How Daniel Cruz Hernandez Recovered $8M in Royalties

Esteban Candelario (00:21.144) Sick. All right, guys. welcome back to Producer Talk. My name is Esteban, your host. And if you're new here, this is the podcast where we sit down with producers and industry professionals to break down what's actually working in today's music business. Producer Talk is presented by Producer Fury, the number one CRM for producers. And today I have a special guest. Usually I'm interviewing producers, but we actually have something a little different. This is Daniel Cruz Hernandez, the founder of Producer Royalty and the royalty law firm. Daniel has built his career around recovering more than five million dollars in advances and royalties for producers.

And we're gonna talk a little bit more about the business side. I know we talk about the music side a lot. So with that being said, man, I know we were just having a conversation before, but how how are you, Daniel?

Daniel Cruz Hernandez (01:00.688) I'm doing good man. Thank you for having me. You guys are building something really cool with the platform and you know if you guys are just tapping in for the interview, I definitely recommend, especially if you're a producer, checking out the platform 'cause it's something that'll really streamline the process. So thank you for having me, man. I'm excited for this conversation.

Esteban Candelario (01:16.302) Definitely, man. Yeah, me too. and I got like a brief understanding of like who you are and like what you do, right, as a lawyer. But I actually want to get into like the journey bef before that, like who you were. So I guess before we get into like producer royalty and like the music industry and all that stuff, like who were you, you know, before you became who you were today? You know, what was it like growing up and I guess what did you originally envision yourself doing?

Daniel Cruz Hernandez (01:40.227) Yeah, so I I grew up in New York, so born in the city, then my parents made a little bit more money, kept moving me a little bit more north into the suburbs. all my friends, I I made a group of friends in the a bunch of Latinos and and black guys and you know, a lot of them were in the hip hop scene and you know, I was more business minded and savvy than a lot of them, so I was kind of their managers. and then, you know, they turned out giving up on their music career, but I was still passionate about it. So I was an undergraduate, and I was like, Well, now I don't have artists to manage, so what do I do?

and I discovered entertainment law. I was a big philosophy nerd and that's one of the things that people in philosophy get into is law. And then I discovered entertainment law and I was all in on that from that point forward. And I just became obsessed, studied all the mu young music lawyers, saw what they did. and one of the things I noticed was working with producers and how a lot of young lawyers were able to build a nice practice office off of working with producers.

at an early age. So I noticed an opportunity. There was nobody necessarily starting a practice that was specifically focused on producers. So I read this book right here. It's actually right next to me called The Game Changing Attorney. and it talks about the best way to occupy

The best way to build a law practice in today's market is to occupy a small box in somebody's brain and to become a specialist in that one thing. Kind of like the medic the medical field where you don't go to a heart doctor, or I'm sorry, if you have a heart problem, you don't go to a general practitioner, you go to a heart doctor. So that's my belief when it comes to representing clients, is you want to work with somebody who's a specialist and and understands your your situation and built a business around specifically your pain points. so that's what we do at at the royalty law firm and and producer royalty.

I started producing royalty while I was in law school and that was a company focused on actually collecting the money and now we're focused on the legal side as well through the royalty law firm.

Esteban Candelario (03:24.887) Nice. Yeah, that's that's a interesting journey. I I mean it makes sense that like people who get into philosophy want to end up in law, like especially when they wanna understand a lot of things around them. And I'm curious because I tried managing producers and granted I made I made mistakes, so it's not a hundred percent on the producers, but as far as like managing artists, like from that perspective, do you do you think, you know, maybe like the I'm I'm assuming lack of inexperience wa was something that was like holding you back or were you just like

less passionate about it as soon as like people were quitting the music. Because I feel like rappers are so hard to control and so hard to manage or like artists in general. but yeah, and I guess along that way, when when did you officially decide, like at what age did you officially decide, like I I'm just gonna go straight into law after high school.

Daniel Cruz Hernandez (04:14.171) yeah, it wasn't right it right into high school 'cause you gotta go to undergraduate first and then you gotta go to law school. So I didn't decide I want to go into law until I was a a junior or senior and it was at that point that I was like, Yeah, maybe I'll go into law. And then I found music law and then I was like, no, I'm definitely gonna go into law. so it was a it was a bit of a slow development. I always tell like people who are in still students don't know what they do. Like you kinda start I I think about it as like a r a pyramid in a sense. Every year you just refine it a little bit more. So, you know, I was like, I'm business minded.

Esteban Candelario (04:19.736) Yeah.

Esteban Candelario (04:30.111) Ha ha.

Esteban Candelario (04:44.216) Yeah.

Daniel Cruz Hernandez (04:44.307) and then I was like I'm managing and then I was like, all what do I do with that? All right, so I'm going to the legal side, maybe potentially, and then you know, this discover producers and then it's like, all right, what does that look like to work with producers? And then just kept refining it and now, you know, we have a pretty solidified pitch. I always say that the entrepreneur's journey is one of a thousand pitches and that's just kind of what it takes. I was just telling talking to people about things that I noticed.

Esteban Candelario (05:01.464) Mm.

Daniel Cruz Hernandez (05:06.712) very often. I was always outside, always going to events and always telling people about, you know, the things that I'm noticing, the things that I'm passionate about. And every single time I told it, I would get just a little bit better. And now I think we have a pretty concise, solid pitch and value add and vision for what we're able to contribute to a community that has a lot of pain points and not that many companies that are focused on solving them.

Esteban Candelario (05:27.82) Yeah, no. And I like what you said about entrepreneurs. It's so true. Like just because of where you start in your journey doesn't mean like it's that's exactly where you're gonna end up. Kind of like ticks a left, ticks a right, ticks a left, ticks a right until you get to where exactly where you need to be. And I it it it kind of sounds like you stumbled upon it just because of like, you know, the the things that were similar to what you were already doing, you know? and I think most people don't realize that about their journey. Just because of where you depending on where you start doesn't mean it's gonna you're gonna end there. And I think a lot of people like have that misconception in their mind.

I know you mentioned starting the law firm while you were in law school. So does that mean like were you in any law practices or did you join any, you know, represented any other law firms as well, like while you're in school or like after you graduated?

Daniel Cruz Hernandez (06:12.08) Yeah, yeah. So I was working for under I I I'm big on working for you know, as a as a young person that wants to get into a specific industry, I think the best thing that you can do is work for a small company and just learn the ins and outs of how to actually run and build a company. and you get a little bit of a feel for everything until you find the thing that makes the most sense for you. so I worked for all of my internships were related to except one that I had for a couple months, and all of my legal internships were related to

specifically music law and small practices, only worked under small lawyers. So I worked under about like five different law firms. there was this one position working under Adam Friedman, who's a lawyer that you might have seen before on Twitter. he he likes to quote labels out on their nonsense and you know the industry and vouch for producers. at least that's what he was known for at the time. and yeah, so I worked with him and 95% of what he had me doing was working with producers and chasing money and he told me a little bit about how to manage and run a practice and things like that.

and then yeah, one day he just looked at me and he was like, Yo, all this payment chasing stuff, this is not even legal work. You could start a company that's focused on collecting the money now and payment chasing and and that's when he gave me the light bulb moment for producer royalty as a company that does one, actually handles the the collection process and we'll

Esteban Candelario (07:18.744) Yeah.

Daniel Cruz Hernandez (07:23.759) represent producers, so I call it the services side of the business. And then also the content brand as well too, because in my head I'm thinking, how do I get clients? I'm new, I don't know. And I already had a podcast that was music industry focused. And I was actually kicked off the show in a sense, but not in a bad way. My co host just didn't want to do that specific segment of the show anymore. so and he moved to Bali and it just wasn't practical anymore.

Esteban Candelario (07:39.275) huh.

Mm.

