Music rights and music distribution: an interview with Timothy Trudeau: part 2

Tim Trudeau is CEO of Syntax Creative. He
has experience in all areas of the music industry – he started out as an
artist, and soon progressed to artist management, promoting other musicians and
brand building. In the late ‘90s, a revolutionary distribution deal he made
meant that his band Sackcloth Fashion could reach a national audience while
still retaining all the rights to their music. By the time he was 25, Trudeau
was the president of a record label that he co-founded. Many of the artists he
helped launch are still touring full time and successful to this day.
Follow him on Twitter or Facebook.

In part 1 of
our interview, he discussed Soundreef, how to sell music online, how the music
business works and how to promote your music. In part 2, he moves on to music
royalties, music distribution, and working with a collecting society.

Division of royalties used to be based on there being a
physical product to distribute. Trudeau has found that the move to digital has changed
the way money is distributed.

‘From my vantage point it has: we have more control over how
it’s all working, we’re seeing a lot more data than we ever saw before, we’re
receiving money faster than we’ve ever received it before. With physical it was
a lot of paper statements compiled together, and some accountant manually
processing it on their desk with a calculator and a ledger, and then stapling
things together, mailing it to you.’

This has revolutionised the way artists get paid – Trudeau
says the old way could work, although there was far more room for error than the updated system, which pushes people towards honesty and transparency.

‘It doesn’t mean that digital retailers and digital service
providers can’t lie about data, they build the technology in such a way to
tell the truth… if everything’s programmed out right, in general, it’s just not
going to have a lot of problems. It’s going to be accurate. And so we’re
finding money faster.’

Perhaps the biggest change, from a distributor’s point of
view, is that they no longer need to deal with the costs and administration
involved in distributing a physical product.

‘The physical component of music is extremely expensive… You
have to figure in the cost of a fork lift, the fork lift operator. You have to
figure whether to rent a warehouse. There are just tons of costs: the trucking
back and forth, the truck drivers and with digital, it’s literally: here is a
file that I am going to transfer from my computer to your computer. And yes,
there’s people involved still, and we have to pay them, but we have just
completely lowered the cost of doing music business.’

Many are sad about the demise of traditional formats, but
Trudeau sees them as being generally good.

‘I’m not opposed to it… I come from all sides of the music
business, I’ve been signed to a label as an artist, I’ve owned a label and
signed artists, I’ve been a distributor doing deals with music stores, working
with stores, having a store – I come from all sides of it, so I know there’s a
lot of different opinions, depending on what side people come from, but for me,
I don’t think that the digital space has cheapened music at all – I think it
just made it more honest.’

This is great news for artists, since it is sometimes
suggested that the paper system left a lot of room for dishonesty – or at least
fuzzy calculations.

‘Well right. You have sales calls are being charged by the
hour, and then you have – well I had – to take this music buyer out to dinner
and you can’t really track all this stuff, but with digital, it’s like: it
costs this much to store it on a server, it costs this much to deliver it,
let’s say it costs about a quarter a track to deliver it to a store, and then
from then on, I mean, it’s on them and they send reports and they send money,
so it’s made it easier.’

These are radical changes, making the market more accessible.

‘With the push of a button, our music is available in the
entire world, and in the olden days – we’re only talking ten years or more ago
– we had to sign with different distributors in different territories, and then
we would have to go setup a bunch of CDs on a palette with customs forms filled out as well as international tax forms… Just to get CDs for sale, just to get
them on the shelf in Australia, to get them on the shelf in Europe. Then after
that was done, who knows if you would ever get paid.’

But getting paid isn’t all that artists want.

‘From an artist’s standpoint, getting paid is important, but
also there’s a side of you that just wants the music available and just wants people to have access to it, and in the digital space that is finally possible. This
year, there were countries I’ve never even heard of that are purchasing music
that I’ve seen on reports now. That’s to my shame – I should be learning more
about geography – like the rest of my neighbours here in the United States.’

Trudeau has extensive experience of working with collecting societies such
as ASCAP and BMI, but wonders how well they fit with the new digital model of
music distribution.

‘They have their place. I’m not sure what that place is any
more… They do seem like they’re always behind the eight ball and always reacting
and slowed down, so I get a statement from them about something that happened a
year ago.’

Payment from other sources seems to be a lot faster.

‘Maybe we uploaded a video to YouTube and we got paid a
month later on what was happening there, so when we see the success in the form
of payment from YouTube we’ve already moved on to our next thing that we’re
working on. We get a cheque from ASCAP or someone else and we’re like “Oh yeah,
that’s right, that was fun when that happened two years ago.”’

He suggests that collecting societies might have got caught
up in the same situation as other music institutions.

‘I think they’re in the same boat that the major labels are
in. At one point in time you had three or four companies controlling all of the
music business essentially, and of course they still are making money, they’re
still a huge part of the pie obviously. But you know, same with broadcasting
and a few companies that were sort of controlling all of that, so if you wanted
to broadcast music then you had to have a licence with one of these, or all of
these companies. And it served its purpose, they were established for good
reasons. They were established because you did have people who were writing
songs and absolutely getting stiffed from getting paid, so I think the original
intent was good, but 100 years later…’

It sounds like it’s quite difficult for them to keep up with
the changes.

