Michael Walker: So, if you’re listening to this then you likely already know that being an independent musician is a lonely road. And maybe your friends and your family just don’t fully understand why you do what you do, or why you invest so much time, energy, and money towards achieving your music goals. And especially early on, it can be hard to find people who really understand what you’re trying to accomplish and how to make it happen. So, that’s where ModernMusician comes in!

My name’s Michael Walker and I can understand and relate to that feeling. I’ve been there myself, and so has our team of independent artists. The truth is that basically everything good in my life has been a result of music. It’s the reason I met my wife, it’s why I have my 3 kids, it’s how I met my best friends. And now with ModernMusician, we have seen so many talented artists who started out with a dream, with a passion, but without really a fanbase or a business. And if they take that and turn it into a sustainable full-time career and be able to impact hundreds, thousands or even millions of fans with your music. We’ve had thousands of messages from artists who told us we’ve helped change their lives forever. It just gets even more exciting and fulfilling when you’re surrounded by a community of other people who get it, and who have shared their success and their knowledge with each other openly. So, if you are feeling called into making your music a full-time career and to be able to reach more people with your music, then I want to invite you to join our community so that we can help support your growth and we can help lift you up as you pursue your musical dreams. You’ll be able to interact in a community with other high-level artists, coaches, and industry professionals, as well as be able to participate in our daily live podcast, meet these amazing guests, and get access to completely free training. If you’d like to join our family of artists who truly care about your success, then click on the link in the show notes and sign-up now. 

John Raso: This is why it's just so complicated. It's hard to get it all down. You almost just need to know that if someone hits play on my song, five different ways I get paid. Am I set up to collect all five? If I control all five? Collecting that is where Audiam comes in.

Michael Walker: It's easy to get lost in today's music industry with constantly changing technology and where anyone with a computer can release their own music. I'm going to share with you why this is the best time to be an independent musician and it's only getting better. If you have high-quality music, but you just don't know the best way to promote yourself so that you can reach the right people and generate a sustainable income with your music, we're going to show you the best strategies that we're using right now to reach millions of new listeners every month without spending 10 hours a day on social media. We're creating a revolution in today's music industry and this is your invitation to join me. I'm your host, Michael Walker.

All right! I'm excited to be here today with John Raso. John is the CEO of Audiam, which is a YouTube digital publishing royalties collection specialization company within SESAC music services. There's so much complexity, so many things that are happening underneath the hood to make sure that you as musicians are fairly compensated and you're paid for your music. And I think for a lot of us, I know myself included, it's a world that can be difficult to navigate around and it's really important to be able to have a service that allows us to collect on those royalties. John, thank-you for taking the time to come on here live and maybe help to demystify a little bit of the experience for us as musicians, just to know: what do we need to know to really be able to fully utilize this?

John Raso: Thank you for having me. Yeah, no, this is complicated. Honestly, this is why we exist because we've migrated from a musician that got to be a musician, to now a musician that needs to be a business person and a lawyer and be like 7 in their own label and their own music publisher and their own marketing person. So it's a lot. It's a lot. And I think people learn that right away. And I think it's great to learn this the sooner the better. Until there's money to fight over, it's better to have the money that someone could fight over rather than fighting over money that someone else has. I think it's incredibly important to learn this. And it's complicated. It's a muscle that if I don't use it, I lose it. It is very complicated. Now I'm just in the publishing piece, really.

Michael Walker: Cool. I'm definitely looking forward to connecting more and hearing more about how it works, but also to hear your thoughts on where things are at right now with the direction things are headed with AI and the music industry and music generation, and how does that affect, royalties and whatnot. But before we dive in, maybe you could quickly introduce yourself for those of us here who this is their first time connecting with you.

Maybe you could share a little bit about your story and how you connected with Audiam.

John Raso: Sure. I've been a huge music fan my entire life. Very quickly I learned that my best instrument was the telephone. And as a result, I became the person that put the infrastructure together for high school bands. I did the bookings. I put together tours, things that I just, I literally was like: Let's go on the road and put a band out for six weeks, not knowing where they're going to be maybe more than a week and a half, two weeks out, figure out what the local radio station was, the local record store, where the other bands were… So it was really just baptism by fire and I'm going on literally 40 years of doing this. So it started early and often, and certainly the world has changed and I've been lucky enough to be in the right place at the right time, not to be left behind with the digital revolution that really started in the mid-90’s. At the time I was with Time Warner/Atlantic Records was 1 entity and I had people there that literally were the first people to build things on the worldwide web. So moving from newsfeeds and putting in commands to do greenscreen stuff, to the graphical interface that we have on our phones now before those phones existed. So I was just very lucky enough to not miss the wave and ride it in and learn it as people did. Now, I certainly have been surpassed in the depths of knowledge of that, but I also had the previous world information to adopt to it. So I've been pretty lucky to be just in the right place at the right time.

