Soundcheck NMPA Annual Meeting A few words from Gary Churgin, HFA President & CEO. Issue 13 June 2004

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1 Soundcheck Issue 13 June NMPA Annual Meeting A few words from Gary Churgin, HFA President & CEO It s June, which means it s time for the annual meeting of the NMPA, HFA s parent organization. I have the honor once again of presenting an overview of HFA during the past year, and the progress to date in I wanted to share with you a few of my remarks. Looking back, 2003 was a watershed year in the music industry s continued evolution towards a digital model. While difficult for everyone, I believe that we are beginning to see the proverbial light at the end of the tunnel. HFA s 2003 results reflected the overall industry downward trend, but one of our bright spots was that 2003 was one of the biggest years ever for settlements from Royalty Compliance Exams. Despite that good news, the overall numbers forced us to make some tough decisions last fall. Prior to December, there was no indication that our industry was near the end of the downturn that began in One of our goals is to keep HFA s commission rate as low as possible, below the global average of 7%. With 2003 such a dispiriting year, we felt that in order to do this and meet our budget for 2004, we needed to take aggressive action. In addition to upping the commission on April 1, 2004 to 6.75% still under 7% we trimmed HFA s headcount by 11%, and introduced an annual affiliation fee. is by improving our website, I know the affiliate fee was not a popular move, and it was not an easy decision for the Board. However, thanks to the apparent improvement in the marketplace, in addition to the great performance of HFA s royalty examination and collections efforts early in the year, we were able to end the affiliate fee program for 2004, and there will not be a fee in has brought a sigh of financial relief for HFA. Through May 31, we are have exceeded our comparable 2003 numbers for collections and distributions. Despite the improving numbers, we are carefully watching our expenses and expect to continue to budget cautiously for the future was a painful year for all of us in the industry. For HFA, it was difficult because of the uncertainty in the marketplace, and because a 75-year-old company can still experience growing pains. Most important, we ve learned that as impatient as we are for organizational and cultural change, it takes longer than we d like it to and that we have to take a deep breath, and remember our main obligation is to you, our publishers. Moving forward, we must carefully create plans that take into account the past and the present, yet remain flexible for an everchanging future. We know the headcount reduction has impacted some areas of service, most notably in Client Relations. One way we ve mitigated that 1

2 HFA Client Relations 101 HFA s Client Relations Department is the primary contact for all of the publishers, record companies, and other licensees that HFA serves. The 13- member staff responds to the over 60,000 cold-call questions that come in each year by phone, and fax, in addition to handling the resolution of all regular client inquiries. There s no average working day in Client Relations the schedule is driven by what inquiries are still open and the new ones that come in each day. An agent needs to be informed on all areas of HFA s operations, including all the new opt-in and out-out agreements that we offer to our affiliated publishers. The goal of an HFA Client Relations representative is to build relationships with the affiliate publishers and licensees and facilitate their interaction with the company. The most popular form of communication is an active publisher client may send over 20 s a day. Client Relations staffers are the generalists of HFA, and they are directly accountable for our clients satisfaction. They need to know the basics of every department, and they are cross-trained on the functions of the Licensing, Index, and Collections areas so that they can resolve a variety of issues themselves. Client inquiries can be detailed and complicated. All are tracked using an inquiry management system (IMS) tool so that we can monitor the progress through conclusion. The IMS record includes the publisher information, date received, method of communication, a detailed synopsis of the issue, and any supporting documentation. If the inquiry is more difficult, Client Relations coordinates with the appropriate departments to bring the issue to closure. Some kinds of inquiries require response from companies outside of HFA, which means they may take more time to resolve. When we are working with third parties, we have to rely on their ability to reply in a timely manner, making it difficult for us to give a firm estimate on how long it will take to bring these kinds of issues to close. Client Relations supports all HFA clients, and handle all limited quantity license requests. Four members of the team are Inquiry Agents, answering all the general questions that HFA receives each day. One member of the staff works on all International accounts and issues, and there are five dedicated agents who are each assigned to multiple publisher accounts. Senior staff handle issues which may require special attention, as well as new publisher affiliation activity. If a publisher would like an assigned account representative, they can let us know by ing client_relations@ harryfox.com, or leaving a message at Client Relations is truly the frontline here at HFA. We are fortunate that we have a staff that thrives on solving our clients problems and take direct responsibility for bringing open issues to closure. 2 HFA Soundcheck June 2004

