Louisiana Music Commission Report June 2001 Page 1 of 13 LOUISIANA MUSIC COMMISSION Ellis L. Marsalis Jr. 3330 N. Causeway Blvd. Suite 438 CHAIRMAN Metairie LA 70002 Phone: 504-838-5600 Bernie Cyrus Fax: 504-838-5280 EXECUTIVE DIRECTOR Email: [email protected] Jennifer Tusa Updated 12/18/00 6:10PM CST EXECUTIVE ASSISTANT ll Articles ll NOJCC ll Links ll News Archives ll Press Releases ll Recent News ll Site Map ll Call for Submissions ll Buy Louisiana Music ll Back to Home Page Louisiana Music Commission Report June 2001 Introduction In the six months since the last Louisiana Music Commission (LMC) report, many significant developments have taken place. Prominent amongst these is the Department of Economic Development (DED) reorganization plan that was recently approved by the Louisiana Legislature. We're happy to report that the Legislature felt strongly that the LMC was doing its job and amended the reorganization bill to maintain the status quo of the Music Commission offices and functions. Therefore, LA R.S. 25:315 remains in effect. A copy of the revised statute is contained within the Attachments. Legislatively, the LMC was successful on every front. HB 1811, drafted by Commissioner Credo and introduced by Rep. Scalise, which clarified the Workers Compensation laws, passed. Additionally, the LMC, with the assistance of Rep. Karen Carter, passed House Concurrent Resolution 154 in which the Legislature pledges to support the LMC's work and the Louisiana music industry. See copies of both in the Attachments. All legislative efforts by the LMC pale in comparison to our biggest accomplishment, capital outlay funding for the Grammy Exposition in New Orleans. An outlay totaling $9.9 million ($3.3 million a year for 3 years) was part of HB 2 this session. This is the first Capital Outlay ever requested by the LMC. If all goes as planned, it triggers a private investment of $70 million to build the Grammy Exposition, a 100,000+ square foot facility. There is no more respected brand in the music industry than the Grammy, and the LMC worked for many years to secure this significant facility. We anticipate that Grammy Expo will have spinoff benefits that will profoundly impact Louisiana's music resources. For example, because the facility will include a 15,000 square foot Louisiana Pavilion, it will help spur the state to better document our music legacy so it can be presented in this high tech, multimedia environment. Grammy http://www.louisianamusic.org/june2001report.htm 1/23/2006 Louisiana Music Commission Report June 2001 Page 2 of 13 Expo is the biggest music project in Louisiana history. Industry Overview In North America, the recording industry is a $14 billion industry. Worldwide sales are in the range of $40 billion. The LMC has calculated that, over the past few years, Louisiana artists accounted for 4% of all North American record sales and 1% of worldwide sales. This is an amazing fact. For a state with 4.3 million citizens to have produced artists whose talent and sales appeal accounts for a measurable percentage of sales is extraordinary. Our goal is to double these numbers over the next ten years. With the added asset of the Grammy Exposition, a complete revision of DED's mission to develop the entertainment industry is needed. An updated Strategic Plan will be drafted as part of the new Entertainment Cluster initiative of the reorganized DED. The future of Louisiana's entertainment industry appears bright. However, the music business is still struggling to adapt to the rapidly evolving (and troubled) digital economy. Exactly what format and payment systems will be in place in 5 years is still a subject for speculation. These changes present both threat and opportunity for Louisiana companies. The LMC is working closely with new business ventures to ensure that potential investors are identified and that new models are analyzed. Traditional businesses, particularly independent record companies and distributors, are being hard hit by a new payment plan instituted by Tower Records which delays payments for up to one year. This situation will result in diminished financial viability for Louisiana's record labels and is a dangerous development with implications that cannot be calculated at this time. Another troubling aspect of the music industry is the pervasiveness of Pay for Play. Record companies are getting around the more than 40 year old laws against payola by hiring independent record promoters ("indies") to provide methods of payment to radio stations for the placement of songs on station playlists. The LMC has done extensive research on this subject and determined that nothing short of a Congressional Investigation is needed. Pay for Play is estimated to be a $200-300 million business nationally. It is an obstacle to all independent labels