And here I am! I'm not selling high end cars or real estate like some of the other people I knew in the music business in the 90’s, so that's been my background and I've moved from record labels to early dot-coms that we would burn and ship you CD’s before there was bandwidth to download a song. I then ended up at a consulting firm. We did a lot of work to build the infrastructure at ASCAP and then the Harry Fox agency, which has now evolved over the years through acquisitions by SESAC to them acquiring the company that I now run called Audiam, which specializes in, certainly, a source of royalties that didn't exist 15 years ago, which was user generated video content: karaoke Pelotons, the fitness… all of those things where music is used and impossible to keep track of. But through what we do and the individual giving us the data, we're able to track down and keep track of your royalties. So that's what I'm hoping to talk a little more about during our conversation.

Michael Walker: Cool. That's super interesting. I love the perspective that you bring from, like you said, over 40 years experience and you witnessing the before and after of this wave with the digitalization of the internet. And I'm curious to get your perspective on how you were able to best leverage that opportunity. One analogy that comes to mind is that we're like surfers and when there's these waves, we have this opportunity where if we swim along with it or we catch it in the right time, that can really boost your momentum. And it's tempting to try to catch a wave that passed 20 or 30 years ago, but you have to kind of sense what's the current wave right now. And even though it hasn't necessarily panned out yet, there's an opportunity to swim along with it. So for things like AI for musicians. I think it's an interesting wave that they could potentially catch. But I'm just curious to hear your perspective from your witnessing and being a part of that evolution: What's your advice for a musician right now that's interested in learning how to catch the wave?

John Raso: Well, to follow your analogy, it's just like that: You can't swim against the current.

The undertow will take you and you will be more successful by going with the flow rather than finding the flow. Arguably, that's exactly what happened with the digital revolution. The record labels fought the Napsters of the world and yet here we are. And they're making a huge fortune. The thing that they were able to ride through is the fact is they owned these catalogs, but they fought it being a legal option, but it's what the audience wanted, right? At the end of the day, music exists by the demand for it. There's no financial success in this business by delivering something that people don't want. Now, you might be able to hang around long enough where you've made music that is so ahead of its time that then you have a victory lap 20 years later because you were: Oh, how'd you know digital electronic music of the 70s was not a big money making scenario, but it is the basis of all music really now. But you have to feed yourself for the 40 years in between. [laughing] AI is a specific thing, but it's kind of the same thing over and over again. Going back a hundred plus years, the fact that: “broadcast radio was going to destroy music”, or making records: “Oh my God, what is a live performer going to do?” “Movies were going to be ruined by television”. So there's always going to be a “the sky is falling” moment, but in reality, you can't fight the demand. It's how people want to consume it. I'm one of them too, people are like: Oh, I remember when you used to have to… you'd listen to an album and you get up and turn it over and you couldn't like skip ahead without getting…. but ironically, that experience has come back in a big way because people do appreciate music that way. Because at the same time of year, like now, streaming has made short songs valuable, right? TikTok even more right? Its: I need a hook that works in a 30, 45 second piece, right? It's this push and pull. I think you just recognize… And then ironically, the laws of copyright don't change quick enough that they get eaten by all this. So frequently there is a push-pull of the creative market who is essentially violating the law, right? Even like a YouTube one: it was not legally correct when it went live. It was just like anybody using any copyright. Or sampling. And eventually there was a push and pull and there was an equilibrium on both sides of: how do we monetize it? And then in some cases it's good and bad. People still argue that. Oh, so-and-so says I can't use their sample, they're ruining my great creative. But your great creative is using their copyright. Shoot on the other foot.

It's the old “you can't drive my car, “I can't believe you won't let me drive your car! I need to get someplace and your car’s right here and I even have the keys to it” But it's my car. I get to decide that. I exited the big record labels at a good time in the late 90s.

