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Jim Donio - NARM

Posted by MMF on May 04, 2012 | 0 Comments

Michael Huppe is responsible for the strategic direction of SoundExchange, the nonprofit organization that collects digital music royalties paid by internet radio, satellite radio and other digital media services on behalf of recording artists and record labels. SoundExchange represents one the music industry’s fastest growing segments including more than 48,000 payable performer accounts and over20,000 rights owners and label accounts. 
  
Michael has devoted the past 12 years of his career to protecting the value of music. Prior to being appointed to SoundExchange’s top position in 2011, he most recently served as organization’s executive vice president and general counsel.
Michael holds a B.A. from the University of Virginia and a JD from Harvard Law School.  He is an adjunct professor at the Georgetown University Law Center. His optimism helped to place SoundExchange among Forbes Magazine’s “Top Names You Need to Know for 2011.”
1. What in your career path led you to your initial job at SoundExchange?
I’ve had an interest and passion for music since childhood, but my career path -- mixed with a little bit of luck -- brought me to SoundExchange.  I was drawn to intellectual property law ever since law school, because of what it meant for our culture and the policy goals behind it.  I tried to work on as many IP cases as I could at my law firm, ultimately moving to focus on the music industry at the Recording Industry Association of America, and spent the last two years there doing work related to SoundExchange.  When my focus shifted to digital issues, it was clear how important this area was going to be for the industry as a whole.  When the opportunity at SoundExchange to become general counsel opened up, it was a natural and exciting move.  About four years later, I became president.
2. How has SoundExchange evolved the last few years?
It’s an exciting time in the music industry, and new services and innovation mean consumers have  more access to music than ever before.  As a result, SoundExchange has experienced explosive growth over the past few years. Our numbers are proof of our growing contribution to the industry: In 2011 we distributed more than $292 million to artists and record labels – that’s nearly triple what we paid out in 2008!  What used to be a rounding error on the books of most recipients has now become a very real and meaningful source of income.
These new revenue streams makes a difference not just in the lives of well-established artists and labels, but also in those of working class artists and labels. That is a very rewarding part of our work.  Of the over 60,000 checks SoundExchange sent out last year (2011), over 90 percent were for less than $5,000.
3. Where do you see SoundExchange five to 10 years from now?
First of all, you can expect to see continued growth from SoundExchange. In the next five to 10 years, we could very well become as large as other performance rights organizations that have been around much longer.
In addition, we’re increasing our technology game. We are building a next-generation technology platform that lays the foundation for our future and for the benefit of the entire industry. We’re also in the process of developing a repertoire database – a single authoritative database for U.S. recording that is critical for SoundExchange to expand and improve our service – also for the benefit the entire music industry. As an organization, we’re focused on creating an environment to allow this new part of the industry to flourish.
We are developing technologies that can have a broad application.  We will be able to do more than simply administer the statutory license, such as helping companies with their “back office” functions, or even helping distribute royalties for other industries. 
I can promise you what won’t change: SoundExchange will always fight for the music community – artists, artists’ managers and copyright owners. We will always work to protect the value of content.  
4. What is your greatest professional challenge today?
While there are many, I think our greatest professional challenge as of this moment is probably also the industry’s most exciting challenge: a change of mindset, and a conversion to a completely different way of consuming music. The historic model was based on sales, and while sales are still important we need to focus on other revenue sources as well.  The consumption today might just as easily be for “access to a stream” as it is “purchase of a CD.”   The model is changing and it affects everyone -- managers, artists, labels, consumers and everyone in between. SoundExchange has found itself right in the middle of the industry’s evolution. Yes, it creates challenges in terms of the need to enhance our technology to keep up with the explosive growth in the streaming industry. But, the real challenge is helping to broaden industry perspectives in order to keep up with consumer expectations for legally accessing music.   
There are some who like to preach “doom and gloom,” or that the music industry is dying.  That’s just not true.  Our industry isn’t dying; it’s simply evolving, and we’re just starting to tap the new potential of this evolution.  
5.  What's the best advice you've received since heading up SoundExchange?
It’s actually a philosophy that I’ve carried with me throughout my life and career, which is “never be satisfied.”  I’ve always been the type to push a little harder, or strive for that target that’s a little higher. Running a company is about what lies over the hill, and not where you’re standing right now.  I believe the entire team at SoundExchange shares the same forward-looking vision that we’re working towards, for the future of our organization and for the future of the music industry.
6 Do you think we will ever get an artist terrestrial Performance Right? If so what do you think it will take to achieve this?
Absolutely. It is only a matter of time.  For anyone who truly looks at the issue, there is really no good factual or policy reason that the U.S. is the only industrialized nation without a terrestrial performance right. This situation is simply a victim of history and politics.
In the last Congress, we moved farther than ever before in the 80-year plus fight for this right.  More artists and more people in the industry are recognizing the undeniable fairness of our position, and this drumbeat is only getting louder.  I certainly recognize the long business relationship between the broadcasters and the music industry, and that they have historically provided benefits to one another.  But it is neither fair nor appropriate that broadcasters make billions of dollars every year from the creativity, hard work and investment of others, without sharing any of that profit.  If someone wants to give away their content, that’s their choice, but it shouldn’t be given away as a matter of law. Everyone with a stake in this fight should speak up and lend their voice to this fight.
7. Do you think services like Spotify have the potential to hurt SoundExchange. Please explain.
SoundExchange is excited about the growth of all digital music services as long as they appropriately compensate artists and rights holders. We’re not privy to terms of any particular deal, but SoundExchange always fights to ensure artists and rights owners get their fair share. It’s our job to ensure that content continues to have a value. That said, we think services like Spotfiy can coexist with those that rely on the statutory license that SoundExchange administers. They offer entirely different experiences and cater to different types of consumer demands. One is a more active “lean-forward” experience, requiring far more input, while the other is a more passive “lean-back” model that requires less interaction from the listener.  It wouldn’t surprise me if the most passionate Spotify fan also listens to Pandora whenever they are in the car, just as the avid record collector would listen to FM radio before.  There is no reason both of these models – and others – can’t easily coexist in the music ecosystem.
8 Do you see any new revenue streams for Artists from new media?
Definitely. We expect digital radio to continue to grow, so more and more artists will see increasing royalties from SoundExchange. Sirius XM, for example, is projected to grow, Pandora’s usage is exploding, other webcasters are seeing double-digit growth every month, and new digital music services are launching every week.
In addition, we are just beginning to scratch the surface on the potential for monetizing the online audience.  Unlike broadcast technology (which is a “shotgun approach” to messaging), online marketing can be ultra-targeted.  Digital services can match a fan with not only their demographics, but their online preferences, online usage patterns, geo-location, or even hyper-local marketing (such as texting someone as they’re passing a relevant sales location).  As this convergence of data is perfected, it will allow artists to connect with fans like never before.  And with that greater connection come new abilities to monetize the experience.
9 What advice would you give a new manager coming into the industry?
I would advise any new manager entering the business to be forward-thinking and keep an open mind. And most importantly – don’t miss out on any of these revenue streams. Remember, many of these models did not exist five to 10 years ago. (Just imagine how different this same discussion would have been even only five years ago.)  If you think you know everything, and every possible stream of revenue, you almost certainly don’t.  We still find managers who think they don’t need to sign up their artists with SoundExchange because they’ve already signed them up with BMI, ASCAP, or SESAC.  So many people in this industry don’t know what they don’t know.
The successful artist of tomorrow will be drawing significant revenue from 10-15 (or more) different sources, as opposed to two to three primary streams under the traditional model.  So be ready to work all the angles for these different sources, including maximizing your online presence and social networking strategy, and recognizing that it is important to extract value from every stream possible.  And make sure you have someone on your team who really knows new media, and how to exploit it to the artists’ maximum advantage.