that don't have the money to hire indies. Additionally, with the rise of Clear Channel into a 1200 station conglomerate, Pay for Play has become an even more difficult hurdle for Louisiana music. We are actively seeking partners in the call for a Congressional Investigation and continue to work on this issue. Pay for Play is a Big Picture problem that represents one of the most difficult barriers to the success of Louisiana music. See the Attachments for copies of LMC memos and a series of articles dealing with this subject On a more positive note, the LMC has been contacted by a representative of Warners seeking to review urban, hip hop and rock acts. It is encouraging that a major label is seeking to stay on top of music developments regionally. In the past, staff have sought to identify and interact with major label representatives to assist Louisiana acts in reaching the labels. However, because of the explosion of independent labels and new marketing opportunities presented by the Internet, the LMC has focused on new business models that have great potential in bringing more money not only into Louisiana, but into the pockets of our artists. We are http://www.louisianamusic.org/june2001report.htm 1/23/2006 Louisiana Music Commission Report June 2001 Page 3 of 13 assisting and monitoring several innovative companies in the state that have survived the dotcom bust. The mechanism of digital delivery of music over the Internet is uncertain as of today; but, the inevitability of this means of delivery is indisputable. Steps taken by the 5 major media giants have slowed but not stopped the development of companies seeking to deliver music in new ways and with new royalty structures that remunerate artists in a fair manner. More good news is that the success of live music festivals in Louisiana in 2001 will be seen as a high water mark for years to come. Great weather and huge crowds attended both the New Orleans Jazz & Heritage Festival and Festival International in Lafayette. The economic impact of this year's N.O. Jazz Fest was estimated to be $300 million, an amount that exceeds the estimated impact of professional sports in Louisiana. And that's just one music event. Overall, the annual economic impact of music state wide is approaching $3 billion. A continued growth of tourism combined with a steady flow of artists and recordings are keeping Louisiana's music industry thriving. A New Fiscal Year and a New DED The reorganization of the Department of Economic Development (DED), the LMC's parent agency, will profoundly impact the operations of the office in the new fiscal year beginning on July 1. The Office of Film & Video is now a part of DED and will be part of the new Entertainment Cluster. How the restructuring will be implemented and how the cluster will be managed is not clear as of the writing of this report. During the Legislative Session, the LMC's future within the reorganization plan was not well defined. Consequently, the House amended the reorg bill to clarify the operation, structure and location of the LMC. Thus the bill was amended to maintain LA R.S. 25-315 with minor changes, including specifying that the LMC be domiciled in New Orleans and adding the consent of the Secretary of DED to hiring and management of staff. Additionally, the LMC was allowed to upgrade office equipment for the first time in more than two years. The new equipment will add to the LMC's ability to design and maintain the website and included digital audio and video capabilities. The LMC will be able to create presentations, radio shows and other multimedia promotional items to increase the LMC's ability to promote artists, new releases, historical vignettes and more. Major Accomplishments Legislative Agenda 2001 The LMC had a significant legislative agenda for the 2001 Session. Grammy Exposition funding, Workers' Compensation clarification, a House Concurrent Resolution and support for historic preservation were amongst the issues the Chairman and staff handled. Also, at the start of the session the very existence of the LMC offices was at stake. Suffice to say that the Legislature recognized and rewarded the LMC in many ways. Grammy Expo Capital Outlay - With the assistance of the Foster Administration, http://www.louisianamusic.org/june2001report.htm 1/23/2006 Louisiana Music Commission Report June 2001 Page 4 of 13 key legislators and DED, the LMC secured a $9.9 million Capital Outlay for the construction of the Grammy Exposition. $3.3 million will be disbursed each year for 3 years for construction costs. This represents the most significant music project in Louisiana history. Grammy Expo will be a major international attraction. The project will greatly impact Louisiana's music industry and will create a presence for the major music industry in New Orleans.