Monthly Archives: July 2016
Monthly Archives: July 2016
SoundCloud is seeking a buyer, and that could make it much more difficult for indie music artists across all genres to have their music heard. The streaming music service is reportedly seeking a sale in the $1 billion range in a deal that could alter that part of the music landscape for a long time.
According to Bloomberg, SoundCloud execs are currently mulling over a strategy that would result in the sale of the company. No potential buyer has been identified however, and one may not be on the horizon at the valuation the company appears to be asking. Either way, it’s beginning to look as if the streaming service’s days are numbered, at least in the form that we know it today.
SoundCloud has sometimes been compared to an audio version of YouTube in that it’s basically a free service for user generated content, most of which is posted by indie music artists. It’s been good for that niche in that it’s easier and cheaper to post a music file to SoundCloud than to host on the artist’s private website or social media network. That said, the company was never going to earn enough revenue just from usage fees by artists, and it’s really not much of a draw for music fans when compared to any of the sites like Apple Music or Spotify that feature commercial music from label-signed artists. It may have 175 million users a month, but most are not high-volume listeners like on the larger services.
But what really hurt SoundCloud’s prospects for turning a profit is the fact that it was forced to sign expensive licensing deals with the major networks in order to avoid pending copyright issues, and to clear the way for the service to offer a subscription tier in an effort to finally increase revenue. While that sounds good on paper, the biggest distinguishing feature of SoundCloud is its indie artists, and that hasn’t proved to be enough of a draw when its free, so it’s difficult to imagine how it could work for a monthly fee. [Read more on Forbes…]
Here’s the music industry news roundup from the last week. There’s much more diverse news than previous weeks, but streaming continues to dominate the conversation.
Taylor Swift is the highest earning celebrity. The thing is, she didn’t get that way from selling music. She learned early that it’s the brand that sells.
Elizabeth Warren has it in for music monopolies. She has her eye keenly on Apple, Google and Amazon. This is not the person to have angry with you, regardless how large the enterprise.
Spotify’s trying some hosted radio shows. It seems like Apple Music’s Beats 1 is making an impact, so Spotify’s trying something similar, but without the big name DJs.
Spotify looks to go public this year. In related news, 5 sources have stated that the company will file an IPO soon. I bet the investors are happy at the prospect of getting some money back, but what will the market say?
Sirius XM subscribers pass 30 million. Everyone thought that the satellite business was dying, but that’s not the case at all. You know what? It’s all about the programming (something that terrestrial radio should learn).
Pandora is teetering. The major shareholders aren’t happy and they’ve brought in a high-powered consultant to explore a sale.
Artists not seeing much from secondary ticketing. Not much of the money made by Stubhub, Viagogo or Ticketmaster seems to be making its way back into the pocketbooks of the artists. Isn’t this a bigger issue than YouTube royalty rates?
Selena Gomez social media posts are worth $550,000 a piece. Astonishing but apparently true, Ms Gomez ranks #1 with sponsors who are willing to pay to be included in her posts.
Nielsen’s mid-year charts. Drake, Adele, Rhianna dominate. No surprises here except for Bowie’s Blackstar being the #1 vinyl album so far (but with only 57,000 copies sold). Sales are still falling, with Adele’s 25 leading the pack with only 1.4 million in sales.
That’s the News Roundup of what went on in the music industry last week. Let’s see what next week brings.
Here’s a very interesting video from The Economist that looks at the new dynamics of the record business and whether an artist really needs a record label these days. It’s a veiled advert for Kobalt, but frankly, that company is way ahead of the game when it comes to not only collecting artist royalties, but reporting them as well.
I had a personal demonstration from founder Willard Ahdritz a few years ago and it was indeed impressive in that an artist could see in real time how much he was making. This, of course, beats having to wait until the end of the quarter or even the end of the year to see a statement to see how much you’ve earned.
As the video correctly points out, Kobalt is perfect for an established artist, but the company has yet to break a new artist, and this is where record labels traditionally excel. Major labels are also able to take a successful artist and boost her to superstar status because of the infrastructure they have in place, something that can’t be easily replicated.
So there is a place for the record label in today’s Music 4.0 world, but there’s also a place for a rights management firm like Kobalt. Check out the video as well as this interesting article to learn a lot more.
