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  Industry Profile

Industry Profile: Michael Simon

— Larry LeBlanc

This week In the Hot Seat with Larry LeBlanc: Michael Simon, president and CEO, The Harry Fox Agency.

Among Michael Simon’s avowed goals is to maintain a licensing infrastructure that ensures music creators get paid a fair royalty from whoever uses their music so that they can keep creating music.

In Oct., 2012, Simon became president and CEO for The Harry Fox Agency, the rights management, royalty and licensing company, headquartered in New York City.

Simon has been with HFA for more than 11 years, serving in numerous positions, including senior VP of business affairs, general counsel, and chief strategic officer.

After joining HFA in 2001 to head its licensing division, Simon was a strong advocate to modernize, and move the company into new lines of business. He supervised the development and implementation of new online licensing tools, integrated business and legal affairs disciplines in order to streamline the delivery of new licensing opportunities, and made moves to strengthen HFA’s in-house transactional capabilities.

Traditionally HFA has been the place to go for mechanical licensing, but HFA today can handle every step in the licensing process—from preparing a licensing agreement, and providing data matching and copyright research services to reporting and distributing royalties, and maintaining publishing ownership information.

HFA, owned by the National Music Publishers' Assn. (NMPA), and representing 48,000 music publisher principals, can serve as an administrator for labels, digital distributors and others, including handling direct licensing agreements with non-HFA-represented publishers.

Being a licensing clearinghouse able to provide customized, outsourced solutions for any company in the music distribution chain is a contrast to HFA’s traditional business of serving as an intermediary licensing music firm for music publishers to record labels, and collecting mechanical royalties from those licenses, a process that it has done for close to 90 years.

Prior to joining HFA, Simon was the executive VP of business affairs and general counsel for technology business consultants, Razorfish, Inc. in New York.

Previous to Razorfish, Simon helmed Simon Ventures, a New York-based artist management and consulting company.

Simon also worked at Polygram Records as senior director of legal affairs and the law firms, Levine Thall Plotkin & Menin, and Rubin Baum Levin Constant & Friedman.

Simon received his Juris Doctor from the Columbia University School of Law, and he graduated magna cum laude from Amherst College.

You are both a tech wonk and a music fan.

I just went to lunch with (music publisher) Ivan Mogull for an hour. Then, I brought Ivan into (our office) to speak to about 80 of our 110 employees about how he did what he did (in music publishing), and what it meant to him.

I have been doing a lot of that.

When I started in the current role, I brought the company together to tell them that I was taking over this role, and this is what we are going to do. I said I could stand there for the next 20 minutes, and I could talk about database architecture, stored procedures, coding, distributions protocol, millions of checks, how to produce blanket licenses and everything that we do all day. I am happy to do that. In fact, I do that for many hours a day. But this all starts for me because I am a music fanatic. I got into the business, perhaps foolishly—especially on this side of it—because I am a music fanatic. Bringing people like Ivan Mogull in is what we are about as a company. These are a bunch of crazy New York people in my company, crazy New York music business people who are moving dollars and issuing licenses every day. I put 80 of them in a room. If I had dropped a blade of glass on the floor, you would have heard it land.

[Legendary music publisher Ivan Mogull’s father, a foot doctor, was the first tenant of the famed Brill Building in New York. As a boy, he got to know many of the other tenants there, including music publishers. He grew up in the music publishing business. He was first hired as a counter boy to assist with the stock of the publishers. Later on, he created his own music publishing firm, Ivan Mogull Music Corp., that promoted innumerable recordings, including a pair of 1960 U.S. pop hits, "Running Bear" by Johnny Preston, and "Itsy Bitsy Teeny Weeny Yellow Polkadot Bikini" by Brian Hyland.]

You are a jazz aficionado.

I own a label. I gave Ivan a copy of this Hal Weary trio record when he was in the office. I had a pile of records over there, and he said, “What’s that?” I said “That’s my record company. The whole company.”

What is the name of the label?

It’s called Simon Recordings. I gave Ivan the trio record that we made in my living room. (Pianist) Hal Weary plays in the trio, but it’s not named after him. He put it together to play that night. He plays with different trios. This is Hal Weary with (bassist) Dezron Douglas who plays with (pianist) Cyrus Chestnut, and with the equally amazing Darrell Green on drums. Next I am releasing “Our Postmortem” by And The Professors on October 29, 2013.

