Recording - February 2016 - 62

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Can you explain what it is just so they know?
Not to get too down in the weeds for everybody,
but essentially what the concern is, in particular
among the major publishers, is that there's an idea
that one publisher and/or songwriter can find all
the co-writers and co-publishers that may be participating in a particular composition when they issue
a license. So if Brian issued a license for $5, and I
normally would have issued that license for $500,
then he can actually do that, and there's concern in
particular that the digital companies-the DSP, the
digital service providers that we all know-will
force, or could lever that to undercut the rest of the
industry.
On the other hand, what's interesting about that is
then you are not necessarily following convention,
meaning the licensing leverage is back on some level.
One guy can't dictate a price and hold up the whole
process. So you've got to weigh it.
On the other hand, it's exactly what you said
[Michael], access is more available than ever, in my
opinion, and that's including the advertising world
as well. I know we've talked about TV a little bit
today, but the advertising world in particular, especially with Elias Arts, I see a lot of that, and you're
seeing it. I mean, live fees have come down; you're
seeing more entrants, more people playing, being
able to go direct to get involved. So while I think it's
a great time to be an independent songwriter/composer/artist and/or producer, there are macro
challenges that are going on that could come into
play. There are a lot of things happening, so am I
bullish on where things are and where they're
going? I am. I think that you're going to see a lot of
technical evolutions that happen in different phases
over the next, say, one, three, and five years that
really bring a lot of power to the individual creator,
and that's where I like to spend my time now. And
when we ran Bug, we were very individual/creatorfocused, so I'm bullish.
Brian, the same question for you from the supervisor
and film studio perspective. Bleak or bright?
Brian McNelis: It's a complicated landscape. I
think right now is a dark moment. I think that this
moment right now is very challenging for all the
reasons that you listed [in your introduction]. We're
living in the era of 15 years of optional payment for
the consumption of music. And the majority of
music is consumed illegally, slathered with advertising and driven by search engines. You know, it's
hard for me to look at the current landscape without looking at it in the top-down macro of an
environment that has allowed piracy to be the number one form of consumption for over 15 years.
That creates downward pressure throughout the
entire ecosystem that affects everybody. And it's not
62

just music at this point. Talking with friends who
are film producers even five years ago they were
like, "Ah, you guys with music. You just did it
wrong." And now they're feeling it. And they're like,
"So, you guys, what do we do here?" So, as the film
people are kind of coming on board now and
understanding the downward economic pressure
that comes from consumption without compensation, the TV guys-traditional broadcast TV, even
though it's over satellite, or cable or whatever-
they're like, "Oh, we make content and we give it
away for free. It's monetized by advertising. What
are you guys complaining about?" And now, TV is
starting to feel that, because everything is being
delivered over IP. So once everything hits Internet
distribution, everything is fair game for consumption without compensation. Whether it's disrupting
a transactional model from downloads and iTunes,
you know, a lot of people have said that streaming
is the solution to piracy. Well, what happens when
piracy is streaming, right? Nobody has really
thought that through. So, if the Pirate Bay is the
alternative to iTunes, what happens when there is a
pirated alternative to Spotify? No, streaming isn't
really the solution to piracy, if piracy is streaming.
And this is what's really affecting broadcast and
television.
So anyway, it's a longwinded way to say that we
have a great deal of downward pressure on the economics that's affecting the entire ecosystem. And
until we kind of get that right, we don't really know
what your work is worth. Because whatever your
work is worth today, it is certainly less than it would
be worth if we weren't living in a legitimized black
market of consumption without compensation that
ripples across music, film, and television.
So I think it's a dark moment, and I'm insanely
encouraged to see all you people in here [at the
Road Rally], because you are the people that will
make the difference. You are the people on your
Facebook page, on your Twitter feed, in your social
media, in your day-to-day interactions who will say,
"This is wrong. We need to support anti-piracy
bills; we need to support something like SOPA." We
need to support the people who are taking care of
your constitutionally granted rights in copyright for
the protection of your work. And it's not okay to
have your work monetized against your consent
and without compensation. You are the people that
will make the difference going into the next era!
And I believe that you will, and I am optimistic that
in 10 years-I hope that it's 10 years-that we're on
the other side of this. It may be a two-generation
issue. I feel that the millennials and the current generation who have grown up never having paid for
music because of YouTube and the Pirate Bay, I
think it will be their children, perhaps, that will go,
"This is uncool. We value a cultural economy."
Because right now there's a large segment of the
population that... And I don't think that they are
bad people that they don't value a cultural
economy, I just think that they just don't
understand. I think that they don't understand that

you can't get something for nothing forever, and
how those economics work. And I think that you
are the people who will help make that change.
So overall, I'm optimistic, and I think that there is a
lot of opportunity in the digital landscape, that if
we can fix some of these problems that it will
restore fairness and an equanimity to the playing
field.
And the last thing that I am going to say is that I
really do believe that the Internet has democratized
this process. Look at you, look at this room. The
Internet is a wonderful, powerful tool that should
be enabling more creative people to make a living at
higher standards than previously available, because
there is no friction in that environment. In the oldschool record industry supply-side economics of
getting records out, and whatever were the number
one factors that affected us negatively. We don't
have that friction anymore, okay? Like somebody
sees a song on a TV show, they can buy it on their
iPhone® immediately; they can also get it from the
Pirate Bay.
So as we've eliminated the friction in distribution,
[but] we've eliminated the compensation for that
consumption as well. If we can fix that, then I
believe we have a strikingly new, vibrant, robust
middle class of creative working musicians and
songwriters. And I believe that we'll have a new creative renaissance which will give rise to all kinds of
fabulous new music that I don't think that we've
seen in maybe 10 or 15 years, because we're on a
retro treadmill where the initiative to truly have an
Return On Investment in place to develop new and
exciting music in a true cultural economy that
rewards your labor and creativity does not exist
right now. But if we can fix that, and you are the
people to fix it, I think it'll be awesome! [applause]
Ironically, you just mentioned middle class. I got interviewed by Newsweek way back when-probably prior
to 2000, maybe in the mid-'90s-about the future of
the music industry. And I used the phrase musician
middle class maybe for the first time in the history of
man, and I mentioned that I thought it would all go to
streaming someday when the pipes could handle it
and processors could handle it, and that musicians
would get paid a penny a spin for their music. And I
got so much hate mail because of the penny-per-spin
thing. I think people would love to be getting that
penny-per-spin now.
Brian: They would. Absolutely.
They'd be making at least a middle-class income
from that if they were good enough to get played.
Brian: There's nothing wrong with streaming. You
know, there's a lot of dissent about Spotify and Pandora. And I'm one of those people who has a very
loud dissent of Spotify and Pandora. But I want to
be clear, there's nothing wrong with streaming as a
technological distribution mechanism. All too often
in these conversations, people who are working
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