Derek Lefholz: ‘We don’t get paid until we make money for the artist’

Derek Lefholz is
Director of Artist Relations and Radio in Retail for 
Music Supervisor Incorporated, Owner and President of Embark Music,
as well as continuing to create music as an artist in his own right. He took
some time out to tell us what musicians need to know about the music business:
how film and TV licensing works, what Music Supervisor does and PROs (collecting
societies).

Film and TV licensing can be quite complex.

‘Firstly you have to understand the bare essentials of a
song,’ Lefholz explains. ‘A song is complete, it is one piece of music, but it
is really two separate entities, that being the writer and the publisher
portion of a song.’

‘You really want to try to maintain your rights for both
sides of your music, moving forward as an artist in the industry. It’s going to
give you more flexibility to do different things and to make more money, to
find new avenues for your music if you have all rights. Then you don’t have
someone who’s retitling your works or whatever.’

‘When you get a song placed on a TV show, they have to clear
what’s called the “All-in” licence. And that is compiled of the master use, and
then the sync use licence. The sync kind of correlates with the publishing side
and the master kind of correlates with the writer’s side. Although, confusingly
enough, within music there’s also a third, unseen right, which is the master
rights.’

‘So usually the label, if we’re talking major label deal,
traditionally – because there’s a lot of different ways things work today –
holds the master to that album. The publishing is usually represented by a
publisher that is an affiliate to the label in some way.  Then the only thing that stays with the
artist is the writer’s share, whoever wrote the song that stays.  Now that’s not to say that you couldn’t go
give a song to someone, and give them the writer rights too – it happens – but
hopefully the artist or the band maintains rights to at least their writers
share.  That’s why we always tell artists
to keep their publishing.  This is basically
the parts you’re working with that make a licence possible.’

What about cover songs?

‘If you have a cover song, you can licence the song for film
and TV, but it makes it that much harder because they have to go clear the
original publisher of the song. When you do a cover, you own the master side of
it but the publishing is always retained to the original publisher.’

In practice, this means things can get expensive.

‘Let’s say we cover an original Beatles song and we have a licence request.  They want to
licence it for $5,000.  Well they may go
to the publisher and the publisher says, now we’re going to licence the
publishing side of this cover for $20,000.  Most favoured nation tells
us that the writer’s side or the master use side has to get $20,000 as well,
the same amount as the publishers, so all of a sudden someone that’s working
with a budget of $5,000 just went to spending $40,000 for a cover song. So it’s
better for people to licence music that’s 100% cleared on both the writer and
the publisher side.’

Music Supervisor helps solve this problem.

‘We’re an agent for the artist. And with that said, we have
100% cleared songs on our catalogue, so both the writer and the publishers of
the songs clear their music through us and give us the right to license their
music for a large scope of things.’

This service is popular with music supervisors, who can use musicsupervisor.com to search for and license suitable music quickly. It’s
also popular with artists: ‘People come to us because we don’t take any
publishing from the artists, we don’t do any retitling of artists’ works, and
we don’t get paid until we make money for the artist! Which is how you guys
work.’

How did he find Soundreef?

‘I was looking for a way for artists to make money with
their music that would be somewhat more sustainable than film and television,
because it’s kind of rocky: you get a placement and you get a decent amount,
but it fades. Everybody banks on the back end, you know, making money for
placements, but the PROs traditionally are pro-major label. So they’re not
really out for the indie guys.’

‘They don’t pay… ASCAP doesn’t actually pay any retail
royalties to any person that belongs to ASCAP unless the song has been placed
on a film or TV show, or has been played on radio. All the income from retail
that they collect goes to major label artists.’

He explains that this is to do with the way that income is
distributed.

‘If Muzak were to go and get some independent music – I’m an
artist too, I’m a producer, so if they were to find my music on some website
and just go ahead and upload it because they have licensing deals in place with
ASCAP or BMI or SESAC, and they put some Beyoncé music in, or some other major
artist, like Tiesto or something like that, then when they distribute royalties
that year for the retail portion of it, Tiesto’s gonna get paid any earnings,
I’m not gonna see any earnings from that.’

