Music Lawyer Donald Passman Talks Streaming Business Challenges

Donald Passman Matthew Belloni - Getty - H 2017
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The lawyer, whose clients include Taylor Swift and Adele, spoke with THR editorial director Matthew Belloni at the seventh annual Power Business Managers breakfast.

"I'm starting with numbers," said prolific music lawyer Donald Passman to a crowd of Hollywood's top business managers on Wednesday. "I want you to feel at home." 

During The Hollywood Reporter's seventh annual Power Business Managers breakfast, held at Cut in the Beverly Wilshire Hotel, editorial director Matthew Belloni and Passman covered topics ranging from artists' revenue sources to copyright concerns during a keynote Q&A.

Music sales were up in 2016 — for the first time since the 1990s — and Passman attributes it to the emergence of streaming platforms. It's not all upside, though. YouTube, he explained, streams more music than all other sites combined and pays artists next to nothing.

Still, Passman is optimistic about the future of streaming, noting that artists are always underpaid in the "awkward adolescence" of any new technology. For an established artist, like Passman's clients Taylor Swift and Adele, revenue comes primarily from touring, sponsorships and songwriting. 

The conversation also veered to the relevance of record labels in the current climate. Passman noted that the labels used to hold the "keys to the kingdom" because of harsh barriers to entry when trying to get physical CDs in retail stores. Now their purpose, he said, is to help mainstream artists "break through the noise." Niche artists can forgo signing with a label, the lawyer added, and for everyone in between it "becomes a jump ball."

Another hot topic among music industry insiders has been copyright infringement, and the landscape of song-stealing claims following the controversial "Blurred Lines" decision. (Read the backstory here.) Belloni asked how artists respond when they realize their new hit sounds like an existing song. 

"Oh, that never happens," joked Passman. If the similarity is discovered before the song is released, he said, they'll typically hire a musicologist to analyze whether the works are substantially similar. If they are, the artist's reps will proactively reach out and offer a settlement, usually in the form of money and songwriting credit. But, after the song is released, "you have zero leverage."

Also discussed during the keynote: Britney Spears and Jennifer Lopez taking on mid-career residencies in Sin City. "It used to be when you did Las Vegas, you announced, 'I'm over,'" said Passman. Now it's an opportunity to cash some big checks.

For young artists, having a strong presence on social media has become make-or-break. Passman said someone like Paul McCartney doesn't need to have an online presence, but less-famous voices need to stand out by building a fan base. He also noted that labels now demand some sort of fan following before signing new talent, and social media is a big part of that analysis.

Statistics from music discovery app Shazam also factor in, which could explain why top talent is more willing than ever to license their music for television and film. Added Passman, "New artists will do it for free or next to nothing."

Earlier in the event, Lynne Segall, executive vp and group publisher of THR and Billboard, drew business managers Evan Bell and Andrew Crow as winners of prizes from sponsor Ermenegildo Zegna, an Italian luxury fashion house. Both Passman and Belloni wore to the event made-to-measure Zegna suits courtesy of the label. 

Belloni and Passman were introduced by Martha Henderson of City National Bank, the presenting sponsor of the seventh annual event.