So I was part of the right side of the argument that won in the long run rather than: Oh my gosh, I need to protect my bread and butter and make sure that you can't buy the single of that one song and you have to spend $16 on the CD and buy the 12 other crappy songs to get that one song you like! That kind of manipulation… People catch on. People aren't stupid. At the end of the day, that was the driver that created Napster: I want this one song I really like. And lots of examples there, but you see what I'm saying? So an AI is just another thing, right? There's violation of copyright. If an AI-Taylor-Swift comes out, right? You can't. That's not legal. There are legal ramifications of doing that. Now, there might be some artistic reasons to do it. And then you do have some artists that embrace it in the same way: okay, I'm not going to make money by shutting someone down for making an AI version of me out there, but it will make me much more famous and sell the things I do make money on. It's always a moving target of where your financial piece is. You go on the road and it's: Oh, I need to sell tickets. I make money selling tickets, but then you find out, you know what? I make a hell of a lot more money selling t-shirts and physical product at the shows. So what if my shows were free and I would get 500 people and 150 of them would buy shirts. Whereas if I charged $5, 20 people would buy shirts. So it becomes just like any business of: where is it of value to me? What do you give away? What's the tease to make the certain thing? Especially now that we're all creators have so much control or really there's no one else who's investing without taking a big enough cut. That's the way you have to think of your place in the world. What is financially valuable and does it impede on my creative process that I make the product that I want to make and I reach the people that I want to reach. You hear about the superfans. If you have whatever a couple thousand people that will pay hundreds of dollars a year that you make a living. It's not about: Oh, I need to get a penny from a billion people. That's a harder market to reach, and a rarer thing, in your genre, your market. So you see, there's so many ways to slice and dice it. And I think if you keep that open mind, that's the secret of not getting shut out in an “all of your eggs in one basket” kind of scenario. I'm all in on telephone booths and then: what's a telephone booth? [both laughing] 

Michael Walker: Yeah, that business isn't really booming right now, is it? Telephone booth. Awesome. Yeah. And there's so much good stuff there. So you talked about the idea of demand: Looking at where's the market demand. And it seems like that is such a core principle of business in general. And us as musicians, if we want to have a successful business, we need to figure out where can we provide the most value to our fans and not fighting the demand, not fighting the tidal wave, but swimming along with the demands that we can get the momentum from catching the wave. Awesome. It's interesting. What that reminds me of is right now it seems like a lot of our artists where they're generating the bulk of the revenue is from higher-end experiences that are things like private concerts or house concerts or custom songs, or these things that are at the high end of the market and people are willing to pay for them, versus, streaming where you get paid a fraction of a penny per stream. And like you said, you need millions or a lot of streams in order to make it pay. So maybe circling back around here to Audiam and royalties and the core basics for an artist who is here, who's an independent artist, who is in the camp that you described, like they have 10 different hats that they're wearing and they're just trying to figure out like what's the minimum that I can know in order to not be losing out on all of the potential revenue that could be generating how do you recommend they start out?

John Raso: So it's pretty straightforward. There's the established means of generating royalties and whil some of it's not very old is the traditional method. I've made a sound recording. I've written a song in which that sound recording is performed on, whether or not you're the performer or not, but let's assume you are completely self contained.

You've recorded everything yourself. You own your sound recording. You don't have a label. You haven't signed a publishing deal with anybody, so you're self published. Think about all the different pieces you need to put together. Your music does not make it to any of these streaming services unless you've engaged a sound recording distributor, right? Whether it's a DistroKid or a TuneCore type of scenario. So you have to get it there, right? That's that piece. Then that one's pretty straightforward because your sound recordings are simple: you own it all and it comes right back to you. Because of the way the law works and historically, the music publishing piece of it needs to flow through multiple different places. So this is the nature of the beast of the history of it: I think it was chopped up because everyone wanted a piece. And if I think if things started today, it wouldn't be as slice and diced as it is. But that is the reality of the law and also the infrastructure that is looking to protect itself too, as well as, there's existing businesses around it. First of all, let's say your song is on Spotify, Apple, Amazon, audio only streaming, right? You know where their sound recordings are coming from. That share is coming back through the digital distributor that you hired to get it there. Now the publishing piece, there are multiple pieces of it. There is what's called the mechanical [license], which literally goes back to the days of when you make a piano roll or a 78 shellac or a cassette tape, or even, not too long ago, even though they're getting old now is a download. You fixed that recording in some means of delivery and the US government has set up what is called a statutory rate and it's a compulsory license, meaning since you wrote it, you get to record it, you get to decide who records it first, and you've done it yourself, and you put it in the marketplace. Once you put it in the marketplace, anyone can cover your song without your permission, but they have to pay this statutory rate. In this case, the streaming service has to pay that statutory rate for every single composition that is embodied in one of the sound recordings out there. And this is music. Sound effects don't have the same thing nor nature sounds or whatever. So this is music. On a streaming service in the United States, there is something that is called the mechanical licensing collective, which has only been in existence for about five years now. It solved the problem of: there's all these different streaming services and I need to make an arrangement to get my publishing known to each one of these services.