Daniel Cruz Hernandez (07:46.41) and so that's when I he was like, I'll give you access to my studio for a couple months and that's when I was like turned out to be the best thing that happened to me. I was so hurt about it at the time. because I I love that podcast and we're doing very well getting into some or pretty well, getting into some n nice things. And then yeah, it w it was because of that that I had the idea and I challenged myself to come up with something very quickly and that's when I was like, I'm gonna make producer side content and one of my first like ideas was to call it songwriter royalties instead of producer royalties.

but then I was like, No, no, no. This book told me that I need to niche down as much as possible, speak to one specific community. Songwriters in my head I'm thinking, Well, there's more writers, I'm helping writers too. But it's like, no, speak to producers who identify as producers. So that's where the the focus came from.

Esteban Candelario (08:29.278) Mm.

Esteban Candelario (08:33.09) What do you think? Because I you mentioned like chasing, you know, chasing the money. And what what is chasing money to you? Because I've spoken to producers on this podcast who have said they they've emailed the label back and forth and then seven months later they get like a a small check of two hundred dollars, which is it obviously isn't equivalent to like whatever the song has done, right? So, like, you know, what is chasing money to you and like what does it look like? You know, what would you specifically be doing for a client? Like, can you just walk us through that process?

Daniel Cruz Hernandez (08:59.764) yeah, so it depends on the type of money. So if we're talking about advances, that was what I started producer royalty on. I noticed there was a lot of clients that similar situation, like they had an advance for a song and they agreed to the deal, they didn't have a lawyer representing them, or maybe they even they did. and then, you know, they signed the contract and it's like, Well, they haven't paid me. I'm like, Yeah.

They haven't paid you because you haven't sent them an invoice. You gotta send them an invoice and you have to go through the whole label vendor registration system, which is it's not as simple as sending an invoice, but I mean, like, in a sense it is like you have to give them a way to pay you and they have their own process of doing that. So collecting advances to is about for one, maybe you never got the the you never you never got contacted. I mean, that's the majority of our our first clients were people that had their music stolen from them.

Esteban Candelario (09:28.014) Mm-hmm.

Daniel Cruz Hernandez (09:45.433) so you know aside from sending an invoice, you gotta actually come to an agreement first before you know what to invoice for. so you know that that is the chasing advances and kind of the the clearance process. And then there's also the master royalty side, which is what we are all in on now, and we've become the leading master royalty admin for producers because there's just all this money sitting at the labels that producers don't know about and they don't know how to collect it and they don't have a team that knows how to collect it and and even if they do know how

You know, some of our clients have over a hundred songs that are recouped or a around the threshold that songs recoup. And it's a whole system to to track and set up those accounts and and fix any errors that come up. It's very similar to publishing. whereas like if you have one song and on the publishing side, you can register it with the main societies that collect that money yourself. And on the master side, it's similar. You could go through the process yourself, but when you reach a certain point, you gotta start working with the team or you should start working with the team.

that knows what they're doing and is able to ensure that you're getting paid everything that you're entitled to and all the accounts are set up properly. you might have 20 recoup songs from Universal and you might get a check from Universal once every six months as you should be when you are owed master royalties. But is it for all the money that you're entitled to or is only one or a couple songs and are there any issues with that accounting? Are they paying you at two percent at a two percent rate instead of a three percent rate? Was your van your advance of 50% recoupable? Was that actually applied? so there's a bunch of things like that.

that you know having a specialist that knows how to handle the process i it benefits you from. And then there's the publishing side too. So you talked about, you know, what does it look like to chase money? On the publishing side, I mean, like we're not a publisher, but we work with a lot of publishers and we refer people and we understand how to identify the issue. but really chasing money on the on the publishing side is for the most part a job for your publisher. They have the usually the exclusive rights to pursue any claims or any money that's owed. So you have to just communicate with your publisher to get the publishing money paid out.

Esteban Candelario (11:21.048) Yeah.

Esteban Candelario (11:42.88) Interesting. And like okay, so I'm curious

Daniel Cruz Hernandez (11:44.661) And there's mo sorry, there's more royalties than that too, which we help with, but those are the main three forms of income. But yeah.

Esteban Candelario (11:48.716) Okay. I'm I'm curious you said so much and like I was thinking about so many things. So I'm I'm really, really curious. because you mentioned the process, like let's say you you, you know, sign to get in advance and you don't get it and 'cause you don't send the invoice. Are do lawyers lawyers excuse me, do do do music labels go into that knowing that sometimes like producers are so unprepared that they actually may never pay them because they don't know what what they're doing? Or is that just like so is that just the lack of like business saviness on the producer side?

Daniel Cruz Hernandez (12:19.466) I'll tell you this, I used to say when I first got into it, I used to villainize the labels and say the labels are out to get you. And you know, it's it's them trying to keep the money away from you and they have, you know, and but really it's it's not really that. you know, we've built really good relationships with the people at the label and they're people that work in departments underneath a bunch of other people, and the people that have and they're getting paid forty to maybe a hundred thousand dollars a year, and you getting paid your money has nothing to do with how much they get paid at the end of the day, or it has very little to do with that.

It's more so that there's just not really a an aligned incentives for the label admins, they're very under overworked and underpaid just by the nature of working in music. Pretty much everybody that works in a major company is maybe underpaid, at least what the market would pay them for similar type of work in other industries, just because everybody wants to work in music. and they have a lot of work. They're like our inboxes are crazy. Their inboxes are a hundred times more crazy. They have people from all around the industry reaching out to have things cleared, and unless you're top of mind for them.

Esteban Candelario (12:49.357) Interesting.

Daniel Cruz Hernandez (13:17.681) And unless you're constantly following up with them, like they're not even gonna notice it. And you know, they might say they'll get back to it later, but they forget. So for the most part, the people in between you and your money on the label side, on the major label side, don't actually have an incentive to keep you away from that money. Now on the smaller label side, if you're working with an independent artist that has their own label and they're distributing through a a distributor, and you know, that money will actually directly affect

them and and they'll feel it and you know they don't want to they want to keep it away from you. Obviously in those situations, yes, like the artist. It's more so the artist and the artist direct team. But also another thing that people don't realize and I I might have not even realized this when I started the companies, but I certainly do now is that the money the producer gets comes out of the artist share. It doesn't come out of the label share. So let's say you get a master royalty account set up

with the label, that money's just getting subtracted from the artist next check. So it's not really even affecting the the label's bottom line like that. it's more so, you know, just like I said, just a there's no aligned incentives for the labels to build the systems that accurately and effectively handle and pay out the money that's owed to producers when they're owed it, if that makes sense.

Esteban Candelario (14:30.446) Is that why artists always go with producers? That's like the I always hear that. That's just like the most common thing every time I speak to producers. Like they'll make a beat, they'll be in the studio, they'll be homies, and then when it's time, they're just they're just gone. Like they don't hear from them ever, especially if the song's released. Yeah. so you built a producer royalty like what around 2023. I guess going into it.

Daniel Cruz Hernandez (14:44.42) Yeah. I mean yeah, 'cause that's yeah, like so you don't to save money and not to have to pay them, for sure.

Esteban Candelario (14:56.652) Was there was there any like major stepping stone for you or like any major success story that you saw that I guess other producers can learn from that you could share with them?

