Music Banking 101: Why Music Banking is so Important? | Music Industry 360 Podcast

Episode 6 June 26, 2023 00:39:30
Music Banking 101: Why Music Banking is so Important? | Music Industry 360 Podcast
Music Industry 360
Music Banking 101: Why Music Banking is so Important? | Music Industry 360 Podcast

Jun 26 2023 | 00:39:30


Show Notes

In this episode of Music Industry 360, we sit down with Senior Vice President Relationship Manager at Studio Bank, Kari Barnhart, to discuss why music banking is important, the difference between a music bank vs a regular bank, management and so much more.

Kari Barnhart has served the Nashville Music Community in various banking roles since 2010. Kari works with clients in all areas and genres of the industry, including songwriters, artists, business managers, and music industry professionals in both the US and abroad. Kari was named as a 2019 NBJ 40 Under 40 award recipient and a 2017 NELA Finalist. She currently serves as the Membership Co-Chair and Past President on the board for SOURCE and as Secretary for the Copyright Society of the South.

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Episode Transcript

[00:00:08] Speaker A: Hello and welcome to Music Industry 360, the podcast brought to you by Symphonic Distribution. I'm your host, Randall Foster. And I am Chief Creative Officer at Symphonic. And it is my pleasure today to talk about music industry banking with one of the greatest, best bankers I know and a lovely human to boot. Please welcome our guest, SVP of music and entertainment banking at Studio Bank, ms. Carrie Barnhart. Carrie, thank you so much for joining us today. [00:00:39] Speaker B: Thank you so much for having me. I'm so excited to be with you today. [00:00:43] Speaker A: Well, I'm excited to have you here because music banking is something that I only realized really existed once I had moved into the music publishing world. But I think music banking, the bankers and the organizations we work with on the financial side are such an integral part of this industry that I think it's going to be really great to explore this subject with you so real quickly. Tell us a little bit about yourself. Where are you from? How did you get into banking, et cetera? [00:01:17] Speaker B: Well, I am from a teeny tiny town in southeast Missouri called Charleston, Missouri. Honestly, I always tell people I don't know how I thought the music that I heard on the radio. I worked at a CD store from the time I was 16 until I graduated college when I was home from school. And was very familiar, of course, with the CDs and the different aspects from that perspective. But I don't know if I really thought much about how they actually came to be or the business side of things until I moved to Nashville and I just had an opportunity to work at a bank. I worked at Fifth Ord Bank when they first were starting their music division and at the time just thought I was going to be working in the actual banking center on the retail side in order to help support the clients that just came into the bank, but also help support the newly started music division. And about a year or so in, they were looking to expand the team. And I had made friends with the different bankers that were dedicated to the music space and they had encouraged me to put in for the job and I actually got it. And so at that point, it was one of those situations that it's like, okay, I've got the job, now what? And the now what for me was now I have to learn about the music industry and the music business side of things. And so I was very blessed with some amazing mentors who took a vested interest in me and my career and wanted to see me succeed. They met with me on Friday mornings at 07:00 a.m. At the Pancake Pantry. And one of them, his name is Kevin Lamb, he would teach me all things music business. I got my first and only music publishing contract where he went through the different pieces of what the contract looked like just so that I could understand better of how to serve my clients and what it was that they were dealing with on a daily basis. And I've been doing it now for almost 13 years. So I worked at fifth 3rd for about six and a half years, and then I left, my entire team left and went to Regents Bank, which is a wonderful bank in their music division and was there for about five and a half years until I left and went to Studio Bank, which is where I am now. It's a wonderful boutique bank that was created to empower creatives, and it really is home. And I'm so thankful to be able to be a part of it and just watch people achieve their dreams. That's why I do what I do on a daily basis. [00:04:07] Speaker A: That's awesome. So you were kind of like the dog that finally caught the car on the get the banking and oh, I've got to learn it now. [00:04:15] Speaker B: Yes, absolutely. My mom had to talk me out of the car to attend events on many occasions. [00:04:23] Speaker A: But that team you were with and I'm privileged to actually know them you all did so much good at every organization you were at, and I was just tickled pink when you had the opportunity to go to Studio, because, of course, we have a