So it's been aggregated into this single thing called the mechanical licensing collective, and you need to make sure your compositions are registered there and you tell them that: I know this person performed the song. It might be yourself and then probably through your digital distributor, you're aware that there iswhat's called an ISRC code, which is Issued by that company, usually, that is a unique identifier for your sound recording. So you want to deliver that too to these places. The mechanical licensing collective is told by Spotify: Hey, this song has been played 15,000 times, they know: Oh, this sound recording of X, Y, Z is actually of this composition X, Y, Z and it's since song titles are not are not unique that it's this particular composition with the title sunshine or whatever that needs to be reported to and then the mechanical licensing collective does a rate calculation based on the royalties. That's a complexity you could really go down, but just know that every single month there is a different rate which is a percentage of all the revenue they've collected and that money is then accounted to the MLC's members, right? So as a publisher you could sign up directly with the MLC or you could use a service like Audium who are able to filter. You come to Audium and Audium will make sure your music is in all of the different services. I'm using the streaming services right now, which is the MLC, but there's also YouTube. YouTube doesn't have the same level of access. Anybody could join the MLC, whereas YouTube, you need a certain tier to do it and Audiam has achieved that tier. There's also direct deals with companies like Peloton. So there's all these places. So Audiam just includes the MLC, but the MLC, you could actually do yourself. It's always worth checking out: themlc.com. And so that's a pretty straightforward one, right? At this point. It used to be far more complicated. You needed to know 12 different places. But so that is your audio only streaming in the United States. And like I said, that's the easy one.

Michael Walker: There's like two components to that though? So there was like the Distrokid or TuneCore.

John Raso: So that's the sound recording. I'm saying that the MLC has nothing to do with the sound recording. Let's put it this way: Your music won't even be on any of those services, unless you've engaged, there's hundreds at this point of digital services that with a credit card and a login will make your information right? All the major labels have it. If you have a record deal, there's companies there. So part of the SESAC music group we have a company called audiosalad which does that. They've been a very big indie organization and they're slowly opening the door to more walk-up stuff. But right now they have companies like Secretly Canadian…

Michael Walker: [chuckling] That’s a nice name for a record label. Wouldn’t want anyone to know!

John Raso: Yeah. I believe that was a label that started out of a college dorm in Indianapolis. Or in Indiana somewhere. Bloomingfield? I won't go down that road anyway.

Michael Walker: They want you to think at least.

John Raso: Yes, exactly. But secretly. That's the sound recording piece. Generally, we're able to provide that if you come to Audiam and you're interested in distribution within the SECSAC music services, like I said we have digital distribution services as well. We have a full service of things that a creator would need including digital distribution. We even have a service that will pay-to-play. If you have a stable of songwriters or you have a record label with a stable of artists and you need the songwriters accounted to, or the individual artists accounted to for the royalties. We know it's not a “one size fits all”, whereas Audiam is much more about: I know what to do with my records but this publishing thing is a little complicated. I may even have joined the MLC, but I know that someone is using my music in a Peloton spin class. There's companies like LyricFind that get lyrics around through the digital services and monetize those. TikTok itself is another one, right? There's all these different places that are not: Oh, I'm just going to go and collect my publishing royalties. And that's where Audiam becomes a one-stop shop where we have all the knowledge, we have all the access, we have the licenses and we have the relationships in place so you could come and sign up with us and, for a percentage of your royalties, and it's pretty small… smaller than probably any publishing deal you'd do.

And you retain your ownership, you're able to not have to worry about that. There is someone out there, as soon as I write a song, you go in and you tell us you wrote this song, we are the ones that go forward and make sure everybody where that song could be used knows it's yours and they need to account to Audiam and then Audiam accounts to you every single month. So once again, it's your back office. It's instead of hiring a publishing person in-house for a small percentage of that, you have the dozen experts at Audiam doing it for you for a percentage of what you earn, right? So if you earn a ton of money, we get a piece of your ton of money. If you don't earn a lot of money, you don't have to worry about it but you're still getting 80-85% of your royalties. It's a good transition. And then if someone comes along and you've decided that you want to sign you: public universal music publishing wants to give you a big check and you want to sign up with them, Audiam doesn't impede that in any way.

You still own it and you've been accounted to. But, that's a whole other thing is: do you want to sell anything? Do you want to sell your kids or do you want your kids to get a college education first? And then boy, my kid's going to be much more valuable after he's got the college education versus the drooling applesauce that he is as a one-year old. [both laughing] That's a horrible analogy, but you know what I'm saying? They are your songs so they're very meaningful.

Michael Walker: [sarcastically] Is there a reason that people have kids and it's not that they're looking to sell them later on in life?

John Raso: It's a crossed analogy, right? People always talk about: what's your favorite song you wrote? They're like my kids! This is an extension of that.

Michael Walker: It makes sense. If you have an appreciating asset then you don't want to put yourself in a corner where if you expect that you're going to grow, which hopefully you do, if you're looking to grow your career then those assets are going to increase in value. So that's great that you have that flexibility.

