Michael Eames:
President, PEN Music Group, Inc.

Interview by Doug Minnick
Michael Eames - PEN Music Group
Where did you grow up?

I grew up all over. I was born in Boston. Then a year in Greenwich, Connecticut. Then three years in Syracuse, New York. Two years in Quantico, Virginia. Back six years in Rome, New York. Then a year and a half in Virginia Beach, a year in Atlanta, and then college. It has been quite a mobile adventure. I have now lived in Los Angeles longer than I've ever lived in any place in my life.

How did you get started in the music business?

I got started in the business end of it in September of 1989 when I moved out here. I was a trained film composer and wanted to make a go of it in that world. I was a music major in college and I figured that when I got out here, oh I'll just get into film scoring and play piano in recording sessions when I'm not composing and pursuing what I want to do. I was totally naïve. I came out here with $5,000 in my pocket from the sale of my piano thinking this is what I'm going to use to get out here and get this life started. My five grand disappeared in like two months. (laughter) I started temping mainly in entertainment-related places. At the same time I was answering classified ads through the Hollywood Reporter. One of them ended up being the office and recording studio of Beach Boy Brian Wilson. I got called in a month after I sent in my resume. I was temping at the bank at the time, so it wasn't a very hard decision. The bank on one side, Beach Boy on the other (laughter).

I was with Brian for about seven months. The great thing about the Brian Wilson job was that not only did it give me exposure to different aspects of the business in general, but it was my first taste of what music publishing was. They administered Brian's publishing out of that office. I would see all of the checks that would come in for all of the Beach Boys songs. I thought wow, this is pretty cool. I like this money. But, depending on how familiar anybody is with the Brian Wilson story, I basically couldn't take the svengali, psychologist, doctor that basically ran his entire life. He was a crazy guy, and I just couldn't deal with it, so I left.

By a fluke, a woman called me that I had met while temping who knew a music publisher who looked after the Jimi Hendrix catalog. I interviewed with him, and we got along really well, and I was there for three years. That was really my main education on what publishing was because I lived it and breathed it for three years. It was really an amazing experience.

After three years there, and learning all of the various aspects of publishing and taking classes, I was sort of running the guy's company. I was seeing how much money he was bringing in, and I decided to see if I could cut a better deal. When we couldn't, I said I'd rather go and do it on my own and see what comes of it. That was April 1994, and knock on wood, we are approaching our ten-year anniversary next April.

Can you tell us a little bit about how publishers make money?

There are basically three main areas of income. The first area is mechanical income. As its name suggests, you earn royalties off the mechanical reproduction of your compositions. In other words, an artist records your song, puts out a CD, the record label manufactures multiple copies of that CD, and you are owed a royalty, theoretically, on every copy manufactured and distributed. That's all over the world. In the United States, that amount is 9.1 cents per song for a song that is five minutes or less. Outside the United States, generally speaking, it is a percentage of what they call the PPD, which is the published price to dealers, which is somewhat equivalent to our wholesale price here. Since CDs cost more outside the United States than they do here, you actually make more money per CD sold outside the U.S. than you do here. That's the first area.

The second area of income is performance. Which, again as the name suggests, are royalties that you earn off the public performance of your song, i.e. radio and television. Those are the two main sources of income all over the world for performance. Live performances, theoretically, also are an area where you can earn performance royalties. And growing, of course, is the Internet. ASCAP and BMI here in the United States have boasted recently that they've each been collecting over $500 million in a year. So that's a billion dollars between them from all of the sources.

The third main source of income is synchronization. As the name implies again, they are fees you get from the synchronizing of your music with a visual image. The three main areas of synchronization are films, television shows, and commercials.

Why does a songwriter, or an artist who writes, need a publisher?

It depends on what their situation is and who they know, since so much of the business is relationships. But for the general guy off the street, there are two things that a publisher brings to the table.

Most importantly, a publisher has the relationships to take what you do as an artist and either get you signed to a record label, and get the album released, and therefore start generating the three types of revenues we talked about before. Or if you have what are generally considered master quality recordings, that is, they sound like a record as opposed to a demo, a publisher has another option of using their contacts in film, television and advertising on the synchronization side to go out and license those.