Daniel Cruz Hernandez (15:05.328) Yeah, so the thing that made me realize that there was such an opportunity in the master royalty side was I was working under Adam Friedman and he had me a random assignment was he gave me to set up these master royalty accounts just to kind of give me something to work on and to do. and I set up an account. It took me like nine to twelve months to set it up. And when the account was set up, a hundred and tw I think it was a hundred and seventy thousand dollars was owed to the producer that he just didn't really know was out there. and it just blew my mind and I couldn't believe it. And I was asking around trying to figure out how this is possible and

you know what what is keeping the producers away from their money, what needs to happen in order for this to to money to get paid. so, you know, I set up that royalty account and that's what kinda gave me the ins like, no, this is a that was the most validating moment that there is a lot of money out there that people don't know exists. People know about publishing and they work with publishers and you know on that side it it could get really intricate when it comes to that. But like on the master side it's like really there's only one company that's in between you and your money. Whereas on the publishing side it's more it could get a a lot more complicated.

than that because it's like maybe your publisher is just incompetent, maybe they only registered you with one collection society. Maybe there's a split dispute. There's a there's there's more things that could go wrong or harder to kind of rectify on the publishing side. so that that's kind of what made me lean into the master side so much. and then you said some success stories. yeah, I would just say like the amount of volume that we've been able to to take on and the amount of people reaching out just through the content like

you know, we've serviced over three hundred producers in the last two and a half years, which I mean if you do the math on how many people that is per day or per week and you know how many cases that comes out to and like we started Royalty Masters, which is it's a branch of producer royalty in a sense where it's our actual administration arm. It's the one that and you know, we're actually doing admin deals at this sense, similar to a publisher but on the on the master side. And you know, we've signed a hundred and sixty guys in the last year and a half. So I mean that's

Esteban Candelario (16:53.922) Crazy.

Daniel Cruz Hernandez (16:54.029) That's pretty remarkable to have and you know, these are songs these are catalogs with hundreds of millions of streams. if they don't have hundreds of millions of streams, they're probably not owed master royalties. So, you know, it's pretty decent sized catalogs. sounds impressive, but there's not as much money on the master side because you were working off of a percentage of one to three percent, sometimes less than that. whereas on the publishing side you're working off of fifty percent on on the publishing or you know, something like that.

Esteban Candelario (17:17.774) That's that's insane. And I mean, I was I was just thinking about this as you were talking, especially with that one producer who said he was old 170K, didn't even know. What what happens to the money? Does it just sit there? Or is there a certain amount of time that if they don't collect it, it just disappears and somebody else takes it? Like the the label, the artist, or does it just stay there forever? Like what is it, what happens to it?

Daniel Cruz Hernandez (17:38.262) Yeah, so it it just doesn't get accounted for, right? So it's basically flowing to the artist until there's a couple things that could happen. So for one thing that could happen is there was no producer agreement ever sent to the label and the label's been accounting as if they're the artist was the one that produced it in a sense. and so that money is just flowing to the artist this entire time. Another thing that could happen is they are aware of a producer agreement and they have been just collecting that money and it's just been sitting essentially in like a bank account in a sense on the books.

as being owed to somebody, but they don't know who to send it to or they don't have the information needed to send it to them. and in both situations, d there's no black box. It's not like publishing where the black box exists for publishing royalties because nobody collected the money. It didn't go anywhere. Basically the the PROs or whatever publishing organization that collected the money, they don't have the writer to pay it to.

Now on the label side, it's not like that. The money went to the label and it's either going to the artist or maybe it's just sitting at the label. So there's no black box to that's like in the same way. And the way it works is when we set up the royalty accounts, you know, we've set up a royalty account for notorious BIG. that song was from 2003. and the the what from what we could tell, the full amount was being accounted for when we set up the royalty account. Now there's definitely some issues that come with the early 2000s and 1990s,

cuts because you know accounting systems switch and they might not have the statements and maybe, you know, you know, around two thousand and I believe seven things really switch and then it switched again, two thousand I don't even remember the date, and then like money's lost in the translation. but in theory you're able to collect all the way back from inception the day that the song came out, assuming that the label's been tracking everything properly.

Esteban Candelario (19:11.406) Yeah.

Esteban Candelario (19:25.678) So even if the label was tracking, because I think you mentioned the label is basically like sending it to the artist if it's gonna go anywhere. So do you think it's more of just like a systems problem? Like the system is just a little too difficult. It sounds like it's a mess. It sounds like a giant mess and you're just like sweeping it up and then just looking for the you know, diamonds in the roof.

Daniel Cruz Hernandez (19:44.201) Yeah, and that this is why I'm hosting a South by South West panel or applied to host it, called producer points, the indust producer points, the royalty the industry was not built to pay. Because producers are accounted through the artist royalty accounting system. So the labels made the royalty accounting system to pay out artists, but the producer's royalty comes out of the artist's share. So it's like it's basically a workaround in a sense where it's like, you know, producers are not the the

This system wasn't really built to pay out producer points specifically. so you know, everything is a bit janky and not as streamlined as it could be. In theory, it could be a pretty simple process, but it's definitely not. you know, we have to go through whole ticket systems or you know, the average person has to go through a whole ticket system with the label that they take months to reply sometimes, sometimes they don't ever reply because they miss it. we've built the relationships with the label where we're able to streamline that and we have them on the call once a week, once every other two weeks. sometimes we just call in when when needed.

And we're able to streamline the process, but you know, yeah, it's just it's it's a systems issue and a lack of incentives, like I said, for labels to account for this properly. Like, why would they build a streamlined system? There's no why, like, I mean, there there actually is some reasons why. For instance, some people actually do care, obviously. So some people might want to see that this money goes to people. and also, you know, we spoke to one of the heads at UMG Royalty Department, and he says that the amount of

tickets that they've received for producer points over the last three years has gone up like three to I think it was three to five X, he said, which is very substantial. Like, you know, you you'll need three times more people to handle that volume. And they actually did within the last couple months scale up their team a bit. but before that, it's just people, you know, a system and people and a team that wasn't built to solve this problem and handle the volume of people. Especially with hip hop nowadays, there's just so many producers that are owed owed royalties from the labels.

Esteban Candelario (21:18.732) Yeah.

Esteban Candelario (21:35.01) Yeah. And I could I could see the tickets going up three three X, five X, especially with the culture of like looping. Like looping is just a form of producing in itself. You know, all you got all these kids from around the world sending, you know, loops to major producers and his producers ghost them and they just you know what I'm saying? It's just it's just a whole mess. and I know you mentioned master royalties and I know you mentioned publishing. and I actually had like a talk with like a producer.

And it didn't sound like he knew like the difference. It it sounded like he thought they were the same or that publishing handled that for you as well. So and I know you've mentioned it, I know you explained it, but can you go more in depth and explain it to like a fifth grader? Like what exactly is the exact difference and how are you collecting in those ways?

Daniel Cruz Hernandez (22:18.096) Yeah, when you get a placement, you're agreeing to three things. You're agreeing to your advance, you're agreeing to your master royalty, and you're agreeing to your publishing. The master royalty is a percentage, the publishing is another percentage. And there's flow like there's a bunch of different types of publishing royalties. There's also different types of master royalties in a sense. and like you need to be able to collect both of them. So your publisher is only going to collect the publishing flow of royalties.

the publishing flow of royalties, there's a bunch of different ways they're generated, but the simple ones are from streams. About you know 20% or so of income from streams will go to the publishing side. And you have to work with a publisher or you could work collect from the societies yourself. So there's I'm sure most of you guys have heard of BMI and ASCAP, and you know most writers when they hear about BMI and ASCAP, they get very excited. They're like, shit, there's a whole bucket of money that's just sitting out there. And this is the organization I need to collect that money. This is how it works.

But they're just one of of thousands of organizations around the world that collect this money for you. And BMI and ASCAP collect the main two types of publishing royalties are performance royalties, and then there's mechanical royalties. BMI and ASCAP collect performance royalties. They collect it kind of globally in a sense because all of the a lot of the major PROs, performing rights organizations around the world, they share royalties with one another. so if your music's streamed in France, they're gonna send money to BMI.

to pay you that money and vice versa. mechanical royalties don't work like that. some ti in some territories they do, but like in the United States there's the mechanical licensing collective that collects mechanical royalties from streams and then you can register directly with them, but they don't have reciprocal agreements, it's called that's what the the PROs have with one another. so sorry, we're going in the weeds here. So I know for some people like if they're just hearing this, it's a lot of information for sure. And you just gotta hear it a lot.

