Monthly Archives: May 2016
Monthly Archives: May 2016
I just returned from speaking at Nimbus School of Recording and Media in Vancouver (one of the best recording schools anywhere – thanks Mike, Rob and Brandon), and one of the questions that I received from the students was if the music business is more difficult now than it was in the past. Actually, getting into the business has always been difficult, and that’s the same as it ever was 10, 20, 30 or more years ago. It’s different, of course, as the industry has evolved, but one thing’s for sure, the seamy side of the music business of the 80’s has improved a great deal over time.
Here’s a video called “The Chart Busters 1980” that’s about the widespread payola of the era that was a requirement for radio airplay. For those of you don’t know, payola is where a record label or promotion company that’s been hired by a label pays a radio programmer in exchange for not only playing a record, but playing it at the best time of the day as well.
At first, payola was all about cash, which lead to the first scandal in the 50s that lead to a law that prohibited cash for airplay. Clever promotion men got around that by supplying gifts, vacations, drugs and women instead, which lead to a second crackdown. The labels tried to insulate themselves from further prosecution by hiring third party promotion companies, but a another crackdown in 2005 attempted to close that loophole.
Believe it or not, we’re experiencing another form of payola today called “playola” where money and favors are exchanged for placement on popular online playlists, so the practice continues in a new and insidious form.
Regardless, this video is a great look at the music business as it was back in the 80s, when vinyl albums were still king and the CD was just coming on the scene.
Even though Facebook is catching up, YouTube engagement is still a primary concern for every artist. Information is power, and some brand new data about viewership on YouTube help to maximize its usefulness as a promotional tool.
For instance, video length is one of the biggest deciding factors for engagement. Videos under one minute are watched to completion 80 percent of the time, while 2 to 3 minute clips have 60 percent retention and 5 to 10 minute videos are only completed 50 percent of the time. That said, the average time a user spends on YouTube has increased, as it’s now up to 39 minutes.
Subrat Kar, the founder of the video analytics service Vidooly, has 5 tips for increasing YouTube engagement.
1. Focus promotion on mobile viewers. 98% of millennials watch video on their smartphones, and 92% of mobile viewers share videos.
2. Post and share at an appropriate time. The peak time for viewing on the smartphone, tablet or computer is between noon and 5PM.
3. Create videos that appeal to audience passions and align with your channel’s brand. 67% of shoppers played a video with the idea of making a purchase and watched it at least 80% through. That means that a video introducing your latest merch or release can be very effective.
4. Increase shares and shelf life by embedding videos in emails. There’s a 96% increase in click through rate, 26% fewer people unsubscribe, and 19% more people open when the title contains the word “video.”
5. Collaborate with viewers and cultivate community. YouTube provides the option for crowdsources subtitles and closed captions in 60 different languages.
Remember that the average watch time for a video is 2.7 minutes. The longer a video drags on, the lower its retention, which is no surprise since the human attention span in 2015 was a mere 8.25 seconds (and 9 seconds for a goldfish).
YouTube is still the king of the mountain when it comes to video, so its best to pay attention to the latest statistics.
In Part 3 on my series on streaming music royalties, we try to make sense of streaming income as we look at why it varies so much and why the sales parameters we set in the days of vinyl and CDs no longer apply in the digital age. Once again, this is an excerpt from the latest version of Music 4.1: A Survival Guide For Making Music In The Internet Age book.
“By now, we’ve all read the horror stories of the artist or songwriter making what seems to be an incredibly small amount of money after millions of streaming plays. What’s more, it seems even more outrageous when you see that the amounts paid look random, with not many of the tiny payments at the same rate.
Hopefully, here’s a way to make sense of those payments based on what was just presented in the previous two sections.
Back in the days of vinyl, cassettes, CDs, and even downloads, a million was a substantial number that amounted to a lot of money in sales. Today, a million doesn’t mean what it used to, especially when it comes to streaming. In fact, a million streams barely registers on the industry’s radar these days; they begin to take notice at 10 million, and 50 million is considered a minor hit. Major hit records routinely rack up hundreds of millions of streams and views.