How many recordings have been released on the label?

We have 4 out.

Changes at HFA have resulted in complaints by some of your music publisher clients that HFA has been compromised and has, perhaps, lost focus.

I understand the criticism. I don’t agree with it. The business is migrating. It’s not that we are migrating. We are changing as the business changes. There isn’t a world anymore where every public performance organization is sacred. The publishers are withdrawing rights from PROs (performance rights organizations); the public performance market is fragmenting; mechanicals, as a configuration by which people consume music, is in decline.

What we are seeing in the market is massive transaction volume, low revenue per transaction, and a need for markets to be efficient by having people in the middle who facilitate transactions.

Now what the NMPA (National Music Publishers' Assn.) with (president/CEO) David Israelite are thinking about is what kind of legislation might enhance the ability to license more expeditiously for companies to be able to enter the market more quickly to find out if their models really work. We are interested in that but we, HFA, can’t affect legislation. We need to make the markets work while Congress thinks about what it’s thinking about. If we had just sat there, and said, “No, we are a pure organization that just does this one thing as an organism, we probably would have disappeared, and the benefit that we provide to the industry by aggregating a market, that would have disappeared too.

In 2005, the HFA, tired of waiting for royalty rates for online music subscription services to be negotiated, changed its licensing terms for new subscription services, and went on to develop a full suite of licensing and royalty administration services.

Yeah, and we are looking at five more rates becoming effective at some point between tomorrow, and five months from tomorrow. A mechanical used to be rate times units. It would increase based on a statutory established COLA (a cost of living allowance) every couple of years. The rate increases were actually established within the regulations supporting Section 115 (of the Copyright Act). The regulation identified the applicable penny rates for the time periods being regulated.

[In 2008, the U.S. Copyright Royalty Board (CRB) set the royalty rates paid for digital permanent downloads, physical product and ringtones. All payments prior to the decision were negotiated by the respective parties.

This was the first mechanical right royalty proceedings before the CRB since the emergence of legal online music services.

The CRB maintained the 9.1 cents mechanical royalty song rate for both physical and digital downloads.]

Now, in addition to 9.1 cents for physical goods and downloads, we’ve got four other rate classes (set the U.S. Copyright Royalty Board in 2008), and we are about to have five more (rate classes) on top of that. So we’ve got the industry getting together on all sides to try to make rate structures work for the new models. But then that means that there’s increasing complexity with administration, and very low revenue per transactions. So you need people in the middle (for administration).

The other market driver which doesn’t create a loss of focus—in fact, for me it creates laser like focus—is that we have companies coming into the market from a technology perspective, not as music lovers, but as five technologists. Those technologists have decided that they know how to use technology to captivate the imagination of consumers, and to deliver music in the way that they want.

What five technologists?

I’m saying that there’s like five guys in a room saying, “We know how to program computers, and connect them to the internet in a way that make consumers want to consume the music.”

You are talking Google, Facebook…

Spotify, Rhapsody, Rdio, MOG, Pandora, whatever. Those guys, when they came into the market, they didn’t come into the market saying “We can build the best rights management solution. We can build the best licensing engine. We can build the best song data bases.” They said, “We can build the best user experience front end, and captivate the consumer user experience.” So we saw a massive influx into the market of companies that were funded that had no rights management infrastructure.

And no single source to access it for awhile.

Yeah, and they had no real interest in it until they started to meet with us. Then they realized, “Oh, there’s a whole licensing piece? Can’t we get everything from you? We will be happy to pay a fee to you to do it.”

A major label that has been around forever has a copyright department between 5 and 30 people (continually) building their databases and infrastructures. Whether or not it’s the best, they have staff and are structured to handle the rights upon which their business relies.

With the technology companies entering the market--not really.

So not only is there a market opportunity for a company like us to deliver services to the distribution side of the equation, but if we didn’t do it the market probably would have been a mess. So, in fact, it enables us to create a marketplace that allows for businesses to launch more quickly. And if a business launches more quickly, and uses songs; that’s not a loss of focus. That actually creates a market for publishers’ works, and launches those businesses both lawfully and more quickly. So, in fact, it focuses the market.

Napster should have been the wakeup call for publishers, but the business stayed somewhat the same for a long time.

