Film Review: The Warning – PBS / Frontline Documentary
Rated: 4/5 stars.
PBS’ The Warning Documentary
The Warning is a PBS documentary discussing a warning from Brooksley Born, an attorney and a former Commodity Futures Trading Commission (CFTC) chairperson. She explained that derivatives were extremely risky insurance vehicles and sent a warning that these vehicles needed regulation during her tenure as CFTC chairperson, but her warnings went unheeded. She resigned in 1999 from the CFTC position after legislation was passed preventing her agency from regulating derivatives.
Vision of this Documentary
While I would like to rate The Warning higher, its take is pretty much tunnel vision on the derivatives markets. While the derivatives markets did melt down and did, to a large degree, spur the meltdown onward, the meltdown was not started because of derivatives. The derivative meltdown was a casualty of and was exacerbated by the sub-prime mortgage meltdown. Had the mortgage industry bubble not burst, the derivatives market might have gone unchecked for many more years. The warning was and should have been about placing regulations onto mortgage lending practices. The mortgage lending industry is the industry that failed and sent the economy into a tailspin, let’s make that perfectly clear. The derivatives (insurance) market, which speculated on the mortgage industry, single-handedly sent Wall Street into a tailspin (along with several large insurance companies like AIG).
Derivatives and the Mortgage Meltdown
Anyone with half a brain in their head could see that using questionable lending vehicles like interest only loans for the first two years or adjustable rate mortgages were ticking time bombs. When the actual monthly payments came due years later after rates went up to where they should have been, people couldn’t afford pay. This was especially true when lenders were handing these loans to people who could barely afford the ‘introductory period’ payments. So, loans came due, people defaulted and the rest is history. The derivatives (insurance policies) that were issued also came due because of the en masse foreclosures. Insurance companies that issued derivative policies speculating people wouldn’t default en masse began to fail because their speculation was wrong. So then, these insurance companies couldn’t pay off on the insurance claims. So, when consumers defaulted, so did the insurance companies offering derivatives.
It wasn’t as if warnings weren’t being issued regarding the inevitable mortgage meltdown, it’s just that Brooksley Born (the focus of this film) was not one of the people issuing the mortgage warning. Her warning was strictly about the highly risky derivatives. More specifically, the black box non-transparent nature of them. The danger, of course, is that derivatives can be placed on any speculative and risky investment as insurance. The reason derivatives need to be regulated is to prevent companies the size of AIG from making stupid decisions about such risky vehicles. However, from a consumer perspective, banks should never have gotten into the position of issuing such risky mortgages like water to people who couldn’t afford them. This was the single mistake that led to where we are today and that mistake has nothing to do with derivatives and everything to do with Government and the Federal Reserve making stupid decisions.
Overall, the movie is worth watching, but also understand its information’s place in the larger meltdown that was at work in our economy.
Recruiting: Job seeker’s friend or foe?
I have been successfully placed by a recruiter once in my career. After that, I’ve had nothing but bad experiences with recruiters. The main problem with recruiters isn’t necessarily with the recruiting itself. It’s the human element that always gets in the way. Let’s explore.
Recruiter’s Bottom Line
A recruiter’s bottom line is the commission that they receive upon placing a candidate. This commission, unfortunately, drives the entire placement process. When a recruiter’s sole motivation is based on money, the candidate and the hiring company both get the short end of the stick.
Case in point, I have used recruiters for the last two or three jobs I’ve attempted to land. In nearly every case, the recruiters misrepresented the job to me in the phone interviews. When a recruiter sent me to an interview, I quickly found the job was not a match for my skills. Basically, the job was entirely wrong based on my skills or I had specifically told the recruiter not to place me in that industry or job type. Yet, there I was, interviewing for a job where I shouldn’t have been.
This ends up a wild goose chase. When I explained the problem to the recruiter, they turn defensive and blame me for a ‘bad interview’. It wasn’t bad, it was just a mismatch because of the recruiter’s lack of skill or inability to listen. Of course, this all comes back to the commission. Once the commission dollars become a reality in their mind, the recruiter puts blinders on. They then attempt to force a square peg into a round hole to avoid losing their payday.