Esteban Candelario (24:02.786) You're good. You're good. I like it. I like it.

Daniel Cruz Hernandez (24:08.045) Until you understand it. But yeah, the mechanical royalties, the MLC doesn't have reciprocal agreements in the same way. So you might have to and this is all preface to say if you work with a publisher, you don't have to think about this as much. You should understand it because publishers make mistakes, especially if you're a small publisher on their or you're a small writer on their roster, they might not prioritize your catalog. And you should know and be able to identify like when things are going wrong. so that's the publishing side. Then on the master side,

Esteban Candelario (24:09.667) Yeah.

Daniel Cruz Hernandez (24:33.652) As everybody knows, labels own the master for the most part, and they get all of the income for the most part that the master generates. It's not like publishing where a bunch of people own publishing. Like all of the writers on the song will own a piece of the publishing, so they collect their own money. The master side, it doesn't really work like that. Spotify will pay out one person, they could pay out multiple, but they'll pay out one person or one company all of that money, and then that one company is going to account to all the people that are owed that money from. So even though there's different types of master royalties, like

understanding the difference of them isn't really it's not even that practical. because like you y you are getting paid it from one source, if that makes sense.

Esteban Candelario (25:12.494) Yeah, no, that it's it it's funny how complicated it is, you know. I don't think it's I don't even think it's designed for like a regular person to understand almost. And even even even, you know, on your side of things, I mean you clearly have an understanding of it, but it sounds like so entangled. I don't don't know if that makes sense. Like it just sounds like a jargon of like information and words, right? but is there any like

You mentioned producers should at least have a basic understanding. You know, you mentioned that for the publishing, but I'm sure they should at least have a basic understanding of, you know, their master royalties too. So as a producer who doesn't have any representation and let's say they're growing right now and they know they might have royalties out there to collect or publishing, what should be like the basics of what they should know?

Daniel Cruz Hernandez (25:57.975) the basic should be that there's two copyrights like we just talked about and you know the you have two percentages. It's not if you're negotiating with an artist, it's not like I want fifty percent of the song. It's I want fifty percent of the publishing and I want X percent of the master. Like you have to negotiate both of those things. And that's n one on one. Like if you're working with an artist, you need to understand that. Otherwise you're not gonna come to any agreement and you're gonna be missing money because you're not even gonna know what money exists. How are you gonna collect it? but then there are companies

You know, like like BeatStars Publishing, who does a great job spreading the information and essentially you work with BeatStars Publishing and and you know you might be good on the publishing side. They might collect all of the money that you're owed on the publishing side. so just know if you want to collect your publishing royalties, if you lock in with a solid, reputable publisher, then that is how you're gonna wind up collecting your publishing royalties. on the master side.

Just understand that like your master royalties are gonna go to whoever owns or controls the master, which will probably be the artist. and if they're working with a label, it's gonna go to the label. So if you want to get your master royalties, you have to get it from the artist or their label. And every label accounts master royalty is different. the the master royalty collection side on the major labels is very complicated and nuanced because you have ginormous companies you're working around, whereas with independent artists.

If you want to collect that money from them, you should just register your split with Distrocate or whoever they're distributing through and they disjocate or whoever it is can pay you out automatically every time the artist gets paid. so I think that's the most the the most basic that you can understand is like just where the money is and and how to collect it is that's a very simple answer.

Esteban Candelario (27:29.102) Mm. And you mentioned being really specific, especially for producers when they when they sign things, in terms of like what they're collecting. You can't just say you want to collect something as a whole, like is that either the publishing or the royalties or whatever it is specifically, or you're just not c gonna collect anything. So have you ever seen like a producer make a crazy mistake like signing a deal with like no clarification?

Daniel Cruz Hernandez (27:49.78) Yeah, for sure. All the time. Every day. very frequently. Yeah, all the time. Is there something you want me to dig in related to that? yeah.

Esteban Candelario (27:57.932) Yeah, like what was the worst? Like what was the worst thing you ever seen?

Daniel Cruz Hernandez (28:01.832) Well, I think the worst thing that you ever I mean, the worst thing is you get a small amount of money and you get no rights on the back end. So you get no master royalty participation, you get no publishing. I mean, that's probably the worst thing that you that could happen. even worse than that is instead of just one song, you wind up signing to somebody that's in the studio with you and they're like, Yo, I'll help you get some cuts and they're really signing you to a production deal, which is not the same thing as a producer agreement. A producer agreement's when you have a song with an artist.

and you're just clearing a specific song or a set of songs. A production deal is like a label deal essentially where you're signing to a company and you're giving up the rights to all of your masters and everything that you create during that time period and you're assigning it to them. And then you they basically c and that locks you in that could lock you in for a long time.

Esteban Candelario (28:30.659) Yeah.

Daniel Cruz Hernandez (28:47.363) so we've definitely seen situations where they didn't know any better. Producers just getting started. Somebody in the room has more motion than they do and they are making some introductions, then they sign them to a production deal and now their whole freaking career is cooked for years and all the money is flowing to this company that's not reputable and you know, and they're they're fraudulent. So I think that that's the thing main thing to think about is like are you sign like I it's unless the person has a shit ton of motion

Like it doesn't make sense to sign to them. Like it just doesn't. Like it's not ever gonna make sense. or it's very rarely gonna make sense.

Esteban Candelario (29:12.504) Yeah.

Esteban Candelario (29:20.846) Mm-hmm. No, that makes a that makes a lot of sense. And, you know, like you talking like it I mean the business is the business is a shy business. You know, at the end of the day, they they say like close mouths, don't get fed. But I I feel like in this business it's more like if you don't find what what you're owed, you're you're never gonna be given it. Like you know what I'm saying? is there anything right now, if you had to change one thing about the music industry right now, that would make it better or easier for you or producers

Daniel Cruz Hernandez (29:39.963) Yeah, for sure.

Esteban Candelario (29:50.38) Or for producers, you know, what would that be?

Daniel Cruz Hernandez (29:57.689) One thing for me or for producers? well the thing that comes to mind that is, you know, I mean this is why we have a business, which is just streamlining the master royalty space for producers. Like there's just no reason to have master royalties

accounted for in this way. So I think that's a very relatively easy fix for major labels is to create some type of system that makes this accounting a lot easier. So that's what's best for the industry. Now our company we might be out of business because that's the whole pain point that we're built built around is is helping that problem. So but definitely that's what's best for the community for sure and I'm all for that. and then what's another thing? So another thing that streams it. yeah I think that

Esteban Candelario (30:25.09) Yeah.

Esteban Candelario (30:32.526) Hundred percent.

Daniel Cruz Hernandez (30:35.363) Just having a more centralized, like somebody taking very seriously and having the best, most thoughtful people in the music industry educate and to make the information as accessible as possible. Like I I'm a big fan of education. I love to learn and I I want to be a teacher more than anything. And you know, I think that's an aspiration of mine is just to

you know, there's so many varying different perspectives. I make videos all the time. People say I don't know what I'm talking about, I don't know what I'm doing, and sometimes I might be wrong about things. but you know, the point of having an institution is you have a lot of different minds working together. So I would love to the industry to form some type of at least make it more which I guess they exist. I mean obviously there's music business schools that people could sign up for, but I guess for producers that would that would be great if there was one specifically about focus on on

on the business for producers and that company also had a very strong internet presence that made it more accessible for that information as well. They without having to spend, you know, go to whatever music business school, Berkeley online or whatever. Which I went to Berkeley online. So

Esteban Candelario (31:33.942) Mm. I always find it funny when when when people in c in the comment sections think they know what they're talking about, little literally they know like you went to school for how many years and like you became like you know what I mean? Like I find it funny. When people on the internet,

Daniel Cruz Hernandez (31:46.029) Yeah, and it's hard to make this content. It's hard, bruh. Like there's a managers that like I try so hard in my videos, like in podcasts, it is what it is. What comes out of my mouth comes out. but when I'm making a a short form video and I'm making a one minute video explaining a topic or thirty seconds, like it's very hard to be precise and to t there's so much nuance on things. So if I say there's never a reason to sign a production deal to somebody, obviously there's situations that there is. And I said the other day that

Esteban Candelario (31:49.111) Yeah, yeah.

