In this interview with Donald S. Passman, we discuss his 11th edition of “All You Need to Know About the Music Business”. Read below as Mr. Passman shares his thoughts on AI’s impact on the music industry, as well as advice for navigating the increased popularity of live performance, importance of TikTok for independent artists, and the complex world of global streaming.
In your opinion, what has been the biggest change that has occurred in the music industry from when you first started working on the new edition of your book and now?
Without a doubt, it’s streaming. From the beginning of the music business, music was monetized by selling something: piano rolls, wax cylinders, vinyl, etc. In those days, it didn’t matter whether the buyer listened to it once, a thousand times, or used it as a doorstop. The artist and company got the same thing.
Now, it’s all about how many listens you can get. That’s because the money is distributed on the basis of the number of plays you get vs. the number of plays everyone else gets. For example, if you have 1000 plays and there are 10,000 that month, I (and my label) get 10% of the money. (The book goes into this formula in detail). So the game is all about capturing ears.
An interesting side-effect of this change is that my listens now affect everyone else’s. In the past, it was irrelevant to me if you sold a lot, because your fans would buy your music, and mine would buy mine. In fact, if you had a massive hit, it brought people to record stores, and they were more likely to buy mine. Today, the more listens I get, the smaller the percentage everyone else gets.
What was the most exciting new aspect of the book for you to research and write about, or that you are most excited for your readers to see?
The section on AI was the most fascinating. It’s an evolving area of the law, and it has the potential to affect many aspects of the biz, as I lay out in the book. Beyond that, of course, it will affect almost every aspect of our lives.
Just as a snippet, there’s no copyright in AI beyond what a human inputs, so whatever is created might be available for everyone to copy without paying anybody. And if you put that together with my answer to your first question, you can see that a number of listens to AI material could dilute the money available to human artists (without the digital service paying anyone for the AI). For example, if there are 1,000 AI listens out of a total of 10,000 (10%), the digital service keeps the AI money because it does not have to pay anyone. Meaning it only distributes 90% of the money to the humans. The record labels are, of course, all over this problem to make sure that doesn’t happen.
Were there any changes you did not foresee in the music industry that may have really solidified your plan to write a new edition?
Yes, artists have more power than ever in history, and I get into all the reasons why. Basically, it’s because the labels mostly chase artists who have already built a buzz of momentum, and since all the labels have access to the same data, they go after the same artist and create a bidding war. In today’s world, some new artists get deals they could have never dreamed of in the past.
The last edition came out before the COVID-19 pandemic, over which time there was a monumental rise in independent artists. Is there any new leverage such smaller artists have now to avoid getting tied up in long-term agreements with managers, record companies, and producers?
As we discussed, artists with a buzz have a huge amount of leverage. But even without leverage, you have to be very careful in your early deals. A lot of major names have been hung up by bad contracts in the beginning. My book has always dealt with this issue and tells you how to protect yourself.
Live performance is back on the rise, and with streaming and social media paying so little for music relatively, what is your advice for smaller, independent artists, regarding breaking into the touring scene?
I have a section in the book on how to market yourself, and I think it’s important to get your chops down playing live. A side-effect of the viral phenomenon is that artists can get major deals but have never played live, or only minimally. If you’re going to have a long-term career, I think it’s essential to have that
Yes, as I said earlier, the labels are all over this. Essentially, they want to exclude AI from the payment formula altogether, so that all the money is shared by the humans.
A large topic of debate is the legality of using copyrighted material to train AI models. Does your book address this issue, and what are your predictions about potential changes to copyright law, or judicial decisions in the near future, that may be made in an attempt to resolve this matter?
In my section on AI, I cover the current state of affairs, but it’s very much just beginning. The specific case of using copyrighted materials to train AI is in the courts, both in the UK and in the US. So there’s no answer yet, and it may be years before it’s settled.
We can’t put AI back in the bottle, so we’ll have to adapt. I think there will be laws dealing with this, whether copyright or otherwise, but it’s too soon to predict how it will be handled. My goal is always to protect artists, so I think they should always have control over how their work, name, and likeness may be used.
With the increased globalization of music due to widespread access to social media, especially TikTok, does your book address navigating international markets as an independent artist?
Yes, the book deals with the international, even though we Americans generally assume the world stops at our borders. It has always covered the world in record deals, and there’s a new section on how international streaming works. Spoiler alert: It’s not simple.
Some labels are reportedly telling artists they need to be not only utilizing TikTok, but also that in order for a song to be pushed by the label, it needs to be teased successfully on the platform first. Do you think with this growing sentiment, artists need to cater specifically to online audiences, depending on social media performance to even be picked up by a label in the first place?
Most of the business is online these days, so you very much have to work that system, whether you want to be on a label or not. That’s where your fans live, so you need to feed and nurture them.
Some labels may consider investing in artists who only have one song go viral on TikTok to be worthwhile, while others see it as a huge risk. Even if these hits are fleeting one-hit wonders, they momentarily capture the attention of millions. With more and more of these artists popping up every day, do you see major companies changing their business models to better capitalize on such artists?
They’re already chasing the artists with online breakouts, as noted earlier. Some of the big deals work out, some don’t. The labels also use their A&R instincts to decide if this is a genuine artist or a lucky fluke. Some labels are talking about doing more to develop artists who have little or no buzz online, which is the historical business, and I think a healthy trend.
As a final thought, with what mindset do you recommend readers approach your 11th edition, and what overarching message or piece of wisdom would you like readers to take away from this book?
It’s an exciting time in the business. It’s more democratic than ever. Historically, record companies were major gatekeepers to artist success — it was expensive to manufacture and ship records, and it took clout to get on radio or TV. Now anyone can get their music to the public. The problem is that everyone can do that; there are over 100,000 new songs uploaded every day. So the game is now breaking through the noise. If you can market yourself well, you can get into a position of great leverage, better than at any time in history.