lot of friends at Studio. And with a name like Studio, of course you are empowering creators. You can't call a bank Studio Bank and not be affiliated with the studios in some way, shape or form. So your place, I'm sure you see a million different scenarios as an entertainment banker to how the bank becomes really a partner with the creators. From everything at the macro level, from the large catalog acquisitions, we always hear about what other parts of the industry, outside of the big multimillion dollar acquisition side of things, do you see banking and especially your role working for a boutique white glove community, really? Community bank for the creative community, what other areas do you guys work in most with regards to your interactions with your clients? [00:05:37] Speaker B: Yeah, absolutely. That's a great question. The great thing about what I do is we work with all facets of the music industry. So I work with emerging artists and songwriters. I work with ones who are newer to town and are in conversations with publishing deals or are looking to make those connections to anyone who are currently playing stadiums. And I work with business managers and then just the music industry professional community in general. So Public assists, ANR revamps publishers, you name it. If they're in the music community and they need a bank, then I work with yeah, I always tell people kind of the best way I describe my job is, on one hand, banks are very highly regulated, and so we work very much in the world of black and white. Whereas the creative community is what I like to say, all colors of the rainbow, some of which I think Crayola is yet to create their color yet or they're the name of their color. My job is to figure out how to make the world of color work within that world of black and white. And so I'm kind of that mediator and translator between the two. So I have to know and speak the banking language, but I also have to know and speak the creative language and that music language. And so I'm the one on the team who's kind of being that translator between those two worlds. [00:07:21] Speaker A: I love that color analogy. I wonder if Crayola has plaid as a color. [00:07:28] Speaker B: I know, right? [00:07:29] Speaker A: The first example I was ever really given, and I won't name names about the entertainment, banking, and kind of how creative you all can get at times when you're trying to translate those colors into black and white. Really revolved around an artist who had gone viral very quickly and who started getting bookings but literally could not afford to get to the bookings. And this particular banker stepped in and assisted in that process. And I believe you were on that team, actually. And I don't know if you remember who I'm talking about, but are there some specific instances like that that are really actuary like, okay, here was the problem that we had. Here's the solution we were able to come up with as the color to black and white translator for the institutional bankers. [00:08:20] Speaker B: Absolutely. I mean, I think that the scenario you just gave Randolph is really a very common solution. It's one of those these opportunities, I've seen it so many times where even when an artist gets signed to a record deal, they have radio tour and they have different events and bookings that are planned months out, but most of them are not sitting on just this massive lump of cash right in their accounts. And so they have to get there. Even if it's something that's reimbursable by the label, it still has to go through the reimbursement process. And so a lot of times these artists are paying for items up front and if they're not already sitting on significant money, that gets very expensive and very difficult to manage in addition to everyday living expenses. And so we will come in and work with the team, whether it's directly with the artist or the artist business manager. And we will kind of evaluate what those needs are and then look at either getting a touring credit card or a touring line of credit, just depending on where they are in their career, what their projections look like. So it doesn't necessarily always have to be, okay, well, we've made X amount of money in the past six months. It can also be looking at we're going on tour or we've got all of this revenue coming in but it just hasn't been actualized yet from a royalty standpoint, et cetera. Another big example is you might have artists or songwriters who are starting to see significant success and are going to be receiving royalty income, but they need to buy a new vehicle or they wanted to buy a house. Their family is expanding and they need to provide a roof over their family's head. So we know that the money is coming in, it just hasn't hit the account yet. It hasn't actually happened. And so we have specialized lending that can aid in helping them. Obviously, we still have to verify the income. We're still, again, in that black and white world, we're still very highly regulated and fall into those regulations and want to do so from the protection of the bank and our clients. But we do have ways in understanding how their