What to Know About the Music Business, According to the Lawyer Who Wrote the Definitive Book

It’s been more than 30 years since legendary music lawyer Don Passman first wrote All You Need to Know About the Music Business, and the latest edition includes topics that no one would have dreamed of back in 1991: artificial intelligence, streaming and the reemergence of vinyl, to name a few.

Passman saw a need for a how-to guide that could help artists, execs and others trying to break into the music industry. The book, which is used as a text in both business and law school courses, covers everything from finding the right team of advisers to navigating record deals and understanding copyrights, touring, merchandising and more.

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“The idea was to try to break it down into very simple terms and digestible pieces and then explain a very complicated business so that pretty much anyone can understand it.” Passman tells The Hollywood Reporter. “It’s easier to get details here and there than it is to get the whole big picture. I wrote All You Need to Know About the Music Business to make sure that people could get the big picture somewhere.”

Ahead of the 11th edition’s release on Oct. 24, Passman spoke with THR about how the industry has evolved, using a pregnant bulldog analogy to explain royalties and what he might need to change for a future edition.

What have been some of the biggest things that you’ve had to add or change since the first edition came out in 1991?

There have been quite a lot of changes, as you might imagine. Of course, the most massive upheaval was streaming, because it changed the way music was monetized. If somebody bought a CD and they played it 1,000 times or they used it as a doorstop and never took it out of the shrink wrap, the artist got paid the same thing. But, that’s not true in a streaming age. Now the artists are paid based on the number of plays, so it completely upended the ecosystem and changed all the practices and economics.

How do you explain these things in a way that you get across what people really need to understand, but also make it readable to somebody who’s on the creative side of the business?

I usually use analogies, because I think those are easier to understand. So, for example, in the book when I talk about how royalties work, I use an example of someone who’s got a bulldog that’s pregnant and wants someone else to raise the puppies and sell them. The idea is that the puppies are records, and the person selling them is like a record company, and the person who owns the bulldog is the artist. So, they get a share of the money from selling the puppies, and that’s sort of an analogy. When I’m explaining a more complicated topic, like cross collateralization, I use illustrations.

I also spend a lot of time figuring out how to organize the book. When I talk about publishing, I start with copyrights because the whole publishing business is based on the rights you get from owning a copyright. I go through what is a copyright and what are the rights you get when you create something, and then how do you get money from it? It’s a matter of breaking it down into smaller concepts and then putting them in order so that someone can build on what they’ve read before to understand it in more detail. I also have sections where you can skip forward because some people aren’t interested in that much minutia. So, there’ll be instructions, “If you want to go through this on a fast track, skip ahead to page X.”

What are some of the topics that you updated in the most recent edition?

I talk about why artists have more power than they’ve ever had in history. It’s basically because the artists are learning how to market themselves and creating a buzz, and the companies are all following the buzz. It means that when somebody’s really breaking out, a number of companies know about it and they all chase them and they bid each other up. So [more] artists are now getting deals that used to be reserved for superstars. On the other hand, there are over 100,000 new tracks uploaded every day. So the question is how do you break through it?

There’s also a section on artificial intelligence and on TikTok, which has become a major force in the business in terms of moving music. I talk about the mega-million-dollar catalog sales that have made the headlines and some not-so-mega ones that haven’t, and whether that’s a good idea for artists. And then I just generally update the trends and try to keep everything current.

What are the most interesting developments on the AI front?

There are a couple of important things. One is that the current state of the law is that you cannot get a copyright on AI created material, which means that if an AI creates something, unless there’s a substantial amount of human input, it may not be copyrightable and anybody can use it or copy it.

The other issue has to do with the way streaming royalties are calculated in that streams are based on how many plays I get versus how many plays there are that month. So, for example, if I have 100,000 plays and there’s a million streams — there are obviously billions, but just to make the math easy — I’d get 10 percent of the money and the other 90 percent goes to everybody else who got plays.

If the digital service providers throw in a bunch of AI music that they don’t have to pay anybody for because there’s no copyright, and those get a number of plays, can they keep that money? Let’s say another 10 percent is AI. So, they’d only distribute 90 percent and put 10 in their pocket because the AI money belongs to them. Suddenly, the people that made the human streams are not getting as much money allocated to them and they’re getting diluted. The record companies are all over this to make sure that doesn’t happen, but that’s just one example of why it could be a problem.

AI has the potential to disrupt almost every business in one way or another, probably including yours and mine. Certainly, there will be virtual writers and certainly there will be virtual lawyers, and there will be all kinds of things coming down the road. It’s a fascinating area. We’re not going to put the genie back in the bottle. It’s too late for that. It’s evolving faster than even the AI people thought it would. Obviously both the writers and the actors have that as an issue in their negotiations [with the AMPTP]. I think the best we can do is just try to deal with what’s in front of us now and then, as it evolves, we’ll have to continue.

It’s hard to predict, especially given the rapid pace of change, but what do you anticipate you will have to address the next time you do an edition of this book?

Well, that’s a really good question. “I don’t know” is the short answer. I don’t expect as radical a change as has happened over the last few years. I think streaming will remain dominant for a period of time. Vinyl is interesting because a lot of people buy vinyl and don’t even take it out of the shrink wrap, meaning they treat it more like merchandise. If you think about it, you haven’t got a way other than a T-shirt to show you’re a fan of somebody, because nobody sees your digital playlist. If you’ve got vinyl in your home sitting out, people go, “Oh, that’s cool.” It’s still less than 10 percent of the business but [it’s] growing rapidly, constrained in large part because there aren’t enough vinyl facilities to keep up with the demand for it.

I don’t think there will be a massive change, but I think AI will be more settled by then and there will be parameters around it that we can’t quite predict today, which is a defensive move, not an offensive move.

Perhaps there will be more advanced marketing techniques than exist today in terms of how to reach consumers and how to build a base. There’s a disturbing trend that in the Billboard Top 100 charts over the last almost 20 years, there has been a decline in the number of new artists breaking into the top 100 every year. Nobody quite knows why, but the theories are [there is a] short attention span and people are more into songs than artists, but it’s getting more and more difficult to build a real artist career in today’s world than it ever was in the past. Hopefully there will be some breakthroughs in that area, as well.

This interview has been edited for length and clarity.

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