Monthly Archives: June 2016
Monthly Archives: June 2016
Today begins a new series on the Music 3.0 blog. One day every week I’ll provide a post with links to a number of interesting music business-related stories. Some will be about social media, some about music distribution, some about royalties, and some about record labels, but all will be connected to the industry in some way (or at least you can take the information and use it for the music business). Let’s get started.
Does YouTube change your listening habits? The article thinks it does. In fact, it states that many listeners don’t even enjoy what they’re listening to and are just dialing up sounds for a particular situation. It says that we watch groups of videos clustered into categories, but I’m not so sure why that should surprise anyone.
Spotify lost more money in 2015. It’s making a bunch, but it’s paying out more than it’s taking in. How much longer can its investors stay in the game? Still, it’s the streaming service to beat as it has more paying subscribers than any other at the moment.
Spotify’s playlists are responsible for a billion streams a week. Speaking of Spotify, their playlists are killing it as they’re now responsible for about 4% of all streams on the service. Not only that, they’re paying out around $1 million per day in royalties!
7 digital advertising trends. This is an Adweek post, so it’s written mostly for brands instead of bands, but it still has some useful information. Like you see elsewhere, it predicts that mobile is the way to go and chat is the future, but it also looks at ad blocking and annoying online ads.
We’re spending less time on social media. Especially on Twitter and Instagram. People are spending less time on Facebook too, but still spend over 45 minutes on the service every day.
Facebook is preferred for video viewing. It didn’t take long for the service to catch up to and surpass YouTube, but it’s now the platform of choice for viewing. Only millennials prefer YouTube now, according to this survey.
A key part of digital copyright licensing law is being streamlined. Right now there are multiple lawsuits against Spotify and other services by songwriters because they weren’t notified that their songs were available on the service, which is required by law. The problem is, it’s not really an easy chore for a service as it’s set up right now, and it’s costly, so a new and improved way of doing it online can make a big difference going forward.
Rights that no one talks about. There’s a lot of money being made when an artist’s songs are publicly performed, but they’re not always discussed outside of an attorney’s office. These “neighboring rights” are important though, and are finally getting more attention.
Classic artists are more popular than ever. Even dead artists like Tupac, Prince, Michael Jackson and Elvis are making more money than ever, and superstar artists over 60 like Paul Simon and Bob Dylan are even having hit albums again. What does that mean for the health of the music industry?
Metal still sells. Attendance is still strong for metal concerts, and the earnings for superstars and newcomers alike are surprising.
Each of these posts contain some useful and interesting information that I hope you’ll enjoy. Let me know if you like this format, and I’ll do more in the future.
My guest this week on my Inner Circle Podcast is sound designer and composer Diego Stocco.
Diego’s not only worked on movies like Takers and Sherlock Holmes, television shows like The Tudors and Moonlight. and video games like Assassin’s Creed, but he’s also one of the people behind the great sounds on the Korg Z1, and Spectrasonics Atmosphere, Omnisphere and Trillian.
This is a guy who hears music in ordinary objects around us, and as a result he’s used both a tree and a burning piano in his pieces, as well as created his own instruments.
In the intro I’ll talk about the DMCA and why both label and music artists want it changed, and the fact that another iconic New York City recording studio is about to bite the dust.
You can also hear both Diego and myself on the AudioNowcast podcast, now celebrating it’s 10th year.
Now that Brexit has unleashed its shock and horror on the financial markets worldwide, other much smaller sectors are wondering how it will affect them as well, and the music business is no exception.
The traditional music business (meaning record labels) is run by a crafty street-wise bunch that know how to roll with the punches, and that’s why I think they’ll find a way to come of this with a net gain when all is said and done.
Most of the analysis of the situation that I’ve read so far centers on the fact that doing business in both the UK and Europe will be more expensive because of the escalated operating costs associated with keeping offices either in London or in Europe. Travel, labor, and finances will all take a hit as costs rise because of the increased paperwork involved.
It’s a fair premise that will likely play out that way, but remember that the industry has a talent for turning lemons into lemonade (although usually that doesn’t apply to the artists).
For example, back in the ‘60s, all record producers were just staff personnel of the record label, and paid as such. After Sir George Martin had huge success after huge success with The Beatles that netted EMI hundreds of millions of dollars in profit, he didn’t get as much as a Christmas bonus, let alone a raise, in appreciation for his efforts. As a result, Sir George bolted and became what amounted to the first independent record producer, demanding his own royalty on the records that he produced in the process. Of course, an exodus of successful record producers followed, and it looked like the major labels had a huge new cost on their hands.
The lemonade came when the labels hit on the idea of passing off this new cost to the artist, and the producer royalty has been the responsibility of the artists ever since. The record labels came out ahead because there were now fewer employees on the payroll, and this new very expensive cost wasn’t theirs to worry about.