Some people didn’t wake up right away. And I don’t know if people were sure that it was going to be anything more than a fad.

With the transformation in the music business came growing opportunities for mechanical rights management businesses. Initially, HFA lost out to RightsFlow, which oversees publishing royalty accounting on behalf of music licensees instead of rights holders.

Yeah. Those guys were all ex-HFA employees who identified a service opportunity working with the other side of the equation, the distributors. No one believed that either we would work with the distributor or a distributor would work with us based on what our historical role had been. So they were able to leap, but we were able to leap with them.

[RightsFlow was founded in 2007 by Patrick Sullivan, who previously was VP of licensing, royalties, and music services for both the digital distributor, The Orchard and its sister company eMusic; as well as before that the dir. of research and development at the National Music Publishers Association (NMPA), and HFA from 1999 to 2004; and Ben Cockerham; who had been dir. of global operations for the music services division of The Orchard. Google's YouTube acquired RightsFlow in late 2011.]

For decades, the distributors were deemed the enemy of HFA. Not so now.

That was part of a mindset change here. Since I had worked at Polygram, I knew a lot of people at labels. My opinion was, “Yeah, there are some bad actors in the market, but most people in the market are either doing the right thing--this was before a lot of people weren’t doing the right thing--or were trying to do the right thing.

You mean that labels generally played by the rules?

It was mostly nonfeasance not malfeasance going on. As a guy who worked at Polygram, I knew that (while there) we weren’t actually capable affirmatively to conspire or undermine anything. We might have not been competent enough. We inadvertently, through nonfeasance or misfeasance, we probably inadvertently failed to do certain things that we should have done, but it wasn’t like we could get together and say, “Alright, let’s build systems that systematically siphon this, and do that.” We didn’t have those resources. We couldn’t do that.

Since you instigated Slingshot as an efficient one-stop shop for licensing needs in 2008 has that side of the business shown growth?

Substantial growth. I can’t go on record with numbers—but I can tell you that it is very satisfying to stand up in the music business…well, now the economy is getting better….but even 8 months ago, I would get up and say, “In a constrained global economy with within which we have a constrained domestic economy with within which I have a music business under pressure within which I have mechanicals constricting and under pressure, we have found a business line that is actually growing year over year significantly. There’s more interest in the service than we can service.”

[In 2005, HFA began offering its clients administration services and introduced such new tools as eMechanical, a web-based mechanical licensing application that enables users to apply for licenses for physical and digital products online. As well, Songfile—the research and licensing component—was substantially upgraded. In 2009, HFA developed a full suite of licensing and royalty administration services, and expanded beyond its traditional mechanical licensing business.]

As the physical sales of music continued to spiral downward, and as the number of devices and delivery methods for digital music tracks continued to explode, HFA had to seek out other opportunities in the mechanical rights management businesses, including offering administration services to music users.

(Traditionally) HFA was an all in business. It was, “I will issue the license. I will collect the royalty. I will take a commission. I will distribute it to you.” Great. That’s very intelligible. But there are 50 things that we do that are related to that transactional stream that I just described that are not in that stream, and we did not monetize any of them. So, on the publishers’ dime, we built the software that became Songfile, which made it easier for religious institutions and academic institutions to pay in advance with a credit card, and get a license that they needed to make their life simple.

That investment made sense because it aggregated a market. But we didn’t actually get a direct return on the capital that we laid out to build that software.

Now we do.

Someone using Songfile, paying a small fee for access to that software, they get the license that they want. It’s easy to get it. It’s easy to pay for it. So we are getting a return on the development cost associated with providing that service.

Then, if you look at just a little nub of a case study, and ask, “What else do we do that is extensible, and who needs it?” Well all of the new distributors, they need data management services. They need licensing support services beyond just getting a license from me. They need royalty calculation services, and distributions. An online guy (music user), even if he got 80% of his licenses from me, means that he got 20% of his licenses from elsewhere. So he can write one check to me, but he also has to deal with the other 20% of the market, and write another 5,000 checks.

In the new world, I can tell the guy in total how much he owes for publishing and he can pay all of it to me with one check, and I can distribute it to the entire industry. So a new media company will say, “That’s very attractive. I don’t have to build royalty calculation capability. I don’t have to build royalty distribution capabilities.”