John Raso: And to this day, you hear about like people who like… I heard… Who was it? It was either like Daryl Hall or somebody saying how they regret selling any part of their cut. It looked great at the time: wow I sold it five years ago for 25 million dollars and now I could have gotten 75 million dollars for it. And what did I do? Nothing! I just could have held onto it and it's not like I wasn't making money. It's just when you do it. Some people, it's their estate planning. Bob Dylan's like: it's much easier for me to divide up half a billion dollars against my heirs than it is to go: Hey, here, you manage “Like a Rolling Stone”. It's a very different business. Is it going to be Dylan and Sons? Or is it going to be: here's a chunk of change, kid. You go do what you do. A lot of different pieces there. So going back to the Audiam piece. Part of it is we like to see ourselves as we're like the music publishing mechanics, right? You don't necessarily know how to fix the car when you bring it to the mechanic. You want to trust them. You want to believe that you're getting a fair price and that when the work is done. that you're getting what you want. But at the same time, if I might think I know a lot about fixing a carburetor in a car but not enough to do it myself, or I know enough to keep you honest. I just don't have the time. So there's varying degrees of knowledge of our clients too. We work for thousands of publishers. We have a million copyrights we represent from legends like the Chuck Berry catalog down to DJ Muggs, the DJ with House of Pain, and Cypress Hill, so who is sampled to this day and is putting out new music, to a kid who just wrote his first song and it's up on YouTube and he wants to make sure he's collecting his money or his viral TikTok pieces is getting it’s fair due.

Now, I can't help you with how much money they actually make. At the end of the day, we certainly make sure that if anybody else is claiming your song that we get them off the song; that if no one's claiming your song that you are claiming your song. So there's all these different things that certainly take a lot of time and effort resolving conflicts. And because we have relationships with all these different publishers in the marketplace, we're able to get those resolved pretty quickly, or at least get them locked up so it's not flowing until it gets resolved. I don't know how much more detail you want me to go into here, but there's so many things that just… like tomorrow there might be a new service and one of the things they will want to do is: we want the songs that are in the audiam catalog and they will come to us and we will make sure those songs are registered in the database they're using. And when a new service launches in two months, when that starts earning money, it comes through. We do it all the time and they never make any money because they're great ideas or bad ideas and they just never find a market. Those are the things that become TikTok; that become Peloton; that become all these guitar tablature services, like Fender has one; there's a company called Ultimate Guitar and all of those things. Anytime someone pulls up your song to learn how to play it and look at the tablature, that generates revenue and it doesn't go anywhere if you're not there making the claims. And frankly, it's just impossible to do if you're also making the music. And so that's where I think we come in.

Michael Walker: Amazing. Yeah. So grateful for services like Audiam. Like I'm imagining for us musicians, if we had to manually go out and handle all of these ourselves, there just would not be enough time in the day. Yeah, it sounds like the best way to dive in would be to go to Audiam.com and explore.

John Raso: Yeah, there's an application to fill out. And so you go through the form there that'll essentially let you know whether or not it's doing business with us. You want to have enough traction that it's worth doing or whatever. At some point you need to have a little going on so there's something to capture. But at the same time, some of the questions we ask will probably be very helpful. And I always recommend people a book by Donald Passman that you must mention to people too called “Everything About the Music Business”. It's really great…. you could skim the top or you could go deep on it. Every musician should at least have a basic knowledge of all the different legalities and where your money comes from and what questions to ask. When you're looking to build your team to know if a manager is knowledgeable enough to help you, not just because his dad knows somebody. [laughs] Sometimes that’s the best you can do, but at the same time you want to make sure that they'll actually be helpful rather than just take your money when you earn it.

Michael Walker: Absolutely. So in terms of who might be the best fit for the roster for Audiam a service, what are some of the criteria that if someone's listening to us right now and they're wondering: am I eligible or would I potentially be good for it? What do you guys look for specifically?

John Raso: Really the only criteria is that your music is up on the service and there's some demand for it, like you have a couple thousand streams, as you may be aware there's been recent changes in a sound recording turn… Sound recording royalties now has to get at least a thousand streams in a month, otherwise that money sits there. Sometimes you can think like 1,000 is a lot, but at the end of the day, to make like $5, you need to even make a dime it's something like 5,000 plays. They're not going to pay you until $5 anyway. So you're really not missing out on anything then. So that's a tier. It's like people go: I have 10,000 views on YouTube. Now, YouTube has one of the lowest rates. At this point, YouTube won't even let you monetize your own channel if you don't have 10,000 subscribers. Once again, that seems like a lot, but remember this is global and billions of people potentially. So from a percentage point of view, it's really pretty low. You'll know if you have traction; if something is going on.

