July 2, 2013
The music and radio industries aren't the only ones significantly impacted by consolidation, intense competition, the digital revolution and royalty revenue. Publishers have had to deal with it all as well. While the bigger companies have gotten much bigger recently, a growing number of small publishers have emerged, branching into new or different areas of the business. Round Hill Music is one such entity; here President Neil Gillis offered insight into publishing's new world order.
After years at Warner Chappell and then Alfred Music Publishing, what made you decide to join Round Hill?
Alfred was a print company I worked with after I was at Warner Bros. They are wonderful people, but it was a temporary situation where I was trying to get some things moving. The Round Hill opportunity came out of blue; it was something that had better firepower behind it and a more advanced specific publishing direction, so making the jump was the right move. I started in late 2010. We are utilizing Alfred as our print publisher as they are one of the industry's best at that.
What does Round Hill do that differentiates it from the other publishing firms?
It starts with the people. This team is fantastic. From [Chairman] Josh Gruss and [Vice Chairman] Richard Rowe to myself and all the new employees -- there are 14 of us now - our history runs the gamut from people having run Sony operations and Warner Chappell to those who worked in ad agencies and law firms in the industry. There are good skill sets amongst everyone here, which enables us to produce a level of personal service with the ability to be creative.
What are the main challenges facing Round Hill in the current music business and publishing environment?
On the creative front, our greatest challenge is to create opportunities from the clutter of a massive number of people trying get media opportunities. More parties own songs and they want to get in the same environment as publishers, which makes it difficult for everyone to get through the growing clutter. However, what we do to best manage that situation is foster personal relationships with everyone, from advertising agencies and music supervisors to film studios, TV studios and production houses.
We also manage, through the work we do creatively, to directly reach the people putting films together or spots for commercials. They know we can share and enhance their vision. We realize that our music is only small part of their project, so when they ask what we have for them, or when they want us to pitch them, we can offer as many opportunities and different ideas as they want. It enriches the process.
Even when we don't get usage out of one of our pitches, they'll know that we saw what they wanted; we really tried to accommodate them and thought strongly about their project to make the ultimate end-product even better. They know that we do good yeoman's work that, from a layman's perspective, can be challenging to accomplish.
Administratively, we rely on our never-ending ability to go out and make sure our writers are getting paid on all usages of their music. That challenge is probably better now than it was 20 years ago in terms of having the technical help to retrieve royalties and licensing fees. Look, we realize that there always has been piracy ... and there will always be. But with all the new platforms and the economics we put around them, it has gotten better in terms of royalty flow.
In the short term, there's a bit of a stumbling block where we're constantly negotiating with the people who need content to create their business; ultimately we have to negotiate a fair-market value.
You talk about the clutter of all these parties having songs to offer films, TV, videogame producers and whatnot. When there's so much content out there, does that create an environment of price-cutting that would undermine fair-market value?
There are lots of people out there who will undercut pricing just to get exposure, but that has always been case in music media. But if you have a real good song that you believe in, that song will inevitably provide a great service for those who have creative media content. That situation will take on a fair-market negotiation.
Not everyone wants stuff for free or cheap music. Some of that, of course, will find placement, but the synch industry for music publishers is as strong as it has ever been --despite the clutter -- because people still want quality and are willing to negotiate with those who own that. Most of them aren't interested in going after the lower hanging fruit.
How have the royalty issues currently being debated in Congress impacted publishers?
Most of that is reserved for performers and record companies. I am on the board of National Music Publishers Association, which is comprised of a great group of publishing companies that, under the leadership of Pres./CEO David Israelite, has been championing music publishing rights, especially when something happens on Capitol Hill. He also holds a good view on being a successful lobbying group, in that when you navigate the waters of Congress, one general business practice to follow is you don't get involved in negotiations that you don't need to get into, such as performance royalties in master recordings.
On the other hand, one of the things that benefit us is that our interests are aligned with Hollywood in terms of film and TV producers, and especially software manufacturers. Much larger industry trade groups travel in the same lobbying processes we do; it helps to have a lot of people on our side.
Has YouTube become a reliable and adequate source of royalty revenue for publishers like Round Hill?
We get a cut from YouTube through the efforts of David Israelite and the NMPA made on behalf of the entire music publishing industry. We just started to receive royalties in the last year or two from that world. We eventually expect to get reasonable and significant performance streams, but as ASCAP and BMI noted, we're in the earliest days of getting paid from YouTube. But we are all moving in right direction.
Are we getting an adequate royalty from YouTube? Not right now, but it is adequate for an ever-evolving process. We see it as an entry point where, in time, we're going to be able to put economics around something ubiquitous.
How much effort does Round Hill put in selling the catalog it has and how much emphasis do you put on finding and developing new writers?
Our core business and the building blocks of our company are the catalogs and songs that create value over long periods of time. But as we've gone forward in the last six to 12 months, we've reached out to new writers and bands to become more of a full-service music company. Part of the Round Hill story is to look for incredible gems from the people -- and their music -- we like ... and then to help them. There are two examples of that:
One is a writer, Chris Caswell, who is an old friend we signed because we believe in him and his work ethic. He's not particularly a hit songwriter, per se, but he just did good work. Well, he got himself involved with the new Daft Punk record; he became part of their process and contributed two songs to the record - and he played keyboards on the entire album. This was someone who usually got contracts to be an arranger or a master orchestrator of strings. Even though he wasn't getting looked at by other entities, he was a writer we believed in - and he winds up on the biggest record of the year.
