League Conference: Digital Media Rights Session

Thursday morning started off with a session about digital media rights, moderated by John Sparrow, VP of Orchestra Initiatives in Atlanta. The panel: Jonathan Brill, Executive VP of Opus 3 Artists; Joe Kluger, Partner at WolfBrown and former President of the Philadelphia Orchestra, and Robert Levine, Principal Violist of the Milwaukee Symphony [and a Senior Editor at Polyphonic.org], who is a leading voice in media technology and the use of iTunes. Joe and Robert were members of the Electronic Media Forum, negotiating AFM media agreements, for many years.

To begin, Joe Kluger gave a 10 minute overview of the world of electronic media. (He actually managed to summarize a rather lengthy presentation in under 10 minutes and received a warm round of applause!)

Joe defined the core mission of an orchestra as presenting performances in person, so electronic media is therefore a secondary role. The value of electronic media is in marketing the institution, expanding audiences, reaching more people, stimulating contributions, establishing institutional branding, and generating incremental net revenue for performers

Joe then defined two types of distribution: Ephemeral content is content to which the customer has access but not ownership or control, such as radio broadcasts, TV, and online streaming, vs. Collectible content, which provides permanent access to and control of content, such as downloads, CDs, and DVDs. But this line is being blurred, given the iPhone. A third newer type of content is On Demand, where the customer has control of access to the content, but not on a permanent basis, such as podcasts.

Historically there was a high cost of recording and distributing a limited amount of content. Most recording projects were the initiatives of commercial and non-commercial broadcasters; they assumed the risk and controlled the distribution. In the current situation there is less demand for full performance content, but an increased opportunity to present excerpts. The costs of digitizing content are coming down dramatically; the Internet provides an opportunity to limit the gatekeepers in the process who control content and distribution.

Joe recommends The Long Tail by Chris Anderson, which describes how you can make a whole lot more by selling a few copies of a lot of things rather than trying to hit the Top Ten and sell a lot of copies of a few things.

Current Opportunity: recognize the value of taking advantage of technology; determine which activities to pursue and set clear institutional objectives for those activities; be clear about the audiences – local or national, which demographics; do a cost/benefit analysis to see if it’s worth doing (i.e., worth the allocation of resources); incorporate technology as a core priority of the organization, just the same as for education concerts; be proactive rather than reactive, and outsource things when appropriate – when they are not part of the core competency.

Agreements: You need to obtain agreement from musicians, conductors, soloists, composers, publishers, stagehands, and performance venues.

Process: the parties have shared goals and strategies, so use collaborative decision making to reach consensus agreements. Structure the relationship on a shared risk / shared benefit basis.

Robert Levine then gave an overview of the Milwaukee Symphony’s foray into putting their archival performances up on iTunes.

In October 2005, the MSO was the first American orchestra to release recorded material directly to online download stores such as the iTunes music store. Arkivmusic.com lists 27 recordings featuring the MSO, plus they’ve done some self-produced recordings, including the first English-language version of Hansel and Gretel in decades. They’ve also long had a local TV presence.

But the most important commitment of the MSO to electronic media has been its national radio broadcast series, produced without interruption since 1976. The MSO has produced over 400 concert broadcasts.

After the Hansel and Gretel recording was released, the MSO management convened a “media summit” to consider further media projects. At this meeting the MSO artistic consultant, Evans Mireages, mentioned that another client was looking for additional orchestral content.

This information caught Robert’s ear, as he’d served on the ICSOM Electronic Media Committee for many years and was very involved in drafting the 2000 AFM Internet agreement.  He had been disappointed that the agreement was so little used. In part this was because of the dot.com collapse, and also because in 2000 most people connected to the Internet with a 56K modem, which was not conducive to downloading a symphonic concert.

“What is iTunes’ phone number? They don’t have one. You have to send them an email. At one point the San Francisco Symphony didn’t know how to get hold of them.”

Robert helped the MSO negotiate an internal agreement; then they identified content and pushed it through their internal artistic approval process. The MSO also had a strong tradition of respectful labor-management relations, which greatly helped the process. They had to jump through a lot of hoops from the online stores, but eventually 14 recordings went public, including a Robert Sierra world premiere.

