Talking Publishing, RECORDS and the Evolving Biz with SONGS CEO Matt Pincus

With an agile, artist-friendly and avowedly classic approach, SONGS Music Publishing has been able to compete effectively with the behemoths of the space, scoring buzzing artists and landing some estimable real estate on the charts. The company is the brainchild of Chief Matt Pincus, an MBA with a punk-rock pedigree (he’s long been the bassist for NYC hardcore band Judge) and a dedication to songwriting (he was recently elected to the Songwriters Hall of Fame’s Board of Directors). Now SONGS has launched a label, RECORDS, with industry vet Barry Weiss. But showing up on this sorry site probably isn’t something he’ll be singing about.

Over the last period we’ve seen SONGS move into the front ranks with much bigger companies. How did you get here?
Well, we would be nowhere without The Weeknd, Lorde, Diplo, DJ Mustard and all the other writers we work with. I started SONGS just over 10 years ago. I had been working at EMI and realized that the majors were focusing much more on their catalog businesses—they were, to a certain extent, getting out of the contemporary space. In the meantime, all these private equity and hedge-fund companies were coming in, chasing catalogs and driving prices up really high. It was almost as if people were afraid of new music. The original idea for SONGS, which I came up with when I was at EMI, was this: What if you built a publishing company that did it the way it’s always been done—writer by writer, song by song—and focused on working with people who are creating music today?

The new idea was to go old-school.
Yeah, back to the future. I was looking at companies like Rondor/A&M, Jive/Zomba and Chrysalis, and thinking there’s a slot for that today – no one’s doing it. Private money, independent publishing with a focus on music. Those guys built those companies over a 25-30-year period, doing business with people—not just buying assets.

So, I left EMI, started the company, and had a plan, but I’m not an A&R person. Thankfully, I was introduced to Ron Perry who joined me right after I started the business and has turned into the most productive talent person in the business by finding and signing all of our big writers. From there It just took off like wildfire, because I had a view of how you contextualize the contemporary space and build a viable business out of it, and he was out there in the market, knowing everything that was going on and doing deals.

When we first started, there were a lot of album sales in the market, so we did a lot of business with great middle-market artists that didn’t have a lot of publishing options. There was a lot of deal flow that the majors were competing for—but not that hard—and we thought we could superserve that market. We had a lot of great relationships that came out of that time. That was Andrew McMahon, Rhett Miller and the Old 97’s, Q-Tip

It’s format artists that have a good, solid following and heritage artists that haven’t been heritage artists for that long.
Exactly, and that was sort of the first chapter. As time has gone on, with the disappearance of the album market, and a greater focus on radio and the streaming market, the middle has kind of dropped out. So, in 2009, we began to pivot towards a targeted, heavily creative approach with writers as well as artists. Now we’re at about 50/50 by revenue writers to artists, whereas in the early days we were really mostly artists.

The result is that we are doing the kind of music publishing that has been done going back 40-50 years. We’re a classic roll-up-your-sleeves, creative music-publishing company. And it’s the team at SONGS that makes the secret sauce. What’s made it work, I think, is that we’re I believe we the youngest management team competing at our level of business, but we’ve actually been working together for the longest amount of time–about eight years, on average. Ron and I have worked together for over a decade. This is because we’ve been able to attract talented people and retain them. Ron was my first hire; he’s now President. Carianne Marshall was my first synchronization hire; she now runs the synch department. Rob Guthrie was my first administration hire and now runs operations. So we’ve been working together for an average of about eight years. About three or four years ago, around the time our business exploded, we built out the team so we could scale. We brought in some senior talent with Tom DeSavia to run Creative Services, and Mitchell Wolk, who had been the president of ADA, to be our CFO. From that point, I could actually do the CEO job. Before that, I was doing the CFO job, the COO job, etc. That’s when it started to really go— and my job became creating an environment where those guys can do their jobs and I can translate that into business results for the company.

It’s noteworthy that Ron was able to get into a derby for an artist like Lorde, build a relationship and ultimately persuade her that SONGS is the place to be—even as much bigger companies, with presumably much bigger war chests, are waving their checkbooks.
Yes, and there are a couple of ingredients to that. Ron must have gone out to see Lorde nine or 10 times early in her process—at least in the U.S.—before we were even in a business conversation. That says a lot. And we treat relationships with the same level of priority throughout our company at every level: our writers, our employees and our licensees. It’s a relationship business. Ron is able to develop relationships with writers that are really second to none. Carianne is deeply personal with every music supervisor in the business. Tom is the best person to make sure our writers are taken care of. What I do is is creating an environment that can support these guys and react quickly to the market. We’re a private business; we own 100% of this company and there’s no approval process to go through.

Being comparatively small can be a virtue when you’re talking to an artist who’s trying to bust through.
I don’t like to sell “small,” because ultimately, if you’re doing good business and can scale it, you should do that. To me, it’s intimacy. The structure of the business is pretty flat—it’s Ron and the department heads reporting to me. There’s no general management layer, so it’s very easy to get around this company.

People talk about music publishing as assets, multiples, and copyrights, when in reality it’s just people making music. Building a music-publishing company is building a mattress out of sheets—one song at a time, one writer relationship at a time. You need to be productive with all the people you work for. If our writers aren’t happy everywhere—with our creative, synchronization, administration, and daily touch with the company—then we’re nowhere.

