inspired by an album's ability to send a boggling chunk of the world purchase-loopy, why are we manufacturing alibis for its success?

Is a blockbuster LP's global impact now so daunting to some music execs that when it is blindingly in evidence, it is actively discriminated against - even dismissed?

Who Is Really Paying For Adele?

The New Yorker

John Seabrook, author of The Song Machine: Inside The Hit Factory

Album sales are profitable, but they are not the future of the music business—streaming is. Could it be possible that the record business, pursuing a strategy of inflating sales by keeping an album off Spotify, Apple Music, or Deezer, is choosing short-term profits over long-term growth? (Perish the thought!) That would be consistent with the industry’s attitude toward its potential tech partners, going back to its failure to join forces with Napster in 2001 and killing Napster instead.

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