Monthly Archives: May 2016
Monthly Archives: May 2016
One of the things that bugs artists, songwriters and labels about YouTube is that it’s pretty difficult to get precise information about views and payments. In many cases, views aren’t counted and in other cases payments take too long to arrive. YouTube is hoping to alleviate those problems by implementing a new tool based on the DDEX Digital Sales Report Flat File standard.
DDEX is an organization dedicated to standardizing the data of the digital supply chain, and its members include Amazon, Apple, ASCAP, BMI, Google and the 3 major labels. The Digital Sales Report Flat File standard is a way to standardize the data so it’s the same regardless which part of the supply chain its in, from content owners like labels, to performance rights organizations and publishers, to digital retails like Spotify and Pandora.
By adopting this format, YouTube is taking a giant step to not only speeding this standard along to companies and organizations that haven’t adopted it yet, but also much faster and more accurate reports and payments from the service.
Data exchange has long vexed the music industry, as each organization has their own standard primarily based on the accounting system it has in place. In many cases, these accounting systems are old but reliable, and companies are reluctant to spend the money and feel the disruption of implementing something new that might end up not being able to interface with other new systems. As a result, it’s not uncommon for a label or publisher to receive sales data from a distributor, then have to enter it in manually into its own system. Because of the manual component, not only does it take an inordinate amount of time to input, but there are also errors that occur along the way.
Maybe now we’ll all see faster and more accurate royalty accounting. The initial testers of the new standard include YouTube, SACEM, GEMA, BMI, NMP and Kobalt.
Who says that there’s no money in streaming? It seems that all of those micro-payments add up after all as Universal Music Group is making about $3.9 million per day just from streaming music, according to its parent Vivendi’s first quarter earnings statement.
In fact, UMG’s streaming revenue was up almost 60% over the previous quarter, which amounted to more income than from downloads, which were down 32% from the year before. Yes, it’s true, fewer and fewer people want downloads after they experience the joys of streaming.
With all things factored in, streaming was responsible for 34% of UMG’s total income, versus 22% for downloads, and a surprising 27% for physical product.
So here’s the scary part – the first quarter of the year is usually rather quiet in terms of front line releases by the company’s major stars, and this year was no exception. That more or less plays into the streaming increase since there are fewer sales. But with Drake absolutely crushing it with his latest release (he just posted the records for most streams in a week – 247 million), which isn’t counted in the report, it looks like that increase will continue on a similar trajectory.
Of course, the real real issue here isn’t how much Universal Music made, since we know that labels do better than OK from streaming revenue, it’s how much it actually paid out to its artists. That will continue to be the problem going forward, as the record label is always the main repository of revenue from just about any distribution sources. It’s then up to the artist (and his legal representatives) to have a strong deal in hand to get a fair piece of that income.
Still, you can bet that the majority of that income stays in the hands of the label. Some things just never seem to change, regardless if we’re living in Music 4.1 or not.
Streaming music royalty rates are such a morass of different percentages and possibilities that few people on the planet totally understand everything, and the ones who do are attorneys working in that narrow end of the music business. Even label and publishing execs who have been in the business for 20 or more years can be confused. That’s one reason artists and songwriters frequently cite low rates on what seem to be a large number of streams. It’s also why an average royalty rate is used in articles about this side of the business. Here’s an excerpt from my new Music 4.1 book that tries to clarify some of the misunderstandings by starting with the streaming royalty basics.
“Let’s see if we can at least make sense of why it’s frequently impossible to determine what an exact streaming royalty rate is.
First of all, there are two basic variables to remember that everything streaming works from:
1. There are two kinds of streams—noninteractive or webcast (Pandora), and interactive or on-demand (Spotify). On-demand pays more because it generates more money.
2. There are two tiers for each stream—premium (paid subscribers) and freemium (ad supported). The paid tier generates a higher revenue per subscriber than the free, ad-supported tier.
With this in mind, there are two different copyrights for each stream (the same as for a CD, vinyl record, or download), regardless of the tier, which provide a royalty stream:
1. A sound recording royalty (that the owner of the sound recording gets)
2. A composition royalty (that the publisher and songwriter get)
You can think of the sound recording as what you hear played on Pandora or Spotify (or a CD, vinyl, or download for that matter), while the composition is the notes and lyrics on paper.