Another example came in the late 80s when recording budgets where skyrocketing. At the time, the labels paid all the invoices resulting from the recording process no matter how large or small. This resulted in an accounting nightmare, with vendors constantly upset with slow payments, and everyone in the supply chain from the artist on down being constantly hassled about it. The budgets were higher than ever, resulting in more invoices than ever, requiring more accounting manpower than ever to keep up. [Read more on Forbes…]
Many artists and bands have been switching their music videos from YouTube to Facebook lately because of the increase in viewership, but it turns out the viewership numbers might be a big mirage. Facebook videos are said to be getting close to 8 billion views per day on its platform, but that number is in dispute.
First of all, the way a view is measured is very different between both platforms. On YouTube, a viewer has to watch for 31 seconds to be registered as a view. Facebook is way different in that a view is calculated after 3 seconds, but an even bigger factor is that the audio may be muted during the view time and will still be counted as a view.
It turns out that 85% of Facebook video views happen with the sound off, according to multiple publishers. Of course, this a major problem for an artist that’s using a video as the means to get their music heard. Advertisers can easily adapt by making sure that there’s text that you can read, and that the point comes across visually. Obviously, that’s not possible when it comes to music.
And, of course, there’s the payment factor, or actually, the non-payment factor is a better way to put it. You may not like what you get paid from YouTube, but at least you have the possibility to get paid something. Facebook is still working video monetization out, although it looks like that’s coming soon.
With that in mind, most artists are probably thinking, “Are Facebook videos even worth the effort?” given that the chances of people listening to a song are pretty minimal. If you’re looking to expand your audience by promoting a video or hoping to go viral, Facebook might not be the best place, given the latest figures. If you have a hungry audience already on Facebook that you want to reach, of course there’s no substitute. That said, don’t give up on YouTube just yet. You may not be getting a fair shake on the platform, but it’s still worth being there if you want your music heard.
With Taylor Swift and U2 the latest superstars to sign a petition to congress complaining about the 1998 Digital Millennium Copyright Act (DMCA), the movement appears to be gaining traction. Chances are this one ends up like others before it though, with lots of strong talking points presented, Congressman shaking their heads yes, but not much accomplished in the end. That’s because the movement suffers from a critical problem – it doesn’t have a politically savvy leader.
At issue is the fact that so much music is available for free on YouTube thanks to user uploads, and the service can’t be held liable thanks to the “safe harbor” guidelines of the DMCA. Although YouTube provides a means of finding and either monetizing or taking down the offending material, it’s a veritable whack-a-mole problem for copyright owners to keep up, as more illegal uploads are posted than are taken down. Plus, finding the violators is on the shoulders of the copyright owner and not the service.
That’s why both artists and record labels want the DMCA adjusted to put more responsibility on YouTube for policing illegal uploads, and the likes of Lady Gaga, Sir Paul McCartney, Ryan Adams, Cher, Sir Elton John, Jack White, Fall Out Boy, Yoko Ono Lennon, Bette Midler, Queens Of the Stone Age,Pink, Maroon 5, Mark Ronson, Pusha-T, Sade, Gwen Stefani, Sting, Beck, Ne-Yo and Trent Reznor, along with the previously mentioned Taylor Swift and U2, have signed on.
The big problem is that there’s no one directly speaking for the artists best interests, and no organization in the United States dedicated to lobbying the powers-that-be strictly on their behalf (although they exist in both Europe and the UK). It’s time for an artist association with a strong leader to truly represent the needs of today’s recording artist – a Music Artists Coalition (MAC has a nice ring to it), if you will.
The idea (but not the name) comes from a music insider who knows a thing or two about industry associations and their power. Rupert Perry, former President of EMI Europe and former chairman of both the UK’s British Phonographic Industries and the International Federation of Phonographic Industries, observed over lunch recently, “The thing that’s holding this back is that artists don’t speak with a single voice. They need somebody who’s as capable of putting on a suit and talking to a Congressman as he is speaking to a label or publishing executive.” The idea makes perfect sense, but that person hasn’t been found and organization hasn’t been created yet, and the cause can’t effectively be furthered until that happens. [Read more on Forbes…]
Regardless of the era, the songwriter and publisher have made money, and continue to make money in three primary ways:
1. Mechanical royalties are paid whenever a song is digitally downloaded, a song is streamed from an on-demand service, or a physical CD or vinyl record is sold.
2. A performance royalty is paid whenever a song is played on radio, on television, or streamed over the Internet.
3. A synchronization fee is paid when music is used against picture.
This payment mechanism hasn’t really changed all that much in Music 4.1 from previous music eras, although it’s managed to become even more complicated than it was. What has changed is that during this period in which music sales are far less than half of what they were at their peak, publishing is the one area of the music industry that has held its own. How does that happen when sales, and therefore mechanical royalties, are down, you ask?
While it’s true that mechanical royalties are not nearly what they used to be now that CD sales are so low and downloads have decreased, they’re offset by the tremendous increase in performance royalties because music is now played on so many more broadcasts than before. The 500-channel cable and satellite television universe, along with satellite and Internet radio, provides more opportunities for music to be played, and as a result, more performance royalties are generated.