Esteban Candelario (31:56.366) Mm-hmm.

Daniel Cruz Hernandez (32:14.12) you know, s signing a co-pub deal is like betting against yourself in a sense. Like I understand that not every situation is like that, and sometimes you need the money from the co-pub deal, and sometimes like you are you you need the money from the co-pub deal to level up, or some publishing companies get you a ton of opportunities, and those opportunities change your career, or sometimes like you're worth a lot of money and somebody's gonna give you a lot of money, and your co-pub deals are actually pretty reasonable terms, and you're actually it's the opposite of that, or sometimes publishers lose money.

on the fact that publishers lose money all the time. So maybe you're actually like there's so many things that go into that. But if I'm making a short little video, like I can't touch on all that all the time. So I can't always be accurate all the time. And so yeah, this manager I looked up to the other day reposted that video and said, you know, I I don't know what I'm talking about. But I understand that yes, that video is not the most accurate and it gets frustrating, but it's just part of the game and I'm just learning to accept that.

Esteban Candelario (32:54.19) Right.

Esteban Candelario (33:10.124) Yeah, yeah. And information is either taken too literal or it's straight up just not factual. Like I find it I find it it goes either way. but for you, I know go ahead, go ahead. Hmm.

Daniel Cruz Hernandez (33:18.112) Yeah. And my goal is just to challenge people to think about it a little bit differently. Like I said that I know it's l it's one of the more controversial things to say, but like at least you're starting to think, hmm.

Why is it making me like, why is it betting against my like how that's such a new thought to me? What is the thought process behind it? because somebody's giving me a lot of money up front. They know that I'm probably gonna be making a lot more than that. Some people aren't really thinking like that. And it's maybe a simple thing for most people, but that's the point of me saying that is just to challenge people to start thinking about it slightly differently, you know?

Esteban Candelario (33:49.134) Hm. Do you think like artists are more respected when it comes to like deals being made for them rather than producers?

Daniel Cruz Hernandez (33:58.348) Can you repeat that one more time?

Esteban Candelario (34:00.11) Do you let me let me try to rephrase it? Do you think artists are more respected in the industry when it comes to them being able to make deals, collect advances, collect royalties, collect publishing versus like producers?

Daniel Cruz Hernandez (34:13.541) Mm, respected. I guess it's just like respected by who. So I'm gonna think labels. in a sense the artists are dealing with very similar situations as the producer. the difference is it's like their own label in a sense, and you know, they're they might not be informed when the the account recoupes and you know, it's a lot simpler of a thing as a label. Like you are setting up these royalty accounts for the artist, so it's like if

i they're encountering it as well too where like they don't know they're recouped and they don't know their owed master royalties. That happens, but like it's one pay pay or instead of as producers, you might have hundreds of them. So it's kind of a different thing, to talk about on the publishing side it's the same exact issues. I mean there's no difference on the publishing side by working with a producer and between an artist and a producer's experience and this when it comes to actually collecting your money or at le there's definitely some differences, but yeah, there I go trying to

Esteban Candelario (34:46.862) Uh-huh.

Daniel Cruz Hernandez (35:05.758) to make sure I'm super accurate. But yeah, so I would say I don't think it's that big of a difference to be honest. I think they encounter very similar issues. It's just the way you rectify them is a bit different. So

Esteban Candelario (35:07.682) Ha ha

Esteban Candelario (35:15.98) Yeah. Yeah, I I I had figured, like, I mean obviously there's challenges that they face, but then I kinda I kinda see it as like it's kind of not their problem anyways. Like you know what I'm saying? 'Cause I'm sure if the roles were reversed, it'd probably be the same problem for, you know, artists, if producers were the ones more favored by the the labels as far as like the relationships. What's up?

Daniel Cruz Hernandez (35:28.842) Yeah.

Daniel Cruz Hernandez (35:33.073) Mm-hmm. This came to mind to me though. Sound Exchange. So Sound Exchange collects a type of master royalty it collects from digital radio, so from like Pandora, Sirius XM, and non-interactive streaming. It's definitely that system is way more favorable to artists than producers because for producers to collect sound exchange royalties, they need to have the artist sign what's called the sound exchange letter of direction, redirecting the money that's due to the producer.

Sorry, redirecting the money that's due to the artist to the producer. And the sound exchange system was not at all built to account to producers. So that money just goes to the artist directly. And it's not until the the artist signs something, it's like why why do they sign why would they sign? because they're good people and because their lawyer tells them that they're they're supposed to sign. But like, you know, part a large part of what we do is just chasing sound exchange letter directions and because that system makes no sense for producers to have to to have to go through that.

Esteban Candelario (36:24.494) That's crazy. and I I don't think I've even like considered considered any of that like in terms of how it affects everybody. And for you, like personally, like is there anything you learned in terms of like the entrepreneurship side of things? Because like you're a lawyer, but I also consider you an entrepreneur too. You know what I'm saying? So is there anything you've learned in the process as far as like being an entrepreneur, starting your own law firm from scratch, and then you know, building a business, building a clientele, building these relationships with the labels?

Is there a specific lesson?

Daniel Cruz Hernandez (36:56.444) Yeah, I think the biggest thing for me was when I started coming up in the industry, I looked up to the older people for advice and I would ask them a lot of questions and I would notice things about the modern landscape that is different than obviously the world that they grew up in. And they told me things. I asked one of my music attorneys, I asked this music attorney who like sixty five, very successful, like, Hey, I don't really want to do entertainment law. I just wanna do music law. Do you think that I should

Practice all of entertainment law, or is there even a way that I can just be a music law? And he told me pretty specifically, no, you need to practice everything because that's how you will get more clients, and that's how you know your clients are gonna need a bit of everything, and that that is the best way to build a business. I was like, that's not really what I'm noticing. I could say the same thing when I going to law school, they don't teach you how to be a business owner at all, they teach you how to practice law, I guess, in a sense.

and the same thing. I would hear the same stories all the time at the at the Brooklyn Entertainment and Sports Law Society dinners. Like they would have alumni of the year. They would come up and tell their stories on how they got here. And it was the same story all the time and I didn't want to embrace it. It was you you you grind your ass off o in in in law school.

trying to get some type of position. You might get lucky getting some internship. And then after that you probably won't get a job in law. Then you keep gr grinding and somewhere adjacent to it. And then you might meet somebody or get some job that you're just eating shit like as an associate for a bigger law firm for like five to ten years. And maybe you'll become a partner and then maybe you want to start your own book of business. And I was like, I don't really wanna do any of that. I w I wanna just study the the the young lawyers that did do it and ask them how they did it, obviously. and you know it you can the older

people like they have so much wisdom to share. But when it comes to like starting a business, in the modern music landscape specifically, things just change so quickly in music. Like it's it, you know, if it's a finance background or another industry that's very stagnant, then I'm this advice might not apply. But I'll just say reaching out to people who are three to five years ahead of you is probably a lot more fruitful than reaching out to people who are very established because you want to try to follow and replicate their footsteps. That's the biggest takeaway for me.

Esteban Candelario (38:44.014) Mm-hmm.

Esteban Candelario (39:02.328) Yeah, no, that is that's facts. And speaking of like things changing like in the industry, just it's always evolving. Is there something like in particular right now that you think is going to evolve and change drastically that you're seeing? Or is it for now kind of staying all within the same?

