Eric Sheinkop, who is in his twenties, is the Co-Founder and CEO of Music Dealers. After a brief career in the recorded music business, following studies at the University of Wisconsin and Full Sail, he began work with Fortune 500 companies, including McDonalds, PMI, and Kellogg. He launched Music Dealers in 2008 and now licenses music of independent artists around the world to top consumer brands. A year ago his company partnered with Coca-Cola, and Sheinkop became a music kingmaker for unsigned musicians worldwide (for additional coverage on the topic, see The MBJ, “Music’s Fizzy Logic”, cover article, March 2012).
MBJ: Why do you think Music Dealers was a match for Coca-Cola?
ES: It’s always a struggle for brands to find new and independent music and have the security to know that they can use that music across all media, globally and for the length of terms they are looking for. Coca-Cola was interested in our database with musicians around the world. We could supply custom content and help them discover independent artists.
MBJ: How does this compare to a traditional record label?
ES: We are definitely not like a traditional record company. We find the right partnership for a brand. Also, the mechanics of signing artists and the money flow are quite different. As an upcoming artist, you would hope to sign with a traditional music label for the sole purpose of marketing and distribution. You hope your single will become a household name. But the million-dollar advance that goes with it has to be recouped from your income.
If you work with the right consumer brand, ad spends are going to be between five and five hundred million dollars. So if you get one of your songs featured, you’re getting five hundred times what a record label would put towards your marketing–and that comes with a ton of exposure. Moreover, it is not a loan. You can invest that money back into your career.
Our most successful artists have started record labels, publishing companies, and funded their tours. The Swedish group You Say France And I Whistle did very well with the initial Coca-Cola ad. They invested in themselves and started touring Europe. We were able to bring them to the US for festivals such as SXSW. They were smart, of course, and catapulted their career. We have also placed another Swedish band, The Majority Says, in a major European ad campaign and the band self-invested in a European tour and a new album to be released shortly. Now, there are many more band managers wishing to take advantage of this new way of doing things.
MBJ: How do you discover songs?
ES: We have an A&R team whose only job is to discover the best independent emerging talent around the world. They will screen blogs and social conversations, getting geographical analytics and metrics on fan discussions. We monitor ‘heat maps’ of new artists as they spread to different territories. That helps us put them in front of the right brand and show them the partnership is right. For every festival in the world like Coachella and Lollapalooza, we focus on getting the opening acts for the bigger shows. Meanwhile, we accept three to five thousand submissions a month but turn away ten times as many.
MBJ: Can you tell us more about your international reach?
ES: We now represent the best emerging indie talent in about eighty countries, in all genres and styles of music. We have about eight offices in five countries. Recently, we have been working quite a bit with China. Our current focus is Brazil, where we are opening an office as we speak. Asia will be our next market.
When Coca-Cola was looking for artists to write a song for the 2012 Olympics “Future Flames” campaign, we crowd-sourced the A&R throughout our global community. You Say France And I Whistle won, and although the band was from Sweden it might have been some other group or artist from around the world.
Talent that just didn’t know how to access the music industry and just couldn’t get their music to the right people is now uploading into our system from all over the world. In addition, we take existing songs and produce localized versions for territories on demand.
As I said earlier, our technology platform allows us to identify the world’s best trending artists and leverage them with brands. Getting talent paid well for marquis live performances is the natural evolution of our model. We are in charge of eighteen parties organized for Coca-Cola during the London Olympics this summer, for which we will be bringing in artists from all over the world. During our event this year at MIDEM, we had one of our UK artist’s, one from Spain, and YSFAIW from Sweden.
MBJ: What are some of the difficulties of doing business abroad?
ES: It is a challenge to understand the performing rights societies in different territories. Every country is different. The regulations that exist in France for mechanicals or sync licenses, for instance, are specific. But whether it is SACEM in France, GEMA in Germany, JASRAC in Japan, or BUMA STEMRA in Holland, we have to tread with care about music rights. For example, knowing when we can do a direct license with an artist, as well as the details pertaining to all her royalty collections, is always a consideration when we move into a new territory.
MBJ: This must be expensive to manage, and we understand Coca-Cola’s financial commitment to you has been strong.
ES: Coca-Cola will have spent about two hundred million dollars using music in different campaigns around the world in 2012. Our partnership with them draws on this, but it is not our company’s policy to disclose the terms of the agreement. Of course, we have become Coca-Cola’s main source for music around the world.
MBJ: What are the types of deals that Music Dealers signs with artists?
ES: There are two ways of working with us.
The first is uploading your existing music. What we really like is to get an album a couple of months or six weeks before it hits the iTunes stores or retail, so that we can find the right brand to partner with and prepare the marketing.
Second, we request custom creations. A lot of talented musicians don’t have aspirations to be performers or put out albums, but they are composers and take orders from us. We do a lot of film, television shows, and video games. They all need the right music fit.
By the way, the deals are standard and involve a 50/50 split. We receive fifty percent of the publishing share of royalties but we don’t touch the writer’s share. So its really 25% of residual royalties. The final fee really depends on the use of the music, whether the commercial plays on global, national, regional, or local TV, or other. The length of play is an important consideration.
MBJ: Does Music Dealers take on the functions of a traditional publisher?
ES: It’s a different model because we are not locking the artist into an exclusive deal–whether they do something for you or not. So, no matter what, we do not own the publishing.
We come from an artist background and are very artist focused. We’d never want to limit talent in any way. If we place a song in a television show and the artist places the same song in another television show, we’re only going to share revenue on our joint work. If they want to pull out at any time and go sign with a major, they can do that. We want to be a tool artists can use to help further their careers.
MBJ: What is your perspective as a young professional?
ES: This is the best time ever in the music industry. There are incredible opportunities for artists, brands, and entrepreneurs to get in and change things. Anybody who comes up with a good idea to fill a void in the market, of which there are tons, is going to have success. There are income streams to support talent other than earnings from physical music, which is going nowhere.
Also, there is no apparent road map for success in the music industry. If you look at the people who have done well, they come from all type of backgrounds, from the formally uneducated to those with experiences in the tech sector and business, including MBAs. So one of the most important skill sets for today is, I believe, ambition and follow-through.
Beyond that, I think artists should start thinking about themselves as a brand, both in terms of how they would like to be represented by one and how the brand itself might like to partner with them. But the new music economy is providing ways of doing business that are valuable even if a game-changing partnership with a brand does not materialize. Each of our offices is licensing about forty tracks a day in television shows around the world. It may not be big money upfront, but over years and years of playing the checks for our clients add-up.
By Zosia Boczanowski