That’s why it’s important to keep the “million” figure in perspective when discussing streaming. It’s a good starting place, but not as impressive a number as it once was.
As stated earlier in the chapter, every time a song streams, a royalty is generated for the owner of the sound recording. This is usually the record label, but it can also be a DIY artist without a label.
Sound Recording Rate Variables
Before the royalty is even paid to the artist or label, the royalty rate has lots of variables, some of which we’ve covered already:
The last two points aren’t frequently brought up in sound recording royalty discussions but are equally as important as the type of service and its tiers. Let’s look at the country variable first.
Each country may have the same tiers, but each may pay at much different royalty rates. This is because many services charge the consumer different rates to subscribe in different countries (usually lower than the United States) because that’s all the market will bear. For instance, an Apple Music subscription costs $9.99 per month in the United States but only $2 (120 rupees) per month in India and $3 (169 rubles) per month in Russia. The royalty rate paid on the sound recording will reflect these lower amounts for streams in those countries.
This is one reason why a million streams for one artist may generate more or less money than another. If most of your streams come from outside the country, chances are your royalty check is a lot lower than an artist with streams mostly from inside the United States.
Another unmentioned variable is that some services calculate their royalties on more than streams. Take Spotify, for example. One of the little known facts about the service is that the artist’s market share is also taken into account when determining the monthly royalty. As a result, an artist with a huge hit effectively gets paid a bonus for her increased market share that month.
It’s been stated before but again frequently overlooked: there’s almost always a middleman between the streaming network and the artist. Most of the time, it’s a record label that’s collecting the revenue and then paying the artist at the royalty rate set forth in their label agreement. For digital royalties, this usually ranges anywhere from 15 to about 22 percent, but you can see how the majority of the income that was generated doesn’t make it to the artist in this case.
This is the same to a lesser degree for the DIY artist. Most services will accept song submissions only from major record labels or large indie labels. As a result, most DIY artists are forced to use an aggregator like TuneCore, CD Baby, or DistroKid.
Some of these aggregators charge a flat fee per song or album for uploading to the various digital services, some charge a yearly fee, and some charge a percentage of the streaming royalty that’s earned. This can be another finger in the pie that the DIY artist isn’t prepared for.
An aggregator provides the convenience of not only distributing your music to multiple services at once but also collecting the money for you as well, but that service does come at a price. If you’re really in a DIY state of mind, consider forming your own label and affiliating with the Merlin Network indie label association (merlinnetwork.org) as a way of submitting to each service separately.”
For more on streaming income, check out Part 1 and Part 2 of this series.
You can read more from Music 4.1: A Survival Guide For Making Music In The Internet Age and my other books on the excerpt section of bobbyowsinski.com.
Once upon a time pirate radio stations were big business and a big influence, with Radio Caroline, Radio Luxembourg and XERF all helping birth the modern radio and music industries. Most pirate stations have been long closed, and it was thought that they’d be gone for good thanks to the Internet. Surprisingly, pirate radio is actually on the rise again, according to a report by the Associated Press.
It seems that you can actually put a station on the air that covers a couple of miles for a mere $750, but why would anyone even think about it? The fact is that many want to broadcast to underserved immigrant communities to provide them with a slice of home. Others who formerly had their own Internet station but were forced to abandon it because of the recent huge increase in license fees have turned to a more traditional terrestrial approach. Still others feel that the homogenized sound of the radio thanks to the station group ownership has let down the listener.
The FCC issued about a hundred warnings to pirate stations last year, mostly in Boston and Miami where clusters of them seem to operate. According to FCC Chairman Tom Wheeler, fining the operators and seizing their equipment doesn’t stop many of them because often they won’t pay the fines and will just buy new equipment if it’s confiscated. The problem is that the FCC is short-handed and isn’t able to following up as timely as they’d like. As a result, agents have instead gone to landlords and local police to enlist them to be on the lookout for pirates.