income, the ebbs and flows of their income happens in order to best serve those needs. [00:11:22] Speaker A: I imagine you all have formulas and all sorts of calculators where you can look at this song went number one on this day. So we're going to see the money start to come in six months down the road. And for our listeners, that's how long it takes. You can be number one on the radio and still borrowing money to go get McDonald's for the first six months. Or that's. That's really cool that you guys have that ability. And it seems like become a real advocate and partner for the creators to help them bridge that process between starving artist and finally making it absolutely well. [00:12:04] Speaker B: And it's so important because we get to meet our clients where they are in their career. And I am just in a really unique position that I get to be a member of the team who is connected to the different areas of the music industry. But I'm kind of that one person on the team that doesn't make commissions based on how well an artist does. And so I get to kind of be that sounding board that can really help guide or just like I said, just kind of be a listening ear. Because a lot of times clients know what they want to do, but they just need someone who knows the players to be able to talk it out. Like, I had one client who had two different publishing deals on the table and he just came in my office and said, can we just talk through this? He didn't want me to tell him which one to pick. He just wanted someone who understood the business, understood the players, who could ask questions that he might not have thought about. So that when he did ultimately make the decision, he knew and was confident in the decision that he was making because that is a big decision and who you surround yourself with really can lean to your success in this industry. [00:13:39] Speaker A: Yeah, I imagine you all serve a similar position as attorneys in the business with regards to playing Connector 100%. [00:13:48] Speaker B: And we also are under privacy laws and so everything is confidential and it's kind of aware a few different hats of financial advisor in certain stints, and budget educator, psychiatrist, a counselor of sorts, a connector, you name it, if the client needs it. That's kind of the role that I feel for sure. [00:14:19] Speaker A: Tinder whatever they need. [00:14:22] Speaker B: Absolutely. Or just a friend and a shoulder to cry on because there are definitely those moments in this industry as well. So citing highs and a few lows at times. [00:14:37] Speaker A: Yeah. Well, with the privacy thing, then I guess I can't ask you to name your favorite clients for us. But in lieu of that, let's talk about the changes that we've seen in the industry and especially on the money side, because you've been privy to lots and lots of changes with regards to the financials of this business. What have you seen change the most over the past few years in music with regards to banking and the financial side of things? [00:15:09] Speaker B: Yeah, I think obviously there are certain restrictions. Of course, right now, interest rates play a huge factor in certain approvals. Right. Because what someone might have been approved for two years ago at a lesser rate, they may not qualify for as much right now. Doesn't mean that they won't qualify for it. It's just you kind of have to be a little bit more creative in that space to try to figure out exactly what their needs are and how to meet those needs. I think that specifically what I do because I work a lot with the individual, so I work directly a lot with the artists, the songwriters, the industry creatives versus I still do work on the catalog side and the royalty lending piece, but from a personal perspective, just what those needs look like. And figuring out the best way to meet those needs within the confines of banking regulations and restrictions has really been a big factor for us, especially coming off of COVID where a lot of these individuals weren't touring or the venues themselves. The live event, people like the booking agents, their income dropped significantly in the year 2020. And even though 2021, we started seeing a rebound, it wasn't necessarily back where they were in 2019. And so when you're still again dealing with those federal regulations where you're typically looking at two years tax returns and things like that, having to kind of be creative and understand that this was an anomaly, this is not how it's going to be going forward, and figuring out the best way to meet those needs despite those facts. [00:17:25] Speaker A: Well, you all were pretty integral with helping a lot of artists navigate the PPP loans. [00:17:30] Speaker B: We were, yes. That was not my most favorite time in history, if I'm being honest. [00:17:38] Speaker A: So helping them navigate the waters to trying to figure out where they can. [00:17:42] Speaker B: Find not obviously I love helping clients. And so it wasn't the helping of the clients, it was the actual PPP process itself that was not necessarily the easiest. The rules kind of changed a few times and there was a lot of anxiety during that