End-to-end licensing support.

They don’t have to buy printers, buy expensive micro inks or mail checks, and they don’t have to get the tax forms from people in order to not withhold from them. It’s a plug-in place solution that the market is thirsting for because all people want to do is launch their businesses, and figure out if they can grab a consumer.

This year, HFA began providing rights management support to Rhapsody for its US-based offering as well as for its acquisition of Napster and its international expansion to Germany and the UK.

We were licensing them on the other (user) side, but they have decided to use our services in addition. Using services to help them pay out royalties that they would owe. Harry Fox, forever, would not put a song in its database unless it was, one, controlled by an affiliated publisher; and two, had what was called “material commercial activity” which meant that our database was relatively small and limited to our clients.

As we loosened up those rules, and started to take in songs from publishers that we didn’t represent, it made it so we could be hired by a distributor to pay an unrepresented publisher. And that is what caused our database to explode in a good way, by volume. Now we have catalogs of publishers that we don’t represent and we can pay those publishers at the direction of a distributor.

Is social media still the Wild West because there is the implication that creators and rights holders are granting right to some of these media sites?

(Laughing) One of the challenges that we face in the market. It starts off as a high-falutin' complicated conversation. We try to cook it down to something intelligible. We try to find out through our questioning who is engaging in the reproduction. Where does the reproduction exist? And, therefore, who is the licensee? There may be many parties who participate in it (the reproduction), but where does it start? You find out, well this guy has the servers; this guy puts it on the servers; this person built the program that transmits it; this person is merely a skin—like a Facebook.

A game of pass the hot potato.

It has become a little less challenging. In the early days of two or five years ago, everybody did, “The guy you want to talk to is the guy next to me.” Fingers pointing all over. Nobody owned up to being the contact. Some of those guys are starting to rationalize their business enough to actually say, “Alright, you are right. I am a potential licensee. Let me talk to you, and take a license.”

No difference to having music as part of the retail store experience. Facebook uses music as part of their attraction. People also want to share their lives—music and videos--online.

Sure. Then the way that rights break out in the United States, you have the non-interactive guys, the Section 114 people, the Pandoras.

Pandora (laughing).

That is the correct response that you are having. Then there are the interactive guys who will debate, “Okay what are the rights? What are the rates? What are the rights’ structures? Is it really a non-interactive background service? Is it an interactive foreground service?” Try them all. Innovate as much as you possibly can in order to find a consumer that is interested in listening to music, and then let us figure out with you what the rights are. Hopefully, there’s enough room in your business model to pay a fair royalty to those who own, control and create the works.

Do online music services now have a better understanding that they have to have access to the data themselves and can do so by hiring companies like HFA? Or do you still have to advise startup services on the licenses that they need to operate?

It’s much better. We do run in to the occasional person who says, “I raised $100 million, and I spent the last two years building this business. It’s Thursday afternoon, and I’m going live on Monday. What do I need from you?” Ahh, 17 million licenses and that doesn’t happen in a day.

We are certainly seeing a change in the market from 2004, when people would come here for the sole purpose of telling us that from their point of view that they didn’t need anything from us. They just wanted to say that out loud in front of us.

For the first three years of the last decade, there were lawyers that would come in or call me up and say, “This is what my client is going to do. I am just confirming that no rights that you or anyone else represented are implicated here. We don’t need anything here.”

How did you react to that scenario?

I would say, “I may or may not agree with you. In this case I don’t. But you are the lawyer. If you want to advise your client that they can run this business without licenses because you believe that legally that they don’t need a license, then you should put your law license on the line, and tell your client that. If it turns out that you are wrong, and rights holders come after them and prove that they need licenses then…..They’d say, “No no no I want you to confirm.” I’d go, “I’m not issuing an opinion that you aren’t using these rights.”

That conversation used to happened with a bunch of specific, unnamed lawyers all of the time. That’s not happening anymore in part because they understand the rights profile a little bit better and, in part, because they have decided that it’s probably better to get licenses from the community, and be a participant in, rather than to be at odds with the community.

There are still those guys like Pandora that want to fight with the community. They say, “We’re not doing anything different than any other business. We are trying to reduce the price of goods sold to improve our margin.”

Okay, fine but you aren’t making any friends doing that.

