Speaking and Communicating Podcast

Welcome back to the Speaking and Communicating podcast. I am your host Roberta. If you are looking to improve your communication skills, both professionally and personally, this is the podcast you should be tuning into. And by the end of the episode, please remember to subscribe, give a rating and a review. Now, so many of us are into music and we've always wondered what happens behind the scenes.
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besides the artists that we see on TV and those that we listen to on radio. So my guest today, her name is Maria Lozano. She's a music business consultant for almost 30 years, mainly geared towards Latin music. She was with Sony for a number of years and she has some very interesting details and stories to share with us today. She currently represents the company X-For-A-Tion and a lot of independent artists.
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And before I go any further, please help me welcome Maria to the show. Hi, Maria. Hi, Roberta. Thank you so much for having me on your show. Thank you for taking your time to be here today. We've always wanted to scoop in the music business. Because we know there's a lot that goes out behind the scenes. But before we get into that, tell us a little bit about yourself. As you said, I am a music business consultant. But prior to that, I...
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did work at a major record label, actually in the music publishing department that's working with songwriters and music publishers for 11 years. Since then, I've been working with independent artists and songwriters and now with Exploration, where we manage huge catalog of songs. I am immigrant from Dominican Republic, grew up in New York, and I'm based out of Miami. You're in South Beach.
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Well, I'm actually really close to the airport. Oh, yeah. All right. So here's the one thing about the music industry. When you're for such a big label, obviously, they're not going to accept everyone. They're not going to accept everybody who sends the demo. Absolutely. Do you know how they get to peek and choose and say, oh, this demo sounds better than that other one. We're going to go with this artist and not with this artist. You know, when I was at the label.
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I was in music publishing, which is separate from A&R. That's an A&R position, which is artist repertoire. There's someone actually dedicated to looking for artists in repertoire. I wasn't doing that capacity. But what I know is that the A&R person is looking and hearing a whole bunch of material, whole bunch of stuff and determining what can stick and what doesn't and what he could bring over to his boss to actually.
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get them to invest and so on and make an artist. That was back then. Today, people are relying a lot on Spotify, on your Instagram numbers. So your numbers have to be high as a new artist, an independent artist for them to get interested. They're not going to get interested on someone who has 50,000 monthly listeners. They want somebody who has surpassed those numbers, you know, 300,000, a million listeners.
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And you do find them. You find a lot of them in Spotify, which is the platform that I use, but you could go into a Tidal or Apple Music, any of the other platforms to see what their numbers are. That's what they're doing now. What is your Instagram numbers? How many followers do you have? How's your YouTube channel? So they're going to your social media, looking for talent and seeing how well you already connect with the audience. If you think about it, I think the first artist that made it like that was Justin Bieber.
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that he was discovered on the internet. He was discovered from YouTube. He had a following on YouTube. And then from there, he became this huge star. And then he got a manager and made it bigger and bigger and bigger. So that's what's happening nowadays. And I would say that's in the last 10 years that it has shifted from where A&R people are just there listening to demos and whatever. If they will listen to a demo, they're going to go look at your social media because you should have a social media following.
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they have to see your resume online, so to speak. So that means anybody can be discovered and the record company will come to you. You don't always have like before be in the begging position to bribe the secretary to slip your devil under the boss's door. Absolutely, absolutely. But what's happened now too is that the access to you becoming an artist has been demobilized. So now if I wanna put out an album, I can put it out.
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I mean, I would have to spend some money. Maybe I wouldn't put out a single. Maybe I spent five, $6,000 putting out a single. But if I have a huge social media following, I don't need the record label because they will recommend. So you have to think of this like a chain. So your mother recommends to your aunt.