Why is pirate radio a problem? With officially licensed radio struggling so badly, any advertising siphoned off by pirates can really hurt financially. Plus there’s the issues of interference with existing station signals and even the Emergency Alert System.
So it looks like something very old is new again. Terrestrial pirate radio may not be hip, but it’s making a comeback.
Pandora’s largest investor is so concerned about its future that it sent a letter to the company’s CEO and board members asking them to reconsider its strategy and explore the possibility of a sale. According to a report in Music Business Worldwide, Corvex Management LP, the investor that sent the letter, owns 8.3% of Pandora and is fed up with seeing the company’s share price slide.
Among the concerns expressed in the letter include:
Pandora is reportedly gearing up to transition to an on-demand service like Spotify, since in its current non-interactive state the company is not able to expand to other territories. It’s now available only in the United States, Australia and New Zealand, but other countries have blocked entry because of local rights issues which have proved too costly for the company to overcome. Turning into an on-demand streaming service would allow Pandora to expand, since most of the required record label licenses would be world-wide and wouldn’t depend upon local broadcast regulations.
Pandora labels itself as “Internet Radio,” a term which, while accurate, is very limiting. In September of 2015 the company purchased many of the assets of the Rdio music streaming service out of bankruptcy, providing it with much of the infrastructure for the change in the platform. The licenses from the major labels (the difficult part) were not included, however.
The call for a sale by its largest investor may cause others to jump on board, which could mean a fire-sale for the company, and one more income source for artists will die.
If you use Twitter for promotion you know that while the 140 character limit seems like plenty, it can decrease rapidly with the addition of a photo or link. Those days may soon be over as the company will soon stop counting photos and links as part of its 140 character limit.
Currently links take up 23 characters, even if Twitter automatically shortens them, which means that you only have a very short sentence available if you use a couple of links, or a link and photo, in a tweet.
Twitter had recently contemplated increasing the number of available characters to as high as 10,000, but a user backlash stopped the motion in its tracks. There’s been almost universal applause among users over the latest proposal however. Then there’s the fact that quick and concise messages are the primary way that the service distinguishes itself from other services.
Why 140 characters in the first place? Twitter started its life as an SMS texting app in the days before smartphones. There was a hard limit of 160 characters available for a mobile text message in those days, and the company chose 140 as a way to keep some characters in reserve for the user name to be attached.
Lately Twitter has been making video a priority as part of its push for live events, agreeing to pay $10 million to the National Football League for the rights to stream 10 Thursday night games during the 2016 season. Twitter is also said to be working on more content deals for streaming sports, political events and entertainment as a way to possibly expand its stagnant user base.
Expanding the messages is also something that Twitter can use to help it sell more ads, as the same character limit applies to promoted tweets as well as normal tweets. Of course, keeping advertisers happy is a major concern (that includes artists and labels if they promote their tweets to their fan base) as many have recently taken their ad dollars to other social media platforms.
It’s obvious that Facebook has been gunning for YouTube for some time now, and the service now claims that it now has more video viewers (although that’s debatable). That’s not enough though, as Facebook will soon introduce a feature called Slideshow that will allow users to create their own soundtracks from a list of licensed popular songs.
Although only Warner Music has signed on currently, all the major labels look to Facebook as a higher paying alternative to YouTube. Having another competitor in the music video streaming space could also force YouTube to reconsider it’s 55/45 payout schedule which has been the bane of record labels for some time. With the rest of the streaming industry paying 70% or more of collected revenue out on royalties, the major labels view YouTube as the thing that’s holding back users from subscribing to the paid tier of streaming networks, since it’s difficult to compete with free.
The labels would still be OK with YouTube if it paid a higher royalty, but since that doesn’t look to happen soon, Facebook’s Slideshow could be their dream scenario.