So that's the sort of the entry level piece. But then we go all on up to legendary big titles. The only thing that would stop you is that you've assigned these rights or sold these rights to somebody else, and most importantly, say you have a co-writer, that means you only control half the song. You have complete control over your half of the composition but at the end of the day, you can only sign up half your song. Which is fine, but a lot of people don't realize. Or if you're doing a cover, that means you don't have the publishing. That's another thing. If you do mostly arrangements of public domain songs like old Christmas songs or just classical pieces that are in the public domain, you are allowed to copyright your specific arrangement but you can't go and say: I wrote Jingle Bells and I collect 100%. Now, you're allowed to collect Jingle Bells as arranged by me, and it's this particular recording in which I've done it in the round, and I've adjusted, or whatever. In that case, you would actually do a derivative work that could be original too. So there's just those kinds of things. I'm trying not to give too many examples because they're uncommon. You can't claim: I wrote a song that uses a sample if you haven't cleared the sample. You can't go: I wrote this great song that's based on a Beatles song. Sorry you might be able to get away with distributing the song if you assign all of the royalties to say that it's your version, but Sony who controls the Beatles catalog could say: no, that's a derivative of work. You don't have permission, take it down. And in fact, we will sue you. There was a famous example from 20 years ago now with Danger Mouse and JayZ, where they took the sound recordings of the white album and put the JayZ black album on top of it and put it out as as the gray album. It's actually very cool, but it's never been legally cleared and released. So it's just one of those things that floats around in the black market.

Michael Walker: Here's maybe an interesting one for you. Obviously right now we're in an interesting place as it relates to NFTs and blockchain collectibles. And for good reason, there's been a market crash with NFTs. There were gif’s of hamsters that were selling for millions of dollars. [laughing] I'm still of the mind that there's an opportunity for musicians for some sort of marketplace that creates limited editions of the music that they could sell to fans. In fact, that's one of the platforms that we're working on right now and building for artists to offer direct to their fans to have ownership of these collectibles. I'd be curious: in terms of royalties and legalities, what would be the proper way for an artist if they, for example, did a cover song of a different song and they created what we call relics or a limited edition version of it, and they sold the relic. And let's just imagine that it came with a video of them performing the song as well and there's 10 of them available, but they sold 10 of them. From a copyright and royalties point of view, what are your thoughts on that?

John Raso: I certainly have a lot of experience here but I'm not a lawyer. Please consult your expert on this. You've actually dropped quite a few rights that would be needed, right? If it's an original work, you control it all and you get to decide, right? So there's no issue. There is essentially no exchange of royalties there, because if you charged a $100 for it, that entire $100 comes to you after you pay whatever costs to make it, whatever the ingredients in your cake, like you have to pay for the eggs still, but you now own the cake. So there is no royalty flow because there's 10 of them, you made $1,000 because you sold 10 of them, all that money goes in your pocket and out of that money, you had to recover what it cost you to create it. In the case of a cover song, you've introduced what things you can use and what things you can't use without permission. So you've made an audio recording that falls under what the original thing I mentioned. There is a compulsory rate in the United States and statutory rate. That is: you're making an audio-only recording; I'm assuming it's a digital package that will be delivered. We're talking NFT, right? The thing you're going to love that rate is 9.1 cents. Now there's a little incremental growth on those so it might be 10 cents at this point, but you would look with the year current rate is and you would pay 10 cents. You're good. That's it. You just have to report: I sold 10 of these at 10 cents each… Here's your dollar. You have to get a license for it, which is relatively easy to do. You could probably even go to the Harry Fox Agency: I'm making a digital, which is essentially a download of this, and I'm making 10 of them. Now, that's it. Now, once you introduce the video component of it, now there is no such thing as a compulsory license. You have to get permission and you have to negotiate what the rate is. So now you're doing, let's keep the Bob Dylan thing going owned by Universal now. He had sold the catalog there. So you need to go hopefully get someone on the phone from Universal, then get a negotiation with them going: I want to do this thing. And you have to explain what it is. Think about it as: I've made this movie and I want to put this song in that scene. It's only the exact same thing. It's: what kind of movie is it? Is there a political message? I don't want anything associated with alcohol or cigarettes. So is anybody smoking in the scene? They own it. They're the creatives in that case. And you want to use their piece of creative in the same way you would want to defend your own piece of creation: my politics are left and you're going to put this in a right-wing thing. I don't want that. I don't want to. I want to say no. “Oh, you're supporting my candidate? Oh, absolutely. You can use it for free!” You have complete freedom on that one. So that becomes the problem there.

Michael Walker: It's interesting that case exists for videos, but not for creating the music.

I guess you have more creative freedom with sync with a video if it is a movie or there's a narrative behind it, that maybe the audio, but I can see someone, I don't know, like creating an audio-only version where they're sneaking in their political agenda within the audio only.