Jim Donio is the President of the National Association of Recording Merchandisers (NARM), the music business association in the United States. Since taking the role in 2004, Donio has evolved the organization from one primarily focused on physical product retailers to a more inclusive trade association that represents the full breadth of the current music business, including digital distribution, mobile, games, video, applications, and other entities that monetize music. This expanding membership vision includes not only Board-level representation from companies such as Amazon, emusic, iTunes, Microsoft, Nokia, Spotify, and Verizon, but also the introduction of membership levels for individuals and students, not just corporations.

  

 

In addition, he conceived the Digital Think Tank, which was formally created in 2009 to explore and resolve objectives related to enterprise-level digital music commerce. Donio recruited Bill Wilson to helm Digital Strategy and Business Development to oversee this area, underscoring NARM’s commitment to being on the leading edge of technological developments for music retail. The Digital Think Tank has now morphed fully into digitalmusic.org, a comprehensive hub for all of NARM’s digital initiatives that features six functional work groups, events such as the Music Startup Academy, white papers, and more.

 

Donio has worked on collaborative industry campaigns to inspire music sales since he first joined the organization in 1988. NARM has worked with every music awards show, from the GRAMMYs ® to the Country Music Awards, to translate the televised experiences into exciting in-store campaigns. In 2007, NARM collaborated with the Rock and Roll Hall of Fame to create the “Definitive 200,” a ranked list of the 200 albums and soundtracks that should be in every music collection.

 

More recently, Donio worked with the Recording Industry Association of America (RIAA) to revive the “Give the Gift of Music” campaign in May 2010, which provides consumers with ideas on how to give music – both CDs and digital formats - as gifts, and providing retailers support materials that highlight “giftable” titles. NARM also supports the now-annual Record Store Day on the third Saturday in
April, bringing together independently- owned record stores and artists to celebrate the art of music.

 

Donio has also revitalized NARM’s Music Biz convention, making it the definitive gathering for
about 1,000 executives engaged in the business of music in the United States. Held each spring in different locations around the US, Donio has also worked to expand NARM’s event offerings beyond
the convention, introducing the Entertainment And Technology Law Conference Series and a regular schedule of webinars on a diverse variety of topics of interest in the industry.

 

Donio also finds time to participate in other industry events. In 2009, he was a keynote speaker at
the TM Forum’s Management World Americas, and was a panelist at MediaTech’s Future of Packaged Media, as well as Digital Music Forum East
. He has also guest lectured to students at the NYU’s Clive Davis Department of Recorded Music and Drexel University.