Sincere Recruiters?
That’s not to say that there aren’t sincere recruiters out there. I’m sure there are some. However, the recruiting industry is so filled with inexperienced recruiters only willing to make a buck that you can’t tell the difference between who is sincere and who isn’t. It’s not like recruiting is regulated or has any grading system. So there is no method for you, the candidate, to determine just how a specific staffing firm works.
The one recruiting game that gets to me is when recruiters simply resume collect to fill a database, but have no intention of placing you. Robert Half (RHI) is notoriously bad for this. They’ll collect your resume, ask you to step into their offices for a ‘face to face’ and additionally ask you to spend an hour or longer filling out paperwork. After you’ve spent all of that time doing this for them, they never call you back. That’s such a waste of time. Instead of wasting a day at their offices, the candidate could have better spent that time sending out resumes to actual employers and going on legitimate interviews with direct employers.
Recruiting Tactics
Other tactics from recruiters include the recruiter finding a job posting on the Internet, collecting resumes and contacting qualified candidates. Only after they have the candidates in hand do they then try to lasso in the employer. They string the candidate along thinking they have a chance at the position when they haven’t even talked with the hiring company about the position. Once the hiring company turns down the recruiter, this is when the recruiter stops calling the candidate and stops taking calls.
This recruiting scam is yet another colossal waste of time. These scams should be very apparent once you get two or three recruiters calling to recruit for the same hiring company and the same position. In a typical recruiting engagement with a hiring company, the hiring company only allows one recruiter to recruit for the position, not multiple. When multiple recruiters are recruiting for the same position, either the hiring company doesn’t understand the recruiting process or, more likely, the recruiters are not on retainer.
Ask Lots of Questions
When choosing to work with recruiters, be cautious and ask lots of questions. A recruiter does attempt to be the candidate’s advocate, but usually only to the point that they don’t lose their commission. If losing their commission becomes a reality, recruiters can become desperate in the relationship between the candidate and the hiring company. In fact, a working recruiter relationship can turn sour in about 30 seconds once the candidate or hiring company expresses disinterest. This is when the recruiter’s professionalism is tested. If the recruiter keeps pushing the candidate or the hiring company after disinterest has been expressed, that behavior is not professional. It also shows just how much the recruiter values their commission over a properly filled position.
For a recruiter, it’s much more valuable to place a qualified candidate in the proper position than collect a recruiting commission. But, many recruiters turn desperate when their square peg won’t fit into their round hole. On the other hand, some recruiters just don’t care. They’ll attempt to place anyone in any position just to fill their required quota.
Recruiting Advocacy
It can be difficult to find a recruiter who is actively willing to work on your behalf as a candidate. If you find one, stick with them. Keep in mind, however, that they are all working on commission, so their placement of you fills their (and the recruiting firm’s) bank account. That money motivation can cause the recruiter to do things they would not otherwise do. Finding the most suitable job for you should be their number one priority. Unfortunately, this isn’t always the case.
Only you as the candidate can look out for your own best interest. If you find a recruiter has misrepresented a position, then walk away from the recruiter. You can, however, submit a direct resume to that employer IF the recruiter has disclosed the employer’s name. However, some recruiters refuse to disclose the prospective employer’s name until after you already know the job is unsuitable.
Recruiters: Friend or Foe?
To answer this question specifically, they can be both at the same time. As a candidate, you will need to keep your eyes and ears open. As a candidate, you must listen, ask questions and understand what the recruiters are telling you. You must also be able to read between the lines to understand if the recruiter is feeding you a line of bullshit or telling you the truth. Having a truth meter is important when working with recruiters. You should also always remain skeptical when the recruiter tells you something that seems too good to be true.
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Paypal: Don’t trust them with your checking account!
Paypal has been in business for how many years now? Yet, they still can’t manage to find a way to verify a person without using a bank account? Since day 1 of Paypal, I’ve been sternly opposed to giving my checking account routing information to Paypal. Why? It’s very simple. I don’t trust them. I never have. I never will.
