Monthly Archives: June 2013

The Myths of Business

Business_ByTwobee_CST Published 06/5/2013

By Jeff King

The business world, like the universe itself, is built upon a series of rules. Some seem obvious. Some are not exactly as they seem. As a guide for our more than 125,000 licensees and 115,000 members, and a reminder to ourselves here at SOCAN, let’s take a look at some of the biggest myths in business.

“Revenues are good, expenses are bad”
This is a big one, espoused around the world. The reality is that some revenues cost so much in resources that they are actually a drain on the business before they even start. And some expenses are required to secure any revenue. Companies need to ensure that they maintain an appropriate balance between resources expended and revenue earned. Put simply, “sometimes you have to spend money to make money.”

“You should give the customers what they want.”
This is another extremely prevalent business myth. To paraphrase the car manufacturing pioneer Henry Ford, if he gave the customers what they wanted, he would have simply supplied them with bigger, stronger horses, not the mass-produced automobile. Similarly, if hotel magnate Conrad Hilton gave the customers what they wanted, he’d have supplied them all with free hotel rooms. The reality is that businesses should give the customers what they need. Goods or services should be fulfilling a need; by doing so, they become less dispensable, and the businesses behind them become more like partners (and less like salesmen) to the consumer.

“Don’t change a good thing” or “If it ain’t broke, don’t fix it”
Leading companies are great because they are desperate to get better. Lagging companies are often complacent and self-satisfied, and that’s why they often get left behind. When great managers have a lead, they step on the gas. Progressive change attracts creative, disciplined managers and a virtuous circle (the positive economic opposite of a negative “vicious circle”) is created.

“People hate change”
What people really hate is change for change’s sake, change that doesn’t make sense, or change that has not been communicated properly – in each case, a change where there’s no perceived need for it and no perceived benefit from it. People will actually embrace change if they understand the need for it and how it will benefit them. For an example, look at the exponential growth of iTunes, Facebook or Twitter in the past five to ten years. For a more extreme example, when someone wins the lottery, they eagerly accept that change!

As a SOCAN licensee or member, deflating the balloons of these myths can only help your business. And as we at SOCAN work to transform our own business with an eye toward the future, we’ll always be mindful not to fall into the traps set by these myths. Our members, licensees and employees deserve as much: a smart, forward-thinking organization that “raises the bar” in every aspect, and a partner that enables them to grow.

Four “megatrends” that matter: Speed, Ubiquity, Efficiency, Comparability

Trends_CST Published 06/5/2013

By Eric Baptiste

No other industry has changed as much as the music business in the last 20 years, and the pace of that change is accelerating.

In 1993, nearly everything was local. Information moved slowly. The transfer of money was expensive and complex. Businesses that use music and songwriters alike were mostly local entities, with very limited ability to compare service levels or require worldwide services.

This is over.

The expectations of licensees and members from SOCAN and other Performing Rights Organizations (PROs) are now derived from their own real-life observations, experiences, and “megatrends,” or large-scale changes in circumstances or fashion.

Four of these megatrends are especially relevant:

 Speed. Everything is quicker now than 40, 30, 20 or even 10 years ago. Withdrawing cash today from an automated teller machine on another continent is wonderful. If the ATM I’m using in another country doesn’t accept my card, I assume something is wrong. The system has failed! Needless to say, I’m now used to the fact that the money is debited from my home bank account in milliseconds, not hours or days.

This megatrend matters because PROs are increasingly being held to similar standards of speed, accuracy and reliability. We need to speed up our operations while maintaining their integrity, which is now possible thanks to new technology and standards.

Ubiquity. To stay with the banking comparison, not so long ago we received bank statements once a month by post. Today our accounts are accessible every minute of every day from virtually every place on earth. This megatrend matters because our members are thrilled when we offer them near-real-time access to their royalty account information, anticipated distributions, provide analytics, answer or even anticipate their queries and concerns, and so on.

Efficiency. Across all industries, processes are being streamlined and technologies leveraged to improve the cost-effectiveness of goods and services. For example, some so-called “low-cost” airlines actually do provide award-winning services, whereas more traditional ones are frequently pilloried for their lack of attention to the needs of the flying public. This megatrend matters because PROs are businesses (ethical, mostly not-for-profit, but businesses nevertheless), and we have to prove to our songwriters and music publishers that we are constantly improving the way we manage their rights. Basically, we must demonstrate that we offer them the best value for money, bar none. We need to do so in full recognition that expectations of music creators are generally different from those of music publishers. That’s fine. We need to understand that and serve both sets of constituents equally well.