It not only generates income, but if a project uses an unsigned artist's songs, the interest in that artist can grow to the point where it could end up in a record deal. Hopefully it all feeds upon itself. Most people, unless they grew up in the business and their dad knows this person and that person, are not going to have those relationships. It's a rather hard road to go down, and it takes a long time and is full of rejection.

In your bio it says you started PEN Music partly to be an alternative to major publishing companies. How is your company different from the majors?

The main factor, and what we certainly consider to be our advantage, is our size. The multi-national publishers-the two biggest are Warner Chappell and EMI - both have over a million songs at this point. Right now our entire catalog is maybe 5- to 6,000 songs.

Really what that helps us to do is focus on what we represent and give it the attention that it deserves, especially for developing writers we believe in. We may not be making any money in the beginning, but we're trying to develop that income with them in a partnership. Once that income starts to flow, because of our size and because of the fact that we're independent, we can make sure that every penny that gets generated comes in the door.

As one can imagine with the two biggest guys having over a million songs, there is just so much material and sources of income out there that they are just not keeping on top of it. It is physically impossible. We, however, can focus on it, and we need to as it is literally our livelihood.

Do you have staff writers at PEN Music?

As we're speaking, no. Ninety-eight percent of the deals that we have historically done and continue to do are what are called administration deals. Our clients are the ones that write the music and therefore publish it until they assign their rights to somebody else. They entrust us with what they've got going on. They say, "This is the income that I'm earning, and I don't really have the infrastructure to deal with it. Can you please collect all of my money on the administrative side? On the creative side, since I can control it all, let's go out and try to generate money that doesn't exist."

We have done two "traditional" co-publishing deals. They are not current staff writers, though we do control the songs that were written during the period under which they were under contract, as they are no longer under contract. It is my hope and plan that after the first of the year, we're going to go out and look for the funds so that we can actively start to sign staff writers.

When we started this as an alternative to the multi-nationals, we were starting to see a trend of some of the bigger writers and artists not feeling the need for the bigger publishers, as long as they don't need that big advance to live on or fund other things. So hey, let's start our own thing and show that there is another way to go.

Well, in the last couple of years, that trend has intensified more than ever before. Now, Warner Chappell is on the auction block. Sony is interested in buying Warner Chappell. DreamWorks Publishing is up for sale. There is an incredible amount of flux going on in the business. With the downturn that we've been having, we probably have not seen the end of consolidation. So now is probably better than in all of the 14 years that I've lived out here to be an independent. There is also seemingly more interest in the music publishing business because there are some new companies being started by venture capital money and Wall Street money. I think it's a great time for us as an independent because we've survived the initial thing and we have a track record.

So when you say you will start looking for writers, are you talking about established, successful writers?

Not really. If an opportunity like that came along and financially it made sense, there is a certain appeal to signing a known writer, particularly one that comes in with some existing songs and cash flow. But it's a business now where I think the longer term income is in finding writers and artists and developing them. They are not as expensive as the existing guys. I think in the end that's not only the more profitable way to go, but there is a lot of great talent out there, so let's foster it.

Do you sign single songs?

We haven't up to now, but it's something that we are actually going to consider after the first of the year. We're getting more active in A&R and getting songs cut than we ever have before. We have the track record in film and television, and now are getting more and more commercials. Really the last piece of the puzzle for me is to say that we're a full-service music publisher and can do everything from soup to nuts. We're making a concerted effort, and have teamed up with an indie song plugger who has over a decade of experience and relationships in plugging. In that sense, we are going to be more interested in doing single songs.

What kind of song do you think is the "easiest" to get cut these days?