Why you should never give out bank account + routing information to anyone!
Let me first say that when I discuss ‘routing numbers’, this means a combination of both your account and your routing number. Clearly, you wouldn’t just give out only a routing number as that’s not useful. It is only useful when in combination with an account number.
When you give someone a signed check, you implicitly give them your routing information. That’s a danger when you write a check to a company. The protection, of course, is that you’ve given them a physical paper check for a specific amount and you know exactly how much that check was. So, when the check number arrives at the bank and drafts that amount of money from your account, it was expected. They can’t draw more than the amount the check was written.
Routing numbers, on the other hand, are effectively blank checks. When you give a company your routing number, you are handing them a signed blank check. That’s because you’ve agreed to allow them blanket access to your checking account. That company can then debit any amount of money from your account they see fit without so much as a thank you. Because Paypal uses EFT (electronic fund transfers) in the form of ACH (automatic clearing house), they can debit your account up to the maximum amount of funds in your account. This means, they can overdraw your account and completely drain your funds. ACH/EFT offers no liabilities to the consumer whether accidental or intentional. Because you gave that company explicit approval to debit your account at will, there are no liabilities for any inappropriate transactions. That’s left between you and Paypal to resolve. The bank will usually not become involved. When banks do become involved, the best they can do is tell you when it happened. You can try to ask your bank for additional help, but they will most likely point you to Paypal for resolution. The reason is simple, you agreed to give Paypal access to your account up front.
Worse, if the company that overdrafted your account chooses to not give you the money back, then you may be out of luck. At that point, you better seek a lawyer, assuming you have any money left to pay them.
Paypal and Checking Accounts
Paypal does not need a checking account to verify you. They just tell you they do because that’s the way they have always worked it. This verification process can easily be done with a credit card charge that you input later to validate that you receive the bill for the card. Paypal simply wants to have unfettered access to your checking account. Frankly, it’s a huge liability for you. It’s also a huge liability for Paypal to store this information. One hacker in their system and they could have a field day with your money.
Credit Cards and Fraud
Paypal is well aware of the fraud issues with credit cards. They are also well aware of chargebacks, merchant liabilities and fees associated with these processes. To avoid them, they prefer unlimited access to your checking account that hold no such penalties or liabilities. Because the consumer has no recourse over inadvertant transactions, Paypal has the upper hand. This is why Paypal will not verify you with only a credit card. Can they validate based on only a credit card, yes. They simply choose not to.
Credit cards have long established liability rules that prevent fraud occuring from both rip-off artists and from merchants alike. Unfortunately, there are no such rules for ACH.
Consumer Protection from Businesses
Whenever a company asks you to give them routing information from your checking account, tell them, “No!”. Not only should you tell them “no”, you should explain exactly why. Tell them that you don’t trust them with that level of access to your account.
Should you continue to do business with Paypal? That’s entirely up to you. But, I still do not have a verified account with Paypal because I simply will not give them the routing information from my checking or savings account. I simply do not trust ANY company enough with that information. Remember, Paypal is not a bank. Thus, it does not fall under any banking rules, liabilities or any federal insurance. In fact, who knows what insurance Paypal even carries? So, whatever Paypal does, you’re at their mercy to do it right. If they don’t, you have to fight with them to get your money back. The bank won’t help you.
But, I need to give out my routing number…
Here’s another option. It’s not optimal, but it works. Simply, open a second checking account. By setting up a checking account specifically and solely to be used with Paypal and merchants, you can limit your financial liability. You can then link another account to this new account for transferring in money only, but be sure NOT to link the new checking account to any overdraft protection on any other accounts. So, if Paypal overdraws your account inadvertantly, they won’t get any more money than what you have specifically placed in there. If you want to buy a $250 appliance, only transfer in $250 for just that appliance.
The problem with this technique is that banks sometime require minimums to open an account and minimums to keep it open. So, you may have to leave $1000 (or some other arbitrary amount of money) to prevent accrual of monthly fees or account closure. You’ll need to contact your bank for details.