The MSO was well positioned to take advantage of the opportunity presented by their consultant. They had a lot of experience with media, and already had lots of digital content from their years of radio broadcasts. They also understood that media is a promotional tool (they never made much money from it). And they had someone in the institution (Robert) with the background and experience to see how to get it done.

Innovation does not have to be expensive – the total cost to get the first recordings up on iTunes was $3,000, donated, interestingly, by a musician in the orchestra. The radio broadcasts had already been paid for. It did take up a lot of staff time but fortunately was done over  the summer.

The next step was to start their own online store, but the Philadelphia Orchestra got there first. The MSO created the theoretical capability to use sales data from that store to cross-sell concert tickets, but they haven’t had the staff time to exploit this possibility.  They’ve started a line of binaural recordings (click here for an explanation of the binaural microphone) but only have two sets of binaural recordings online.

Robert’s biggest take-away is that innovation is hard – not because of resistance to change or musicians wanting more money, but because, as Peter Drucker wrote in 1966, “Innovation and change make inordinate time demands on the executive.” The MSO just doesn’t have the staff to pursue this.

Their biggest success in working cooperatively may have held it back as well; cooperation is also very time-consuming, and no one person owns the project. It’s not high enough on anyone’s radar screen to take accountability for it.

To sum up, the MSO has gotten a lot of attention for being first, and they’ve made some money – not enough. It’s good professionally – the musicians are happy to see their work up and available. But they haven’t really tapped the potential in fundraising and ticket sales.

Robert’s summary was that media is very challenging to manage, and it’s hard to capitalize on what you’ve done if you don’t have the resources, particularly staff time.

John Sparrow then asked Jonathan Brill what the important issues are from the artist’s point of view. What sorts of rigors/matrices does he go through with managers?

Media is cheap to do – production costs are so modest, and union arrangements are amenable. Most institutions include a clause in the contract that they will do media. Peter Gelb, General Manager at the Metropolitan Opera, made an arrangement for all media rights to be bundled together. Without exception, everyone agreed to a 5-year period. Peter has the right to do anything with the recordings in all categories (such as DVDs, etc.). This agreement enabled him to do the HD transmissions of live operas into movie theaters. He started with 300 screens and now transmits to 1100 screens world-wide. The revenue model is the tickets – people are willing to pay $20 to see live opera in a nearby theater.

The billion dollar media business has pretty much disappeared. It’s dried up – it’s a desert.

Other opera houses world-wide have begun to ask for the same rights as the Met; media rights are now bundled into the performance contract. Many artists want to separate the idea of a personal performance and a recording performance, but these rights have been negotiated at the Royal Opera House in London, in Italian opera houses, and in Spanish houses.

Rostropovich made six recordings of the Dvorak cello concerto. He hated recordings – he didn’t even like radio broadcasts.  Philadelphia tried to get him to agree to radio broadcast and to streaming a performance. According to Joe, “He was one of the great artists of the 20^th century but now we’re in the 21^st century.” A handful of artists would refuse recording rights because of their exclusive contract with a record company.

An artist has a different imperative than an institution. A solo artist will narrow the repertoire – they may play multiple performances of the same concerto. But then they’re suddenly asked to give these rights to particular institutions.

Does the accessibility of recordings help classical music? There are probably no statistics to answer this. Young people are willing to accept a far lesser quality of reproduction on their iPhones than their parents ever were with their fancy stereo systems.

You can have all rights subject to artistic prerogatives and limitations. Territorial limitations are being destroyed by the Internet. You can also negotiate time limitations – the Royal Opera House has a 10-year contract.

There’s a difference between stating that “the commercial value is not there” vs. “the rights are worthless.”

Artists need to participate in the discussion, and they cannot do so if the rights clause is just there in their contract.

It’s important to manage objectives together; it’s important to drive communications between partners.

From Audience Questions:

Copyright issues: the League’s website has information about basic copyright issues – you need a collaborative process.

Think of Glenn Gould, who quit performing when he was 32 years old and only made recordings; the recording process is very different from the performance process.