time for everyone, right? And for some, being approved for the PPP loan really was a make or break kind of situation. That's what kept food on the table and helped provide for their family. Not only their family, but also to the families of the individuals that worked for them. So these artists that have a team and that they're responsible for, there was just a lot of pressure there for them and so there's that await that comes with that. And so knowing that you're helping them help themselves or also if it didn't get approved for whatever reason that really could negatively impact their livelihood was very daunting at times. [00:19:00] Speaker A: Worth it, I'm sure. With regards to your partnering and your lending practices, this may come as an OD question, but Savonic is obviously a distribution company and we are what we phrase genre agnostic. I am interested in working with successful independent musicians and labels. If it happens to be a jazz record or if it happens to be a hard rock record, means very little to me because I place my value on the music. And I firmly believe there's no such thing as bad genres. I think there's bad music, but I've found music in every single genre in the world that I love. So question for you is, do you take genre into consideration with your lending practices, et cetera? And I'll follow that up with on our side, there's definite modeling that we've been able to see that some genres earn differently than others depending on consumption habits of the consumer. And so we've keyed in on that a little bit, mostly just for our internal kind of speculation about sales growth, et cetera. Do you all take that into consideration or is it just a matter of does it earn or does it already have bookings ahead that we can look at and model out a break even point on this line of credit? [00:20:22] Speaker B: I think it's a little bit of both. I would agree with you. I work with clients in all different genres of music. Obviously, because I sit in Nashville, I do work a ton in the country space. But as we both know, Nashville isn't just country music. And so as we're seeing the rise of other genres in Nashville, but know the flexibility of what I do is know I meet my clients where they are and if that means they're not in Nashville, that's okay know, I have clients all over the United States, some globally. If it makes sense, then we definitely have a way of making that partnership work. There is obviously an understanding and that's kind of why I do what I do in the sense that I show up to different conferences and different things to learn more about the items and the issues that my clients could be facing on a daily basis, whether it's country, whether it's pop, whether it's hip hop, et cetera. And so I need to understand their revenue streams and how they make money so that I can best be that translator and be that spokesperson for them from a banking perspective. And a lot of people are like, Well, I don't have anything going on, Carrie. I'll come to you when I have my first single or know, have my first number one, et cetera. But what I explained to people is this is a relationship. And obviously, the longer I have a relationship with someone, the more I know their story, the easier it is for me to be able to speak on their behalf and so understanding what that world looks like for them. And we do obviously take into consideration certain models because there are, as you said, the income. A number one song in country does not make nearly as much money as a number one song or even a top ten song sometimes in pop, right? And so we do look at those factors, but then sometimes it can be as cut and dry as what does their profit and loss statement or their balance sheet say? Who is the team around them? Right? What do they have going on? Again, that projected income piece, there are a lot of different factors. It's not your traditional banking of here's your credit score. I mean, yes, we look at credit. There are several things that we do look at that's the same, but we do look at it just a little bit differently through a different lens as we're making decisions. [00:23:37] Speaker A: So artists, pay your credit card bills on time? [00:23:41] Speaker B: Yes, please. And if you don't and you need to talk about how to repair credit, I'm obviously not a licensed debt consolidator or anything like that, but I can give some tips and tricks to kind of help and what can be done and what I've seen work throughout the years to help improve that. So that as more things are going on and more money is coming in, you are in a position to make financial decisions for yourself that will really be impactful both in the present but then in the long run, right. Because that's the thing is, unless you work on the traditional business side, right? You and I, we have 401, we have ways to invest. But for a lot of artists, a lot of songwriters and a lot of independent contractors within the music community, that's just not their world. They don't have their employer taking out a certain percentage and then matching that their investments and their retirement income comes from the work that they're doing