Facebook, Instagram and Messenger users currently spend 50 minutes a day using the services, CEO Mark Zuckerberg revealed on the company’s last earnings call. It also reported an surprising 57 percent increase in ad revenue to $5.2 billion, and the music industry would certainly like to get a larger piece. That said, the average person spends about 1 hour and 12 minutes viewing online videos, and much of that is still on YouTube. Facebook would like to be part of that daily experience, which is why it views Slideshow as important.
Slideshow better be easy to use and even easier to search, as that’s the secret sauce of YouTube. It’s the second largest search engine in the world (and owned by the largest, which is Google), and that basic ability shouldn’t be underestimated.
Artists and songwriters, even some publishers, very often misunderstand how streaming income and royalty rates and payments are determined because it’s a immensely complex subject. One of the things that I’ve done in my new Music 4.1 book is provide an overview of how streaming royalties work and are paid, in many cases following the revenue stream down to the last $0.001. Here’s an except from the book explaining how the streaming performance royalty rate for songwriters is determined, since that’s the area that’s frequently quoted in articles and more often than not blown out of proportion. We’ll also introduce a brand new royalty that only applies to on-demand streaming services like Spotify called the streaming mechanical.
Just like when it’s played over the radio, when a song is streamed, a performance royalty is generated. It’s almost always collected by one of the performing rights organizations (PROs), like ASCAP or BMI, and then distributed to the publishing company and songwriter.
Performance Royalty Rate Variables
There are a staggering number of variables when it comes to the different performance rates paid on a stream because there are a lot of different streaming services, and each has a slightly different way of determining the royalty it must pay. Just this section alone could take up at least several chapters, but because this isn’t a book on publishing, here are some of the situations you should know about where the performance royalty rate might vary, along with a short explanation of each:.
The average composition royalty rate per stream is around $0.0005, according to Audiam.
In the case of on-demand streaming services like Spotify or Apple Music, there’s an additional royalty generated on the composition called a streaming mechanical.
The Streaming Mechanical Royalty
The streaming mechanical royalty is relatively new and was created on the premise that on-demand streaming closely resembles a permanent download because the user has such a high level of control.
When the Copyright Rate Board ruled in 2008, it mandated that the streaming mechanical rate would be around 21 percent of what’s paid to the record label for the sound recording if paid directly to the publisher, or around 18 percent if paid to the record label (depending on a set of variables too deep to get into here). That means that the average streaming mechanical rate per stream is somewhere around $0.0067, according to the digital music accounting firm Audiam. As a general rule, the owners of a sound recording often end up with five or six times more revenue than the owner of the musical composition on a particular song stream.“
As you can see, there’s a huge number of variables when it comes to royalty rates paid to songwriters, and they each pay at a slightly different rate. That’s why whenever you read a figure about how much a stream pays you have to remember that it’s usually an average, and might not apply to your particular situation. Remember, we’re talking royalties only paid to songwriters here, and not to artists, which is a separate subject. In the coming weeks, we’ll look at other aspects of online streaming royalties that you probably won’t see anywhere else.
You can read more from Music 4.1: A Survival Guide For Making Music In The Internet Age and my other books on the excerpt section of bobbyowsinski.com.
(Photo: courtesy of PDPics.com)
I’ve been no fan of the Rock n’ Roll Hall of Fame, as you probably know if you read this blog. I don’t believe there should be such an institution, since there’s really no way to quantify who should be in it, unlike a sports HOF where there are plenty of statistics to gauge someone’s qualifications. That’s why Steve Miller’s Rock n’ Roll Hall Of Fame Rant was so interesting. As a recent inductee, he was not happy with his treatment during the event, and raised some concerns about the selection process as well, and was probably the first artist to ever voice a negative opinion about it.
This may be old news to some of you since this interview in Billboard came out last month, but it’s still plenty revealing. Here’s an excerpt.