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she recommends to the abuela and then your friends to another friend and so on and that's how you make the change and you make this grow. You'd be making your money directly so if you earn a dollar that dollar is coming directly to you and you don't have to split it with the record label. So that's the advantage of being an independent artist nowadays is so demarketized. Speaking of money which is where this whole conversation is going. How many times have we read stories like TLC,
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Pepper, Tony Braxton, you sold $250 million worth of records and this bankruptcy or TLC was paid $99. How do these numbers vary so much with the previous record labels before the independent age we are now? Were they really screwing people that much? I don't think so. And I'm not a defender of the record labels or of anybody for that matter. But I would think that
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a lot of artists live larger than they can and they don't realize the financial aspect of earning money. So if you earn money on a huge hit now, let's say MC Hammer, for example, who can touch this is an anthem. To this day. Yeah. To this day. But he never taught that. So you can't spend all that money that he was spending or at the rate that he was spending it. And then say the record label screwed me. No, you were living larger than life and
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to the point of the record label screwing you. You have to look at the agreement, maybe not you, but have a good competent attorney actually checking in everything and making sure that attorney has your best interest because it doesn't happen sometimes. Even though you hired the attorney, they may not look out for you? Yes, I had one guy call me one time and he said, Oh, I'm gonna have my attorney call you. And I said, fine, okay, I'd rather speak to your attorney because I know he's gonna understand. So I said, okay.
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Can I talk to him now? And he said, no, because he's in a jail. He's going to see a client in jail. So this client, what type of attorney is he? He's like, oh, he's a criminal lawyer. I'm like, look, a criminal lawyer is not going to be speaking my key language. Isn't there something called an entertainment lawyer, not that I'm illegal? Exactly. So that's another mistake that a lot of artists do. They go to their cousin who's a lawyer. He may be a personal injury lawyer, but he doesn't understand music.
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you need to hire an entertainment lawyer who is competent and will look for your best interests. And a lot of times, like in the case of TLC, they were young girls, they were very young. I'm sure the agreement had to have been signed by the parents because a minor cannot be the signatory on an agreement. And the parents were responsible for getting a competent attorney and making sure also that their finances would have been taken care of in a responsible way. I saw...
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behind the music, BH-1, where they were saying, well, you know, I made this, and then they paid me this, and they paid me this. Well, I'm not saying that that's not true, but the artist needs to know what they're spending. So there is an account that the record label will keep track of. So if you spent a night of Griselle and sushi and limousines, it's gonna come back to you. They're going to deduct that money from your account. Even in my old life, I actually saw where
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the label was paying for an artist's tickets. You know, he lived in New York City, so his car, he didn't move it from one side to the other, so he would get a whole bunch of parking tickets. Who was paying for those tickets? And then when this person came to say, oh, but the labels don't pay me any of the money. Traffic department will beg to differ. Exactly. And this is another one that was like, wow, the label was paying for a child that this guy had outside of Wet Block. Did he ask the label to do that? Yes.
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Yes. And then he would say, well, I guess he would tell his wife because he didn't want to know about the kid. Stories, stories, stories. I understand that. And yes, you can't expect the label to pay your expenses and your child support and your sushi fees and everything. But here's my question. So when you sign the contract, I know that you are not in the constructional section, but just in general, if you are signing the contract, does it tell you for every dollar you sell of your CD?
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you will get 40 cents and the record label keeps 60 cents for every dollar. Is there something like that in there? It's not that cut and dry. It says we will pay you, let's say 25% of the PPD. The PPD is the price to the dealer and the dealer is the retail store. So if we're selling an album, think of it back then where you sold actual physical copies, you're selling an album to Best Buy.
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sell 10,000 units to them, you're not going to sell it to the 1599, which is the price that they sell it at. The record label will sell it at 750 or whatever. Oh, so Best Buy adds its profits. Obviously, that's how we come to buy for 1599. Exactly. So the label is actually selling it to Best Buy, Walmart, and all the distributors for 750. So you're getting not from the 1599, you're getting on the price to the dealer.