That said, music publishing income is derived from more sources than you think, and while some of it doesn’t appear significant by itself, it can all add up to a nice royalty check. Here’s an excerpt of a chart from the latest edition of my Music 4.1 book that shows a simple breakdown of when publishing royalties occur, how it’s collected, and the royalty rate.
As you can see, many of the royalties and fees are variable. Synchronization fees consist of an upfront fee which is usually negotiated by the publisher, and a performance royalty whenever the piece containing the music airs on television.
With a movie, the upfront fee is the only one that’s paid for any showings in the theater, but a performance royalty is paid whenever the movie is played on television afterwards.
Likewise, both printed sheet music and digital use of sheet music or lyrics are subject to negotiation. Ringtones are still a source of income not to be overlooked even though the market for them is far below what it was during their peak.
Publishing royalties come from more places than you think, but the rates are different over a wide range of scenarios, which makes it a very complicated subject.
Twitter has made an investment in SoundCloud for a reported $70 million and if you’ve been following the story between the companies, you have to ask yourself “Why now?”
About two years ago Twitter almost acquired SoundCloud before walking away at the last minute, and an acquisition certainly would have made a lot more sense at the time, even though it might not have changed the futures of either company.
Back then Twitter wanted to capitalize on its high profile music users like Taylor Swift, Justin Bieber and Katy Perry, who had massive followings on the service (and still do) but weren’t able to take advantage by directly serving up their music to them. SoundCloud was struggling with both monetization issues (which still exist) and licensing problems, and theoretically could have provided the infrastructure for Twitter to transition to at least a partial music service.
Many think that Twitter was better off for walking away from the deal and keeping the focus on its core business, which in theory worked fine except for the fact that the company’s user base has plateaued in the meantime even with a focused agenda not diluted with delivering music.
SoundCloud has actually come a long way in that it now has signed licenses with the three major record labels, and has since worked hard to roll out its $9.99 monthly subscription service called SoundCloud Go. Still, it’s a cash-starved company and needs another round of funding to stay alive, so having Twitter as an investor in this round is most welcome.
That said, the benefit for Twitter isn’t as apparent. It’s not getting any of the technical goodies that come with an acquisition, and it’s buying a piece of a company that essentially hasn’t grown in valuation since its last go around.
In fact, out of all the music streaming companies currently in the space, SoundCloud may be the most baffling. It’s long been a boon to artists, bands and songwriters as a tool for free music distribution, and at that it may very well be #1 in the space. That market isn’t large enough to add enough subscribers to make the platform go however, and may be tapped out already. Attracting regular music consumers to its paid Go service may be limited to electronic music fans, since the platform is a favorite of DJs, but that genre seems to have plateaued as well. [Read more on Forbes…]
Artists, labels and music services alike continue to lament the fact that not enough free streaming subscribers are converting to the paid tier, yet the possible incentive to get those free tier customers to upgrade is being ignored by the different players along the product pipeline. Superstar albums continue to be released without the industry taking advantage of the considerable leverage that they bring with fans, which amounts to a missed opportunity to improve the health of the music industry.
What would be the perfect reason to upgrade? How about the ability to access the latest album by Radiohead, Drake, Kanye, Beyonce, Adele, Taylor Swift, or other superstar artist?
By making that new hot album available only on the streaming service’s paid tier, there’s a reason for the consumer to buy in (as we’ve seen with the upsurge of subscribers caused by latest albums from Beyonce and Kanye on Tidal). Although it would be better if a major release was available on every streaming platform for anywhere from two to six weeks before it migrates to the free tier, even an exclusive on a single on-demand platform like Spotify would work, as long as it was only available on the paid tier. Paid-only services like Apple Music could provide the same incentive by not having the latest release available during its free trail period, for instance.
That way, the artist, label, songwriters and publishers all get paid at the highest rate (and their complaints about the low payouts from streaming would diminish as a result), more consumers are turned into paying monthly subscribers, and the industry grows at a much faster pace.
Of course many of the current megastar release strategies are strewn with apprehension that equates to inaction. We may be in the last throws of the physical music business, but that segment still maintains a high-ticket and high-margin. Everyone wants that last surge of profit and no one wants to leave money on the table. But Spotify, who reportedly refused to window the latest Radiohead album on its premium tier, may be just as much to blame as well. [Read more on Forbes…]
This week I’m lucky to have my compadre from the AudioNowcast on my Inner Circle Podcast, songwriter Martin Page.
Martin’s had much success over the years writing with everyone from Earth, Wind and Fire, to Bernie Taupin, to Hal David, to Robbie Robertson, to Robbie Williams, and he’s also co-written a couple of world-wide #1 hits – “We Built This City” for Jefferson Starship and “These Dreams” for Heart.
Martin will talk about what he’s learned working with some of the world’s greatest writers, and tell a few very cool inside stories as well.
In the intro I’ll look at some numbers about the typical indie label that I found totally unexpected, as well as a quick overview at what I saw at the High End Audio Show in Newport Beach, CA.