While this does work, it’s not optimal by any stretch. It requires you to be extra cautious with how you use that account. You have to be diligent to place the money in there when you need it. And, you need to remember that transfers of money into the account are not always instanteous. So, you may have to transfer your money in the day before you intend to purchase to ensure the money is there to cover the transaction.
What if I’m a Merchant?
For merchants who want to get paid for products they sell, I understand the issue here with ACH/EFT. Again, in this instance, I would set up a separate checking or savings account solely for Paypal use. Only give this account to Paypal so that when you receive payments, you can transfer them out of that account and to your ‘regular’ account immediately. This way, if Paypal decides to debit you for any reason, the money won’t be there.
Overdrawn Accounts
If Paypal overdraws your account for any reason, don’t expect them to pay you back for insufficient fund fees. You will have to deal with these fees on top of the inappropriate debiting from Paypal. You will then have to argue with Paypal to get your money back and your bank fees reimbursed. But, good luck with both of those processes.
Spending Limits
If you choose not to give your routing information to Paypal, Paypal arbitrarily limits how much money you can send to an individual when you buy merchandise. For this silly reason alone, this is enough to tell Paypal to take a hike. There are plenty of ways to buy merchandise from merchants on the Internet. In fact, when a merchant is reputable enough, they will set up their own merchant account with a bank and let you pay the merchant directly. You should also feel comforted knowing that when you send a payment to a merchant, not through Paypal, you have the full card protections behind your transaction. When you purchase through Paypal, your Paypal account agreement may prevent you from using some of your card’s built-in protections… such as a chargeback.
Credit Cards
For all of these reasons above combined with card liability limits, fraud protection and other protections that come built-in with the Visa, Mastercard and Amex logos, credit cards protect a whole lot more than ACH/EFT. Cards limit your exposure to ID theft and they also limit your liability if someone steals your card and then, for example, buys a new car with it.
For payments, Paypal could choose to issue checks instead of requiring ACH/EFT. But, they have never wanted to go this route for payments. Instead, Paypal forces you to verify your Paypal account by giving them a routing number from your checking account. As I have said, this is not necessary and is a huge liability.
If you want to protect your money in your bank account from unauthorized transactions, you should not give Paypal (or any company) access to your checking account via routing numbers. Instead you should insist on the protections that credit cards offer. Credit cards are more than sufficient for anything that Paypal would need (at least for paying for merchandise). For merchants, you will need to determine what works best for you.
[UPDATE: 6/27/2012]
Paypal now has a new wrinkle in its verification process. When attempting to verify a checking account and your bank has a web portal (i.e., Wells Fargo), they will ask for the login and password to your bank’s web portal to do an ‘immediate’ verification. Don’t do it! Don’t give it to them. Paypal says they won’t store the credentials, but with all of the stolen information from various sites, do not trust ANY site with your bank’s web portal login and password. This should really be common sense, but maybe it isn’t. With that said, if you must verify a bank account with Paypal, do it the old fashioned method by letting Paypal make two small sized deposits. First, it makes Paypal give you about 25 cents. Second, you’re not giving out your bank’s web portal password to some random third party.
As much as I rant above about giving out routing numbers and blank checks, it’s far worse to give out your bank’s web portal login and password information. Do not do either if you can help it. However, if you can manage to set up a separate one-sided transfer system into a free savings or checking account for Paypal payments and transfers, then by all means set that up. Do not give Paypal access to your primary checking account with full access your bank account. Also, make sure that you have disabled overdraft protections on any accounts you give Paypal so that if they reach in and grab money out, when the account hits $0 it doesn’t go any further. You don’t want to be mopping up a mess of bad debits and at the same time having to pay interest payments on those bad debits. Paypal is not a bank and they’re not likely to reimburse you for any bad transactions leading to overdraft fees or interest accrued. So, avoid the issue and prevent Paypal from doing this damage in the first place.