The second example is a newer band, American Authors -- just a great conglomeration of four guys who play great. They met up at Berkelee College of Music and they have a great radio and TV family sound. They're very synch-friendly -- and just in this week alone, we've received probably five or six TV or film spots requests ... and we just sent the CD out. We think they're going to be around for a long time.
While there's a new venture side of our business, it's still a small minority of what we do. It's significant enough for us to provide a flavor represented by all genres. We look to diversify the company in three ways - we make sure we have songs played all around the world; we have genre diversity, to provide the gift of music in every genre that can be monetized; and have income stream diversity, where our songs are making money from being getting download, from being played on YouTube, on radio, in film and in videogames.
Has the dramatic change in the music business, from consolidation in both radio and records to the tumultuous, piracy-laden transition from brick-and-mortar to digital sales, impacted the way you do business?
The simple answer is yes, and we've had to go with the flow of business. But it always comes back to an old Quincy quote: "A song is a song." You start with really good music, whether it's created by people in a garage or by someone who was just signed by a so-called label. Publishing is something that's been around much longer period than records, and the reason for its resilience is because every time some sort of music played in our life, it has created some sort of royalty for the music publisher and artist.
However, you need to recognize just how you should deal with the changes. If it's in the evaluation of a deal, you have to make sure the mechanical royalties are properly paid to the writer. If the writer or the artist you're working with doesn't have a label, you have to come up with ways to help them create their own records that can get interest and be used in the media world.
Again, it only starts when the music is good. If you like the music, you usually like the people creating it. It adds value to get this music out to a wide audience, so we need the ability to create new ways to make money with it. We could possibly sell a foreign-language version of the song, synch rights for a film, or a video game. Not everyone is looking for classic songs; not everyone look for new songs, either. They may need something that enhances a specific mood or dramatic moment in their project, which is why we want to have a diverse, multi-genre portfolio
Obviously, your goal is to get your songs exposed, but when you do, are you worried that the songs can get too exposed? Have you ever pulled certain popular songs off the market because you feel they're burned out?
If you think about it in terms of a license and, say, you get a huge spot with a song for a worldwide campaign that will expose it for a year. While being exposed in that way, usually other prospective suitors tend to beg off of it, because they don't want their product to be associated with the client currently using that song.
We're not recreating the wheel here. This is not rocket science. Back in the heyday of music publishing, the '50s/'60s Brill Building era, there were entrepreneurial music souls running publishing companies who signed people they thought were great writers and artists, which enabled them to create the music that would build them an empire. There are reasons why songs written 60 years ago are still making money - people still like listening to them.
But does what worked during that era still work when Round Hill is up against publishing giants like Warner Chappell, Universal and Sony?
It's true that those companies represent the conglomerate vision, but there is room for more companies. We are dealing in a time where publishing got corporative. When BMG came in and took out a large portion of the indie publishing landscape strategy in the last few years, it created a wide open space for new boutique publishers like us, who have more of a hands-on home approach and are still using today's technology that recognizes the world around us.
I believe it's actually a good thing for the Round Hills of the world to be in a marketplace where it's harder for large music companies to move the needle on a smaller deal. When their catalogs are so large, they go for the big deals and pay less attention to the smaller deals. That, in turn, creates additional deal flow for us, as writers and their songs are dropped from the majors or didn't get enough service; they're looking for smaller companies to provide better service for their songs.
What's more, the majors essentially acquired tons of companies, taken the cost out of them and put all of the songs into one smaller cost center. That has taken their ability to manage songs out of proportion. All of the institutional knowledge is gone. We're on the opposite spectrum of that; our goal is to find great songs and writers and organically move them with the highest levels of service. We make sure our staff understands every writer we have and are familiar with every one of the songs in their catalog.
I know that sounds like a basic, simple thing, but try doing that when you have hundreds of artists and millions of songs. There's just not enough people and time to do that at a major publisher. I use the analogy of "the student/teacher ratio," only it's publishing staffers vs. the number of writers and their songs. That makes a difference. This is a creative business, and our people take our writers and their catalogs seriously and passionately.
What's the key to future success for publishers such as Round Hill - staying small and focused on doing a few things really well, or growing bigger and adding new services and media platforms?
First and foremost, as a publisher, we're song people. People always need a song, but they may not need a specific recoding of it. We have jazz standard called "All Of Me," which has been recorded by hundreds of people. We may license the Frank Sinatra version, the Michael Buble version, or the Billie Holliday version.
On top of that, today's music publishers not only have to foster a creative environment for writers, where we not create publishing activity inside the company, but we need to become more of a "one-stop shop," where we can help writers get their songs recorded, or get them exposed on multiple digital media platforms and get iTunes distribution to market. We want to provide both business-to-business and business-to-consumer services. We feel we can do more for our writers when more control of their songs is in the hands of the publisher.
But all that is dependent on the quality of the material. It's got to start with the song.