John Raso: That opens another can of worms now! Even if you're doing a cover, if a cover would be  true to the original. That doesn't mean it has to be note for note or whatever. I'm trying to think of some of the examples where people say: you've changed that enough, it's a problem. There was a band called the Stray Cats that covered an old 50s song by the artist Eddie Cochran, and they swear in it. And there was no swear in the original Eddie Cochran version and the estate of Eddie Cochran was like: look, we are very religious. We do not like swearing. We're going to sue you. You didn't get permission to do a derivative work. You've changed it significantly enough. You could imagine even just one word it being a swear would cross that line that you can't do it. You're getting into the area of almost like sampling where: I'm going to use the riff from this new song as the bait for you to hear my rap or whatever else you want to put in there. You can't do that. You need permission. You've changed enough. So you can't integrate it into that message, right? Because you've changed it enough. 

Michael Walker: So that makes sense. You can’t just warp things.

John Raso: And I can say, this gets really complicated with lawyers too. But parodies are perfectly fine? A parody is very specific. And there's also educational uses. There's some argument: well if I'm playing the song in my video to teach someone how to play it, is that educational? And then sometimes people make up their own rules. If I use less than a 30-second clip in my podcast, it's perfectly fine. This is where the law and creative and people try to get around it. And for example there's those “create your own radio station” where I say: I like “Hey Jude” by the Beatles and then they create a whole radio station around it. It's different than a Spotify playlist where I could select all the songs that are going to be on my radio station in a row, versus, I'm allowed to skip three times in an hour on my radio station. There is no law that says “three times in an hour” is within range, but it's just become accepted practice.

Because once you are able to change every single song, then there's a mechanical in there and you have to pay the 9 cents per song kind of thing, right? Versus: you only have to play the performance piece because we even get theirs, right? There's a public performance piece. And that's where it's played in the gym or even on a streaming service or on a radio station.

That's where you sign up with your ASCAP, BMI, SESAC to collect the performance piece of it. Which Audiam doesn't do. There's a lot of protection of the songwriter there where the songwriter could go and collect their piece and they split the song in half where there's a publishing chair and a songwriter piece. And that's where the performing rights organizations work. This is why it's just so complicated. It's hard to get it all down. You almost just need to know that if someone hits play on my song, five different ways I get paid. Am I set up to collect all five? If I control all five? And that's where that collecting is where Audiam comes in.

Michael Walker: Fantastic. Awesome. And just to to put a wrap on the music relic discussion. If I understand what you're saying correctly that someone was going to do a cover song, it's a little bit easier if there was just audio only because they could just pay the fee, the 9 cents per song mechanical license.

John Raso: It’s called a mechanical license, you get a fee. Yeah. That was established in the 1900’s. I want to say like 1915 or something like that. So that was the introduction of a piano roll, like these old piano players. And it was like: how do I get a piece of that? So that has been relevant up until streaming happened. Nothing's changed about the law or how you got paid until streaming happened. And that complicated things.

Michael Walker: But then when you introduce the video aspect into it, then it becomes a much larger discussion; more complicated around the legalities of it. I know that YouTube has some interesting arrangements where you can do cover songs on YouTube because they’ve work it out?