We all love vinyl and if you’re an artist you’d like to release your next album on it. The problem is the long 6 month+ wait times at the pressing plants and the big orders that you have to place just to get in line.
Qrates.com offers vinyl orders for as few as 100 copies, has a unique online ordering system, and provides built-in crowdfunding for the product as well all on one site. Chief Marketing Officer Taishi Fukuyama joined me on this week’s podcast to discuss the Qrates business model, as well as a little bit about the music scene in Japan at the moment.
In the intro I’ll discuss Deezer’s launch in the United States (finally) as well as Fairlight leaving the audio business (now that’s a piece of audio and studio history).
YouTube is capable of making people stars, and while that happens to exceptional content creators, most of them are not music artists. One of the reasons that artists don’t fall into the YouTube star category is that their general mindset is still set in the past. Here are the 4 places were artists go wrong on YouTube, which leads to far less success on the platform than they’re capable of.
Artists and bands have a love/hate relationship with YouTube but the fact of the matter is that it’s still one of the most effective ways of getting your music out to both fans and non-fans alike, and growing an audience. That said, the techniques that worked in the past are no longer valid. Luckily, there are some very good models to look at for guidance, but few of them are from the music business.
After a year run up, the streaming service Deezer has finally launched in the United States. Spotify’s major competitor in Europe is now in the world’s largest market, but the question is, does it have enough to differentiate itself from the rest of the current streaming contenders in the space? The Paris-based service launched in 2007 and is already live in 180 countries and has 3 million paid subscribers.
Deezer is available on iOS, Android and Windows phone apps and features a catalog of 40 million songs and 40,000 podcasts, but most significant is that it won’t have a free, ad-supported tier. The service is instead opting for a free 30 day trial period with no ads and no usage limitations. That should make artists, their managers and their labels happy, but it may not be much of an incentive to get people to jump from an existing service of choice.
The platform allows users to create multiple playlists, import MP3s of songs they already own so all their music can be found in one place, and even listen while offline. A feature called Flow also provides song recommendations based upon the user’s listening experience and existing library, and something called Deezer Sessions features live music from festivals and other venues. There are also curated playlists and recommendations, and lyrics are available for the songs you listen to.
Deezer is rolling out its U.S. service without a top Stateside executive though, as former CEO Tyler Goldman is apparently no longer with the company, according to TechCrunch. You can hear Goldman discuss Deezer on my Inner Circle podcast from September 13, 2015.
The company postponed its IPO last year after receiving only lukewarm interest, but raised an additional round of funding worth $109 million this year that made the U.S. launch possible. Deezer has been active in the territory for a while though, as it had previously acquired Muve Music from AT&T as well as the podcast service Stitcher, and also partnered with Sonos last year to support its $19.95 per month high-resolution tier. [Read more on Forbes...]
Here’s some interesting music business news from the last week. There’s a lot going on in the streaming world, but as usual, that’s not all.
Warner Music had it’s best quarter in a long time. Streaming agrees with this major label, and it’s up around 14% over the same time last year. Guest what? It’s all due to streaming.
“Happy Birthday” is copyright free, but what about “We Shall Overcome” and “This Land Is Your Land?” Both are considered national treasures and thought to be in the public domain, but are instead controlled by the daughter of Woody Guthrie. New lawsuits attempt to change that, but what does it mean for copyright law?
Many superstars are going it alone without a manager. Taylor Swift, Bruno Mars, Beyonce and Ariana Grande are using a close tight nit team to guide their careers instead of traditional management companies. Prince was notorious for doing the same thing, and Mick Jagger has essentially guided the Rolling Stones since early in their career. Works for some, not so much for others as Queen and Billy Joel had a rough time after trying the strategy.
Drake’s Views chart dominance is mainly due to streaming. It seems that sales aren’t what they used to be, but I’ve been making that point for a long time.
Spotify is trying to program ads based on your musical tastes. The company is now asking advertisers to submit ads that fit specific profiles to better target listeners on its free ad-supported tier. Creepy or smart?
Song pluggers now target playlists. Song “pluggers” or promoters used to target just radio in order to raise the profile of a song and make it a hit, now they target various playlists instead.
Apple has fixed a big problem with Apple Music. It has moved to fingerprinting technology to help better match your personal music collection to its online catalog. User have been frustrated with inaccurate matches, but this promises to kill the bug.