 

Donio worked his way up through NARM since he joined the organization almost 25 years ago as Director of Creative Services.  In 1991, he added PR and marketing functions to his NARM resume, and was promoted to the position of Communications Director.  In 1995, he took on oversight of NARM’s conventions and conferences as Vice President of Communications & Events.  In 2000, he was elevated to Executive Vice President, adding most of the organization’s day-to-day administrative and operational responsibilities to his job description, before assuming the top job in 2004.  

 

Prior to joining NARM, Donio held a variety of editorial, PR and event-related positions for the Association of Information Systems Professionals (AISP), an international individual membership organization focused on the needs of office systems professionals.

 

A Philadelphia native, Donio earned his Bachelor’s Degree in Journalism from Temple University.
He has been involved in the city’s Mummers Parade tradition since his college days, and has supported the Mummers Museum since it opened in 1976. This folk tradition, one of the oldest in the country, celebrates the New Year with elaborately costumed participants, songs and dancing. Jim has participated in a variety of ways, including as a musician, costume designer, choreographer, and television commentator, and won a local Emmy Award in 1986 for “Outstanding Cultural Programming” for his special coverage of the event.

 

Donio has also acted professionally, and if you look closely, you can see him in the movies “Mannequin,” “Clean & Sober,” and “Stealing Home.” The first record he recalls receiving as a gift was Meet the Monkees, which is still on his personal “Definitive 200” list.  

 

 

1. What in your career path led you to your initial job at NARM?  

Prior to joining NARM, I was working for a business organization whose member were office information systems professionals. That organization was relocating to Chicago and I did not want to make the move.  I answered an ad in the Philadelphia Inquirer for an editor at a South Jersey-based entertainment industry organization...and that was NARM and its sister organization in the video space the Video Software Dealers Association (now the Entertainment Merchants Association). I has always been interested in the entertainment space, having been an actor, broadcaster, musician, and dancer with a voracious appetite for all things involving popular culture.  Since my degree is actually in Journalism, and I had substantial prior writing, PR and editorial experience, the initial position was upgraded to Director of Creative Services and I was responsible for both organizations' publications and promotional materials. 

 

2. How has NARM evolved the last few years?

NARM has gone from an organization whose members and mission were exclusively focused on the distribution and sale of physical music product to an organization whose members are now evenly split between physical and digital distribution and sales. We have also created a new brand for our digital initiatives called digitalmusic.org that has six work groups, events, white papers, etc. Even our Board of Directors is now skewed slightly more digital than physical, including representatives from Amazon, emusic, iTunes, Microsoft, Nokia, Spotify, and Verizon.

 

3. Where do you see NARM five to ten years from now?

We are a service organization that exists to advance the business of music. As the future of the business continues to evolve and unfold, we will be reflecting those changes in who belongs, what we offer and what we do...providing the necessary programs and services that our membership demands.

 

4. What is your greatest professional challenge today?

What keeps us up at night is really no different than most other businesses in these tough times...finding the best ways to maintain and increase revenue, while controlling expenses. 

 

5. What is the greatest advice you've received since heading up NARM?

I would say the best piece of advice I have received was from a very trusted mentor and friend who I was talking to when I was extremely angry about a particular e-mail I had just received.  I was venting about how I was going to quickly respond, and the advice was never, ever respond to an e-mail when you are this angry. You should always wait until the next day. I have really tried to heed that advice.

 

6. How do free services such as Spotify impact retail music sales?  

Music subscription services, some of which have free options, have surged recently in both usage and overall membership. And that surge has brought with it no shortage of questions, confusion and controversy over how the model will impact the broader music industry: both labels and artists alike. As the collective voice of the digital music business, digitalmusic.org and its Music Subscription Work Group convened to address this issue directly and drafted a document to dispel myths and facilitate a balanced discussion on the role of subscription music services in today’s marketplace. This is a complicated issue that, like past innovations in this sector, will take time to fully comprehend and appreciate. Spotify, Rhapsody, MOG, Rdio, Slacker, Cricket's Muve, Zune, and Sony Music Unlimited are all members of this Work Group. It's a myth that these subscription services cannibalize music sales. In fact, digital music sales have actually increased along with the spike in on-demand streaming and subscription music users. By getting consumers to subscribe for fixed periods of time, creators and content companies benefit from a steady stream of revenue. 

 

7. What do you think is the future of physical product such as CD's and vinyl?

I think there will always be a role for physical products in the marketplace. But the products will likely continue to change and perhaps bundle different types of digital offerings with the physical product. The way people enjoy music falls along a spectrum of choices and I don't see that spectrum diminishing its choices to completely eliminate a physical option of some type.

 

8 Where do you see opportunities in the digital retail space for new artists?

It's really all about commerce in its broadest form. There has probably never been a time where there are more avenues for new artists to gain exposure for their music. But sometimes the monetization is not as simple. I have already talked about the subscription model, but there are also new opportunities as social media embraces social commerce. There will be other types of commerce opportunities as well for artists to explore and exploit with the development of new apps.




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