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which is the 750 they sell to Best Buy for. Do they tell you though that out of the 750, you get $2? No, they don't. It's not specific like that. Whatever the prices that they sell to that dealer. So they may have a different price for Best Buy as they will have a Warlord. But that's in the older days. But a lot of labels, which is what I don't like, they still continue to use that language. The reason I keep asking that question, I'm trying to get at as an artist,
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Do you at least have an idea upfront that if you sell this many, you potentially are going to gross this much? I don't think they do. And it's really hard to tell because I don't know what price you're gonna sell. It's like your shirt, you know, I like your shirt. How much would you sell it for? I don't know. I'm gonna get 10% of whatever you sell that shirt for, but I don't know what you're gonna sell it for. That's the incognito kind of portion that you just don't know. So even they don't know how much they're going to make.
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If it goes platinum, do they know at least an estimated figure of how much the record label is going to pay them from that or the record label just does its own math and it doesn't include you, you must just get whatever paycheck you're getting and be happy with it and go home. There is audit clauses in all agreements. So I suggest that artists check out what the audit clause is and basically pays attention to that because once the audit period is over, you can go back and audit that period.
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So you are given, I think about three years to audit any statement. And if you realize and you say, wait a minute, my album went platinum and Olaf received this, this something's wrong. Yeah. Artists need to be checking that or a business manager, which is something now that a lot of artists do have is a business manager who should be checking those numbers and making sure that if you're a platinum selling artist, but you're getting platinum.
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kind of money. But to answer your question, it's kind of vague. You have to go back line by line and check to see exactly how much they sold it for because they will tell you. They will tell you what the price was. The price was $7.50, $6.95, $5, whatever the price may be. And then from that, you get that whatever 25, 18, 15%, whatever your rate is with the label. At the end of the day, probably not a bad deal because they have a lot of marketing costs, which don't necessarily need to
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So all of those things are variables in the agreement. Do they give you the money upfront or after you've sold the million dollar copies? A lot of people get a lot of advances. That's the allure. That's what we are experiencing now. Like for example, at Exploration, we don't give advances, but we pay monthly. So it's like if you need money for your rent, you're gonna have money because you need money for food. You're gonna have money because we pay every month from the 23rd to the 25th, you can bet on it, you're gonna get your check.
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So you're going to get payments so you can cover your costs. But when you get an advance upfront, in my experience, what I've seen a lot of artists do is they will buy a shiny new car. Oh, I need to be seen on Cribs with my Lamborghini. I so black now. Right. You've seen Cribs. That's the allure for artists to get a big advance. They want that advance. I usually tell them it's a high interest loan because it is a loan.
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you have to pay it back and usually you have to pay it back from your royalty. So if your royalty says you're getting 25% of whatever we make, then it's being recouped from that 25. Let's say they sell an album for 750. It's not coming out of the 750 that $200,000 advance that they gave you. It's coming out from your 25% of that. Then it affects the royalties. It comes from your share, whatever belongs to you, that's where it's going to get recouped from.
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At the end of the day, it's a high interest loan, but a lot of artists, and they have expressed this to me, they tell me, well, I want an advance because I want to invest in putting together a band so that I can take my show on the road. That makes sense. You're putting it back into your business. To the business. And you have to think and say, okay, this is a business. It's not a free license for me to get a brand new house or larger house, Lamborghini's. I don't know if it's true, but I don't know if this is attributed to Jay-Z, but I've heard that.
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that he said that if you can't buy something twice, you cannot afford it. And I love that. That's good. Love that. Because I mean, don't they do the same thing? Like if you're going to rent an apartment, they say your take home should be three times or however much more than the rent. Otherwise you can't afford that rent because you don't want to live by the edge of your finances and literally be hanging by a thread every month. But a lot of people don't hate to that advice. They don't. And that's where you run into problems.