Within those parameters there are a tremendous number of variables that can occur, all of which affect both the payout for the sound recording and the composition. Let’s explore the different types of streams first.
The Different Types of Streams
What most artists and bands don’t realize is that there are two types of streaming services, and they each operate differently and therefore pay at a different rate.
The first type of streaming is called a noninteractive or webcast stream and comes from either a platform that acts as an online radio station, like iHeart Radio or any traditional broadcaster with an online presence (like your local radio station), or a service like Pandora where the user has a certain amount of control over what plays but can’t directly select a song or make it repeat. Streaming platforms in this category include services like Pandora and Last.FM. SiriusXM and the music channels on cable television also fit into this category.
All noninteractive streaming services must obtain a congressionally created “compulsory” license with the rate set by an entity called the Copyright Royalty Board (CRB), which I write about in more depth later in the “How Royalty Rates Are Set” section. The CRB recently set the rates for 2016 and beyond for radio broadcasters with terrestrial radio stations at $0.0022 ) per stream. Noninteractive platforms like Pandora pay $0.0022 per stream from a paid subscriber and $0.0017 per stream on the free tier.
Interactive or on-demand streams are treated differently from the radio-style streams in that the rate is considerably higher (between $0.005 and $0.009, depending on how much the listener pays per month, among other factors). Services that provide interactive streaming include Spotify, Google Play, Tidal, Apple Music, and Slacker.
The down side here is that if you’re signed to a label, money from interactive streams is paid directly to them. You’ll then be paid by the label based on the royalty amount negotiated in your agreement with them. For instance, if you negotiated a 15 percent royalty rate, then you’ll be paid 15 percent of $0.005 (using that number as an average), or $0.00075 per stream.
If you’re not with a label, the money will be collected by SoundExchange or an aggregator like TuneCore, Ditto Music, or CD Baby if they distributed your songs to the online streaming services.
Average Streaming Type Royalty Paid
Interactive On-demand – $0.005 to $0.009 (average depending upon the tier)
Commercial Broadcasters – $0.0022
Noninteractive – $0.0022 (paid tier) $0.0017 (free tier)
On top of the royalty paid to the artist and label, there’s also a publishing royalty that varies yet again from the above rates, which we’ll cover in the next section.
You can see why artists, bands, musicians and even record labels can be confused about how much they’re receiving from streaming. As The Temptations once sang, it’s a “ball of confusion.”
This is just the tip of the iceberg when it comes to revenue splits and royalty payments from streaming music. It also doesn’t cover the publishing side of streaming, which is another issue entirely. That said, in the coming weeks I’ll go beyond the basics to explain more about how each streaming music royalty actually works.
You can read more from Music 4.1: A Survival Guide To Making Music In The Internet Age and my other books on the excerpt section of bobbyowsinski.com.
Spotify recently announced that it was getting into the original content business by launching 12 new shows, and guess what? They’ll all be on video. According to the company, the video shows will be “centered around three main themes – music performances, music profiles and music culture,” and the episodes will be up to fifteen minutes long.
The foray into original video programming comes on the heels of the service successfully showcasing clips from Comedy Central, ESPN and MTV within the app over the last year.
One of the shows is Landmark, which is a documentary series centered around important moments in music history. A second, Rush Hour, forces two artists to quickly collaborate on a setlist of songs that they must then perform live. Yet another features veteran actor Tim Robbins who will produce a mocumentary about a competition that becomes the next dance music craze. Also planned are a number of animated and comedic series “tailored to the service’s young audience.”
Spotify didn’t provide a launch date, but indicated that late summer or fall is targeted. The company did say that the shows will be available to all users on both paid and free tiers, and initially available in the United States, United Kingdom, Germany and Sweden.
It’s pretty interesting that Spotify should jump into original programing, and especially video programming as well. Getting away from its streaming music core may be a stretch, but on the other hand, an audio-only show might be construed as trying to follow Apple Music’s Beats 1. Still, 12 shows is an ambitious agenda that requires not only a fair amount of corporate will, but the funds to match as well.
A year from now we may look back upon this decision and say how brilliant the execs at Spotify were, or we may say that they got away from the company’s core business. Only time will tell.
User generated videos must be a really big business because another huge online player just jumped into the arena with YouTube and Facebook. Yesterday Amazon announced the launch of its new video posting service, called Amazon Video Direct, in the United States, United Kingdom, Germany, Austria and Japan.