‘One of the things our business does is “fingerprinting”. In
the olden days people would manually survey some broadcasts and generate cue
sheets. They use that to create a base and then pay out writers and publishers
off of that. Of course independents were the last to be heard on the handful of
surveyed stations. Since we’ve been doing fingerprinting, you wouldn’t believe
the amount of stuff that is caught that is just never caught by the manual
process. It’s either revealing something that’s always been that way or, in
general, we’re all moving faster now and having a lot more outlets, and so PROs  are having to catch up and build technology… They
know that that’s where they need to head if they want to keep their writers and
their publishers happy.’

Sometimes collecting societies can get cut out entirely.

‘We, as a publisher, did a direct deal with Google for
YouTube and there’s really not a reason for us to wait for the PROs to get our
money when we can get it directly from Google. We get more by doing direct deals
and we don’t have to wait and have such a huge portion taken out.’

Did he have any problems with the local collecting societies
you were using when you registered music with Soundreef?

‘I don’t remember whether that happened because we get so
many letters from collecting societies! Basically, we get them trying to slap
our hands and say, “You can’t do a deal with them because…”. There was one
point in time where there was a huge amount of money that was, I guess, put
back, that they had already paid us out and then they said, “Sorry, we’re going
to put a negative amount on your account because you did a direct deal with
this person or that person.” For us, we have it and it’s there, and it fills in
some gaps, but in reality, our business moves a little faster – we get the
letters and we just file it and we go, ‘Okay.’. We just keep it moving because
I don’t have time to circle around things that are… where we’re fighting over a
nickel here or a nickel there… I’d rather be chasing after huge opportunities
than doing that! They’re the ones that are spending money on their legal team
doing all that and if they’ve got it figured out to where that nickel should
have been split in half well, if they’re going to spend money doing that then
have it – it’s yours.’

Although he avoids the finer details when dealing with his
own business, he understands why people think this is important.

‘Again, people might disagree with that approach and say
it’s the principle, and I don’t necessarily disagree with that, it’s just that
there’s only so many hours in the day, so for us, we like to just focus on
where the revenue is coming from, the major places, and then put our energy
into that.’

Having seen so many radical changes in his work, what does
Trudeau see happening to the music business in the future?

‘I’m excited about the future – to me it looks good! You
have people who complain that subscription models might be taking out retail
and so on and honestly, I’m not buying a lot of the disgruntled artists or
music business people who are running around saying this is killing this
industry and this is killing that because to me, the statements don’t lie and
we continue to have success at all these different places and I think… I’m

In contrast to many in the music industry, Trudeau thinks
Spotify is definitely a good thing.

‘You have a lot of people that are anti-Spotify or
anti-Deezer… To me, they’ve been great partners because they’re making
music available to places and people that normally wouldn’t have purchased the
record anyway. To me it’s extra money! To me – say what you want about Spotify,
I’m not saying they’re perfect or anything and that they haven’t made various
mistakes – but in general, what we have seen is they are creating a brand new revenue
stream for us, from people that didn’t buy music anyway, so not music
collectors – people that don’t care about holding something in there hand or
exploring the artwork. Also, they truly have found a way to monetise pirates. I
think that’s wonderful.’

For Trudeau, the future is definitely bright. ‘I look
forward to more innovation, I look forward to what’s after Spotify, what’s
after the thing that’s after Spotify, I look forward to it because we’re big
enough to survive, but we’re small enough to manoeuvre through the changes in
the industry.’

This can be problem for bigger organisations. ‘What I think
of major corporations is that too many of them are like the Titanic and we’re
like this speedboat and we see a giant iceberg ahead and we just go, “Oh, okay,
go left,” and it’s no big deal.’

But the model isn’t perfect yet – changes still need to be
made. ‘What I would like to see would be more innovation… you do have more
technical people that are in charge of things that maybe are a little more
emotional, or taste driven, and that can be complicated at times, but you have
a lot of people who are left-brain, right-brain, working with the technical
people who are coming from music. I look forward to that.’

How would he like to see things change for artists?

‘Number one, I would love to see artists get more educated,
understanding things a bit better – stop thinking that everyone is always
stealing from them, ‘cos it’s not necessarily true.’

He also suggests there needs to be a bit more understanding about
how much it takes to get an artist in front of a large audience.

‘One artist performing one song on one stage, in front of
people, you know to the consumer maybe it looks like this artist has worked
their butt off to do that, but they have no idea about the team of thirty or
more people that work around the artist. So we have to make sure that everyone
is getting paid – not just the artist – for all their work. It’s the same thing
with movies: the most visible people are obviously the actors, but you have so
many people who worked on building the set or doing the special effects or
doing the editing or making the music. They’re not always visible, and we need
them to be getting a decent amount so that they can continue to do that.’

‘For us, we’re mostly excited!’

Based in San Diego
Syntax Creative offers services ranging from administering
copyrights, worldwide distribution, marketing and social strategy, creative
direction, and launching a brand from concept to creation. Follow Timothy
on Twitter or Facebook.