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You get the larger bands from the record label, but instead of putting it back into your business, you put it onto shiny new stuff. So when you guys pay monthly, is this similar to, you know, how when you win the lottery, they give you two options. Do you want the lump sum upfront or for the next 20 years, we pay you a month. Right. That's a good comparison. Yes. We pay on what we collect. So if we collect $10, our deals are pretty simple. It's 15% of whatever we get from YouTube.
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and 10% from everywhere else. So you know that if you get a hundred dollars, you're gonna receive $85 if you got it from YouTube. If you receive a hundred from any other source, you're gonna get $90. $90, almost like the Uber model. You know exactly that if I collect this much Uber it's gonna take its 25% and I'm good to go. Exactly. It sounds to me like that's what the big record label should have done from the very beginning, because...
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That model seems to work for everybody because you know what you're getting. You know what you're getting. You know what you're getting, yeah. But I don't know who started doing those agreements and they sort of stayed and plastered and that's what everybody uses. They want to cover themselves for a lot of things. They need to cover themselves for lots of things, including copyright protection. So you want also, because they're paying for the production, they're paying for all of the studio, all that stuff, they want to pay. They want to make sure that they own those tracks.
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So there's a lot of language about copyright protection on those agreements. Do most artists even understand royalties? I would say no. In a general sense, no. There's only a few that I would say that are very well versed in what the business is. But most artists that understand the business become businessmen and forget about being artists. So take for example, Jay-Z or they're like, okay, I understand this. Let me make money this way. They produce other people and they're not really out there doing shows.
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They understand the model. Earlier you said they come to the record label, the order sushi and expensive champagne. Here's what I remember from the Tony Braxton interview with Oprah when she declared bankruptcy. The first time she said one, she didn't check her finances, which I thought was odd even for me and I'm not a multi-millionaire coding artist. She just let the accountant handle everything. She didn't check her finances. And also.
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record company like you said they would say we paid for the concert all the stage the equipment traveling you to whatever the places where the concert was held but then my question is wouldn't she have made more money from that and then had a positive net effect so revenue from concert tickets miners whatever needed and then wouldn't there be a net effect at face value yes
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In reality, maybe not. I don't know if you know the concept 360. So in the music industry, a label can give you a 360 deal. And what that means is that they take a cut out of everything you earn, including live shows. I don't know the ins and outs of her deal with whatever label she had at the time, but they were paying for her stage and everything to do with the show. They probably had a cut in that. In everything.
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Yeah, they would be taking a cut, but still, you know, sometimes, unfortunately, like in everything, there's a lot of contents that are not kosher. Let's put it that way. Oh, we hear those stories all the time. You're Rihanna, you're Steve Harvey. They run away with millions. Oh, those. Oh yeah. Steve Harvey. Yeah. The football players. That's why some of them retired broke because the accountants are some unscrupulous ones. Yeah. One guy too, that I know of, he's a small time songwriter, but.
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One thing that's worth mentioning, the songwriter or the artist, they just don't realize it. When you get an advance from a record label, you're getting, let's say, $100,000. From that $100,000, the first money that needs to come out is taxes. Do they forget that? They forget it. So I have this one guy that I've been telling him for years, listen, dude, you need to go to your local field office of IRS and just tell them.
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I want to do a deal with you guys. Stop charging me interest because I'm going to start paying you and start paying that tax bill that you have that is growing by the minute. So what's happening to him is that all the labels everywhere that he had any money coming from is being garnished by the IRS. Oh my God. I feel so bad for him. And I'm like, I want to do this for you. I want to go with you. Let me know when you want to go. So he hasn't taken the time to go and negotiate. He hasn't done that.
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you know, that's the first thing. And a lot of accountants, they know that they have to do that. But sometimes, I don't know, they probably sleep on it or whatever. And that in the long run also affects the artists. Because if you realize, oh, I have this account and I have been doing this and I've been living my life and not caring about the numbers because I get my money and live my good life and then realize you have a tax bill. You have the information and you know that the first money that you have to pay is to the IRS.