I used to have 10 meetings a week with people trying to get me to confirm to them that they didn’t need any licenses. Now I have one meeting a quarter where that comes up, and it’s usually a novice or it’s someone coming in, maybe, from another territory who says, “So I can just file a piece of paper with you and I will get every song for the United States?”

I have to say, “That’s not the case.”

How about dealing with companies from outside the United States?

Even they are beginning to understand U.S. rights. It’s much more confusing to them because they come from a blanket licensing world. So we have spent time explaining (U.S. rights) to non-U.S. headquartered distributors as they have entered into the United States. It’s almost as if we are an educational institution. In order to get to the license, we have had to spend hours and days educating owners and general counsels of ex-US headquartered distributors of how the U.S. works. They are used to (the business strategy of), “We are live in 15 ex-US territories. We went to a society, we gave them $20, and we got a license. Now I report all of my usage to them. They tell me how much I owe, and they pay it out.”

How early did Spotify come to talk with HFA before opening in the United States in 2011?

I am not going to comment on their rate structure or the (Radiohead frontman) Thom Yorke’s (royalty rate dispute) thing blah blah. But Spotify is very professionally managed. They have smart lawyers, and their smart lawyers found us a year before they went live in the United States which is much different than what it used to be. It used to be that we would find out a week after something went live because some skateboard kid who’s friends with a friend of a friend comes over (to the house) and says, “Have you seen this?” We’d be like, “It’s been live (online) for a month and I don’t know.”

There’s a major Swedish law firm called Mannheimer Swartling. The lawyer for Spotify, their senior most lawyer (general counsel) Petra Hansson, came from Mannheimer Swartling. That’s not, “Hey, we launched a company. and we don’t know anything.” In New York, that’d be like saying I got a lawyer from Loeb & Loeb or Paul, Weiss (Paul, Weiss, Rifkind, Wharton & Garrison) or one of the big firms there to come in. This is a very professional lawyer who thought hard and long about rights. They were smart to have a conversation a year before because with a Swedish company, it goes to the society (STIM) which issues a blanket license. First of all, we are not a society. Second of all, we don’t operate under blanket licenses.

Even though it took us a year of talking to Spotify before they went live and before we developed a business with them—which might frustrate some people—that is a revolutionary change compared to what it used to be.

It takes Europeans awhile to wrap their heads around the differences in licensing in America.

That’s common. I go to MIDEM and I meet people who say, “I know how GEMA (Germany), SACEM (France), MCPS-PRS (United Kingdom) work, tell me about the United States.”

I say, “A song that has two owners, you need to license each one of those spits. I might represent one but not the other. You can get a license for 60% from me, but you need to go to someone else for 40%. For every song that you distribute, you have to have to have a license on it in order to cover 100%. You might get 100% from 20 different places. If it’s a rap song, there’s the underlying master or multiple masters. If it’s a Beastie Boys song there may be five master owners, and 15 publishers. You need to go to all of these people and grab all the rights.”

By the time I’m finished, they are like “Aww man.”

What sounds normal to us sounds nightmarish to people not in our market. The NMPA in Washington—David Israelite and his crew are working with Congress and others in the industry to modernize and rationalize how copyright works.

In the meantime, we are trying to build market solutions.

Spotify is a poster child for the different (licensing) world. That is calling a year in advance. Do you know how shocking it is for someone to call saying, “I need to talk to you about licenses. We are going live in a year.” That is never the conversation. Recently, someone did call me on a Thursday, and say that they were going live (online) the Monday and what could do for them? We did a lot for them, but that’s a different conversation than. “Yes, we’re going to talk for a year, and see what we can do to figure out how to rationalize this business.”

When you arrived at HFA in 2001, you came into a company viewed as being in the past. Within the first year, there was a complete overhaul of the backroom systems as well as changes to the business model.

I had been on that side of the business, management, and all of those things. When I came in, my mission was to look at our people, our processing technology and try to figure out how could we diversify this business. This is not a revolutionary thought to any business person other than music business people.

HFA data now flows freely from across all borders. That wasn’t the case years ago. As a result, the HFA database was fairly limited.

