Global Music Distribution 2015: An Interview with Stevan Pasero, CEO, Sugo Music Group

Global Music Distribution 2015: An Interview with Stevan Pasero, CEO, Sugo Music Group

STEVAN PASERO PHOTO W BORDERS 1800X600

Question:

The music industry is experiencing mass change. How can musicians and music execs effectively exploit this change to successfully distribute and market their music assets?

PASERO:

This should be the greatest time in music history. More and more music is being written, discovered, distributed and listened to than ever before. Consumers are embracing digital music Streaming—and that’s good news, whether we understand it, like it, or not. Will Streaming be the savior of our precious music industry in an era where piracy had almost crucified and eviscerated it? Everyone should be rejoicing, reveling, partying—yet musicians and music execs are now standing alone in dark corners of cold rooms, with arms folded, and frowning upon this abomination: Streaming.

As a musician and music businessman, I’m doing fine. I’ve made a good living and the future forecast is good (cloudy yet clearing). Yet I fear for my musical brethren who’ve spent a lifetime honing skills, writing songs and practicing technique on guitars, violins and ukuleles. And for all the wide-eyed talented artists bursting onto the scene today, unknowing of what lies ahead or why all this happened, their prognosis may be dispiriting. Doom and gloom? Not so fast. Yet to grasp the bigger picture and to get a clearer understanding of the end result, it’ll require a more thorough examination of where the music industry was yesterday, where it is today and, most importantly, where will it eventually evolve to?

For the indie music masses, it’s all about making an honest living—with instrument in hand and song in the air. Yet many musicians and music execs now honestly feel that it’s all slipping farther and farther away from their reality, from their dreams, and from their passion. So the question still begs—is Streaming an abomination or will it be our savior?

To start, it’s worth taking a brief look back in time—a rekindling history lesson of sorts—to where music was 50 years ago and where it is now. From Vinyl, Cassettes and CDs, to the advent of Downloads and Streaming, the music industry has undergone significant changes relevant to how music was created, delivered, promoted, and perceived—not to mention how each music format birthed new distribution channels, cool gadgets and fanciful consumer psychographics. Some of the biggest changes in our beloved music industry are occurring right now and there are more changes heading our way.

It’s easy to fault Spotify, MP3s, black market piracy, and even those cute little keyboard synthesizers for the radical decline in musicians’ income and the increase in pessimists’ gloomy forecasts. But the solution may be a simple mathematical equation: “X” + “Y” = “Z”. Yes, that’s right, so grab your calculator and let’s do the math. When Streaming eventually fulfills its potential by: “X”} legally transmitting throughout emerging territories in the new frontier (e.g. China, India, etc.); + “Y”} broadcasting songs seamlessly via consumers’ lifestyle touch points and machinery (e.g. cars, TVs and connected devices), the resulting sum will equal “Z”} increased music royalties for our music brethren. Hmm, easy math? Sounds too good to be true? Possibly, yet first a few things need to be ironed out to validate this simple mathematical equation.

It’s easy to fault Spotify, MP3s, black market piracy, and even those cute little keyboard synthesizers for the radical decline in musicians’ income and the increase in pessimists’ gloomy forecasts. But the solution may be a simple mathematical equation: “X” + “Y” = “Z”. Yes, that’s right, so grab your calculator and let’s do the math. When Streaming eventually fulfills its potential by: “X”} legally transmitting throughout emerging territories in the new frontier (e.g. China, India, etc.); + “Y”} broadcasting songs seamlessly via consumers’ lifestyle touch points and machinery (e.g. cars, TVs and connected devices), the resulting sum will equal “Z”} increased music royalties for our music brethren. Hmm, easy math? Sounds too good to be true? Possibly, yet first a few things need to be ironed out to validate this simple mathematical equation.

Steaming, the savior, has arrived. Hallelujah!

Question:

How is digital distribution evolving? What’s on the digital horizon? What do we need to know to compete and flourish with the advent of digital Streaming? How is your distribution company, Sugo Music Group, coping with these issues?

PASERO:

For over 30 years Sugo Music has distributed, sold and/or manufactured most types of music media: vinyl, cassettes, compact discs, multimedia, downloads and streaming. We’ve distributed music products through most channels: internet, mobile, satellite, cable, music stores, gift shops, big box retailers, corporations, licensees and wholesalers. Most importantly, the Sugo team consistently researches and acts upon the ever-changing entertainment landscape regarding technology, social media, consumer devices, distributors, collection agencies, performance rights, label partners, publishing, synchronization, content management, CiD, music trends, and more. That’s a lot to do on a weekly, daily, and minute by minute basis! Yet we love it, and we believe that if it’s done right, then the music ecosystem can once again flourish unilaterally. Lastly, there is a final component to address. It’s a common distribution thread which connects music with consumers, technology and sales channels. It’s called Metadata: the musical fingerprint of the new world. It’s simple, yet complex; it’s mathematical, yet cognitive; and it’s utilized widespread these days, albeit ignored by many music content managers. In this burgeoning network of retailers, broadcasters, agents and emerging territories, Metadata should be properly reckoned with and pondered deeply. Metadata traverses geographic borders, DMS providers, hardware and political ecology, and will help ensure that an artist’s music gets discovered and properly paid for, especially in this era of Streaming.

