Christmas Eve is upon us. Maybe you and a loved one plan to do some festive snuggling as you stream a classic film like “Holiday Inn” after you persuade the kiddos that Santa can’t come until they scurry off to sleep.
Does a Grinch lurk somewhere in this cozy 21st-century picture?
A lot of musicians, including some that I know and many who work in Hollywood, are convinced that the Grinch – that mythical creature who sprang from the imagination of Dr. Seuss complete with a heart two sizes too small – has come to life, in the form of some of the “suits” who run certain streaming services and cable channels. Others doubt this. They believe the aforementioned executives can’t have too-small hearts due to lacking them altogether.
I too think the analogy is misplaced, but for different reasons. The Grinch resented the joyous spirit of Christmas, as celebrated by the denizens of Whoville. The antipathy between musicians and the businesses who use their work is not about joy, but rather about money. So rather than the monochromatic beauty of “Holiday Inn,” which introduced Irving Berlin’s song “White Christmas” to the world in 1942, I see the dispute more in terms of my own Christmas favorite. That would be “Mr. Magoo’s Christmas Carol,” a 1962 television cartoon special that featured music by Broadway composers Jule Styne and Bob Merrill. If there’s a seasonally appropriate villain to invoke, it is Ebenezer Scrooge.
My musician friends are upset because Discovery and either Netflix or some of its content creators (depending on whom you believe) want to write new contracts that will deprive composers of residuals, the payments songwriters receive each time their work is rebroadcast or streamed. These “back end” payments can comprise the bulk of a composer’s income, especially later in a career. In some cases, a single hit song can finance an entire retirement. “White Christmas,” which the Guinness Book of World Records names the best-selling single of all time, has sold an estimated 50 million copies since its release. Don’t confuse royalties from sales of the song with residuals from screenings of the film that made it famous – but either way, that’s a lot of holiday cheer.
Even for less iconic compositions, residuals are important. Some composers told Variety that Discovery’s decision to require them to sign away the ability to collect royalties will result in an 80% to 90% decrease in income for those shows. In part, this is because the upfront composer fees have declined by as much as half over the past two decades. “There is no way I can support what it takes to do a show based on what they’re offering,” composer David Vanacore said of Discovery’s new terms.
Big Hollywood film and TV studios have paid residuals to musicians for years. The model extended to many cable television outlets as well, at least until now. But streaming platforms have reportedly been less consistent. They have offered varying terms, depending on which producers supply them with content and, in some cases, depending on where the show containing the music is produced or streamed. Some foreign jurisdictions, including the United Kingdom and much of continental Europe, offer relatively strong legal protections to musicians and other artists compared to America’s relative freedom for parties to make their own deals.
As more content is produced specifically for the streaming platforms, the issue is taking on greater importance for musicians and other creative artists. Unions representing directors, writers and actors have already arranged residuals on streamed programming. But the musicians are in a weaker bargaining position, because their work can be more readily outsourced to creatives far from Tinseltown – or from America, for that matter. Executives may figure we viewers won’t notice any difference, although I don’t think that is strictly true. I didn’t get a nice sound bar for my big-screen TV to better hear a score by, say, Bad Uncle Boris and his Blazing Kazoo when I watch my next spy thriller.
Producers and distributors have legitimate concerns. In just a few years, the streaming menu has grown from Netflix, Hulu and a few also-rans to a veritable farmer’s market of variety. Each service needs some “must-have” content to stand out from the crowd, but also a large roster of additional offerings to support its value proposition to consumers. Services will spend whatever is necessary on the must-have content, but they will try to keep tight cost controls on everything else to avoid pricing themselves out of our digital wallets. Daniel Salmon, a media analyst with BMO Capital Markets, estimated that Netflix alone may have spent as much as $15.1 billion on licensing and creating original content in 2019. Under the circumstances, it is not surprising that services want to pay musicians once on a flat fee-for-service basis, rather than share their constrained revenue stream.
As with most everything in the entertainment industry, this conflict is likely to come down to bargaining power. Famous composers will be able to command whatever terms they want from the clients who can afford to hire them. Newer and lesser-known creatives may have to band together – there is a musicians’ union already that is fighting this battle, but it has limited reach in the streaming world. (Composers do not have a union of their own.) Or composers might need to work through publishers and agents, who can demand better terms but who will take their own cut. Or they could demand enough money on the front end to compensate themselves for the loss of revenue on the back end.
What they must avoid doing is taking jobs just for the “exposure.” Exposure is what every platform owner since the first days of radio has wanted to offer them. Exposure is a lottery ticket. Sometimes it produces a winner like “White Christmas,” but most of the time it does nothing easily quantifiable to put food on the table. Professionals work for money, not for publicity.
I expect musicians will come out OK in the end if they remember this. Producers and streaming services don’t want to create a product that customers will shun, which will definitely happen if they hire Bad Uncle Boris. Even Scrooge saw the error of his ways and opened up his fat pocketbook to help share the joys of the season.
To which I will add my own wishes for you and yours to enjoy a Merry Christmas, Happy Kwanzaa and/or Hanukkah, a prosperous Year of the Rat, and the best of any similar celebration I may have overlooked here. And, of course, a happy and healthy New Year in 2020.
Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book,
The High Achiever’s Guide To Wealth. His contributions include Chapter 1, “Anyone Can Achieve Wealth,” and Chapter 19, “Assisting Aging Parents.” Larry was also among the authors of the firm’s previous book
Looking Ahead: Life, Family, Wealth and Business After 55.