It continues to grow on that side. It used to be pretty paltry. It was pretty good, but it wasn’t great because songs wouldn’t get into our database. We had reciprocal relationships with 30 odd (international) societies, GEMA, and SACEM, all of the way down the line, but they (the societies) wouldn’t put their entire data base into (our) data base. They would put them (repertoire) in there one by one; like as a Spanish song got translated, and popularized in the United States. So that was one by one. And, if we had a song in the United States that saw activity abroad, we would send them a notice of foreign activity for one song. There weren’t good data exchanges. Over the past couple of years, we have gotten better at exchanging big blocks of catalogs. So our international database, the profile, has been growing. Mostly with what you would call Anglo American repertoire, the euphemism for English language repertoire.

A contrast to HFA of the 1930s when there was a filing cabinet filled with boxes of cards.

When I got here, I had the filing cabinet.

I was kidding. There was an actual card system?

In late 2001, there were files that looked like library cards. The drawers were taken out of the cabinet. They put them in a closet. Someone asked, “What is that?” We were told, “Every once in awhile, we have to go and look and the cards.” I said, “what?”

They said. “C’mon over here, and let’s go to F.”

So they would go to F and Fa, and they would pull out a famous song. It would be a note card probably written by Harry Fox himself with a little bit of typing on it. They typed the card, and then they wrote notes on it saying, “Licensed to Columbia/Screen Gems” in handwritten that looked like my dad’s handwriting from the 1940s.

So we had those card catalogs.

When I got to Harry Fox, we would identify how many licenses behind we were or how unprocessed we were by someone knowing how many pieces of paper there were in an inch. How many pieces of paper there are in a license, then measure the stack. We aren’t talking about 1950. we are talking about 2001. Someone would take a stack of paper, they would measure it and say, “Okay, that stack is sixteen inches high. In a stack of sixteen inches high, there would be X number pieces of paper. We know that each license is five pages. So divide that number by five. That’s how many licenses that we are behind.

The rule was that you would stack them up in one person’s office because they had a good corner with nothing in it. Then, once a week, they would measure it, and after they were through measuring they would walk up and down the aisles, as if we were in “Ben Hur” or something, handing them out to people as “here’s the work for the week.”

Of course, that is not a scalable business.

It made sense in 1980, but not now.

Meanwhile, HFA’s traditional model of licensing songs for records and collecting mechanical royalties was in decline as CD sales decreased.

Yeah. Mechanicals were in decline. It was evident to me that if I captured 100% of mechanical market share, it would be catching a falling knife anyway—a declining business. People in the music business were thinking about this but it wasn’t everybody in the music business, but when I was at Razorfish, we were thinking about where are the consumers going all day. It was evident to me that consumers were going to expect a richer experience, which would mean not a mechanical (license) and, therefore, not a statutory reproduction.

The new pipelines weren’t that evident at that point.

No. It was before YouTube. But still it was becoming clear that consumers were migrating to richer experiences, even with DVD-style experiences. I thought, “If I capture 100%--if I can convince every publisher to not license direct, and to license through me--I would be capturing 100% of a declining market. But let’s look at our (HFA’s) capabilities. What is it that we do? What is it that we could do and how do we extend it into new business.

The bulk of HFA’s collections remains in domestic licensing?

I would be personally be happy if the international money was all of ours. As a piece of the business, it (international) is not materially material. It’s meaningful but it’s not a serious move of the needle. That may change though because the online services are breaking down barriers.

Twenty years ago, (as an international label) if you wanted to you could find 3,000 record stores in the United States, manufacture units and to put them in those stores to hope that there were three people in each market that were interested in a French language recording. Online you can aggregate that market today. If you make a (French singer and actress) Patricia Kaas French-language record, well does it make sense to put that French-language record in record stores hoping that there are pockets of French language aficionados in all of those markets that will find the record and market it to them? Probably, it’s not worth all of the distribution effort. But if you put it up iTunes that market can be aggregated much more efficiently.

That means international repertoire, coming into the United States to make markets online, is much more meaningful, which is why we have ramped up our data acquisition for international repertoire. Online, it just makes much more sense.

At the same time, an international publisher can effectively still use HFA as a sub publisher.

They can. But we don’t pitch against our clients. There are some international publishers who use us directly for the United States as opposed to going through sub-publishing arrangements. They all make that decision based on what they need in the market. Truly to collect (just) mechanicals, they might not need a publishing relationship. But we do not offer creative services. We do not do film and TV pitching. I’m not going to set up co-writes.