3 Digital Jukeboxes HFA just entered into a licensing agreement with Rowe AMI for their digital jukebox service. Jukeboxes are another area of the music industry that is expanding the boundaries of its traditional business thanks to the use of digital technology. Rather than having a jukebox in a venue that is limited to a specific number of physical CDs contained in the device, each Rowe AMI digital device allows the consumer access to an almost unlimited number of songs via digital transmission, with an LCD read-out of the song information. This eliminates the need to change CDs, maintain CD libraries and create new title strips. It s interesting to note that both Rowe AMI and HFA owe their existence to the disruptive technology of the first form of recorded music, the player piano. Rowe was founded in 1909 under the name of Automatic Musical Instruments, Inc. (AMI). It is now the oldest and largest manufacturer of jukeboxes worldwide. Of the approximately 350,000 jukeboxes on location and operating throughout the U.S., 230,000 were manufactured under the Rowe AMI brand. Despite its huge success, Rowe AMI recognized that it was going to have to transition its company to a digital delivery-based service. In fact, when the company polled its operators it discovered the operators expect that digital jukeboxes will represent 80% of new jukebox purchases by Rowe AMI actually began employing digital jukeboxes outside the U.S. in 2002, and is now live in Mexico, Australia, New Zealand, England, and Finland. Rowe AMI has entered into agreements with various companies in the different territories to provide the music for their service. Different companies require different solutions for their jukeboxes - for example, in Mexico, Rowe AMI also uses satellite delivery, as broadband Internet services are not as available there. However, theses jukeboxes can later be converted to the online service once broadband availability increases. In the U.S., Rowe first worked with Ecast, another digital jukebox company, Rowe AMI s NiteStar Floor All-Digital Model but is now developing its own licensed digital music service for its jukeboxes. The all-digital music jukebox is essentially a special-purpose personal computer, which lets patrons search for songs by title, artist, album or genre using graphical search and navigation tools. The broadband connection is used for both music on demand requests as well as remote Internet-based management of the up to 3,000 encrypted song files stored on the device s internal hard drive. The music HFA Soundcheck June

4 network that supports these jukeboxes includes several built-in layers of security to deter unauthorized access of licensed music. Digital delivery allows Rowe AMI to offer original programming to its operators. For example, Specialty Music Play Lists are created by the Rowe programming team according to a theme such as Holiday music, St. Patrick s Day, Birthdays, etc. This feature is low maintenance for the jukebox operators and allows them to easily offer a seasonal playlist for their patrons. Rowe AMI Opt-In Letter Due July 9 Don t miss your opportunity to be included in this deal. If you have any questions about this offer, please contact J.C. Lindstrom in HFA s Business Development department by at jlindstrom@harryfox.com or by phone at As the music business continues to move towards a more digital-based model, HFA will be right there, pursuing new licensing opportunities for its publishers. In Memoriam: Kevin Au Yeung On May 5 th, HFA lost a beloved friend and colleague, Kevin Au Yeung, after a valiant twoyear battle with cancer. For those who didn t know Kevin, he was Vice President of Audit, now known as Royalty Compliance. He worked at HFA for over 15 years and was the Agency s first in-house auditor. Kevin oversaw the department and its growth from one to five people, including Steve Choy, Frank Neuschaefer, Michael Lam and Rob Rooney. Under his leadership, Kevin and his team completed many successful settlements that benefited both HFA and our clients. The sadness we feel is immeasurable as Kevin meant so much to so many people. Through the last two years, Kevin s positive outlook and the courage he displayed facing his illness were inspirational. This photo was taken just one month before his death when Kevin spent the day with his friends from HFA enjoying his favorite hobby, fishing. We were lucky to have a colleague like Kevin. He will be missed by all of us. Our heartfelt condolences go out to Kevin s wife Mary and their son, Jonathan. 4 HFA Soundcheck June 2004