Billboard: How would you describe your week following the Rock & Roll Hall of Fame induction ceremony?
Steve Miller: The last week has been pretty interesting; I played three concerts in New York at Jazz at Lincoln Center with Jimmie Vaughan; I did the Rock & Roll Hall of Fame induction ceremony; and now I’m in San Diego. Tonight will be three shows that I’ve done in the last four days out here on the West Coast. The Steve Miller Band is busy, the Jazz at Lincoln Center projects have been great, and the Rock & Roll Hall of Fame was just one of those things in the middle.
Has the reaction to your comments following your Hall of Fame induction surprised you?
Well, not really. I’ve gotten hundreds of emails from artists and pals and peers just saying, “right on, man, I can’t believe you had the balls to say that,” that kind of stuff. The reaction from the Rock & Roll Hall of Fame and Rolling Stone magazine has not surprised me at all.
I imagine you were aware when you were saying the things you did that some of it might not go over so well.
You have to speak truth to these people. It has really been a long, long slog for the Rock & Roll Hall of Fame, and for some reason, I don’t understand why, they really have made it tough. It’s not a pleasant experience for the people being inducted — at least from my personal experience it certainly wasn’t. The whole process feels like you’re dealing with a company that wants you to give them everything and they’re going to go make all this money and they’re going to do everything with it, and you have no input into it, no say about any of it, take it or leave it. Probably what the general public thinks and what it really is are two different things.
You said some pretty harsh things, do you stand by all of that?
Of course I do, yeah. I spoke the truth as I experienced it, and as I have experienced it over the years. Basically, as everybody that has had a taste of the record business knows, they are gangsters and crooks. The history just proves it. If you’re naïve as a musician when you go into it, you learn your lessons quickly. I remember when I was a kid and signed with Capitol Records I thought, “boy, this is great, I’m going down to L.A., I’m going to record at Capitol tower.” I went in there and the engineering staff walked out because they didn’t like me because I was a hippie [laughs]. That was my first experience. I was thrown into a pool of sharks, where all the bands were fighting for the same resources, managers were wheeling and dealing, and it was a lot more than I thought. I was pretty naïve when I started and, over the years, my record companies have grossed over $1 billion from my work, and I’ve spent 50 years auditing them to force them to pay me what my contracts call for. I caught them illegally selling hundreds of thousands of my records in markets worldwide. They’ve broken their contracts, they’ve broken their word. They have built-in theft in all their accounting. I’ve had to threaten to use the RICO statutes against them. It’s a business with built-in theft and cheating, that’s just considered normal, and I’m just not the kind of guy who tolerates that, I don’t go for that. If it’s not fair, and if it’s not clean and clear, then I’m going to work to make it that way.
So that billion dollar figure you used in the Rolling Stone interview you didn’t just pull that out of thin air?
[Laughing] No! And that was when a billion was a billion, not like today. Millions and millions and millions of records worldwide, it’s just been 50 years of auditing and arguing and lawsuits. I’m just a walking library of what it’s like dealing with a business that’s designed to cheat. It always has and it always will.
So when you looked out into the audience at the induction ceremony, the crowd kind of represented that to you?
Well, the audience that I saw was just a bunch of people at tables. I looked out there and I didn’t really see any friendly faces — I basically saw people I had been suing and auditing for years.
Maybe that had something to do with why you said what you did when you walked off stage and someone stuck a microphone in your face?
The whole experience is not like what you would think being inducted into the Rock & Roll Hall of Fame would be. You’d think it would be a wonderful experience. You’d probably imagine someone from the Hall calls you and congratulates you for being nominated and inducted, and tells you you’ve been voted in, and you’re invited to a series of events culminating in the actual induction ceremony. I imagined there might be a dinner party to introduce all the new inductees to each other, and the past inductees, an evening of congratulations and toasts. Maybe the director of the Rock & Roll Hall of Fame would welcome the new groups and discuss the goals and projects of the Hall, ask the class of 2016 to pitch in. You might even think there might be some performances given by kids who have benefited from music lessons provided by the Hall. Maybe a speech from the museum curator and the head of the nominating committee, or something to explain the importance of the Hall’s work, to thank the inductees for doing a concert to raise funds for the museum. Then you’d be pretty surprised to find out that none of that happened.