I was being tongue in cheek about being a sub-publisher.

I’m being less than tongue in cheek. There are international publishers who say, “All I am doing is collecting mechanicals. I don’t want to pay you and pay someone else. And I know that they (online music services and labels) use you.” There are other people that ask, “Can you plug my songs for TV ads.?” I tell them, “No you need a real publisher in the market if that’s what you want.”

HFA’s business will likely expand more outside of the U.S.

Yes. I don’t know, at least now, if we would grant rights in a non-US territory. But for rights that have already been granted in that territory, those distributors need the same help with royalty processing and calculation, and they can hire a U.S. company to do that work. I am not a rights holder or an agent for a rights holder in that territory but I can be hired in that territory to help that company figure out how to pay those rights holders. There are more and more people trying to enter the middle (in the mechanical rights management businesses) which creates more fragmentation; creates less efficiency; and it siphons more money away the creators, rights holders and those who administer on their behalf and into the middle. So I recognize that what I just said could be negative to me, except that I think that if we do it right we can create some efficiencies within the bounds of the law that would make the market work better. It means that we have to align ourselves with other types of companies.

HFA has been independent for over 90 years. Would you consider merging HFA with another collection society?

Well, things change. Things that are absolutely certain often change. Arthur Anderson was my auditor in my past life at Razorfish. The attitude was, “We’ve been around for 100 years, and we are Arthur Anderson.” Enron comes along and, within two weeks, there’s no Arthur Anderson. So that which is absolutely certain and unmovable moves very quickly.

What part of Minnesota are you from?

Saint Paul. Keeping it real. Old school.

Growing up, you played in bands?

I have been playing music since 1968, when I was given my first drums at around age 5 by (multi-instrumentalist/record producer) Steven Greenberg who went on to (as a songwriter) “Funkytown” fame. He gave me some beat-up old Ludwig drums-- two early 60’s tom toms with calf skin heads. That changed my life for the better or the worse. I was playing in bands tin Saint Paul. The Honeydogs were from there. The lead songwriter in the Honeydogs Adam Levy was in my ska band in high school called Go Borneo.

You were a fan of the English 2 Tone ska revival of the late 1970s?

I was a fanatic. The English Beat, the Specials, the Selecter, Madness and all of the old stuff like Toots & the Maytals, Desmond Dekker and 300 others guys in the genre. I was a fanatic for all of that stuff. The Specials played down the block from my office a few weeks ago. I bought tickets in January to go, and I couldn’t go because it was parent’s night my kids camp. In June, I took my 11-year-old (son) to see the English Beat at Roseland (Roseland Ballroom) in New York. Why not? The English Beat.

All of my kids love music but my 11-year-old really likes music. He’s like me, and I don’t want to say anything about it because I know what it leads to. I’m just letting him do it. He’s the kid who goes to bed with the radio on, and listens to music all day. So I have taken him to see a whole lot of bunch of bands. I took him to see Squeeze, Devo, and to a Green Day show.

You also took him to see Rush at Madison Square Garden in 2011.

Madison Square Garden is 8 blocks away from our house. That’s like my local venue. It’s a five minute walk. So that’s not a big extravagant “Go to New York, go to the Garden” thing. To me, it’s like Rush is playing in the neighborhood. That’s cool. I’m not the world’s biggest fanatical Rush fan but I really appreciate them. As a drummer, I could stare at them for the rest of my life. I watch Neil Peart, and think, “I know he did that but I really don’t know how he did that.”

Rush formed over 40 years ago.

Hey, these guys have been around. Their accomplishment is astonishing. Their achievement, their work ethic. I’m telling this to my son, and he’s like, “Yeah dad, what does their music sound like? I don’t care about all that other stuff.” He doesn’t want to hear about their business stuff. So I played him a song, and he thought it sounded cool. So we went. I said to him at the beginning, “Now I’d like you to like the show, and I’d like you to stay, but f you are not having a good time you don’t have to sit here and torture yourself. You just let me know at any time that you want to leave, and we can walk home.”