Daniel Cruz Hernandez (39:17.977) Yeah, that's a great question. I would say

Yeah, I was talking to one of the the heads at Cobalt the other day and we had a great conversation about where the direction of the industry is going. And yeah, that the administration side of things, actually collecting your money is just becoming easier and easier and easier. And you no longer like, why do you need to sign it to a big publisher? He was emphasizing there's three ways and I love this. There's three reasons to sign to a big publisher. There's three value ads that they have. For one, actually collecting the money for you, administering the royalties. For two, they're a bank. And that's another reason that you might want to sign with them.

for three, you w want to get some type of opportunities with them and you know, that's kind of a joke at the major labels nowadays. Like that's not as much of a thing as it was a long time ago. Now the administration part, like that part is becoming very easy to or a lot easier to do yourself. And it's very clear with all these companies that are popping up to democratize like the collection side of things and do things on your own. Like I don't think starting a ro like a a a standard publishing company or like

I mean there's definitely opportunity now and you could build a catalog now that lasts a long time. But like, you know, I think that the the bigger opportunities are creating the systems that are a bit more innovative and streamline the process in one way or another. And there's a lot of competition in that space, so that's definitely a hard thing to do, but and t requires a lot of experience and research. But yeah, it when it comes to administering and collecting your own own your own money.

obviously that's that's changing a bit. And people are seeing it with the the label side of things too. Like you you couldn't cut records on your own before. You needed the labels to do that, you needed a lot of money to do that. and now also on the funding side too. Like I said, there's three reasons to sign to a big publisher, you know, for the connections. Now you can do that a lot on your own as well too. and then for the what was the other thing I said? Or for the bank, there's alternative funding options as well too, where you don't actually need to sell your masters and give up ownerships to people like this, the the

Daniel Cruz Hernandez (41:10.189) finance industry in Wall Street is tapping into the music industry a lot more than they were before. And then there's companies like Beatbread like Sound Royalties that that give you an advance on your royalties without you having to sign, you know, huge deals.

Esteban Candelario (41:22.828) You could get an advance on your royalty and so b essentially you're getting a loan based on like whatever your royalties are worth.

Daniel Cruz Hernandez (41:30.16) yeah. Yep, exactly. So like Sound Royalties and Beat Bread. Beat Bread is more geared towards artists and like their recording revenue, if I'm not mistaken, maybe I'm wrong. and they will, you know, they Yeah, and Sound Royalties is very popular in the producer community specifically. they will give you a loan based off of whatever royalty stream you have. If it's sound exchange royalties, master royalties, if it's you know, from your PRO, just your writer's share of PRO revenue. You give them the statements, they make an estimate on how much that's gonna generate and they give you a bunch of money up front.

Esteban Candelario (41:31.822) That's crazy.

Esteban Candelario (41:37.186) You know what? I've heard of beetbread. Yeah.

Daniel Cruz Hernandez (41:59.53) And they actually cap the amount of money that they can make. So it's not like a publishing deal where, you know, they can make infinite amount of money off your catalog. there's a lot of companies that are innovative and innovating and saying that you can only make they're only gonna take a certain amount of money. And anything above that is actually yours, even though they signed you to this deal earlier on.

Esteban Candelario (42:18.05) Mm-hmm. And it sounds like it makes it a lot easier for like the producers to get access to it too, especially with like things like beetbread. It makes more sense. I mean, do you think it's circumstantial, like, you know, depending on the situation, or do you think in most cases it would make more sense for most producers to go that route instead of like going through a label or something like that and signing a a deal and getting an advance from them?

Daniel Cruz Hernandez (42:38.016) Well, you need to have some money flowing to do that. Cause like if people like publishers are making like there's publishers that might give you a hundred thousand dollars off your talent, where these companies aren't doing that. Like they're giving you off of the money that you're already generating. So like the producers that need the most money are oftentimes the ones that don't have any money coming in. I mean, that's obvious, but so it's like, you know, you might still need people that see the talent and want to bet on you and have a high upside 'cause if they're giving you a lot of money up front, they need to have some type of upside.

Esteban Candelario (42:40.152) Course, yeah.

Esteban Candelario (42:56.91) Yeah.

Daniel Cruz Hernandez (43:05.945) you know, like it's like, you know, signing an admin deal versus a co publishing deal. It's like they are gonna give the writers they're gonna give the opportunities to the ones that they have the highest upside. They have you know, if you have you you might have a thousand writers on on admin but only like a hundred on Copub, like you're gonna give it to the ones that you have the highest you know, upside on. So you just ha people have to understand that as well too.

Esteban Candelario (43:21.474) Yeah.

Esteban Candelario (43:26.464) Mm. And I mean, clearly you work with, you know, producers who who do have some sort of income coming in or income that they they don't know yet, right? So like how are how are you finding producers or is it the other way around? They're more finding you. Like how does that work for you?

Daniel Cruz Hernandez (43:40.2) Content is the foundation of it all. We've built a content brand that, you know, people come across and they reach out to us. But you know, to effectively build any startup company, like we haven't built like a big sales funnel. Like we're not trying to like get people into some type of marketing system, which there's nothing wrong with that. We just haven't done it. and you know, in a in a and so we are pretty big on outreach. Like if you're a big producer, it has catalogs with hundreds of millions of streams, or at least like cause for us on the master realty side.

Like you could have a catalog with a billion streams and none of them are above the threshold. You just have a thousand songs with ten million streams. none of those songs probably recouped. so you know, you're not owed master royalties. So for us, like we a lot of our biggest clients, like they just have a couple songs that are very big, maybe three to five or maybe a hundred of them, some of them. and those are the ones that were like, Hey, we saw this song that i is recoup or likely recouped and you know, you might have if if you're somebody watching this show

You might have seen us reach out to you in in in your inbox. So outreach, I mean, if you wanna start a comp like producer community is used to outreach, right? So that's we've built a business. The the biggest people, you know, they're not reaching out to you the majority of times. they're either gonna get referred to you, which is really the biggest peop like this the superstar talent that we have, which is like we worked with some of the biggest producers of last two decades, and if not the biggest, one of our clients and the the referrals. Like they're like they're not answering their their outreach either's so

Esteban Candelario (44:46.101) Mm-hmm. Yeah.

Esteban Candelario (44:51.95) Course. Yeah.

Esteban Candelario (45:05.708) Yeah.

Esteban Candelario (45:09.166) What are the biggest challenges with those types of producers? Like is there is there any difference versus the producers who are kind of just getting their feet wet?

Daniel Cruz Hernandez (45:16.912) Yeah, for sure. So the older producers, like producers with catalogs 15, 20 years old, biggest challenge with collecting their master royalties is tracking down the agreements. Like if do you the labels won't set up the royalty accounts until you have the agreements. And it might sound like the easiest thing or the simplest thing, but like tracking down agreements for guys that have hundreds of songs that are above above the threshold for recruitment is a whole battle in of itself. And what happens is a lot of these guys

Esteban Candelario (45:26.126) Yeah.

Daniel Cruz Hernandez (45:41.328) Like, you know, they built the catalog over the years and nobody on their team, maybe they set up a couple master royalty accounts along the way, but nobody on their team was constantly looking it over and ensuring and every six months, every year, ensuring that the money was flowing properly. so now we have to go back and first step, collect all of the agreements. And not only do you have to have the agreements, they need to be signed by the artist. So you we need to go chase those signatures from artists that a lot of our clients are are deceived

A lot of the artists that we're working with are deceased. So, you know, they've we have to chase signatures from their team who doesn't know what's going on or don't care. Like not their producers, they don't care. and so that's one of the biggest challenges is just locating the agreements, especially during the early 2000s, because like we're working with some big clients from then that have songs in 2004 and those are all signed paper. Those are not saved digitally. So they're sitting in some lawyer's office that is probably retired or maybe deceased now.