The launch partners include Conde Nast Entertainment, HowStuffWorks, Samuel Goldwyn Films, The Guardian, Mashable, Mattel, StyleHaul, Kin Community, Jash, Business Insider, Machinima, TYT Network, Baby Einstein, CJ Entertainment America, Xive TV, Synergetic Distribution, Kino Nation, Journeyman Pictures, and Pro Guitar Lessons, but curiously, no record labels.
Amazon has also announced how it will pay everyone, as well as how they will take down videos if copyright infringement occurs.
Amazon Video Direct (AVD) gives partners four options when uploading their content:
According to Variety, the Prime Video option pays video owners a 15 cents per-hour royalty fee in the US and 6 cents per-hour in other territories, but that appears to cap at $75,000 per year. On top of that, Amazon will also pay partners a 50% royalty of the retail price from one-off purchases and rentals. As with YouTube, Amazon will pay the partner 55% from any ad revenue received.
Amazon will also distribute $1 million a month to the makers of the 100 most popular programs viewed by Prime members each month.
Amazon Video Direct could be a game changer for content creators in that it’s now possible to get paid a reasonable amount for your content. That said, even though Amazon Prime has tens of million of subscribers (the exact number is unknown but may reach as high as 90 million), it’s still hard to compete with free, which is what YouTube still provides.
If you’re trying to boost your fan base or engagement online, then you’re probably doing at least a little social media marketing whether you like it or not. The problem is that the best practices do change over time as social media and user trends evolve, so in order to get the most out of the time you spend promoting yourself or your music, that means you have to keep up with the latest trends as well.
Here are what’s currently considered to be the45 best social media marketing practices when putting your online strategy together.
1. Use demographics to drive quality traffic – It doesn’t do you much good if most of your social and website traffic comes from people that aren’t particularly interested in what you have to offer. That’s why it’s important that you know your demographic well so you can aim your marketing directly at them. How do you do that? By taking a hard look at your analytics. Even the free analytics that you can get from just about every social network, as well as free services like Google Analytics and Statcounter can be very helpful in this regard. If you know your audience, you can better cater to them.
2. Find out what type of content your audience wants – Over time you get a feel for what your audience likes by looking back at your posting history. Is your audience visual? Do they respond more to pictures or videos? Do they like to read and prefer blog posts? Do they like photos with captions? Whatever it is they like, make sure you give them enough of it, although like anything else, too much of a good thing won’t work either. Try to discover what the proper balance is between different types of content.
3. Remember your brand – If you’re marketing well then you’re creating brand awareness in everything you do, especially online. Be sure that your posts stay in line with your brand philosophy and visual qualities. Don’t know what your brand is? Check out my Brand Your Music Crash Course.
4. Respond to positive and negative feedback – The negative comments are just as important as the positive ones. You can learn what your audience and fan base doesn’t like, and you can also learn what you’re doing wrong in engaging them. Don’t get drawn into an online flame war however, as that can be hugely counterproductive in the end. If you can’t resolve the issue in a comment or two, it’s time to let it go.
The list of best social media marketing practices can easily be twice as long as the above, but following these first 4 takes you along way towards your primary goal, which is growing your fan base and keeping them happy.
While Apple Music has garnered 16 million paid subscribers rather quickly since its launch last year, the service hasn’t been without criticism, especially about its ease of use. Despite being a huge company, Apple does listen to its customers though, and as a result, it’s been reported that Apple Music is about to receive a needed facelift.
The reboot is said to be set for the company’s Worldwide Developers Conference in June, and is said to include an easier user interface and more radio stations.
In a nod to Spotify’s recent success, Apple is also rolling out a “student plan” paid tier at $4.99 per month instead of the normal $9.99. Many think that the recent growth spurt of Spotify is mainly due to the introduction of a student plan, and Apple aims to find out if it can indeed emulate the same results with something similar.
That said, many analysts believe that Apple’s 16 million subscribers, while nothing to sneeze at, it’s still far lower than it should be, considering that the company has around 850 million credit cards on file thanks to iTunes and the App Store.
Many insiders feel that this can be traced back to the interesting chain of command inside of Apple Music, where a number of high ranking executives must sign off on nearly everything, making development much slower than it should be. Apple content head Robert Kondrk, Nine Inch Nails frontman Trent Reznor, design chief Jony Ive, along with former Beats founder Jimmy Iovine and Eddy Cue, the senior vice president in charge of Internet services, all are said to have their hands in the final decision making.