John Raso: Yes. So similar to rights. So at the end of the day it's like the mass access to technology, right? When someone started putting music in a movie in the late 1920s, it was like: Oh, I wrote the song or you want to use a hit song that I wrote. And it wasn't like I was hired to write the music and the song. That's when it's like: okay, well come to me and we negotiate it. And for decades and decades the amount of volume of things that came out: TV commercials and movies was controlled enough that you actually reasonably could negotiate it. It was in the tens of thousands, right? Let's call it that, right? Over the years, how many movies came out a year? And then. It started ramping up obviously with music videos, but the music videos came out of the record companies that already had a license and a relationship with the song. So it was just like, and we didn't want to do a video. Great. Okay. The fee for that is this, or it's included as promotional because we'll sell more records. So that went along. But then YouTube shows up and all of us are now, something like 50 days of content that go up every hour on YouTube. And so much of that contains music. There was a lawsuit that came out of that where it was like: you have to negotiate. And YouTube successfully said YouTube doesn't have to… The kid who uploaded that song in their skateboard video has to negotiate with you. And now it goes from: okay YouTube, you pay us and we negotiate, or it becomes: wow, now it's 50 days of music every hour we have to negotiate with, or 50 hours of video, right? So it became impossible. YouTube won the lawsuit saying it wasn't their responsibility, it was their platform. They weren't putting up any copyrighted material, they just had a place where copyrighted material can be put up and every single person that upload it, if when you've gotta read the fine print, you check the box, you said: you have permission, so you've lied to YouTube. It's not YouTube's fault. You've told Google, you're allowed to do it. And so you violated it and then it became as some of you might be old enough to remember the whole, Napster user was being sued. And Metallica famously went after these people and they looked bad. They were perfectly right, but it looks bad, right? You're suing your fans, right? And so it's: I like your song. I'm going to sue you because you put it up on video. So it became sort of a compromise. Google wanted music on their platform. It was successful to them. They make money the more that goes up, but they want to make a good user experience. So there's a general agreement out there: All of the music publishers sign into that you're allowed to put the music up there as a result, they get a piece of the advertising revenue that's included in the pre-roll or the ads that Google sells and you get paid for that. And so the more your videos watched, there's more impressions, the more ad revenue it generates for Google, the more money you collect. And you still retain the right going: Hey, you've put your music up in a political ad. I don't want to! I'm going to say: take it down. I have the right to take it down. Now that's the thing: is you could send a notice to YouTube, whereas you have someone like Audiam working for you, you could just let us know and we can block even before the user puts something up, we could make sure it's not available. You always have the right to do a takedown and we could actually block things directly, whereas you would be more reliant on a takedown notice for YouTube for them to take it which frequently becomes whack-a-mole because then someone just puts it in a different video and puts it back up again. That case has actually opened the marketplace. It used to be: you have a new service. You can't have my music. End of story. You have to negotiate with it. It's moved from a: I'm going to do it. It's popular. Sue me. I'll beg forgiveness. I'll write you a check and then we're good going forward. Those days of the Wild West that YouTube was part of is over. Now it's like: you can't launch your service until you have a licensing deal in place. And now there is a marketplace where you go to Audiam and you go: we're looking to put this up. Great. You could use our catalog. We want a percentage of revenue. It's common. It's 30% or 50% or whatever. We participate. And all of our songs are fine to be on those services. And the same is true with all the majors. So that's another reason why you want to be part of that business development of the growing market is your catalog is already considered part of the Audiam negotiation to make music available on these services. We've become a business development team too. And sometimes we say no, cause we just say: you know what, this is a crappy deal. If universal music comes back and says “yes”, then maybe we'll have a conversation. Cause certainly it looks bad to us. And if they're able to beat you up for a better rate, I want the same rate. Then we'll think about it. Or you paid them in advance? Percentage wise, we want an advance of money that we'll pay out to our clients too. So it makes you part of a bigger group. You get the clout. And once again, you're not keeping up the ownership. It's a good fake-it-till-you-make-it place. And even if you make it, you keep more in your pocket too.

John Raso: John, man, thank-you for coming back on the podcast and sharing some of your genius zone and expertise aroun this area that for a lot of us, I think is complicated because it is a complicated thing, but it definitely feels good to know that there's people like yourself and companies like Audiam that are helping to demystify it and allow us as artists to focus on being creative and making the music. Thank you for taking the time to be here and. For those of us who are interested in checking out Audiam, or potentially signing up if we think that we're eligible for it, what's the best place to go to dive deeper?

John Raso: If you go to Audiam.com, there is a “get started” button, and you'll go through the questionnaire. Like I said, we also handle sound recordings, deliver them to YouTube as well. And while we haven't really rolled it out, we're moving all of the various pieces of what is called the SESAC music services. We're going to roll that out so it'll be much more of a service offering. You'll see that happening over the course of the year. And so if you have additional needs, you could always go to SESACmusicgroup.com and you could see a wide range of stuff. We have things that specialize in religious music, library music, there's a lot of things if you do various things. Audiam’s much more in the creator hub community that can help probably a lot of the people that are participating in the Modern Musicians studio.

Michael Walker: Awesome. Fantastic. Yeah. And I'm personally interested in connecting more related to having a catalog of musicians and services that you can plug into the resource that you've built with Audiam. So I’m looking forward to talking more about that. And yeah, on behalf of all of us, again, thank you so much for coming on the podcast and sharing some of the insights and lessons that you've learned over the past 40 plus years.

Michael Walker: Well thank-you so much. I’ll be at SXSW next week since we actually have some notice, I will be there all next week. Come by the SESAC event on Tuesday afternoon, March 12th at the sidebar in Austin, Texas. So maybe I'll get to meet some of you. That'd be great. 

Michael Walker: Awesome. All right let's do a virtual round of applause. Do a: yeeeaaaah.

Hey, it’s Michael here. I hope that you got a ton of value out of this episode. Make sure to check out the show notes to learn more about our guest today, and if you want to support the podcast then there’s a few ways to help us grow. First if you hit ‘subscribe’ then that’s make sure you don’t miss a new episode. Secondly if you share it with your friends, on social media, tag us - that really helps us out. And third, best of all, if you leave us an honest review it’s going to help us reach more musicians like you take their music to the next level. The time to be a Modern Musician is now, and I look forward to seeing you on our next episode.