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That's it. They forget that and then it gets interest and penalties and it just keeps growing. Yes. So that could also be an issue with a lot of artists too. They have to declare bankruptcy because they now realize they have this tax bill that how am I going to get it? How am I going to get it out? Speaking of the monthly stipend, okay that's what you do now, but before that when they gave you that million dollar check, did you know upfront how long it's
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repeatedly. How does that work? I don't think there's any way of knowing, especially nowadays. In the old days, you're kind of new because major albums usually sold 10 million units and you're like, that's okay. But you wanted to sell 30 million units. Those are the numbers. That's where something's happening. And of course they don't pay you that all at once. It gets paid over a period of time. Okay. You have to account for returns.
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In the music industry is the only industry where you could actually return the goods. Like if you go and buy something at your supermarket, you go buy a piece of meat and you don't like it, you can't return it. But the record stores could actually return to the record label if they're not selling. If they're not selling, they would return it. Yes. So that's something that, okay, you sold 30 million units, but you had 10 or 15 that were returned. 10 or 15 million. Now the record label needs to either house these.
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So there's expenses there too of warehousing. I did not know that. Yes, so that's in the old days. It doesn't happen that way anymore because you have streaming, so there's no charges. But still, those are remnants of the industry that's still seen in agreements, even today. Even though they don't exist. Even though they don't exist, but a lot of people want to get CDs. So a lot of smaller artists that still do shows, they want to buy physical copies, and they do.
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they buy it from the label. So the label has to print them anyway. So there is that component and it has to happen. It has to be there because even if it's not the major source of income, it is some source of income. If the artist wants units printed, they will do it and even vinyl. In any question that I've asked you, at the end of the day, you still need an entertainment lawyer because I'm sitting here thinking, oh my goodness, even that would trick me up. You need an entertainment lawyer.
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Absolutely. And make sure it's an entertainment lawyer, not an injury, not an ambulance chaser. No, you need an entertainment lawyer. If I need something because I got hurt, then I'm going to go to that type of lawyer, not an entertainment lawyer. So you need somebody who's specialized in that. I would also recommend a business manager. If you're at a point where you're getting, you know, X amount of money and you're not sure what to do, a business manager should be able to help you to diversify your investments.
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to make sure you have money invested in not only in expenses. Right. Keep tabs of your expenses and tell you, hey, you overstepped your expenses this month. You can't go over that because everything is not rolling in. Not just raining money. How do you keep tabs on your accountant? There's also managers. You have a manager. OK. Most artists have a manager, business manager.
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the business manager will hire an accountant or it could be a third party. You could hire auditors, actually audit one or the other. I'm not sure exactly how, but there's all types of professionals. And when you reach a certain level, you have to know about those professionals and how best they can help you. In my case, for example, I'm a music publisher because that's mostly what I did, which is working with songwriters and everything starts with a song, you know that, right? Yes. So the songwriter.
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That's the ones that I work mostly with. And the songwriter, because he's not producing any physical units or anything that you could actually see, it's intellectual property at the end of the day, that's what that is. So, because they're not seeing that and people are not seeing that, they're like, so how does a songwriter make money? They do make money, not as much as the artists, but they do make money. And you have somebody like me who is trusted in the industry, because I have so many years and people still tell me, they call me, I had an attorney call me yesterday.
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He's like, I have a question about my dad, but you're the only one I trust. So I built that type of relationship of trust with the community and they trust me and they know that I'm not gonna steal for them because my name is more important than anything else. Right. And my reputation. So surround yourself with people who you trust and that are trustworthy, who know what they're doing. I know you love your mom, you love your dad, but your mom shouldn't be your manager.