Let’s get into the increasing prevalence of streaming. It seems we’re essentially moving to an all-licensing model of the marketplace.
The economics are a real challenge. One of the things that people don’t focus on enough is rate disparity. There’s a huge disparity between the amount of money labels get paid and the amount publishers get paid, and it’s gotten a lot worse. We’re in a 14:1 ratio at Pandora; we’re at 7:1 at Spotify. In other words, the labels get seven dollars to every one we get.

That’s a major challenge for our business, which is why I spend probably 25% of my time dealing with trade issues. I’d rather be in my office working with writers and employees. But we’re at a real inflection point, where the economics of the business are being defined. If you look at the market now, there are a few ways we could really win and a couple of ways we could really lose, just based on how the the digital business develops. If we have 150 million paying subscribers of on-demand services five years from now, there will probably be growth in the music-publishing business. If we only have 50 million, it’s going to be a much smaller business.

The labels are very high on subscription streaming, but there’s a potential for far greater growth on the master side. It seems like it’s something that publishers are going to have to negotiate on their own.
Yeah and look, I’m bullish on the streaming business too, but the question with a Spotify type of company is how many subscribers they can get to pay. They are at 20 million globally now. When you get to 150 million between Spotify and Apple Music, that’s a strong business. But that’s going to take a lot of capital and consumer engagement we haven’t seen yet.

But the streaming business is really hard to get off the ground, and the level of scalability is a question. The Internet radio business has been even more of a challenge, because there’s been real downward pressure on our rates and we’re way outmatched by the digital companies in Washington.

Broadcast is still a big presence, but it’s definitely diminished in influence.
That’s where the real trouble is. Radio is changing, and we need to make sure the new model is equal or better that the old model. All this stuff tends to get really emotional when people debate it. People need to strip the rhetoric out and understand the numbers. Only if digital radio pays the same or more than broadcast will we have a leg to stand on. So I need to fight for what’s in the best interest of my company and the people I represent now more than ever.

If I were doing what I’m doing 25 years ago, I would have a firehose of cash on me right now. But we’ve only lived in a post-DMCA, Internet-penetrated business. That means that you can have 14 top-charting songs, 5%+ share at radio, four superstars, songs reacting around the world, and we show up to work like it’s the first day. And if you do that, business can still be great. It’s still all about music. If you can make music that makes people want to buy it as soon as they hear it, you’re going to be fine in whatever environment you’re in.

Speaking of adding value, you’ve now moved into the master side. Tell me about your strategy for the new company, RECORDS, and what kind of a value proposition that is. Will you be signing people for both sides as often as possible?
Well, it’s an age-old relationship—labels and publishing. In the ’70s, ’80s and early ’90s, publishing became more like a financial-transaction business where people went to borrow against their copyrights. We’ve brought publishing back to the studio, so that’s a natural point from which to extend Ron’s A&R capabilities into recorded music. At the same time, the business process between record label and publishers has become more similar than it used to be.

It's not putting things on trucks anymore.
Right. It’s about content management on the back end. But the core capability you still need to have more than ever is radio promotion. When we started talking to Barry Weiss, his vision was that consolidation in the business is overcrowding radio. So many more records are going to Pop radio at any given time now. Meanwhile, focused promotion setting up records at format is a declining art. That’s where we thought we could really provide a differentiated option to artists that are really looking for record deals. We want to create a system that can take a record all the way at Alternative and Rhythm and even Pop. To do that, you need your own promotion infrastructure. You can’t hire it all out.

Barry is a legend with a deep edge in marketing and promotion and a long, successful arc in introducing artists—from Too $hort to Justin Timberlake at majors and at Jive. He added another whole set of capabilities, so it made sense for us to do this as a partnership with him, rather than staff it ourselves.

The label business is a huge priority for us. As to the overlap, there are obvious complementary aspects to music publishing and records so some of our deals will be publishing and records. The first record we’re doing is “The Fix” by Nelly, who’s a SONGS writer, featuring Jeremih. Our writers DJ Mustard and Mike Free produced the track. That’s a good example of something that we’re unique in doing, because the track is a sort of remake of “Sexual Healing.” As you can imagine, it’s probably the worst time to try to clear a song by Marvin Gaye. A lot of the publishing value went to that, so we were able to repackage that, put Nelly on it, and make it the first release on a record label.

You’re making up for whatever is lost from the license.
Yeah, and we’re doing it in house. Ron and his department put the whole record together and they were the only people who could’ve done that. That’s a good example of how the record company and the publishing company will cooperate.

Is there anything that we didn’t touch on that you think is fundamental?
The important thing that I want people to understand about our business is that it all comes back to music and relationships. To me, that is the only competitive advantage. And building it takes time. Ron and I had this joke after Lorde won the Grammy where all of the sudden everybody was like, “Songs? Who’s songs?” and we’re like, “It’s a band that’s been touring for seven years.”

The overnight sensation that took years.
Right, and we view this business in that way. We’re long-term; we’re working hard; we’re getting up every morning and thinking about how we can add value. It’s a human business and I think that’s what sets you apart from people who manage for quarterly results or cash yield. We manage for music and for people.