And you would have participated in those sorts of things?
Of course I would. The way it all went down was it was basically I found out from a friend that was nominated that there was public voting going on online to decide the public’s nominees, and their 100 million votes counted for less than one vote in the nominating process. That’s pretty cynical. What it really was was an argument over their documentation and contracts for the gig, no input on anything, you have no choice as to who’s going to induct you. Here’s what the experience was: there was a sound check the day before, where I was told to hurry up, do my sound check, and get off the stage. Then the next night I came over and went through like four security checks. A hired handler, a very nice young lady, said, “OK, we’re going to put you over here in the holding pen,” so I went to the holding pen, then we did another quick sound check. Then I was pointed to where my table was, told to go out there and sit down. I didn’t know anyone at the table, no one said hello, nothin’.
I wanted to talk to Dre, I wanted to find out why they weren’t performing; they pit everybody against everybody; you’re having this thing like, “OK, when are we going on, what’s going to happen, when are we in the show? [And the response is], “Oh, that’s all a surprise, it’s going to be this way, Deep Purple’s going to play then you’re going to play, then this is gonna happen,” then it’s, “no, it’s changed now, NWA is going to play after all,” and this is all happening as you’re going into it. There’s really no concern for you as a musician or artist, or congratulations, it’s “we’re making a television show, it’s our show, we’re making money off this to run our museum, shut up and do what you’re told to do.”
And there really wasn’t ever any contact with anybody from the Rock & Roll Hall of Fame, other than, “wait a minute, this contract is way out of line, what are you talking about?” I spent from February reviewing the contract until today, and it still isn’t signed. Their paperwork is vague and demanding and they want you to give them your guitar, and anything you have that’s really special to them, and they just treat you like, “hurry up and do this stuff and get out of here.”
So, for me, my experience was a sound check, go sit at this table — it turned out I was sitting next to the drummer in Chicago, and we did have a good chat. Then I was called up to do my little talk, I did, then I went over and played three songs. Then they take you in the back and there’s like 20 little tents and all sorts of people with cameras and stuff. I think the first [interview] questions was, “wow, Steve, what do you think?” [laughs] So I said, “Here’s what I think.”
You mentioned a lot of things, but anything else specifically you would suggest that the Rock & Roll Hall of Fame might do to improve the induction ceremony, and improve as an organization?
I think they need to stop dividing people and being so dismissive of some acts, and they need musicians on the board. The people who are doing the nominating are the opposite of the spirit of rock and roll. They’ve turned it into a very elitist little group of people deciding who is important, who isn’t.
I wanted to ask Elton John to induct me, because Elton knows my music and loves my music and we’re friends, and I thought he would probably have a good historical perspective. But they said, “no, the Black Keys are going to do it,” and I said, “well, OK,” and they said “there’s no negotiation on any of it, that’s the way we do it, that’s the way we’ve always done it, that’s the way it’s gonna be. It’s all gonna be a surprise; you’re not gonna know what they’re gonna say, you’re not going to know anything about that.”
We all want to support the Rock & Roll Hall of Fame, the public takes it seriously. It needs to be transparent, and it needs to be fair. They should rotate the nominating committee, they should have musicians on the nominating committee, they should have a dinner for the inductees, they should spend some time explaining who they are and what they do to the inductees. They shouldn’t consider it, “you don’t have time to do that, you wouldn’t come in for a dinner, why would you want to do that?” They’ve turned it into a really cold, hard-ass deal.”
Read the full interview on the Billboard site.
(Photo: Tim Brown via Wikipedia)