Music Publisher Finds Niche Market, to the Tune of Profits

The big record companies may be losing customers. But 79-year-old former band conductor Milt Okun and his tiny music publishing firm have figured out where America is really listening:

At stock car races. On the gridiron. And during cartoons.

Filling such nooks and crannies with musical themes has become a major business for Okun’s New York-based Cherry Lane Music, a privately held firm that has found cash where the conglomerates of the entertainment world sometimes haven’t bothered to look.

Cherry Lane has secured a stake in the orchestral scores accompanying the National Football League’s programming, including today’s Super Bowl with its more than 80 million expected viewers. And when young hordes tune in to “Pokemon” on the Cartoon Network, they too are listening to Cherry Lane -- as will fans of NASCAR telecasts, under a just-concluded deal to provide musical theme songs for the auto-racing circuit.

Music publishers typically make their money by licensing songs from their catalogs to advertisers or other customers, as well as by collecting royalties from albums that include their tunes. But Cherry Lane’s catalog of older songs is relatively small, so it has staked its fortunes on creating original music for TV shows and films.

With album sales on the decline, music giants such as AOL Time Warner Inc.’s record division or EMI Group, which has rights to an estimated 1 million songs, increasingly have relied on their publishing units to provide a cushion. In terms of library size, Cherry Lane is minuscule, with about 50,000 copyrights.

But the company’s growth in recent years suggests that a music industry dominated by a handful of behemoths still can learn from hard-driving entrepreneurs such as Okun and Cherry Lane’s chief dealmaker, Aida Gurwicz.

“They’ve carved out a niche by being clever, nimble and by uncovering opportunities that others might overlook,” said John Frankenheimer, a veteran music attorney who represents stars such as Vince Gill and Diana Ross. “When they see the true value of something, they’re prone to be as competitive as any company, large or small, in the marketplace.”

Once known as the quiet repository of John Denver’s folk song catalog, 43-year-old Cherry Lane has made its mark by targeting untapped -- and often low-brow -- outlets. It acquired a position in the music of professional wrestling broadcasts and recently cut a deal to have its composers write songs for televised bull-riding contests.

Executives say the firm posted sales of about $45 million last year. Although unprofitable for most of its existence, Okun said, the firm now is in the black.

In a business filled with bean counters, Okun has the least likely of backgrounds: He started as a musician. After landing a gig as piano player on singer Harry Belafonte’s summer tour in the late 1950s, Okun rose to become the calypso star’s band leader.

Eventually, he said, he was fired after a dispute over the tempo of a performance. But Okun resurfaced as the producer or arranger for leading acts in the 1960s folk music movement, including Peter, Paul & Mary and the Chad Mitchell Trio. He discovered Denver, a soloist recruited to join Mitchell’s former bandmates, and went on to handle the singer’s publishing.

By the early 1990s, the firm was looking for a new direction. Okun hired Gurwicz, an executive at a prominent classical music publisher, to restructure Cherry Lane’s international royalty collection system. Along the way, they stumbled into their saving grace: the neglected corners of Hollywood.

Gurwicz discovered that the company’s TV clients, such as the composer of the score for the show “Beauty and the Beast,” hadn’t received proper payment, in part because its producers hadn’t filed the necessary paperwork with royalty agencies around the globe.

“We realized there were lots of shows like that,” Okun said. “There was a hole in the market.”

Cherry Lane began offering royalty-collection services to independent TV production houses, mostly those in the business of pumping out movies-of-the-week. If successful, such films generate publishing royalties of $25,000 each, with Cherry Lane’s cut typically ranging from 10% to 25%.

The dollars were small, but such deals had another benefit: They provided crucial entree to Hollywood.

In 1996, Cherry Lane agreed to sell a 50% stake in its older song catalog -- including numbers by Denver, Irving Burgie and Tom Paxton -- to DreamWorks SKG, which had started a movie studio and a record label. Cherry Lane also took over royalty collection for the DreamWorks music unit.

For their part, big corporate publishers aren’t giving Cherry Lane a free ride. EMI last year outbid Okun’s company, holding on to royalty collection for the NBC broadcast network. And Cherry Lane hasn’t fared as well pursuing emerging stars. It made an unsuccessful run for singer Norah Jones before the release last year of her hit album, “Come Away With Me.”

Mostly, Cherry Lane has made do with lesser names, focusing on the hunt for unexploited markets.

Such was the case with the “Pokemon” phenomenon, which Cherry Lane discovered early. Gurwicz read an article about the series’ explosive sales in Japan and decided to roll the dice.

“It was an educated guess,” Gurwicz said.

Cherry Lane ponied up a six-figure advance to the program’s U.S. distributor, 4Kids Entertainment, for 50% of any revenue that stems from the music in the series. Just weeks after the deal was signed, “Pokemon” turned into a U.S. smash.

Cherry Lane has helped release five “Pokemon” albums, which have sold a total of about 4 million copies worldwide. Under a deal with 4Kids, Cherry Lane now co-owns the music for the TV company’s Saturday morning block of cartoons.

For those watching the Super Bowl today, it’ll be easy to miss Cherry Lane’s piece of the action. The orchestral snippets that it owns with the NFL will serve as an aural backdrop for highlight footage and league promotions.

But Cherry Lane’s place in the shadows doesn’t mean that it hasn’t made a real mark on the industry.

Okun’s firm has “always spotted trends,” said attorney Fred Goldring, whose clients include No Doubt, Destiny’s Child and NASCAR. “The other publishing companies should be looking at Cherry Lane as a model.”