Esteban Candelario (46:34.85) Ha ha

Daniel Cruz Hernandez (46:36.97) And like we have to figure out a way to get that agreement signed, found and then signed. And you know, it can take a lot, a lot of months. so you know, we have to hit the producer side up, the producer's lawyer, ask everybody there, ask the artist team, ask their lawyer, their manager, their former business managers, everybody to try to track it down. If that fails, then we ask the label. If that fails, then we have to work with the artists to draft a new producer agreement. So that's probably the biggest part is just tracking that's one of the biggest value ads that we have. And it it takes a long time and a lot of diligence.

to track down those agreements.

Esteban Candelario (47:08.248) Jesus. And what do you do? Like, I mean, is there I mean, are you just code emailing or like code calling? Because I I was talking to a producer, the one I mentioned way earlier in the beginning, who ended up just only getting two hundred dollars, you know, for and he waited like seven months for his paycheck and it was only two hundred dollars. He was reaching out to people at the label and I think he was emailing them. So like I mean, what do you do to get their attention? I mean, is there is there certain things that, you know, you is it just straight just following up with them constantly until they finally get back to you? Or is it a little bit more complicated?

Daniel Cruz Hernandez (47:39.0) Yeah, the first step to get paid is to know who to reach out to. So there's a couple of ways you could do that. For one, you could just look on the artist bio, see if there's a manager. Maybe that that'll work for these mid tiered guys. Bigger eyes, that's that's not gonna work. so for two, see who their A and Rs are if you could figure that out online. for us, like we've worked with pretty much every artist, so we know who's responsible for them. If not, then we ask somebody who does know. so if you have somebody that has worked with the artist that likely has been paid before, you gotta ask those people if they know who to reach out to.

And then sometimes you just gotta guess. So if we don't know, we might reach out to somebody at the label who is head of AR and be like, Hey, I have this song I haven't been paid for. Who is responsible for handling this? you ask them that question. If you say, like if you don't ask, like you could ask, do you oversee this, or is there somebody else that I should be reaching out to, or something like that, instead of like accusing them or something like that? Because you know, people want to help out, people at the label want to help out. There's lot of good people that are care about the artist, and that's why they're head of AR. So

I would say if there's a label, like ask one of the heads of ARs, DM them on Instagram. A lot of times they're that big, where they won't see your DM. find their email, email them, and just try a bunch of you gotta try a bunch of different things. I would say if you have a decent sized lawyer, they'll probably know. or you know, established lawyer and maybe a manager that that would know. You just gotta ask around, really. And you could guess, but it's like even if you do know this is the person, like you can't just give up with one email. You gotta email them per persistently.

Maybe escalate a little bit in in terms of the aggression and you know, maybe you gotta call them. We we gotta call people and I hate calling people. So, you know, shout out shout out to Alina and my assistant and Dan Montano, like one of my partners, like they don't mind calling people. So they just be calling people and and bothering them until they get it done. So that's sometimes we gotta do too.

Esteban Candelario (49:26.05) You you don't like the chase of calling people? That's that's like all I used to do when I was working in sales. Is it like, I don't know, too much of a process?

Daniel Cruz Hernandez (49:30.765) True. Yeah, nah I just I'm a yeah, I'm a am I Gen Z? I think I'm Gen Z. I I don't like calling people like that. I rather just said the message. Yeah.

Esteban Candelario (49:39.352) I feel that. I I'm Gen Z, but I I enjoy calling ironically, like, you know. But so I mean for you, like where do you I guess where do you see a producer royalty like going in the next five years? 'Cause I mean, it you really just started. It's only been like what, three years? You know, and five years it'll be about eight years. So like where do you see producer royalty and like where do you see yourself?

Daniel Cruz Hernandez (49:59.349) Truthfully, I think the the the biggest opportunity for us right now is the backdated money. so this money that's just owed to producers that they don't know that like right here, this is the invoice for four hundred and seventeen thousand. It was we've gotten bigger ones now. that was just like one account with the label that was set up. and that was the first one that was like, wow, like that's that's a lot of money. and so we got that set up and like those opportunities are shrinking and the recurring revenue is not that like big.

Like the recurring revenue on these royalties, like you know, this guy's making maybe about like twenty thousand a year. So building a business off of like and that's a these are big songs, obviously, right? So like building a a successful business off of that isn't that exciting really. at least in terms of like if you wanna build something big. I mean it's very nice to have a royalty business 'cause it it's recurring flow. but really for us it's like we're just focused on becoming the biggest and we are the biggest. and just continuing to

Esteban Candelario (50:31.128) Okay.

Daniel Cruz Hernandez (50:53.115) own and and operate that market as much as possible because the opportunity is gonna be gone. one because of the backdated money and for two, the labels are gonna build something that streamlines the process. it's not there yet and then who knows when it's gonna be there. But like the master royalty space, like I wouldn't suggest getting into it because it's not it's not an opportunity that's gonna be there for a while. We were very early on in it. but and we've gotten to take advantage of of the opportunity before it's gone. but that that's gonna be relatively gone. So

so producer royalty, I want to focus on the brand side of it, like more than anything. Like for me, producer royalty is the brand and then royalty masters is the the royal the master royalty collection company that I started with my founders. I don't mention it much because people are signing in trust. It's the same team. but producer royalty is i I'm gonna focus on building that brand up. I love to speak, I love to educate, and I love to make content. So I want to do that at an even higher volume, bring some other voices on.

And on the law firm side, you know, I wanna build the law it it's focused on producers, but I wanna represent everybody. It's more of like a a marketing kind of ex like I wanna build my expertise in one one area, but I wanna, you know, step more into repres representing other types of people as well too.

Esteban Candelario (52:05.324) That's cool, man. And I you mentioned like reoccurring. I mean, maybe you can answer this, maybe not, you know? Because I always think about like streaming and like streaming pays way I mean, I it feels like it pays way less than what artists or producers used to make before streaming existed. So do you feel like maybe artists and producers are going to be making less because of streaming?

Daniel Cruz Hernandez (52:28.358) Are artists and producers gonna be making less because of streaming? less than they are now?

Esteban Candelario (52:31.662) Mm-hmm.

Esteban Candelario (52:36.014) in the sense of I mean, here, let me rephrase this question. I say less compared to let's say before streaming existed, right?

Daniel Cruz Hernandez (52:45.337) Yeah, that's a good question. I I don't know if it'll go back to like the same amount of money per record as before streaming. I don't expect that to happen. It's possible, but I I don't know how like people aren't willing to pay fifteen dollars and maybe that'll change someday, but and for an album, the price got undercut. but people are willing to pay an extra dollar per year or whatever it comes out to. So the price of like that people are gonna be getting for streaming, I think it's just gonna continuously go up. I think specifically the publishing side.

Esteban Candelario (52:52.396) Right.

Daniel Cruz Hernandez (53:13.882) Like right now it's about eighty percent goes to the master side, twenty percent goes to the publishing side. Why? Does that make sense? I don't know. Does it like why is that what it is? It's by lobbying and people just advocating on behalf of one side. So I think that's probably gonna continue to change and maybe be a little bit more in one side's favor. But like if you just see like the amount of acquisitions that that when we reach out to people, a lot of them think that we're trying to buy their catalog because the catalog acquisition space is just it's just it's

Esteban Candelario (53:32.44) Yeah.

Daniel Cruz Hernandez (53:42.784) skyrocketed in the last couple years and like I I wasn't in the industry really that much before that, but like it's just it everybody is talking about catalog sales because everybody knows that the music the value of music is continuously or is gonna continue going up and it's becoming a like the dawn of streaming. If you think about before, if you made an album that did very well and people bought it, and even if they keep listening to it every day, it's not generating more money. Now it streams.