Question:

What comprises a complete music distribution portfolio? What are the key components?

PASERO:

Well, I guess every meaningful component is “key” when building a complete distribution portfolio, yet there are some highlights. To begin, let’s start at the 10,000 foot level and work our way down by asking a few questions. The first question is, “How do we connect the chasm between Music Channels, Music Marketing and Music Sales?” Second, “Have we taken adequate time to review the essential components and underpinnings of a standard distribution portfolio such as master rights, performance rights, synchronization rights, songwriter and publishing rights, licensing, collection agencies, content identification and more?” Thirdly, let’s take a look at some additional discussion points worth considering at this time:

  • HOW to Build an Effective Team and Business Stratagem? It is industry consensus that it takes a team to exploit a product effectively. Yes, that means musicians may need to recruit strategic, valuable, skilled team members and organizations along the way (when applicable) such as a record label, distributor, manager, publicist, booking agent, radio agent, marketer, engineer, or an attorney to help bridge the conundrum between music assets, sales channels, marketing, and consumers. Any of these team members can be hired as independent contractors or “cut into the deal,” so to speak. A well-oiled “team machine” will typically be able to work more effectually in real time compared to going solo, and also capable of multitasking the monolith of duties of a well-laid plan. This business stratagem—building an effective music team—defines the age old theory that “you can earn $1 yourself” or “you can generate $100 and share it with 3 co-workers”. The math is simple. Team members can also help protect and safeguard assets—this should not be underestimated and it’s very hard to do on your own! Around the world, criminals are bootlegging and plagiarizing music content at an alarming rate. Also, if your music content was formatted prior to 2014, your metadata (digital track info/data) may not be up to today’s standards and impeding proper distribution (metadata guidelines change almost every year). Lastly, most artists are ill-informed regarding copyright law, infringement, indemnification, and double-claiming, which can complicate matters exponentially. Building a robust distribution team and pre-emptive stratagem is essential. So, grab a pencil and paper and start ‘whiteboarding’ your grand team schema!
  • WHERE are the 3 Primary Consumer Lifestyle Touch Points? They are 1) Mobile Devices, 2) Automobiles and 3) TV’s. As previously mentioned, these 3 core touch points consume significant parts of consumer’s lives (besides sleeping in bed at night). To better understand the impact of these 3 touch points, let’s take a brief look backwards in time at how music media generated revenue. Vinyl, CDs and Cassettes were called the “dollar game”: royalties ranged around $1.00-$5.00 for each wholesale. Next, Downloads were subsequently labeled the “penny game”: artists received $.10-$.70 per download. Now, Streaming is considered the “fractional game”: broadcasters pay fractions of pennies for each stream. Many musicians believe that Streaming marks the end of their careers. Is this a false assumption? There are analysts, including myself, who are forecasting juxtaposed results. These pundits predict that once consumer lifestyle machineries (mobile devices, cars and TVs) are fully equipped to receive digital broadcasts seamlessly in major territories alike, then musicians will prosper once again. Think about it! Do the math: apprx 300 global territories, apprx 365 days per year, apprx 24/7, and through all touch points. Hmm. Analysts are responding favorably and are now adopting the “glass half full” approach.
  •  WHAT are Emerging BRIC Territories? The emerging territories of BRIC (Brazil, Russia, India and China) have arrived. Although the territories of Brazil and Russia are important relevant to commodities and world economics, the territories of China and India are very, very important relevant to music and video distribution—due to the sheer combined population (apprx 3 billion consumers) and active mobile devices (ranked #1 and #2 respectively in the world). Although there have been some ancillary music distributions in both territories via telecoms (Nokia, etc.), both nations have not been active participants in legally disseminating music. Yet in the summer of 2015, Apple Music launched streaming services within these two powerhouse nations. What does this mean for music sales? How will royalties be distributed? Will music be more easily plagiarized? These are just a few questions that are being asked by critics and advocates alike. That said, the emerging BRIC territories will undoubtedly play an important role in music sales, foreign fan bases, and in building a complete distribution portfolio.

About The Interviewee: Stevan Pasero is Co-Founder and CEO of Sugo Music Group, a global digital music distributor located in the San Francisco Bay Area. In addition, Mr. Pasero is also a music producer and musician. As a Producer, he has recorded over 1000 studio albums for an array of music artists and, as a musician/guitarist, he has recorded 30 albums which have sold 20M copies.

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