Ticketmaster: Master of nothing, king of fees
If you’ve ever purchased tickets to a music concert, chances are you’ve had to deal with Ticketmaster. You know, the ticket printing company that claims to help you obtain tickets to your favorite concert or event. In reality, this company is nothing but one big scam. Having sold tickets for Ticketmaster in the 80s, I’m well aware of their practices and how they choose to do business.
Scam or Scalper?
The only reason Ticketmaster exists is for convenience of the artists/promoters, not the concert goer. If you’ve ever had to stand in line waiting for tickets at a venue, you can at least count the number of people ahead of you and know about what tickets you will receive. Enter Ticketmaster with their near global presence. Now, you stand in line at a Ticketmaster outlet and you have no idea how many other people are ahead of you or how many tickets they may purchase. Combine this with Ticketmaster’s scam of holding back tickets for later release, random selection of tickets and you get the recipe for failure. Even if you’re the first person in line at an outlet, you may walk away with upper promenade tickets simply because that’s ‘best available’.
Best Available
This notion is Ticketmaster’s way of searching their database and giving you whatever they deem is the ‘best available. Note, however, that most outlets won’t let you specifically search or ask for tickets in other sections even if it doesn’t show to ‘Best Available’. Yet, they may be available. For example, I’ve specifically searched for seats in lower prom sections and found tickets there even when ‘Best Available’ shows to be upper prom. So, whatever algorithm that Ticketmaster has written is completely flawed and doesn’t work (or is intentionally designed to NOT give you best available).
Released Tickets
Granted, some promotors do hold back sections of seats for their own use. Some may be reserved for other purposes and some may be reserved for the venue to sell directly. When these seats aren’t sold, given away or whatever, they are then released to Ticketmaster. These seats (some front row seats) can appear even just hours before the event! I have found front row seating for several events the day of the concert simply just poking around looking for tickets in Ticketmaster’s computer. Granted, when you find them, you have to be willing to purchase them immediately because any of the other thousands of outlets could also be looking for them too. For example, I had found front row seats for Neil Diamond (back during his heyday) and front row lower prom for Stevie Nicks (back in her heyday) within one or two days of the event.
Fees and more fees
Ticketmaster now charges $12-$20 per ticket convenience charge. Ticketmaster might as well be considered scalpers. In 1979, tickets to concerts COST $15.00. The cost of Ticketmaster’s convenience charge is now close to or more than the event ticket cost in 1979! For example, with Britney Spear’s 2009 tour tickets, why would you give Ticketmaster $18.75 for you to go to the web, search for ‘Best Available’ and then issue and print your own tickets? It doesn’t cost $18.75 to print two paper tickets and mail them. The cost for that process is perhaps no more than $2. $1 total for the ticket paper, ink and envelope and $1 for postage. Ok, so there might be a small fee incurred in hand carrying the envlope to the post… So maybe $3. Paying $18.75 for $3 worth of materials is outrageous. If you choose to print your own tickets from your printer, they STILL charge you! Yet, you paid for the paper and ink.
Online Ticketmaster
Now that Ticketmaster has moved to the web, their searching process has not changed. But now, you have no control over what they find for you and you have no idea how many other people are out there doing the same thing. They also do not give you the ability to actually search for tickets in specific seactions. You take what they find for you even if they aren’t the best. Worse, Ticketmaster still charges you the $18.75 convenience fee for you to do the work. Other than their print and mail process, which is probably automated anyway, this fee is now completely outrageous and unnecessary.
No Ticketmaster concerts for me
Ticketmaster is part of the problem. For the reasons above (price, fees, bad business practices), I do not trust Ticketmaster. As a result of that lack of trust combined with outrageous ticket prices by the artists, I do not go to concerts. When concerts cost no more than $20 to get in, I’m game. When they get to $80, that’s when it’s no longer worth it. After combining Ticketmaster’s outrageous and unnecessary fees with the cost of the event and the venue fees, I don’t understand why anyone continues to use Ticketmaster for purchase of tickets. You’re just paying to ensure Ticketmaster’s continued existence. Sure, it’s convenient, but it’s also a complete rip-off. Insist on buying your tickets directly from the venue directly without the need for Ticketmaster. If the venue sells you a ticket with a convenience fee, insist on not paying it as there is no such thing when you’re purchasing it directly from the venue.
