The Looming War Between the Major Labels and Late-Night Talk Shows

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Jimmy Fallon

"Labels see the big picture as, 'Nothing should be given away for free,' " says an artist manager. "It's not that cut and dried — it will all be looked at case by case."

The music industry's mantra of "free is bad" is spilling over to the talk-show circuit.

After years of sanctioning the posting of bonus music performances online -— an outro song or any additional performance beyond the act's one-song commitment to the show —- the major labels are considering vetoing access to such clips on secondary screens. The potential impact could mean less airtime for artists, particularly on late-night TV, if bookers choose to instead feature comedians or other non-music acts, and could also do away with large "event" performances like Van Halen's seven-song set on Hollywood Boulevard for Jimmy Kimmel Live! on March 30.

At the heart of the issue: money. The labels are paying to produce expensive content, yet aren't able to monetize it. In Kimmel's case, some $400,000 was required to pay for street closures and a sizable stage. Chevrolet footed some of the bill, but such costs as travel, crew and lodging weren't covered. The price tag for Paul McCartney's 2013 concert on the ABC talker approached seven figures. The average low-production act can look to spend between $25,000 and $50,000 if not already planning a stop on the coasts. Multiply that by five for a pop star like Taylor Swift, who requires the full glam-squad treatment and a dozen-member band.

Few pockets are deep enough to cover such payouts, and so a debate is raging: Is the value there?

For decades, the expense was seen as producing a decent ROI, and such shows as Late Show With David Letterman, Conan, Kimmel, The Ellen DeGeneres Show and Jimmy Fallon's two NBC late-nighters, were allowed to post not only the on-air performances but bonus material as well. But increasingly, Universal Music Group (UMG), which has online limits due to its part-ownership in the video hub Vevo, has objected to artists handing over extra web content to live only on a TV show's site, says a person familiar with the music booking process.

The economics are as such: Stand-alone performance videos are licensed for the Internet for 30 days, after which time a gratis license from the music publisher is required to keep them online.

"It's too expensive for each clip to live in perpetuity," says a late-night TV producer, noting that publisher negotiations begin in the thousands of dollars. In addition, union fees and an AFM tax are often levied on the act. Says one insider: "The labels pay for almost everything, which is why they stack up bookings in cities like New York."

Another deterrent for the music makers: Some 25 percent of the late-night audience tunes out before the musical guest takes the stage. In fact, the older model of a TV appearance as a promotional tool has changed to entirely new platforms. "Younger people watch everything on their iPhones and iPads," says another late-night source.

Benny Tarantini, a former Columbia Records publicity executive whose BT PR agency represents AC/DC, The Smashing Pumpkins and others, says bands are routinely asked to performer older, classic material for online bonus content, but instead prefer to steer toward non-performance content like an interview or — in the case of the Pumpkins — a Periscope session. The approach to video use "is different with each label," says Tarantini, who adds that "every blog covers these performances, so there is value to them."

Still, the labels are hardly in the business of drumming up profits for Fallon or Kimmel by way of website traffic and YouTube views.

"Labels have the right to say, 'No, we won't give you permission to use that clip,'" says an insider who has watched this scenario evolve during the last year at late-night and morning shows. "[TV programs] don't have the rights to put it on their own platform without a negotiation."

Label sources say no edict has been issued yet, but the word at UMG and Sony Music is that this strategy is coming down from the highest levels as veteran executives remember a fateful misstep when they allowed MTV carte blanche access to pricey music videos as a trade for "promotion." For decades, the arrangement was seen as a quid pro quo: The show provides the exposure, the labels foot the bill. But what happens now that the promotion is unlikely to be recouped with album sales?

Currently, the issue appears limited to only the big guns as major independents say they still see TV as crucial exposure for developing acts. "If a show like Kimmel asks for an extra song, nine times out of 10, we'll say 'yes,' " offers one high-level publicity executive. Adds Big Machine senior vp Jake Basden: "Whether a viewer sees the performance on TV or in their Facebook feed, the same type of connection can be made. Having the online 'endorsement' of a TV show promoting your artist is a strong marketing tool."

Ed Sheeran's year of supporting x is a masterful example of using talk shows and TV specials to introduce new singles. His April-February TV schedule included Austin City Limits and CBS' Stevie Wonder tribute, plus another 13 opportunities — eight of which were on talk shows — for new music. "Sing" was played five times between April 12 and July 4; "Don't" started showing up at the July 4 Today concert series and was replaced by "Thinking Out Loud" in December, which Sheeran performed most recently in February at the Grammys and on Ellen.

Sheeran's label, Atlantic, sees such publicity opps as vital. (Ironically, clips that get the most traction, like Christina Aguilera's impersonation of Cher on Fallon — 32 million views and counting — don't feature music at all.) "Labels see the big picture as, 'Nothing should be given away for free,' " says an artist manager. "It's not that cut and dried -- it will all be looked at case by case."

This article first appeared in the April 18 issue of Billboard.

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