Posted by Larry M. Elkin, CPA, CFP®
photo via Decca Records, 1942 on Wikimedia Commons
Christmas Eve is upon us. Maybe you and a loved one plan to do some festive snuggling as you stream a classic film like “Holiday Inn” after you persuade the kiddos that Santa can’t come until they scurry off to sleep.
Does a Grinch lurk somewhere in this cozy 21st-century picture?
A lot of musicians, including some that I know and many who work in Hollywood, are convinced that the Grinch – that mythical creature who sprang from the imagination of Dr. Seuss complete with a heart two sizes too small – has come to life, in the form of some of the “suits” who run certain streaming services and cable channels. Others doubt this. They believe the aforementioned executives can’t have too-small hearts due to lacking them altogether.
I too think the analogy is misplaced, but for different reasons. The Grinch resented the joyous spirit of Christmas, as celebrated by the denizens of Whoville. The antipathy between musicians and the businesses who use their work is not about joy, but rather about money. So rather than the monochromatic beauty of “Holiday Inn,” which introduced Irving Berlin’s song “White Christmas” to the world in 1942, I see the dispute more in terms of my own Christmas favorite. That would be “Mr. Magoo’s Christmas Carol,” a 1962 television cartoon special that featured music by Broadway composers Jule Styne and Bob Merrill. If there’s a seasonally appropriate villain to invoke, it is Ebenezer Scrooge.
My musician friends are upset because Discovery and either Netflix or some of its content creators (depending on whom you believe) want to write new contracts that will deprive composers of residuals, the payments songwriters receive each time their work is rebroadcast or streamed. These “back end” payments can comprise the bulk of a composer’s income, especially later in a career. In some cases, a single hit song can finance an entire retirement. “White Christmas,” which the Guinness Book of World Records names the best-selling single of all time, has sold an estimated 50 million copies since its release. Don’t confuse royalties from sales of the song with residuals from screenings of the film that made it famous – but either way, that’s a lot of holiday cheer.
Even for less iconic compositions, residuals are important. Some composers told Variety that Discovery’s decision to require them to sign away the ability to collect royalties will result in an 80% to 90% decrease in income for those shows. In part, this is because the upfront composer fees have declined by as much as half over the past two decades. “There is no way I can support what it takes to do a show based on what they’re offering,” composer David Vanacore said of Discovery’s new terms.
Big Hollywood film and TV studios have paid residuals to musicians for years. The model extended to many cable television outlets as well, at least until now. But streaming platforms have reportedly been less consistent. They have offered varying terms, depending on which producers supply them with content and, in some cases, depending on where the show containing the music is produced or streamed. Some foreign jurisdictions, including the United Kingdom and much of continental Europe, offer relatively strong legal protections to musicians and other artists compared to America’s relative freedom for parties to make their own deals.
As more content is produced specifically for the streaming platforms, the issue is taking on greater importance for musicians and other creative artists. Unions representing directors, writers and actors have already arranged residuals on streamed programming. But the musicians are in a weaker bargaining position, because their work can be more readily outsourced to creatives far from Tinseltown – or from America, for that matter. Executives may figure we viewers won’t notice any difference, although I don’t think that is strictly true. I didn’t get a nice sound bar for my big-screen TV to better hear a score by, say, Bad Uncle Boris and his Blazing Kazoo when I watch my next spy thriller.
Producers and distributors have legitimate concerns. In just a few years, the streaming menu has grown from Netflix, Hulu and a few also-rans to a veritable farmer’s market of variety. Each service needs some “must-have” content to stand out from the crowd, but also a large roster of additional offerings to support its value proposition to consumers. Services will spend whatever is necessary on the must-have content, but they will try to keep tight cost controls on everything else to avoid pricing themselves out of our digital wallets. Daniel Salmon, a media analyst with BMO Capital Markets, estimated that Netflix alone may have spent as much as $15.1 billion on licensing and creating original content in 2019. Under the circumstances, it is not surprising that services want to pay musicians once on a flat fee-for-service basis, rather than share their constrained revenue stream.
As with most everything in the entertainment industry, this conflict is likely to come down to bargaining power. Famous composers will be able to command whatever terms they want from the clients who can afford to hire them. Newer and lesser-known creatives may have to band together – there is a musicians’ union already that is fighting this battle, but it has limited reach in the streaming world. (Composers do not have a union of their own.) Or composers might need to work through publishers and agents, who can demand better terms but who will take their own cut. Or they could demand enough money on the front end to compensate themselves for the loss of revenue on the back end.
What they must avoid doing is taking jobs just for the “exposure.” Exposure is what every platform owner since the first days of radio has wanted to offer them. Exposure is a lottery ticket. Sometimes it produces a winner like “White Christmas,” but most of the time it does nothing easily quantifiable to put food on the table. Professionals work for money, not for publicity.
I expect musicians will come out OK in the end if they remember this. Producers and streaming services don’t want to create a product that customers will shun, which will definitely happen if they hire Bad Uncle Boris. Even Scrooge saw the error of his ways and opened up his fat pocketbook to help share the joys of the season.
To which I will add my own wishes for you and yours to enjoy a Merry Christmas, Happy Kwanzaa and/or Hanukkah, a prosperous Year of the Rat, and the best of any similar celebration I may have overlooked here. And, of course, a happy and healthy New Year in 2020.
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