Unless concert promoters wake-up realize that Ticketmaster is not the answer for selling tickets, they are likely excluding a lot of people, like myself, who would go to more events but simply will not use Ticketmaster, but still want a web based ticket purchase. Promoters: Ticketmaster is not helping you fill the arena.
Competition is healthy
Visit your artist’s web sites and let them know that you don’t want to pay Ticketmaster’s gouging fees to obtain tickets to their event and encourage them to use other ticket distributors such as BandsInTown. We desperately need competition in the ticket selling space to force Ticketmaster to rethink their outrageous fees.
Note that buying your tickets from a scalper is not the answer. nor is that competition. Not only are you now paying Ticketmaster’s fees, you’re paying the scalper’s outrageous upcharge. Again, scalpers are not competition to Ticketmaster, they are just there to mark up Ticketmaster’s already scalped prices.
Ponzi Schemes and Wall Street
I hope that everyone who invests money knows that entrusting your money to someone else is risky. It doesn’t matter if the yield is 0%, 2% or 5%. The act of handing your money to someone else involves risk. So, is it then no surprise when someone like Bernard Madoff, who once the chairman of the Nasdaq Stock Market, is arrested for an alleged ponzi scheme that bilked people out of billions?
Hello, no! Wake up people. When times are good, no one delves into such corrupt Wall Street vehicles because they are self-sustaining. It’s only when times become bad that these schemes fall apart. The way a ponzi scheme works is by paying old investors out with new investor money. The fund itself is not self-sustaining (and probably was never intended to be). So, as new investors dry up, the older investers can no longer be paid. The whole thing then falls apart.
But, the question isn’t so much that this one person did this. It’s the loss of trust and of faith in the system. It’s the question of how many more people are doing it? When respected people of the invesment community end up operating such scam vehicles, what does that say of Wall Street as a whole? Clearly, this is not and will not be the only ponzi scheme to turn up. It’s the first major case of it recently, but it certainly won’t be the last.
Is investing a bad idea? Not necessarily. But, it is risky. This is why diversification is part of the answer. Do not put your money into one fund or even two or three funds. Spread the money out into many funds. Granted, it’s harder to keep track of, but the chances that every single investment fund being corrupt is unlikely. However, we all know that money corrupts. So, you have to take the good with the bad when you give someone your cash to manage.
These are the kinds of problems that shake the foundations of investing to the core. These are the kinds of trust issues that the investment community needs to avoid like the plague. Yet, here we are. These are also the kinds of problems that America itself has been fostering for the last 10-15 years. Why is greed, power and corruption such a big part of the American dream today? Only a historian will be able to look back and fully answer this question. Today, these problems appear to be unrelated. But, is this problem systemic? Is it only likely to get worse? When well respected Wall Street investment professionals, such as Madoff, can bilk so many out of their money, this is much more than isolated and, indeed, does appear to be systemic and a symptom of a much bigger issue.
At this point, America needs an overhaul and perhaps this downturn and the financial sector upheaval is the beginning of that overhaul. The corporate and financial system on which this country is based is near completely broken. When 20 year veterans of Wall Street can turn to Ponzi schemes to keep their lifestyle afloat, anything can happen. So, watch your money closely when you invest. But, even doing so is no guarantee that you aren’t investing in a sham. One quote is more salient now than ever… “Caveat Emptor” (Buyer Beware).
Songwriting Competition or Lottery?
If you are a songwriter, you want your songs to be heard. However, there are so many web sites and people out there that promise you the world and deliver nothing. This article will discuss songwriting competitions.
Is it a lottery?
Most songwriting competitions charge money for each song entry. Think of the song entry as a form. You might as well have just submitted this form into a barrel. Then, they have judges who are supposed to review the entries and pick winners.