He’s 9 years old,

He stayed for the whole show. A 9-year-old stayed for the whole thing. A big stadium show. This wasn’t 200 people, and being engaged. This is sitting in chairs. Afterwards, I was talking to David Basskin (president and CEO of Canadian Musical Reproduction Rights Agency) and I was telling him about seeing Rush, and he mentions that Peggi (Peggi Ceconni, VP of Rush’s management company, SRO/Anthem Entertainment) being on the (CMMRA) board. Next topic, and we move on.. Two weeks later, an envelope appears in my office, and it’s a bunch of Rush sweat shirts. So my 11-year-old is the only guy I know walking around in special edition Rush sweat shirts.

Have you watched the 2010 documentary film “Rush: Beyond the Lighted Stage?”

The documentary about them? I have made people watch it. It doesn’t matter if you don’t like the band. If you watch it, you might not start to like the music, but (watch) to understand how they achieved what they achieved in the music business for four decades, and the way they did with a relatively low level of nonsense compared with what most bands have done. It’s truly astonishing.

You worked for several years as an artist manager.

When I graduated from the Columbia University School of Law in New York, I realized from day one that I wanted to be in the music business. I was managing bands at Polygram.

Polygram let you manage?

I was managing a no-account indie band. I was managing the Honeydogs. They knew about it. However, when the Honeydogs went from being a no-account band to having major label offers, including Mercury that is controlled by Polygram, I had to decide if I wanted to drop the band and stay at the label or manage the band which meant quitting my job.

You left Polygram to open your own management company Simon Ventures in 1995?

Who in the right mind?

I’d surprised your parents didn’t have you committed.

They were in Minnesota. I was far enough away that they couldn’t hit me. Listen, my parents understood completely go to law school, and work in big building doing legal work. They understood a little bit less when I said I was leaving the big firm to go to a five lawyer firm to do music work. When I said that I was now leaving the law firm to go and work at a record company, they said, “I don’t think we understand anymore what you do. But it’s a company, and they pay you, right? It’s a business.” I was able to say, “yes.” At least, it was a corporation. When I said I was leaving there (Polygram) to manage bands that’s when my parents said, “We now hope you know what you are doing. We do not understand anything that you are talking about.”

Why make the jump?

It was one of those moments where I say, “Alright, I am 28 years old with no spouse. I have no mortgage. I could do this.” If it didn’t work out, I could get a job. I wasn’t going to jeopardize my entire family. I’m going to manage this band. they are going to get a major label deal, and they have a major publishing. I was a crazy person. So I’m managing this band and other people wanted help so I started to build out management company. It started out as just me and it ended up with four employees. These bands were touring.

The Gigolo Aunts were on a Universal-affiliated label. In the U.S. they were on a label (E Pluribus Unum Records) started by Adam Duritz of Counting Crows. They were on Polydor ex-US. We had the Gigolo Aunts, the Honeydogs, Amy Rigby who was on Koch Records., and Kristin Mooney who is now a very successful background singer.

How did you become executive VP of business affairs and general counsel for technology business consultants Razorfish?

Everyone who manages bands from their apartment calls it a suite so nobody knows that they are managing from their house. I didn’t want to do that. I went to some friends who had internet-based consultancy (Razorfish). They were 10 guys in a room, and said, “I will work out of your office. I will do your legal work to cover the overhead of my management company.

The legal work for that startup was 5 hours. My management company was as many hours as I can spend. That little 10 person startup do five hours of legal work a week became Razorfish. I was the 11th guy to move into their office down on Broadway and Soho.

When I left, we had 2,500 employees, and had 16 offices in 11 countries. The year before I left was the best year during my tenure with $350 million in revenue. (Early on) we had a party because we had revenues of $100,000. We went from 10 people private with $100,000 in revenues to a 2,500 people, $350 million public company. I moved into that office Nov. 1996, and I left there in December 2001. It felt like 100 years.

Larry LeBlanc is widely recognized as one of the leading music industry journalists in the world. Before joining CelebrityAccess in 2008 as senior editor, he was the Canadian bureau chief of Billboard from 1991-2007 and Canadian editor of Record World from 1970-89. He was also a co-founder of the late Canadian music trade, The Record.

Larry is the recipient of the 2013 Walt Grealis Special Achievement Award, recognizing individuals who have made an impact on the Canadian music industry.

He has been quoted on music industry issues in hundreds of publications including Time, Forbes, and the London Times. He is co-author of the book “Music From Far And Wide.”

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