Gosh, it's enormously difficult to get cuts right now, but I'd say it's in the current trend towards all of these kind of pop idol competitions that are going on all over the world. I think we've still got another year or two left of riding this wave. They're ramping them up in different countries. I just read the other day that there is going to be a world idol competition where all the winners of the various idols throughout the world are going to compete for the world's best singer or whatever. All of these artists need songs. For the most part, since these shows are focused on people as performers, the majority of them don't write. I think this whole phenomenon now is actually a boon to the people who are just songwriters and not performers. That's probably the one area that has the best chance of getting something cut because there are going to be so many records and they're going to need so many songs. But then you get into the whole politics of it all-they're going to go to the same writers that were on the previous records, or the same producers, etc.

What might even be an easier thing to make happen is just finding a great band that writes their own material and develop them and get them signed. That, in the end, could open up more opportunities. Over the last year or so, rock and all of its various flavors is back. I think it's a great time for rock bands, but at the same time, if you want to go the major label route, this may not be the best time. It may need to sort of shake out over the next year or two. But that actually may have a greater probability of success.

I would assume bands like that would also have better shots at film and TV placement along the way too.

Oh yeah, that's our bread and butter. Rock bands - we're getting stuff used all over the place.

How much money can a writer make through TV placements?

Let's say that you have a song in a show on NBC that is a one-hour drama. Generally speaking, the up-front fees for an independent artist on such a show are going to range anywhere from $1,000 on the low end up to $4, 000 on the high end. There are a whole lot of factors to determine where it falls in that range. That is the up-front fee - the synchronization fee. That allows the piece of music to be synchronized to that scene.

The second and more ongoing flow of income is going to be the performance royalties generated every time that show airs. The magic timing here in the United States is you hope that you're going to get played 45 seconds or more. ASCAP, BMI and SESAC allot their maximum payout once you hit 46 seconds. Whether it's 46 seconds or 2 minutes, you get the same amount of money. All of those societies make separate payments to the writer and separate payments to the publisher. As long as it has hit that 45 second threshold, and it's on NBC (the big three networks are considered the pinnacle), and airs in primetime-anytime between 8 pm and midnight-right now it's generally around say $1,000 to $1,100 paid to the writer, and $1,000 to $1,100 paid the publisher from just one airing.

Of course, that's divided amongst multiple writers and multiple publishers if there are more than one. On network television, if it's a show that is at least successful enough that it's not going to get cancelled immediately, most series contractually have a requirement that each episode is going to repeat at least once. So if you do get on such a show, say like Ed that has been around for a couple of years, chances are that episode you're in not only will air that initial time, but will air another time as a repeat. At that point, that's $4,500 or $5,000 that has been generated just from those two performances. Of course, if it is a show that is successful and stays around, it might not only get a third repeat, but it will start to get sold around the world and generate performance royalties in countries around the world. It can become an annuity over the next two or three years where the money trickles in. It can certainly add up, especially if it's a successful show that not only will get sold everywhere, but again have repeats in other territories.

What about cable shows? What's the range of income there for synch licenses and performance royalties?

Taking the synch first, the synch can sometimes be around the same amount. I'd probably say in cable's case, because there is less money in cable, the fees can sometimes nestle in the lower end of that $1,000 to $4,000 range. The significant difference in income is less in the up front fee than it is in the performance. Cable pays so much less than NBC, ABC or CBS. It's rather dramatic.

But the one distinction that should be made is cable shows in foreign territories can pay more (in performance royalties). If they are successful shows and get sold overseas, because most countries have fewer channels than we do, they can air on a primetime channel in that foreign territory. In that case you can flip it around and make more money in performance from foreign than you would in domestic.

Earlier you said that if a band or an artist has master quality recordings, then you can get them placed in film and television. In your experience, can that kind of recording be done at home these days?

Oh yeah, absolutely. Many of the things that we pitch are definitely done in someone's bedroom or garage. Really, the technology is there and available, but how well do you know how to use that tool? There are some people that have spent countless hours learning how all of the stuff works and how to best maximize it and get a great sound out of what they've got. There are others that are just basically going to go to the presets on the various machines that they've bought, and just sort of piece it all together and say, here's a song. It's not going to sound as if it's an organic whole. There is a craft to it. It's no coincidence that there are schools and classes for recording engineering and production. It is a whole other craft on top of performance, and composing, and songwriting, and that takes time to learn and master.

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