5 Affiliate Profile: Hugh Prestwood Staff Songwriter, BMG Music Publishing Hugh Prestwood has been writing country hits for over 25 years, including Hard Times For Lovers, Hard Rock Bottom of Your Heart, and The Song Remembers When. He is a staff songwriter for BMG Music Publishing, and he has taught advanced songwriting classes at The New School in Manhattan since In addition to songwriting, Hugh has exercised his writing talents in a number of thoughtful editorials and articles in publications such as The New York Times. A recent Billboard magazine included his An Open Letter to File-Sharers, which concludes in part, If you won t pay for music, you will soon be receiving a product commensurate with your thriftiness. HFA Soundcheck caught up with Hugh to get more of his thoughts on this important issue, as well as on songwriting. While he had been a musician in his youth, songwriting is a second career for Hugh. Convinced he could not make a living as a musician, he became a sixth grade teacher. In a serendipitous turn of events, a friend who was performing on Broadway cut some of Hugh s songs for a recording for CBS, and the producer became interested in Hugh s work. At 30, he came to New York as a singer/songwriter and was discovered by Judy Collins. He became a staff writer at Mary Tyler Moore Enterprises, which was acquired by BMG Music Publishing in 1990, and he s been there ever since. Hugh notes that being a staff writer is a great thing. I have a great team and support system. The only downside is that it s a year-to-year gig you have to work your butt off! As a professional songwriter, Hugh is appalled by the implications of illegal file sharing, but applauds the rise of the legal music services. Free sounds good when you don t have to support your family. I feel most kids are really uninformed about the impact of their actions. However, he does feel the tide is starting to turn, noting that, For a long time the media was oblivious, and saying things such as, you ll make it up in live performance. The songwriter is not getting paid for their live performance! Our livelihood depends on people paying for music. Hugh is currently putting together a recording of songs for BMG to market, which he expects to be completed by the end of July. He says he does not generally write songs with any specific performer in mind, and does not work with co-writers. He notes that for a professional songwriter, musical delivery can t mask any issues in the songwriting substance must always triumph over style. His songs strive to be one size fits all not so personalized that they can be only delivered by one singer or to one audience. This is a concept he teaches in his songwriting classes as well. Originality is actually a very easy to come by trait I could sit here and spin off a song about my refrigerator, or asparagus a professional songwriter is in a bit of box. I tell students you will write about love so many times, the challenge is how to do it differently and well each time. Another topic close to Hugh s heart is the quality of the content in current music. HFA Soundcheck June

6 Somehow, in Rock and Roll it became hip to talk down to your audience, and there became this concept that too much popularity can do you in. Country is on a more human level. It has a more direct connection to the audience. I think too many writers for pop mediums do not respect the audience, and write down to them. We need to give them more credit. Rather than letting popular drag us writers down a level, we need to play a stronger roll in lifting people up. Award. MTV/VH1 received the ASCAP Partner in Music Award as the pioneers in Music Video Broadcasting. The 2004 ASCAP College Vanguard Award went to The Mars Volta. Word on the Street... HFA Affiliate Publisher News The Universal Music Publishing Group announced that it will administer Clarence Avant s music publishing catalogs, Avant Garde and Interior Music Corp., including representation worldwide for synchronization licensing for motion picture, TV, and advertising. The Avant catalogs encompass many hit songs, including classics by Bill Withers, Jimmy Jam and Terry Lewis. In other news... The IFPI has offered European collection societies a blanket 8% regional royalty rate for downloads and physical sales, including CDs and DVDs. The current UK mechanical rate is 8.5% for physical sales, while the rate determined by Biem and the IFPI for continental Europe is 9%. DVDs are licensed at 6% in Europe, but that rate is still undetermined in the UK. 50 Cent, Graham Edwards (The Matrix) and Nelly were named Songwriters of the Year at the 21st Annual ASCAP Pop Music Awards celebration held May 18 at the Beverly Hilton Hotel in California. Songwriter/producer Rick Nowels received Song of the Year honors for the smash hit single The Game of Love. EMI Music Publishing picked up the Publisher of Year award as the music publisher with the most award-winning songs. Special awards were given out to Jackson Browne, who received the ASCAP Founders Award, and to Metallica who was honored with the inaugural ASCAP Creative Voice Left to right: Graham Edwards, ASCAP President & Chairman Marilyn Bergman, Jackson Browne. BMI saluted the past year s 50 most performed songs during the 52nd Annual Pop Awards on May 11, with The Game of Love as Song of the Year, Lauren Christy and Scott Spock (The Matrix) as Songwriters of the Year and Warner/Chappell Music Group as Publisher of the Year. Frances W. Preston, President & CEO, and Barbara Cane, Vice President & General Manager, Writer/Publisher Relations, Los Angeles, presented BMI Citations of Achievement during the dinner event honoring the writers and publishers of the top 50 songs. A highlight of the gala, staged at the Regent Beverly Wilshire Hotel in Beverly Hills, was a tribute to artist/writer/producer Brian Wilson, who was named a BMI Icon. For the fourth consecutive year, R&B songwriter Bryan-Michael Cox was named Songwriter of the Year at SESAC s eighth annual New York Music Awards held May 6 at Manhattan s Studio 450. Song of the Year honors went to Headstrong, the multiformat smash from Trapt. W.B.M. Music Corp. took home Publisher of the Year honors. Word on the Street is taken from press release material. 6 HFA Soundcheck June 2004