This has lead to somewhat of a brain drain within Apple, as many former Beats employees have left in frustration, although it’s still too early in the game to know if any of that is really a difference maker.
One thing is for sure, an updated, face-lifted Apple Music along with a new ad campaign is still a force to be reckoned with. Watch out Spotify.
I’m a big proponent of virtual reality, especially when the audio is done well, and many have predicted that the technology will eventually be a boon to concerts. We’re going to see soon enough as virtual reality concerts will actually begin to roll out this summer.
NextVR, which has been a leader in VR broadcasting of sporting events, has teamed up with LiveNation to broadcast a series of concerts, although no artists have been named as of yet. There will be a limited number of VR music events this summer, with a full schedule planned for 2017.
The NextVR broadcast will be available via Samsung’s Gear VR using the Oculus Home app, although they will also most likely be available on other VR platforms as well.
LiveNation/NextVR aren’t the only companies jumping into the concert broadcast game. iHeartRadio and Universal Music Group previously announced that they would also broadcast VR concerts this year.
Virtual reality concerts hold great promise because it gives the viewer a feeling of actually being there and watching from the best seat in the house, which many feel may eventually eclipse attending an event. Paying $200 for a nosebleed seat might not be a suitable option when you can get a better view from your home while still feeling immersed in the event.
The same can be said for sporting events as well, as NextVR recently signed a 5 year deal with Fox Sports, although there may be more technical challenges in this niche than with music as the best seat in the house may not apply, although it’s probably too soon to really tell. VR users will ultimately decide.
One thing’s for sure, VR is taking beginning to take off, even though it still hasn’t hit the general public yet, as more and more companies are jockeying for position.
If you were to listen to a week of nothing but radio, you’d think that all we listen to in the U.S. is pop and country music. If you were to read a week’s worth of the music news, you might think that dance/electronic/EDM was close to the top of the heap in what we enjoy. The problem with those assumptions is that they’re wrong, at least according to the 2015 Nielsen Year End Music Report that, among other things, looked at each music genre and discovered which we liked the best last year.
When taking into account the total amount of music consumption, which includes physical and downloaded albums, downloaded tracks, and streams, here’s the order of music genre preference that the study determined:
Rock – 24.5%
R&B/Hip-Hop – 18.2%
Pop – 15.7%
Country – 8.5%
Latin – 4.5%
Dance/EDM – 3.4%
Christian – 2.8%
Holiday/Seasonal – 1.7%
Classical – 1.3%
Childrens – 1.1%
When it came to number of albums consumed, Rock was far ahead at 32.6%, followed byR&B/Hip-Hop at 15.1% and Pop at 22.6%.
For streams, R&B/Hip-Hop came out on top at 21.1%. Rock at 17.5%. and Pop at 14.5%.
Rock might not be the hippest music genre and it’s frequently portrayed in the press as spiraling downward in popularity and relevancy, but it still continues to out-perform other music genres, for better or worse.
Since 2008, Record Store Day every April has been a huge hit. In fact, many in the music industry feel that it’s been a big reason for vinyl’s resurgence, calling attention to a side of the business that had been essential dead and buried and has now returned to a level of surprising growth. Even though the latest Record Store Day a couple of weeks ago was proclaimed the biggest ever, there’s evidence that we might’ve seen its peak.
One of the best things about RSD was that the small Mom & Pop record store was celebrated, but this time many of these stores refused to join in the festivities because they now feel it’s been totally co-opted by the major labels.
The reason is that in order for a store to officially participate in the event, they are forced to purchase a slew of “official” new vinyl releases, which they’re not able to return if unsold. This has imparted an undue financial burden upon already cash-strapped stores which many are now unwilling to take.
While many vinyl fans do look for new or re-released titles, most record stores make their living on used or early edition releases, and find that new vinyl just doesn’t sell in the quantities that the labels require them to take for the event (the big indies are complicit here too).
Small indie labels and artists are also upset too, in that the major labels tie up all the vinyl pressing plants for months prior to RSD, so they’re not able to have new vinyl ready for the event.
So like with so many other movements that start off with the best intentions, Record Store Day has been co-opted by big business, and as a result will soon cease to be the event that it once was. Let’s hope that the indie record stores find other ways to maintain their visibility so they can still stay in business.