You buy you you are paying money every single month that like for that. So like it's making it a very consistent stream of revenue for people that people are stepping into the space and sp putting a lot of money in because it's a great asset. What other asset exists out there that is just gonna continuously per like it's generating money and and some songs flop, but if you diversify your catalog and have hundreds of songs and like thousands of songs in your catalog, like your catalog's not gonna flop in the same way that a stock would like

Esteban Candelario (54:37.39) That's a solid point. That's a very I never really thought about the process of people buying an album and you only making money once versus you know it it being reoccurring for every stream that it gets, even if it is for a small amount, it definitely adds up if you got some motion, of course. let's say like, okay, let's say like I'm a producer, right? And I'm listening to this right now and I'm writing everything down, like everything, you're like, Well, this guy is speaking at a million miles a minute and like all his information is fire. Like

Daniel Cruz Hernandez (55:00.782) Yeah, sorry. I know I do.

Esteban Candelario (55:02.54) No, you're good, you're good. But I'm just talking about like from the perspective of a listener, like he's probably like, Holy crap, I gotta pause here and like, you know, rewind it. You know what mean? So like let's say but I am a producer who does have placements with major artists, but I personally never checked where like I'm actually receiving everything I'm owed. Like what's the first thing like I would have to do or that you would suggest I do?

Daniel Cruz Hernandez (55:21.936) first thing put all like if you want to collect all your road tees, the first thing is to put every single song that you have on one spreadsheet or you could build your own app like we've built our own apps with that all the tools accessible now. and you build something that it allows you to track every song. Then you put your percentages that you have on each of those songs. And then the next step for you is to understand who is collecting each of these revenue streams. So like maybe on a separate tab or whatever it looks like, you make a list of all the revenue streams. when we started before we had access to the tools.

we just use a Google Sheet and we had one box for advanced collected. Check. This song was collected on master royalties. That's not the best example because master royalty. Let's say performance royalties. check. BMI, it's flowing properly from BMI. Mechanical royalties. Okay, cool. Who collects my mechanical royalties? All right, I'm signed to a publisher, so they will. Let me check in with my publishers. Okay, cool. They're collecting my mechanical royalties. So you just gotta like, there's no way around it. You need to create one centralized base.

with all of your songs and then you need to create some type of tracker that you can use to check whether you've are those revenue streams are actually flowing to you. So that's our main value add is on the master side, that's what we do. We have built the system that is proprietary to actually tracking that revenue and being able to manage it. Like and you know it's proprietary and it works really, really well. And yeah

Esteban Candelario (56:42.476) smart. No, that's having a central base for everything is is I feel like essential to like not even just music itself, but like everything in life, understanding where everything comes from. but as far as for producers, especially if you're somebody who is who has major placements but you just don't know exactly where everything's coming from, that's probably the best way to do it. but let me I'm gonna take a step back. if I was somebody who is talented but I don't have any placements yet and I'm trying to understand the business side of things, like what would what

Would be the first thing you would tell them to start doing.

Daniel Cruz Hernandez (57:15.669) if you're on the producer side, I would say watch every one of Producer Realty's videos. especially once I that's what I would say. But like genuinely like find a page that you really like and that you trust. and I would there's very, very few producers that have a very firm understanding of the business because they're only dealing with their own business. So as a lawyer and you know, they're not learning from other people's mistakes or their own mistakes and new catalogs and new things like that. So

Esteban Candelario (57:19.766) Daniel Cruz Hernandez (57:40.564) I would say find a brand that you really look up to and you you trust them for whatever reason. ideally somebody on the business side and just dig dig in. There's really no excuse. Like I I learned way, way, way more about the music industry from YouTube and from books than I ever learned about and I got my master's in music business and going to law school. It's not even close. and that might sound obvious to people that actually take advantage of it, but like, yeah, you just gotta you just gotta dig in, find the resources you trust, and d like make the time to study it. get obsessed.

It's your it's your own business. Nobody's gonna do it for you.

Esteban Candelario (58:09.698) I agree. I agree. If if if producers were as obsessed with the business side of things as they are with producing itself, I think like whoever that person's going to be in the future is gonna be a monster. but cool. I this would probably be one of my last questions. I like I was always always like closing out with one of these questions, but it's if you can go back in time and maybe speak to a younger version of yourself, is there anything you would tell yourself to do differently?

Daniel Cruz Hernandez (58:37.375) Yeah, I actually never been asked that one on a podcast, but I really do like that one. what I tell myself to do differently

No, I'm just I'm honestly very grateful for how things wound up playing out and I trusted my judgment. I I used to get pretty upset when people in my family and really my family when they had very strong opinions on like the thing about family is that they want you to do well. You don't need to do extremely well for them to I mean most like you know like you don't need to do extremely well for them to be proud of you. But like for you to have aspirations to do something that is extraordinary, that really like has never been done before, there's going to be a lot of risks involved.

Esteban Candelario (59:01.304) Mm-hmm.

Daniel Cruz Hernandez (59:15.889) And parents are and family are a bit risk adverse for you because they want you to do well, but they don't need you to be the the best create like whatever you wanna be for them to be proud. So I think I used to let those conversations with my family get really upset I really upset me. and I wish I I it didn't. It was probably it part of it lit a flame under me just to prove them wrong. like for instance, like when I dropped out of law school,

It I dropped out of law school to get my masters in music business. I started and I realized I had no connections in music, so I like, I'm gonna drop out, get my masters and go back to law school and my mom was very understanding of that and she believed in it, but my dad was a little bit like, I I don't I'm not expecting you. He he he let me rock, but you know, like he wasn't expecting me to go back. so I would just say like understand follow the people who are where you wanna be, not really the people that are closest to you, I guess. I could've made that a better answer, but

Esteban Candelario (59:49.518) Mm.

Esteban Candelario (01:00:07.756) Yeah, sometimes you gotta follow your own course, not the course that everybody wants you to follow for definitely, bro. I didn't I didn't know that. I didn't know you dropped out to get your masters and then went back to that's crazy. That's that's actually fucking crazy. Yeah. I think most people actually wouldn't go back after that for sure. but awesome, Daniel. I mean I I learned a lot myself. Like I have a very, very basic understanding, but like listening to you makes me realize there's levels to this shit.

Daniel Cruz Hernandez (01:00:16.604) Yeah, yeah.

Daniel Cruz Hernandez (01:00:20.657) Word. Yeah.

Esteban Candelario (01:00:31.59) And it's it's very informal. Like you're the most informal person that we've had because again, we always talk to producers. So it's always good to understand and hear somebody on the business end of things because I'm always trying to tell producers to understand the business better, but I myself am not the expert at that, you know? but awesome. I mean if you want to plug yourself or plug anything, where can they find you or is there anything you want to tell them about?

Daniel Cruz Hernandez (01:00:52.667) Yeah, thank you for asking. So yeah, producer royalty, producer dot royalty. biggest thing for us is that's on Instagram and TikTok. biggest thing for us is growing the YouTube channel. We got a lot of great information on there and the views aren't what I would like them to be that to motivate me. So, you know, we got about like three thousand subscribers, it's growing, but I would love that to be ten thousand soon. So if you could help me out and get this information out there, if you could go to producer royalty's channel and hit subscribe, I that was the big that would be the biggest thing and maybe share this with somebody that you know could benefit from.

Maybe drop it in a group chat. That would really help out if you drop it in a group chat. so this video or one of our others, we really appreciate it. And me personally, my Instagram at is DanielCruz dot esq. thank you so much, Esteban. I really appreciate the opportunity.

Esteban Candelario (01:01:35.374) I appreciate you, man. Thanks for t thanks for hopping on.

Daniel Cruz Hernandez (01:01:38.114) For sure. Sick.