(For more on why it works this way, see our blog post on how PROs (collecting societies) distribute royalties and distribute royalties internationally.)

‘So with all this, and also with the non-exclusive nature of
PROs in the United States, we knew we were able to do something like work with
Soundreef where we could get our catalogue to you guys and you guys could
curate that for your radio stations and earn money for our artists. And so that
way the artists get paid directly, the PROs are not involved at all.’

‘A company like ours and Soundreef was kind of a match made
in heaven because you guys traditionally don’t charge the artist, you split
what you make with the artist, you’re very pro-artist and so are we.  It’s
just a natural relationship to work together and come up with ways for artists
to make more money.’

Does he ever deal with PROs?

‘I deal with the PROs, but I don’t know how long I’ll deal
with the PROs.’

‘The bottom line is this: no PROs are paying any indie guys,
period. At least not fair rate (what the majors make). I’ve been a member of
ASCAP for probably six or seven years, I have over 200 titles registered, I
know my music’s been played on a lot of internet radio stations and used for
different web series, and all kinds of digital media, I get streams on Spotify,
all that kind of stuff, and I’ve never seen one dime from ASCAP.’

‘Last year, in 2013, I had about 10 or 15 of my songs used
for Elite Model Look Singapore – they used a lot of minimal and tech house stuff that I’d written – and they used
that for the show and there were webisodes, but then it was also showed on TV5
out of Singapore, so I’ve been trying to collect now from ASCAP, since summer
2013, and they’re telling me I’m gonna see my first payment in February of
2015!’

‘It’s ridiculous. And do you really think that I’m gonna be
like, “Yeah, I’m getting all my money, oh yeah I’m sure I’m getting everything
I’m owed.” I’m very passionate about the PRO situation because I feel like the
guise of, “Hey, come join us, we’re gonna help you. Artists, this is your place
to come and have a home and collect professionally…” No. It’s big walls, it’s
big business, it’s major label-focused, and it’s definitely not pro-indie.’

‘Artists don’t necessarily want to deal with all of
collecting on their own from all these places. But they would definitely open –
I mean I would be open – to working with some other affiliate that is
collecting my royalties and actually paying me something.’

‘For instance, I’ll give you a very specific example, ASCAP,
unless you have over 155,000 plays per quarter on Spotify, you earn $0. You’re
under the threshold, you make nothing. If you hit the threshold, you make one
credit. So if I have 155,000 plays in a quarter at ASCAP, I earn one credit for
$7.80. For 155,000 plays. If I get just below that, I get nothing.’

‘And basically their consolation is, you can apply to our
awards ceremony and get an award from ASCAP and potentially like a few thousand
dollars or something if you win, if you can prove that you have had an active
year in film or TV or retail or whatever it may be. So, ASCAP’s saying, I’m not
gonna pay you your money, but show me that you’re doing well enough and that I
should be paying you and I’ll maybe give you an award and a little bit of
money. So it’s pretty dirty.’

Sounds like the artist has to jump through a lot of hoops.

‘That’s the nature of the industry right now. I mean, with
all of the performance right collection societies, the PROs and affiliations
like Sound Exchange in the United States
that collects for internet or for digital radio, like satellite radio et
cetera, and they pay the master and the performer for that, and that’s all run
through the government and everything, there’s a bunch of hoops there.’

‘It takes a long time to start getting money. When you go to Harry Fox you can’t even talk to anybody at
Harry Fox, and it’s all done through email… It’s a lot of red tape, a lot of
hoops, at the end of the day for really little to no gain, because you’re not
seeing the money that’s supposed to be there, as an independent artist.’

In Part 2, Lefholz
explains how things have really changed for artists and how artists can make
the best of their music.

A member of the
Recording Academy, Derek Lefholz, aka 
DegreeZero, founded Embark Music, a Creative Licensing Agency and Record Label in the early 2000’s. Lefholz also works as Director of
A&R and Radio in Retail for 
Music Supervisor Inc., managing and consulting with thousands of musicians, artists and bands daily. As an artist he continues
to produce and has writer and publisher credits on over 200 tracks in many
genres. You can contact him via 
Facebook and Twitter.