Because listening to a song is based entirely on subjective likes and dislikes, there can be no objective methodologies to pick a winner. Thus, subjective criteria equals random selection. This means that, overall, this is tantamount to pulling a slip of paper from the barrel and choosing winners at random. Because you must pay to enter and because it’s a random selection, it’s a lottery. Don’t fall for lotteries disguised as contests. Worse, there’s no guarantee the judges actually listen to every song submitted anyway… which further makes this a lottery by random selection.
Don’t support pay-for-play competitions
If you are an independent artist, songwriter or musician thinking of entering a songwriting competition, think twice before entering. Many of these competitions are scams. They are there to take your money and leave you high and dry. Instead, use your money to further your career (buy recording equipment, pay for studio time, book gigs to make money). If you really must play the lottery, play the state lottery. It costs less and you have equal odds of winning.
Allegedly, one of the largest ‘competitions’ is the ISC (International Songwriting Competition). They boast industry seasoned judges and lots of impressive things, but overall it’s still a lottery. As far as I know, independent lotteries are still illegal in most states.
What you win
Should you win, let’s put a spotlight on this aspect. If you do enter a competition and by some miracle fluke the judges actually pick your song, what’s next? This is tricky to answer. You need to read the fine print on the competition. You might win a recording contract, but then you might be required to turn over all rights of your music to the contest. Are you willing to part with your music rights just to record or win? These are not necessarily lucrative contracts. On the other hand, you might win a small pittance of cash or some dinky thing and still be required to relinquish your musical rights. You need to read closely to find out what you might be giving up.
Turning over music rights
This is a tricky subject because there’s no right answer. However, consider this. If you’ve written what you consider to be an absolutely fabulous song and other people agree, then you probably do not want to part with the rights to this song. If you turn over all rights for this music to the contest, that means that any money made from that music is no longer yours. If the music, for example, gets licensed to Justin Timberlake or Britney Spears and they turn it into a #1 hit, you still won’t get any money from it. Of course, you can always try to sue, but the contest probably has a reasonably binding contract in place. Thus, you aren’t likely to get very far with a lawsuit.
However, there’s the flip side of that. If you are wanting notoriety, then perhaps it is worth giving up the rights. Meaning, if you’re hungry and willing to lose the rights to one of your songs in order to get your name on the songwriter line that does become a #1 hit, it may actually help your career. That is, of course, assuming the contest has any obligation to put your name on the song as author based on the contest rules.
Furthering your career
If you really want to further your career as a songwriter, you’d probably do better to list your music through an A&R service like Taxi (see below) or another placement service who can get your music out to artists, TV shows, movies or video games. It may cost money to place your music, but it’s not a lottery. It’s more of a ‘music store’ where entertainment industry professionals can find new music for projects.
How about free contests?
By all means, enter as many free contests as you can find. That is, if you can find any. But, ignore contests that charge you money. You have no idea where that money goes… and many charge as much as $25-50 per song! By comparison, you can put an entire CD on iTunes, AmazonMP3 AND Rhapsody for that same $25-35 (the cost of 1 competition entry) using places like CDBaby. So, save your money and invest it into equipment (instruments, recording equipment, computers, etc) or advertising. This will take you a lot further in your career by allowing you to produce your own music. You can self-publish or submit demos right to labels. You can also take out your own personal advertisements for your CD as well.
Careful with your money
Always be careful as there are many musician placement (A&R) services out there that will scam you before they give you any real level of service. Taxi is one of the few that appears to be reputable in this regard, but they will charge you money for each submission on top of a monthly fee (so be cautious even here). Broadjam is another, but they also charge to submit music ($5-15 per song on top of a subscription fee) for placement consideration. When businesses charge you money to submit music for placement, you should be wary. There is no real way to know that they are doing the right thing for you. So, if you submit music without response or get an unexpected (strange) response, don’t spend money for that again.
Bottom line, there are plenty of places out there that can scam you… if it looks like a scam, feels like a scam and acts like a scam, it probably is.
Random Thoughts - Randocity! 
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