now. And being able to plan for that is also important. Just being able to have someone they can trust to kind of talk about what their current goals are, but also what their future hopes and dreams and what they would like to achieve is really important. And that's why I am here with a smile. [00:25:32] Speaker A: There's a word you keep saying and I love it because it's so easy to get lost in the numbers and this business and to only be about the bottom line. But you keep saying the word relationship. I've known you long enough to know where that's coming from in your heart. A lot of artists don't have the benefit of living in Nashville, New York, La or Miami. And so the prevalence of entertainment banking may not be as present in those communities. Is there any advice you could offer an artist that lives in small town USA or perhaps or an artist who lives in Puerto Rico who's listening to this, who wants to do this and wants to find a way to have a bank that can be their advocate and their friend and their ally? I think most of us kind of banks are tolerated. For most of the population, it is true, it's a necessary evil. You're with them because you like the website and because you get maybe free checking account or something, right? [00:26:47] Speaker B: Yeah. [00:26:49] Speaker A: For those who aren't privileged enough to live in these communities where you all are all present, how does one establish that relationship? And or do you all work with out of state people who are looking to have an advocate who, you know, I might be in Nashville twice a year, so maybe it makes sense to bank with someone there who is in the industry who can help plug me in with a pro if I want to change pros. Or help me navigate that publishing deal like you were speaking of earlier. [00:27:23] Speaker B: Yeah, absolutely. So as I was mentioning earlier, I have clients all over the country. I have some clients in Canada and the UK. So we definitely have some flexibility. Obviously banking has evolved even in the 13 years that I've been in Nashville. I've been in finance for almost 20 years and I always joke and say the Lord has a great sense of humor because I have a political science history degree and hadn't really intended to get into the world of finance, but I'm very thankful that I did. But I think it's one of those where I'm always happy to be a resource and have a conversation with anyone to see what makes know there there may be one of those situations they it does make sense to have a Nashville based bank and then sometimes it doesn't. My advice would be is just get to know your local banker. The challenge that you'll have if you're not dealing with a music industry bank is I've spent 13 years of my life attending events and really immersing myself in the music and creative community. And so I understand again just those ebbs and flows of the income and the revenue. And for a lot of banks going back to the regulation side in that black and white, a lot of them, it's very cut and dry. Let me see your pay stub, let me see your last year's W two. Let's take a look at your credit. Based on this metrics, you qualify for X, when in reality, the majority of the creative space, that's not what their income looks like. Being able to find someone that understands that, who can be a champion and an advocate for them within their local bank is doable. But it may not be as available as a music industry bank. And so to answer that, I am happy to connect with whomever and so please feel free to share my contact, my email, be careful. But it's just one of those that I'm happy to answer questions if people have them, you never know. And I think sometimes just having someone that understands it, that can just kind of provide a little bit of guidance is definitely important. And especially for those who are looking to potentially make that move to Austin or Nashville or La or New York or, you know, even Vegas, having someone in your corner from a banking perspective is just really important in my opinion. I'm very biased, I can acknowledge that. But I do know having someone who gets what you're doing in that world definitely can help make a difference. [00:31:01] Speaker A: I couldn't agree more. And I think most major banks have some semblance of some sort of entertainment division, though I think a lot of them are more focused on the macro business and the multimillionth dollar deals. And it's so refreshing to hear you come at this from the SVP title, from the ivory tower per se, with a focus on community, which I think is really cool and maybe a vast differentiator for your bank and for you, which I think is really neat. With regards to the business, the industry, we keep hearing about NFTs and about Blockchain and about all of these other emerging technologies that we're trying to leverage and utilize within the industry. What has you most excited moving forward for the music industry? Not banking specifically, but across the board? [00:32:04] Speaker B: Yeah, that's a good question. Obviously the technology is evolving and as someone who is not super technologically savvy, it can be very daunting at times. But it's also very exciting