SXSW Round-Up

Well, another year, another South-by-Southwest in Austin, Texas.

While many grumbled that the 2006 event was more crowded and generally more hectic than ever before (it didn't help that St. Patrick's Day fell right smack in the middle of the chaos), this music confab continues to be North America's premier crossroads for artists, labels, booking agents, publishers and anyone else that hopes to be a part of the music industry.

Yes, despite the hundreds of live shows and constant bar-hopping that takes place, SXSW is really about the intersection of art and business-and where it's all heading.

Whether walking through the exhibit hall or attending the many panels on various subjects, participants seem keenly aware that the music business is ever changing. Like last year, much of that debate centers around technology and where it's taking the industry. At the top of everyone's minds is how artists and labels will make money as music consumers leave the universe of physical product (LPs, tapes, CDs, etc.) behind and enter the new era of digital entertainment.

It's not just about jettisoning the physical form. In fact, downloading songs or albums digitally can still lead to burning them to disc or some other physical media at some point. But the digital revolution has put music consumers more in control than they have ever been. They can now dictate how they obtain music and whether they're willing to pay for it. Artists and labels are finding that they must comply-whether they like it or not.

Part of this consumer-in-control paradigm centers around the emerging art of podcasting, a phenomenon that gives consumers more intimate access to artists and helps artists stay in closer touch with their fans (previously covered in Feb 05 & Mar 05 issues).

And it's not just unknown artists going the podcasting route. Heavy hitters like Liz Phair posted weekly podcasts on her Web site during her last tour, some of which included meandering phone conversations with her brother. Fans ate it up. And for emerging artists still trying to create "brand loyalty" among their fans, podcasting has become a huge opportunity- not just as a way to keep fans engaged with artists on tour but also as a way to get music played by the growing ranks of everyman podcasters out there.

But at one SXSW panel about podcasting, industry reps pointed out that podcasting raises complicated issues that must get resolved if it's to reach the next level. After all, podcasters often use copyrighted songs in their underground shows. And whether that use involves major artists or indies, one of the many ongoing questions is whether a podcast is a download subject to a mechanical license or enough like streaming to fall under a compulsory license applied to Webcasters. John Simson, executive director of Washington, D.C.-based royalty-collection agency SoundExchange, said even a podcast download should be subject to performance royalties. While not technically a stream, "you're making something available to the public," he said. "When that person accesses the content, it's a public performance."

That opinion isn't shared by everyone-even people from the label side of the business. David Lessoff, senior director of business affairs at Capitol Records, noted that while he can't speak officially for the label, his personal opinion is that podcasting isn't a stream and therefore not subject to performance royalties. However, Lessoff said the bigger concern for labels is the unauthorized use of copyrighted works within podcast shows. While he said the industry isn't overly concerned about podcasting yet, it's keeping close track of the situation (such scrutiny may increase as podcasting grows into an ad-supported medium in which people are making money). Lessoff said that podcasters must ask permission before using material but added that labels are often willing to work with them. "You always take consideration of who the person is and what the means are and what they can afford," he said, adding that often it comes down to whether the entire song is being used from start to finish. "That's a major concern of the record label," he said. "How much is going to be used."

Panelists said a common misconception is that podcasters can use up to 30 seconds of a song without getting permission. "The real truth is that you can't use any amount of the content without coming to the rights holder," Lessoff said. Simson agreed that "this 30-second thing is just an urban myth." And Peter Strand, senior counsel at Chicago-based law firm Holland & Knight, said the evolution of audio podcasting into video podcasting can even bring in rules governed by the Screen Actor's Guild when copyrighted video content is used. Said Simson: "It just adds another level of rights that makes it more complicated."

Of course, podcasting is only a part of the much larger music downloading phenomenon that includes everything from pay-per-song services like iTunes to all-you-can-play pay services like Yahoo! Music Unlimited to "social networking" sites like MySpace (check out MySpace coverage in Feb & Mar issues) and even to the often-maligned "free" activities taking place on peer-to-peer and file sharing networks.

In one panel about music downloading, participants said the complicated landscape remains an incredible playground for up and coming bands trying to make a name for themselves. "Bands need to utilize everything-especially at the grassroots level," said Lucas Mann, a Los Angeles-based music consultant who helps labels exploit different marketing avenues. "There's unlimited technology available at this point."

Panelists also said that-like podcasting-the overall download market is fast becoming video driven rather than a place just to download music. So bands at all levels need to provide at least some video content to compete. "Your fan today wants to see video," said Jay Frank, who heads label relations for Yahoo! Music. "If you're going to connect with fans, you need to give them a visual." Jeremy Welt, VP of new media at Warner Bros Records, said that bands don't need to spend a fortune on a music video. In fact, he said that fans often appreciate grittier or behind-the-scenes fare that seems detached from slicker Hollywood productions. "You really need to build something below the mainstream media these days". But he said labels are still vital in mixing all of the different marketing channels-both underground and mainstream-into a well-oiled machine. "That's why the role of management and labels is more important than ever," he said. "It's incredibly complex."

Mann said that too many artists and industry view the online channel as a way to sell music rather than a conduit for physical goods as well. "The digital strategy is also, how are you selling merchandise and how are you selling tickets," he said. With so much music now available on P2P and file sharing networks (as well as so easily copied and shared), artists are starting to realize that a deeper fan relationship is one way to sell digital as well as physical goods. "It really puts the hot, white light on the other category-and that's the relationship," said Eric Garland, CEO of BigChampagne, a market research firm that measures the use of online media, including music files on peer-to-peer networks like Kazaa. According to Garland, the business of banking on a big hit song to sell millions of CDs (without a deeper artist-fan relationship) is over.

And although tech is a big part of the industry's future and well covered, SXSW 2006 presented panels on a variety of topics, including the popular "Crash Course" series, which tackled management, legal matters, design and packaging, press and publicity, and of course Internet resources for musicians. Other panels gave tips about touring, A&R, international rights, distribution, music licensing, publishing and even healthcare insurance for musicians. There were mentoring sessions and other panels dedicated to analyzing hit songs and evaluating artist demos, plus interviews with legendary artists like Ray Davies, Morrissey, Neil Young, the Pretenders, Judy Collins, Beastie Boys, Kris Kristofferson, k.d. lang and others.. Whew. Lots of stuff.

Perhaps what makes SXSW so compelling and effective is the sense of comradery between artists and the "business folks" that's hard to find at many other conferences. Differences remain, but in the end it forces all camps to get together and discuss pressing and endlessly confusing issues-and then stand in line together at incredible, intimate, live shows all over town. And there's no doubt that SXSW 2007 will give us more of the same-no matter what new issues and challenges face the industry. See you there!

(Mike Grebb is a writer, journalist and singer/songwriter based in Washington, D.C. He has written for numerous publications, including Wired and Billboard. His debut solo record, Resolution, is available at www.mikegrebb.com, as well as digitally on iTunes, MSN Music, Musicmatch, Yahoo! Music Unlimited and other sites. And you can also be his friend on MySpace! www.myspace.com/mikegrebb).