Downloads will be dead by 2020. That’s what this article predicts as it looks at the downward spiral down of downloadable music consumption. Not analysts believe it will happen this quickly, by the way.
Has streaming broken the UK singles charts? A better question might be, what dos the singles chart now measure, because it certainly isn’t sales.
That’s the News Roundup of what went on in the music industry last week. Let’s see what next week brings.
Who says Apple’s music executives aren’t smart? In what may end up being a brilliant strategic move, the company discretely made a proposal to the governing Copyright Royalty Board to increase the song publishing royalty rate to 9.1 cents per 100 interactive streams, a significant increase over what is currently paid, according to the NY Times.
On the surface, this is not only an greater payday for songwriters and music publishers, but also a vast simplification over the current complex royalty calculation. Streaming services now pay publishers from 10.5 to 12% of overall revenue, which is determined via a strikingly large number of factors that changes with the device used, the country the user resides in, if the service is bundled, and the type of subscription, to mention just a few. The music royalty collection company Audiam reports that the average publishing royalty is now around 5 cents per 100 plays, so Apple’s proposal of 9.1 cents represents a windfall for a part of the industry that has suffered during the run up of streaming popularity.
There’s also a psychological impact that goes along with that figure however. Currently, the mechanical royalty rate for every song on a CD or vinyl record, or a download, is also set at 9.1 cents. A streaming rate set similarly will not only bring it in line with those standards, but put the ease of calculation back in the hands of the songwriter and publisher, who must now depend upon the streaming company to calculate the monies owed.
The Back-Door Strategy
While simplicity may seem to be the overriding factor for the proposal, there’s something much more strategic behind Apple’s thinking. First of all, an increase in publishing royalty payments would severely stress stand-alone streaming companies who’s only product is music streaming like Deezer and Tidal, but most especially Spotify. That company still hasn’t turned the corner to profitability, and having to pay roughly 80% more in publishing royalties might keep it that way, which may put the company in a more serious bind with its already itchy investors.
Not only that, it would put a severe crimp on any interactive streaming service (as opposed to non-interactive like Pandora) that currently features a free ad-supported tier, since the royalty rate per 100 streams would be the same regardless of if the subscriber makes a monthly payment or not. Such an increase in expenditures might put an end to the free tier as we know it (which in the end, might not be such a great thing for the industry – a topic for another day). [Read more on Forbes…]
Bobby’s worked with a variety of great artists ranging from Michael Jackson to Carole King to world music superstar Johnny Clegg to the legendary Harry Belafonte. He’s also a composer with his own music library, and his credits include shows like Oprah Winfrey, The View, Survivor, and ABC’s 20/20 News, and commercials for Coca Cola, Ford Motor Co. and American Airlines. Along the way, Bobby’s also been nominated for a daytime Emmy award. We had a great chat that you’ll enjoy.
In the intro I’ll discuss Apple’s interesting proposal for a new streaming royalty rate for songwriters and publishers, and the new breed of big fast flash drives now available.
In another blow to the mom and pop music store, Warner Music has cut off more than 100 accounts that do less than $10,000 in business per year with the company, according to a post on Pitchfork. That means that in order to have a direct account with Warners to get the best pricing, a store must now do a minimum of $10k per year.
Small stores that can’t hit that limit will still be able to sell Warner products, but it will cost them more, as they’ll now have to purchase from a third party instead. This extra cost will inevitably be passed on to the customer.
The music business, especially the major labels, have always undervalued small retailers, favoring large chains back when they ruled, to the megastores of Walmart and Target today. That said, the lifeblood of the industry has always been the small local retailer, where many artists get their starts with their self-made products.
Today the local record retailer is mostly in the vinyl business, as CDs have fallen deeply out of favor. That said, not all of the accounts shuttered by Warners sold vinyl, and according to the company, about a third hadn’t ordered any in about a year. The company also said that not all were record stores and that some, in fact, were museum gift shops.
Many small record stores who made the cut are nonetheless shaken, and fear that the minimum sales level will continue to rise. If that’s the case, it would put many stores out of business, an ironic self-fulfilling prophecy where the industry complains about not enough sales, but willing buyers can’t find a place to browse product and make the purchase. The same thing happened with the CD, which could have had a much more gradual decline than it’s experiencing had there been more stores with available product. The same might happen again in the vinyl world.