to be a part of this time in history to see how things are going to land and how things are going to shape mean we're not anywhere near there yet, but just even having conversations within Studio Bank and with other colleagues who are well versed in that world about potentially lending against NFTs, just like we have in the past with catalogs or songs. And to me that's very exciting to be on the forefront of something, being involved in watching history change and getting to be a part of that because a lot of the things that I do now was put in place by my predecessors. And so it's like now for me to get to be a part of that new wave of technology and figuring out what music banking needs to look like and what the industry looks like as a whole is just really exciting. So I don't know if there's just one thing I'm really excited to see where this new technology between AI and the NFT and crypto space lands, for sure. [00:33:58] Speaker A: Yeah. No, AI is definitely something that I think everyone in the industry is keeping. [00:34:03] Speaker B: An eye on 100%. [00:34:08] Speaker A: I keep hearing these stories of these artists that are just blowing up on NFTs and doing well, and I feel in some cases, they're artists who don't stream that well. And so it's very to see diversification across that plane. [00:34:26] Speaker B: Well. And I think it's really exciting in the sense that I've had clients who have seen an incredible amount of revenue come in from NFTs and releasing their music through that avenue that it would have taken them a long time of playing the local honky tonks or the writers rounds or smaller shows, which is kind of where they might fit right now or receiving royalty income and things like that for the songs that they're releasing via the DSPs. And so that's really exciting to me to be able to watch them achieve their dreams through that avenue. Obviously, from a banking perspective comes some questions about tax implications and different ways to handle those funds because of how they get paid out. But that presents a fun time for me to kind of figure that out along with them and what that needs to look like and really help be that sounding board for them. But, yeah, there's a lot of opportunities to be had there. And for those who are figuring it out, they're seeing a nice uptick to their income, for sure. [00:35:58] Speaker A: That's awesome. So only a couple more things to ask you here. Very important, hard hitting questions like, which band are you currently listening to? That's your favorite band right now. It's got to be current, though. You can't go into catalog. Don't tell me it's the Eagles. Okay, who's your favorite current band right now? [00:36:19] Speaker B: Well, I love the Parma League guys, and I love the new music that they've been releasing, and so you can definitely catch me singing along to them in my car. Well, you probably don't want to catch me singing along my car, if I'm being honest, just because there's a reason I'm behind the scenes when it comes to things. I'm not the best singer in the world, but you wouldn't know it the way that I rock out to their current music while I'm driving around. For sure. [00:36:55] Speaker A: Parmaly it is. [00:36:57] Speaker B: That is a great yeah, so fantastic. They're just great humans as well. And so it's always fun to see good people do. Great things. [00:37:08] Speaker A: Boy, you can say that again louder for the people in the back. Awesome. So if someone wants to get a hold of you or learn more about Studio Bank and what you all do, I think, right? [00:37:21] Speaker B: Yeah. Great. [00:37:24] Speaker A: And if you are going to be gracious with your email address, now would be the time when I'll let you espouse that so that our crowd can write that down feverishly and blow your inbox up. [00:37:36] Speaker B: Absolutely. Well, they can also reach me at LinkedIn, so my name spelling is a little different. It's Carrie Barnhart at Studio Bank. But I spell my name K-A-R-I. So it's Carrie. K-A-R-I barnheart. [email protected]. So feel free to shoot me an email. You can shoot me a message on LinkedIn. I'm not really on a ton of social, so I'm kind of one of those weird people that have I enjoy the freedom of not being attached to different social media apps all the time. So I would definitely shoot me an email or hit me up on LinkedIn. And I'm happy to answer any questions you might have. [00:38:29] Speaker A: Well, and how kind of you to offer that direct contact up. I think this is a first for the Music Industry 360 podcast that we have actual contact details. I do appreciate you sharing that and I appreciate you being here with us today, Carrie, and sharing all of your vast knowledge in this space. That about wraps us up, everyone. Thank you for listening. Once again, my name is Randall Foster, this is Music Industry 360 podcast brought to you by Symphonic. And we appreciate you being here. Stick around for more. We've got great episodes coming up as well and you can explore our web website and find those episodes for your own listening pleasure. Thank you so much. Goodbye.

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