Friday, August 01, 2014

Music Licensing is Cannibalizing Your Business

Monster # 2 by Julia P.
If you're the Executive Producer or Creative Director of an established music production company whose core capability has long been the development of original music compositions for advertising and entertainment, how do you compete in an environment when agencies and brands increasingly elect to license stock music, not simply because it's cost effective, but because buyers perceive that such tracks work just as well as a bespoke commission (at fulfilling their client's marketing objective)?

In light of this exponential increase in licensing, more and more music production companies that once specialized in original music scoring are re-inventing themselves as one-stop sonic solution providers, and as such, now offer their own mid tier to bargain basement priced libraries.

For some organizations, this simply means classifying and bundling unsold demos that they once relegated to their archives, or recycled for incoming projects that required or accommodated the same genre and timing. For other companies, the result is an open source library that includes external talents as well as their own. And for still others, this means devoting the time, talent and energy to composing entirely new libraries from scratch based on the formulaic models they anticipate will work for a given class of cut.

Work on enough luxury automotive spots, for instance, and the majority can be seen to bear some editorial similarities. Work on enough detergent spots, and one can pretty much predict exactly where a hole will be required for a product demo in any and all subsequent like spots. The assumption, valid or not, of course, is that average commercial timings will generally remain stable in a world when all other media is experiencing tremendous flux.

Either way, there is certainly a valid argument to launching  a limited license option if only as a means to neutralize competitive offerings. For those who intent to reach parity with or overtake the market leaders, such a strategy requires not only a conviction to succeed, but an honest assessment of risk, and the reserves to carry out a prolonged and costly campaign. In all likelihood, once they achieve their goal, what ever original members remain with the company will find themselves, for better or worse, employed by a very different organization than the one they initially joined.

Other audio providers, however, proceed with greater reluctance, and perhaps great resistance, because for them, scoring sound to picture, collaborating with clients,  scheduling downbeats under looming deadlines, recording live musicians and mixing right up to the media buy is what makes this profession so fun. And why would you do anything if it wasn't fun? Not to mention that they also firmly believe that the process of tailoring custom sonics to moving image produces better results, even if they can't quite quantify exactly why.

For this class of creative venture then, it will be interesting to see if, on the whole, whether the provision of an in house music library will result in profit and growth, or if it will result in dwindling revenue, auction sales and eventual burn out?

For incumbent bespoke music organizations that already possess a large market share, success will be measured depending on whether clients who opt for a bargain priced, off the shelf track, only do so intermittently, and whether they will, hopefully, continue to and more frequently commission projects that resemble or approach normative budgets.

Nevertheless, in the interim, for those organizations that pursue such a bilateral strategy, one can imagine the awkward position that these contemporary music professionals now find themselves in when pitching to a prospective client.

Here's how I imagine it might sound:

"I can score an original composition  that will sync to picture, save the spot, support the story, compliment the cut, propel the action, emphasize the emotional content, enhance the product, clarify the unique selling proposition, bedazzle viewers, win prestigious European awards, move markets, earn your Fortune 500 client millions in fans and sales, and communicate the brand’s core message across borders and languages, and throughout the world, all via the power of music."

"Great! How much will it cost?"

"It'll only cost you $25,000 to $30,000, –a phenomenal deal since it represents relatively the same unchanged rate from the mid 1980's, despite subsequent inflation;  plus you'll need to pay residuals to a group of musicians and singers for the life of the spot. –But, trust me, it's well worth it, and I’ll even sign over all the intellectual property rights to your client, so that they wholly own the work, for use on any other property that they wish, in perpetuity.”

“Gee, we already used up most of the budget on editorial overruns. Do you have anything cheaper?”

"Oh sure, lots of stuff; I'm not just a composer, I'm a sonic solutions provider. As a matter of fact, instead of scoring something to picture, I'll be happy to license another track to you that I wrote using the same super amazing talent that I would use for an original commission. I'll even modify the arrangement and sweeten the mix, if you want, in order to make it fit the final cut better. It will be just as effective as a bespoke score, and it's yours for a cycle for only $500 flat."

"What about musician royalties?"

"There are none: it's all samples and synths, and I'll be happy to forgo my own legally entitled  portion of performance portion residuals just to have your business.”

So, will this strategy work for you? Maybe, maybe no. There is no one size fits all strategy,  but regardless of whatever tact you employ, it's wise to ask the following:

When assessing a project, do you evaluate whether any given near term investment in time, money and resources is truly worthwhile for achieving your long range business goals, or do you simply convince yourself that by being a resource, you and your organization’s objectives will eventually be met?

Is there evidence that once you establish a baseline price, and then thereafter devalue your art, craft and expertise, that you will be able to flip perception later? It's interesting and informative to note that the American Association of Advertising Agencies (AAAA) tells its own members (your clients) that: “If you accept an agency fee that is much lower than it should be just "to get the account", your chances of increasing it to where it should be in subsequent years are slim to none.” (Guidelines for the Pursuit of New Business)

Stock or library music is functionally similar to bespoke music, but can a case be made that it is technically different from a custom composition in it's ability to address communication objectives? Can you create a business case that establishes both legitimate value and a compelling reason for electing a costlier original music commission over a more economically priced licensed option?

Consider this: Why don't Ferrari dealerships also sell Ford Fiestas?