Today’s digital age has made penetration into the music industry extremely exciting, but not without risk. Some artists are willing to make (or have to make) sacrifices when signing a record label deal in order to make a living and stay afloat. Access to funding allows them to continue writing, creating and producing their music, but often requires them to sign away their musical rights in perpetuity. Many artists regret this down the line.
As a result, some have begun to go the “independent” route to retain control over the ownership of their works. This leaves a major problem: a lack of funding.
Record deals can involve long-winded legal contracts with little to no available means of rightfully reclaiming copyright ownership. One of the more high-profile cases has involved Hollywood manager Scooter Braun and Taylor Swift, when Braun acquired her old label, Big Machine Label Group, and Swift’s master recordings along with it.
Traditionally, record companies own a performer’s master recordings. However, artists like Swift have pushed hard against that policy. From a legal perspective, owning the rights to a master recording means owning the right to make, sell, or distribute copies of that recording. Anyone who wants to make a copy of, license, and/or stream the recording, must ask for permission from the owner of the master rights. In this case, it’s not Taylor Swift, the artist—it’s Scooter Braun.
Last fall, Swift left Big Machine for Republic Records, part of Universal Music Group, under the condition that she would own her new master recordings. So, even though she has full ownership of all her new material moving forward, when it comes to her existing recordings (with the exception of Lover, her first for Republic) Braun is the rightful owner. For now, anyway.
MIW recently spoke with Alex Heiche, a specialty finance executive with a passion for music, who founded Sound Royalties in 2014. The company enables artists to secure funding for creative projects and development based on their royalty income, without putting copyrights at risk. The company is reversing the stereotype of the predatory lender in the music industry by basing their deals on songs and royalty streams, not the individual, so credit checks and bank statements are not required. What’s more, is that Sound Royalties never buys or takes possession of copyrights.
Sound Royalties has had the opportunity to work with artists such as Wyclef Jean, DJ Khaled, Pitbull, Rich Robinson (Black Crowes), Lil Wayne, Brenda K. Starr, and many others. Heiche is recognized as an expert in the global royalties and music finance marketplace, having been invited to speak on the subject by the Recording Academy, Sync Summit, Belmont University, Vanderbilt University, and other organizations.
MIW: How did you come to start Sound Royalties?
AH: I founded Sound Royalties because I genuinely wanted to bring a revolutionary change to the way artists fund their creativity and share their music with the world. So many creatives who were seeking funding had no other choice but to give up their copyrights. We changed that model, without asking for, needing, or wanting their copyrights. We don’t put the creative’s copyrights at risk for any reason.
MIW: You have an extensive background in finance and technology—how did this help inspire the birth of Sound Royalties?
AH: In 2013, I was ready for a change. I looked back on my life after having success in finance and high tech and realized that I wanted to go back to my roots. It felt natural to go back to my first love—music. I didn’t only want to be a part of the music industry, I wanted to add value to the music industry. So, the first thing I did was take a trip to Nashville to meet with all the financial industry experts that I could—everyone was welcoming and opened their doors. From there, I began attending music events, networking, and really taking the time to get to know the creatives in this space. The more I heard their stories, the more I saw the need to protect artists and their work. So many lawsuits regarding copyrights and record deals were becoming public and permeating the media. That’s when I truly became an advocate for the rights of creatives.
MIW: You mentioned your first love—music. Spill the beans!
AH: My love for music started at an early age—playing piano at four years old. I played in the school band all the way through high school. During this time, I also experimented with the clarinet, flute, alto, tenor, and soprano sax. Throughout my professional career, I’ve had the pleasure of working in specialty finance and high-tech software firms. In 2014, my two passions, music and finance, merged together with the vision of helping music creatives who needed resources to fund their dreams.
MIW: From a financing perspective, how does the overall model work?
AH: Sound Royalties operates differently than a bank model in that we are not making loans. We also don’t take ownership of the underlying collateral such as a car in a car loan, a house in a mortgage, or in our case, copyrights. Our pricing selection offers an alternative to traditional banking options and is also available to those who may present a higher risk. Many veterans in the music industry are skeptical, and rightfully so. We often hear, “this seems to good to be true,” but after research and review, they conclude that it is true. We act with transparency from the very first conversation with a music creative, presenting a choice of financing solutions on a single page summary sheet, making their options clear and concise. After that, they quickly become part of our family.
MIW: If you could give any artists, up-and-coming or established, a piece of advice when it comes to balancing their financial determination with the importance of retaining copyright ownership, what would you say?
AH:
Content ownership is king for emerging artists in a streaming world. There are ways to work with financial service companies and still retain copyright ownership. Artists need to know the difference between working with an investor who will want to own all or a percentage of the copyright, and a financial services company that will only charge fees.
My Final Thoughts:
As a branding and reputation manager throughout Hollywood and the Nashville area, I help up-and-coming artists establish, manage, and maintain their personal musical alias and brands. Many have already signed away the legal rights to their current and future works, simply so they can access the funding and resources they need when they are ready to create again. With almost each of those clients, they have come back to me wishing they hadn’t. It’s good to know there’s a guy like Alex Heiche out there with the business expertise and passion for music who has created a winning business such as Sound Royalties. Bravo!