Comparability. Our world is shrinking. The same user experiences, the same shopping experiences, and the same business standards are increasingly available throughout the world. There are still important differences, but the trends are clear. Expectations are similar all over the world, or they soon will be. Better be prepared. This megatrend matters because in the past, PROs could operate very differently around the world, but this is increasingly untrue. The international dimension of cultural industries is not a “nice-to-have,” or marginal, any more – it’s a core part of our business. Comparability is not just for “businesses” (music publishers), but for people (songwriters and composers). Therefore, our behavior and business practices, although with deep roots in our local civil societies and cultures, will have to converge more and more.

At a high level, I hope that the 150-plus PROs around the world that manage the rights of writers and composers of music, as well as their publishers, will soon achieve the following:

Raise the bar to rise to the challenges created by new worldwide and integrated players. To accomplish that, PROs have relied on their accumulated experience, and improved on their quality and transparency, thanks in part to the CISAC Professional Rules & Binding Resolutions.

  • Recognition of new music business models, with PROs’ communication and licensing policies seen as enabling digital services to flourish at levels that generate sufficient income to sustain the creative energy and process.
  • Finally, prioritizing the implementation of standards and tools. For example, all relations between PROs collecting more than $10 million per year, as well as between them and their digital licensees, must be automated and fully rely on an agreed-upon set of standards and technical tools (e.g., ISWC, ISRC, ISAN, IPI, ISNI, DDEX, IPI, CISNet, IDA, GRD…) to efficiently and accurately handle “nano distributions” and multi-territorial licensing.

SOCAN will continue to be a world leader and a passionate advocate for these changes.

“Behind-the-scenes” songwriters earn a living from royalties

Songwriting_ByGrantCochrane_1_CST Published 06/4/2013

By Marie-Josée Dupré

Copyright is complex and, to many people, misunderstood. One of the biggest misunderstandings is that people don’t recognize the difference between a performer and a songwriter. It’s naturally confusing, since often they’re the same person.

But when they’re not one-and-the-same person, we usually don’t know squat about the songwriters; only the names of the performers come to mind when we think about a song.

For example, if I mention the song “This Kiss,” you’ll think of Carly Rae Jepsen. But if I ask you who wrote the song with her, you probably won’t have a clue. You know who performs the song, but not who wrote it. The answer is Matthew Bair, Kelly Covell and Stefan Gordy: they co-wrote “This Kiss” with Carly Rae Jepsen, and they – along with more than 120,000 other music creators – are the reason why SOCAN exists.

Songwriters and composers who don’t perform their own music usually don’t have a publicly recognizable “face.” In those rare cases when they do, it’s not because of the work they’ve done to write the music, but because of the performances that people see and hear. But they still deserve (and are legally required) to be compensated for their work. And, make no mistake, it is difficult and highly specialized work.

This fair compensation happens through SOCAN licensing. When a songwriter’s music is publicly performed, the royalties that they deservedly earn for the public performance of their music is one of their two main sources of income.

A business uses their music to create more business and, for that, songwriters deserve a small portion of that additional revenue. A business always has a choice to turn off the music. But they choose not to because music makes them a more profitable business. A restaurant fairly compensates the farmer who grew the lettuce for the salad. It’s no different with music.

Since music is available everywhere, we sometimes think that we can do whatever we want with it. But it’s not the case. Through a collective like SOCAN, songwriters and composers license the use of their work according to different criteria. We can’t really argue about being paid for working, can we? Just like the business using their music, songwriters and composers are working hard to make a living and deserve fair compensation for their talent and hard work.

The reason why music creators license their works through SOCAN is for ease of process, not only for them, but for those who use the music.

Imagine if every businessperson had to contact each and every rights holder of every song they’d like to play in their place of business – it would be a nightmare to administer. But a SOCAN licence gives music users access to virtually the world’s entire repertoire of copyright-protected music. One licence gives a music user the right to play more than 3,000,000 songs, and businesses can then choose what music will improve their business results the most. That’s easy, effective, comprehensive access.

I hear music users say, “Why would I have to pay to listen to music I already own?” The answer is clear: Music makes your business better.

If you have two jobs, you expect to receive two paycheques. Why wouldn’t the writers and recording artists of music get the same treatment for the two different jobs that they’re doing? As recording artists, they may receive money for the sale of their music, but as songwriters, they also deserve to be paid for the business use of the songs that they worked hard to write. It’s only fair. And if the songwriter and the recording artist are two different people, both need to be fairly compensated for the use of their music.

SOCAN works with businesses that use music to improve their business, so that they do what’s right for music by compensating songwriters and composers for their extraordinary, specialized work.

Because no music means no atmosphere, no atmosphere means no fun, no fun means no customers, and no customers means no business.