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because she doesn't have the expertise. She's just your mom who loves you. And you could have your mom overlook your manager. You can do that, but she shouldn't be your manager. They have that momager kind of thing. Kris Jenner, to her credit, she's... Not everybody can, in the billions she's created with a family. Exactly. So she's been able to create a dynasty, but most parents can't. So you have to know who is apt for the job at the end of the day. I mean, I knew songwriters do make money,
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Diane Warren, how many songs do we love written by Diane Warren? So I know she makes a couple of dollars from that. She does. And the way that it works and just a brief thing, there's a thing called the mechanical, a mechanical income. Yes. Mechanical in the old days when songs were put into a CD that is a mechanical instrument. So it's still stuck. It's still called a mechanical. And the U S copyright board set a rate of.
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0.0910. So it's like nine cents for each unit sold for each song. So if you have a song with 10 tracks, know that your cost in mechanical is going to be 91 cents. Okay? So that's how the record label also does their math. They're like, okay, I also have the mechanical cost because sometimes Diane Warren is not an artist. She's the songwriter. So that's what they're going to pay Diane Warren.
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Whitney Houston, Celine Dion, yeah, asherized ball of 91 cents for every unit that is sold. For songwriters, you're almost able to estimate about how much they're going to earn. That was in the old days. Nowadays with streaming, it's hard because streaming has so many ins and outs. So you don't really know how much you're going to get paid for a stream. You've heard the stories. I don't know if you've heard of Aloe Blacc. And he says, I had, I don't know how many millions of streams and I got 72 cents because the streaming business and model is
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I cannot even begin to explain it to you. They make very little money from each stream. So this is why when I told you that A&R person nowadays is looking for your numbers on Spotify to be high, that's the reason. The more- So does this sound to me like streaming is screwing artists worse than what we thought record labels were doing? It's not that they're screwing artists, it's that the agreements that they've made with the record labels have not been very beneficial for the artists or the labels themselves.
27:06
they're not beneficial. They are changing it and there is a copyright royalty board that is sort of in the middle now. That's a section of the US Library of Congress. So a part of that is devoted to setting copyright royalties for those, the Pandoras, the Spotify, the titles of the world. There is a board trying to make up rates that are fair for the songwriters. Yes. So there is a body that is regulating it. But
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Think about it when this all started, it just went from CDs to streaming. Yeah. Which gave us the impression that now independent artists are not going to be screwed over. They're going to be in control of their work, their earnings. It's going back to the old days again. It's sort of, sort of because they will be paid based on what the majors agree with them. So even if you're an independent artist and the majors or the copyright royalty board set.
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set amount, this is the amount that's going to get paid, that's what's going to get paid, but it's usually because you have lawyers and advocates for the majors. All the majors agreed on a rate, then that's what everybody else will get. They kind of set the bar for everyone else. But I have faith in the Copyright Realty Board. So that they're going to keep things under control. They're going to keep it under control and be more fair to the artists. But there's so many services and they're popping up at every moment.
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We have Peloton now. Peloton is using music. Of course they have to use music for their bike. They have to issue a license also that will pay the artists and songwriters for that. So that is all in the copyright royalty board consideration, I guess. It makes sense. We all want to get paid for our hard work. Absolutely. Absolutely. Oh, Maria, this has been so wonderful and entertaining for me. Oh, I'm so glad you liked it.
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Such a pleasure. Thank you so much for taking your time and being here with us. Thank you for having me. This has been so much fun actually. I have to do a plug to my Toastmasters group because I don't know if you know Toastmaster. I'm a Toastmaster, yes. I joined one of the South Korea in 2015 in August. So yeah, I've been a Toastmaster for seven years now. Wow, I'm a Toastmaster since 2021. Last year.
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last year and I'm the VP of Education so I have a meeting now that I have to get to but I know that you talk about public speaking and all that and this is part of what I wanted to do. I wanted to do this podcast because I want to see how comfortable I actually feel in it so thank you. Of course and when it's released I'm gonna send you all the links and you if you want to share it you can share with your Toastmasters everything I will send it to you when I release it. I'm gonna stay in touch. Thank you so much for being here today. Thank you. Bye.