Why Brenda Lee May Not See Much Money from Her No. 1 Christmas Song - MarketWatch

Music industry veteran David Schulhof explains who earns the real money in the world of recorded music and how streaming affects revenue.

 

Below is an article written by Charles Passy and published on MarketWatch on 12/6/23:

In case you missed the news, the pop-chart star of the moment is Brenda Lee, a 78-year-old Rock & Roll and Country Music Hall of Famer whose 1958 holiday hit, “Rockin’ Around the Christmas Tree,” is remarkably now the nation’s No. 1 song, according to Billboard.

It all follows a major push by Lee’s label, Universal Music Group’s UMG Nashville/UMe to bring the decades-old rockabilly-flavored song to the fore. That included releasing the first-ever video for the song, with cameos by country greats Tanya Tucker and Trisha Yearwood, plus a new EP.

But here’s a related story that could come as a surprise: Lee may stand to gain relatively little financially from her chart-topping success, according to a number of entertainment-industry attorneys and experts who spoke with MarketWatch.

David Schulhof, a veteran music-industry executive who is behind the MUSQ ETF MUSQ, an exchange-traded fund focused on the music business, said that Lee might take home $250,000 at best directly from recording royalties through her label.

Not quite the millions of dollars you might expect, in other words. And certainly not the estimated $2.5 million to $3 million that Mariah Carey rakes in annually from her holiday hit, “All I Want for Christmas Is You,” the song that has given Carey the unofficial title of “Queen of Christmas.”

But Lee’s case is not unique, Schulhof said. “A lot of these artists appear to be richer than they are,” he said.

MarketWatch reached out to Lee for comment through Universal Music, but didn’t receive an immediate response.

Lee did issue a statement through the company, however, saying, “This is amazing! I cannot believe that ‘Rockin’ has hit No. 1 65 years after it was released, this is just so special!…The song came out when I was a young teenager and now to know that it has resonated with multiple generations and continues to resonate — it is one of the best gifts I have ever received.”

A label spokesperson didn’t have immediate comment on the recent royalties generated by the recording.

 

Not that Lee’s royalty earnings this year may be anything to sneeze at — certainly, $250,000 is not a bad payday. But in general, the big money in the music business often goes to songwriters, Schulhof and others explain.

 

“The richer pot of the two is definitely the composer’s side,” Barry Chase, a Miami-based entertainment attorney, told MarketWatch.

That is, songwriters are guaranteed a solid chunk of royalties in most contractual arrangements. Indeed, the reason Carey does so well with “All I Want for Christmas Is You” is because she helped pen the hit, which is said to have earned her $60 million since its 1994 release. (That said, Carey is now facing a $20 million copyright lawsuit connected to the song.)

In the case of “Rockin’ Around the Christmas Tree,” the songwriter is the late Johnny Marks, who also penned such holiday hits as “Rudolph the Red-Nosed Reindeer,” “A Holly Jolly Christmas,” “Silver and Gold” and “I Heard the Bells on Christmas Day.” Marks’ catalog is now managed by his estate, with the songwriter’s son, Michael Marks, helping guide the business.

“Who would have thought?” Michael Marks told MarketWatch about the recent chart-topping success of “Rockin’ Around the Christmas Tree.” But he didn’t want to respond to other questions, saying, “This is a busy time for us.”

A key reason songwriters stand to benefit so much is that they receive money from radio play, whereas recording artists — and record labels — do not, explained Chase. And while radio is not as significant in the era of Spotify and other digital outlets, it still counts for something.

Chase says the radio arrangement was set in motion decades ago and that record companies didn’t push for money tied to airplay because they were eager for the exposure, which they saw as a way to drive sales of the singles or albums.

Other issues are also at play for recording artists that affect their earnings, experts explain. That’s especially true for older artists who signed contracts decades ago when the industry was especially known for taking advantage of singers.

Further complicating matters: The artist contracts back in the day didn’t anticipate the advent of everything from digital platforms like Spotify to ringtones, all sources of royalty revenue, experts note. And while there might have been clauses that allowed for the potential of such future sources, there’s no saying those arrangements were fair.

Contracts can be renegotiated, of course — and often are, particularly if a label is trying to stay on good terms with an artist in anticipation of keeping them signed and making more hit records, industry professionals observe.

But when it comes to something like Spotify, the royalties still may not amount to much — reports say they can be between $0.003 to $0.005 per stream. And even then, the artist is splitting that streaming revenue with the record label.

“It takes a lot of streams to make money,” Lisa Alter, a partner and entertainment attorney with the New York-based firm Alter, Kendrick & Baron, told MarketWatch.

Schulhof throws another wrinkle into the equation: Often, a contract renegotiation involves the recording artist getting an upfront payment from the label in advance of future royalties. So, in theory, an artist like Brenda Lee could be receiving nothing in 2023 from her label, with the money having been paid out years ago, Schulhof said.

Lee can still mine her chart-topping success in other ways, however. Namely, through concert engagements, personal appearances and film, TV and advertising opportunities. Schulhof said that could easily add $100,000 to $150,000 in earnings this year, but probably not more.

But Holly Gleason, a veteran music journalist who knows Lee personally, said Lee is both “cute-as-a-button crazy” and sharp and smart — in other words, just the formula that would make her someone in demand for a variety of opportunities and someone who would know how to mine them properly.

And Gleason told MarketWatch that those opportunities could be endless. “Maybe she’ll be on QVC selling Christmas trees,” Gleason said.

 

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