7 HFA Employee Profile The HFA Office Services staff is the focus of this month s HFA Employee Profiles. Among other duties, Office Services makes sure that all mailings including distribution checks and mechanical licenses get in and out the door as quickly and efficiently as possible. Harri Ramkishun, Jr. Harri started at HFA as a temp 4½ years ago, and was promoted several times to his current position as Manager of Office Services. Harri supervises all of the daily operations in the mailroom and the maintenance of the HFA facilities. He is the manager of HFA s softball team Megahurtz, a member of the HFA employee Roundtable, and he participated in the first HFA Team Challenge. Harri also coordinates the HFA employee holiday party, and plays MC at that event as well as at HFA employee band showcase nights. Harri loves the atmosphere at HFA, and the flexibility to do different things. I get to interact with everyone in the company. Harri MC s and DJ s at non-hfa events, and he writes poetry and participates in spoken word performances. He s also planning his January wedding to Erikka Harley, the Executive Assistant in HFA s Finance Department. Mark Stopek Mark also started as a temp in the Office Services department, and is now an Office Services Assistant. Mark transitioned to HFA after two years of teaching music in public schools, and he has his Master s in Music Education from SUNY Potsdam s Cranes School of Music. Mark tracks when the Distribution checks are mailed out, handles the mailing of the publisher and manufacturer s reports, and tries to track down publishers that have had mailings returned. He is also on the HFA SWAT team that is employed to troubleshoot in different areas of the company. As a former band teacher, Mark can play just about every instrument, but he focuses on the trumpet. He and his wife both play in community orchestras and brass quintets. Overall, he finds his life at HFA more balanced than during his teaching days. Hugo Coello Hugo joined HFA in 2001 after working in the mailroom of Universal Music for 11 years. As the Assistant Manager, he helps Harri oversee the day-to-day operations, and he handles the mechanical license mailings. He is also the Bob Villa of HFA, handling office moves and the like. He is completing his Bachelor s degree at Lehman College, and in his spare time, likes to mountain bike, travel, and he s going for his black belt in Jujitsu. Barry Cruz Barry is the HFA Mail Clerk. In addition to delivering all mail and inter-office materials to the staff with a smile, he handles messengers and express delivery. He runs the mailing machine, and assists with check sorting. Barry favors hip-hop, salsa, and R&B. A man of few words, when asked what Barry would want to make sure people knew about his department, he stated, we send out the checks! L to R Hugo Coello, Barry Cruz, Harri Ramkishun; Seated Mark Stopek HFA Soundcheck June

8 Did you sign up your publishing company for EFT yet? Direct Deposit, or Electronic Funds Transfer (EFT) forms, are available online at Sorry, at this time we can only offer EFT for U.S.- based accounts. Return to Sender, Address Unknown Publishers MIA: Can You Help Us Find Them? HFA represents over 27,000 publishers. Over time, some of them change their addresses and forget to provide us with forwarding information. While we do our best to track them down, there are some that we have been unable to reach. We need your help! Please take a moment of your time to go to and let us know if you can provide any information that would help us locate any of the entities on the site. If you have any comments regarding HFA Soundcheck, please contact Laurie Jakobsen, Senior Director, Communications, at or ljakobsen@harryfox.com. HFA Soundcheck is published 10 times a year by The Harry Fox Agency, Inc. (HFA). All rights reserved. Established in 1927 by the National Music Publishers Association, HFA represents over 27,000 U.S. music publishers for their mechanical and digital licensing needs, and the collection and distribution of royalties. HFA also provides collection and monitoring services to its U.S. publisher clients for music distributed and sold in over 75 territories around the world. For more information about HFA, or to become an affiliate publisher or a licensee, see 8 HFA Soundcheck June 2004