Although credit has tightened on Nashville's Music Row, as it has everywhere else, banks are still lending money to songwriters, music publishers, studio owners and related enterprises.
Some business managers who handle money for artists worry that the economic downturn will hamper ticket sales next year as well as cut back even further on declining record sales.
"In the past 10 years or so, it was a little easier to get credit," says Lori Badgett, first vice president of SunTrust Bank's sports and entertainment specialty group. "Today, it's just not, no matter who you are or what you're doing.'
However, adds Badgett, "At this point, we're still loaning a lot of money and putting a lot of money in circulation in the Nashville music market, as well as in the national music market. We do a lot of business in Atlanta, Miami, New York and L.A."
"Probably the biggest thing we've been doing on the banking side ... has been helping folks maximize the FDIC [Federal Deposit Insurance Corporation] coverage on their accounts," reports Lisa Harless, senior vice president of client services at Regions Bank.
"When the economic stimulus bill was approved, it gave depositors the ability to get $250,000 insurance per eligible account," she continues. "In certain situations, you can get a million or two million dollars in coverage, depending on the titling and ownership of the account. So that's the biggest activity we've seen. We've opened numerous accounts for folks who felt a little unsure about having all their liquidity eggs in one bank. So we've opened accounts for those spreading their funds around."
Music publishing, Badgett says, is the brightest financial spot on Music Row's radar. "That seems to be the only part of the music business that's making any money right now," she notes.
Historically, publishing has generated two main income streams: mechanical royalties (which are tied to record sales) and publishing royalties (which come from songs being performed on radio and television and in clubs and other public places). Mechanical income has declined along with record sales, but performance fees continue to be strong.
Lenders are alert, Badgett points out, to "people who are finding new models of how to re-create and re-invent music as a commodity -- new and different ways to use music. That's where we're seeing a lot of hope."
Business manager John Sayles of TrustCore Management Services says none of his artist clients currently operate on credit and, thus, have not been directly affected by the current crunch. But, he adds, "It may very soon affect people wanting to pay the money to go sit in the [concert] seats, buy the CDs and all that other stuff.
"I haven't heard any problems with employees [of the artists] being able to get mortgages or car loans. But if this doesn't get straightened out soon, it's going to happen to band members and crew members and bus drivers and all the rest of the [support] people out there."
"From a tickets and merchandising standpoint, I don't think we're seeing much [trouble] yet," says business manager Mary Ann McCready, president of Flood, Bumstead, McCready & McCarthy. "I think that if the [recent Congressional] bailout had not occurred, it could have been really rough."
Harless says the economic slump has caused some clients to scale back on their earlier aspirations.
"What we are seeing is that some folks who may have been planning to upgrade to a more expensive home have decided to just stay where they are and maybe get a home equity loan and do some renovations," she says. "We've seen maybe a little increase in our home equity applications."
Credit conditions are becoming more stringent, she says, but still reasonable.
"We request tax return information for income verification," Harless says. "On real estate purchases, we do look for clients to have good credit, solid income and a down payment. I guess the basic characteristics of applying for credit apply now more than ever."
If there have been any recording studio foreclosures or bankruptcies, neither Harless nor Badgett has heard about them.
"The money is still available, and there are still qualified applicants," Badgett summarizes. "I like to be optimistic about these things. I had a manager the other day who told me, 'It's almost cheap enough to start buying.' As the market plummets, it's a good opportunity to start buying things on sale."
Maybe not tour buses, though.