Publishing and licensing - real cash $$$ - the big picture

[Jonathan]

Picked up from previous conversation…

Haven't been recording much lately

The publishing and licensing avenue involves much deeper understanding of law than playing in a band and selling CD’s does. The legal training certainly helped me really understand how things work. It gave me the tools to ask the right questions when I was out of my depth, and to do my own research on the parts I wanted to know more about.

[Jonathan]

continued…

Haven't been recording much lately

So, you have talked quite a bit about this in other threads, and probably for a long time even back to RR. The theory of it makes a lot of sense, but that logically leads to the application. You had talked about acquiring publishing and licensing portfolios etc. Now, I completely understand if this is not something you wish to divulge details about, but if you’re doing this successfully it would be really interesting to know how you have gone about implementing the strategy to build the enterprise.

I knew a guy who had taken that route some years ago, but I don’t know how successful he was with it. I think he was mainly composing background music tracks and then licensing them for use through a number of websites (and even his own eventually) that specialize in that. He may have got into the publishing acquisition part too. He definitely saw some potential there, but as with anything else turning potential into actual is the challenge.

[Jonathan]

My take on this is generally still the same, but my understanding of it has grown a bit since RR.

Three years ago I hit an income ceiling. I realized that no matter how big and fancy I built the studio, that the business was not scalable, and it was infuriating that even after I’d beaten every single competitor into the pavement, that it wasn’t seeing exponential growth. I looked at several different avenues. Moving to a bigger market, expanding my broadcasting services, or going all-in on the area which I’ve always seen having the most growth potential. I quit thinking of the studio as a place to record bands. I started thinking of it as manufacturing facility to build catalog. I quickly realized I wanted to do the publishing thing, but I didn’t know how.

So I left the freelance recording scene to understand intellectual property law. I was in a decent enough financial position to enroll in law school and dedicate time to working along side people anyone who publishes and licenses just about anything. I chased everyone who would throw me a bone. I ran trivial errands for book publishers. I accompanied fashion and modeling agents to national event showcases, visited photographer and play writers all over the country…I got to observe patent lawyers working with software designers and medical industry techs. Anything that could license anything to anyone, I wanted to know about it. I was shadowing professionals with publishing experience to ask questions about how good deals were structured and learning how to manage risk. I started to identify what I think has made some of them much better than others at generating income off of licensing deals.

In terms of how to execute on this: There are three parts to a licensing deal. Acquire, re-pakage, and sell. Not all property requires repackaging at first, but the real test of its value is how many different things you can do with it over time. There are several distinct points at which the investor can enter. Some buy distressed assets for pennies on the dollar then re-purpose them. We saw a lot of that when the major labels collapsed. Others go in for equity shares when the catalog is young but promising, and acquire it by offering resources. Others commission their catalogs from scratch based on a need in a particular market.

Here’s my approach: I’ve always felt comfortable using the studio as bartering collateral to buy into a catalog. With the musicians, I offered the studio services in exchange for shares in their LLC’s which I made sure included their publishing catalogs. I developed their catalogs the best I could. Some catalogs I’ve held. Others I’ve exited by flipping them when the artists needed to raise capital from a more predominant source (namely the big label). It worked better because I got paid somewhere along the middle of the road, where as multiple artists I’ve tried this with have been waiting years for theirs. Its worked because I know the bigger labels go after the publishing rights and/or exclusive licensing rights first. They’re critically important in the US. And I have never done a deal where an immediate publishing/licensing monetization avenue was not within clear sight. The first deal we brokered was ballpark $120k for one track. I can’t go too much further into the specifics of that one, but having gone through the process made every transaction after that much easier.

Right now, I see a huge surge in the indie gaming market, and I want in. Same strategy (though I’m a long ways away at the moment). Find a company that needs you. Offer your services (plus cash) for an equity share in the company, create some really good (and well implemented audio) then monetize the catalog. If you own the company, and the company owns the publishing, then you own the publishing, but the licensing plays and market threshold in software is much much bigger than in the music industry right now. The audio tools are similar, and the accessibility of software design engines I predict, will make a great landscape for audio guys in the future

[Stan_Halen]

The first deal we brokered was ballpark $120k for one track.

Nice! Now it’s making sense to me. It seems very generous for all those people to help educate you on the subject. Did you have a ‘pitch’ for making the ask, and were you able to network to achieve this or was it a lot of cold calls?

[Jonathan]

It wasn’t cold calls at all. I started with people I already knew then tried to find somewhere I could be of help to them. Once they figured out I was serious about holding up my end of the bargain it actually wasn’t to hard. Don’t get me wrong, not everyone is interested lol. A LOT of people weren’t willing at all. But I kind of expected that, and didn’t let the rejection get the better of me. Its quite understandable and I’m more than ok with it

[Stan_Halen]

I started with people I already knew then tried to find somewhere I could be of help to them.

Yes, that certainly aids the process.

I kind of expected that, and didn’t let the rejection get the better of me.

Ha, yeah that’s probably the key there. Perseverance.