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Monthly Archives: July 2016

July 15, 2016

Maybe YouTube Isn’t Music’s Boogie Man After All

YouTube logoArtists, bands and record labels have issued an all-out assault on YouTube this year over a variety of issues that mostly stem from what they consider to be low royalty payouts. The problem is, while it’s likely that many of the presumptions leading to the attacks have a basis in reality, their conclusions may be premature.

In the music industry’s eyes, YouTube is a devil that it’s forced to deal with. The service is widely used to market it’s product while throwing off enough revenue that it can’t be easily dismissed, yet YouTube is in a position of strength where the labels can’t easily use their licensing leverage to get their way as they could with other streaming service negotiations in the past. What seems to be true is that content owners are receiving a lower royalty rate for every video view than ever before. In fact, industry analyst Mark Mulligan reports that the per view rate was actually cut in half from 2014 to 2015, and is now down to around $0.001. That said, YouTube continues to pay the industry more money than ever, with almost $2 billion in payments since 2014.

While that may be true, the fact of the matter is that YouTube isn’t nearly as powerful as it once was, and indications are that its popularity for music delivery is waning. According to a recent BuzzAngle report that looked at music consumption from the beginning of the year, for the first time streaming actually outpaced music video views, with the number of streams at 114 billion and video views at around 97 billion.

What’s more, according to the GlobalWebIndex study, young people between 16 to 24 (the traditional driver for video views) are more willing to pay for streaming than older adults, despite indications that only 1 in 10 digital consumers end up paying for streaming music overall. This figure for younger Americans could actually be higher though, since pre-teens and teens don’t usually have credit cards. Many ask their parents to pay for the subscription or are part of a parent’s family streaming plan, so the complete picture here is still a question mark. When you take that into consideration, there may be more young people in that subscriber category than you might think.

Google has certainly taken notice to these numbers and is attempting to increase it’s own music subscriptions by running a sale. First of all, a free 2 month trial period for Google Play is now available that includes its YouTube Red service as well, and Red alone is being offered for just $0.99 for the first three months through the YouTube app. A company running aggressive sales campaigns is reacting to the market, and Google sees the writing on the wall. YouTube is falling out of favor with the demographic that, at least up until now, consumes it the most. [Read more on Forbes…]

(Photo: Rego Korosi via Flickr)

Music Industry News Roundup #3

Music Industry News Roundup Here’s some interesting music business news from the last week. As always, it’s surprising how some old topics keep on coming back to life, and the new topics that we never expected pop up.

Streaming music has surpassed YouTube music views. They said it would never happen, but streaming music is now more popular that YouTube for listening to music. This is extremely important because it’s really a paradigm shift happening right before our eyes, as music streaming becomes the big dog of music distribution. Watch the financial pie get bigger for everyone in the food chain!

Spotify and Apple Music are beating YouTube with blockbuster hits. Huge hits like Drake’s “One Dance,” Rihanna’s “Work,” Desiigner’s “Panda” and Zayn’s “Pillowtalk” don’t appear as much on YouTube as on the streaming services.

Spotify paid subscribers now at 37 million. That’s a good strong metric for success, except that so many of subscribers are on a discounted $0.99 per month or 3 months for $10 plans, so there’s no telling what will happen when those run out. Spotify figures they’ll lose between 1 and 1.5 million subs, but experts figure it will be higher. Still, the streaming service continues to grow at a faster rate that the competition.

Sony/ATV’s purchase of the other 50% of Michael Jackson’s catalog is in jeopardy. It appears that European regulators may block the acquisition because it will give Sony too much control of the publishing world. I guess that owning 60% of any industry would get anti-trust regulators to open their eyes.

Speaking of Sony, it’s being investigated in the U.S. for colluding against Rdio. The streaming service filed for bankruptcy last year (a lot of its assets were purchased by Pandora), but Rdio’s 3 founders are filing an anti-trust suit saying that Sony colluded with Warner Bros and Universal in licensing issues to force them into bankruptcy.

The music and tech industries are out of touch when it comes to copyright laws. That’s the conclusion from an article in the Wall Street Journal, but most industry experts think that the existing copyright laws need a serious updating since they apply more to a time before the high-tech age we live in today.

A classical composer has a similar viewpoint. It’s not only pop and rock songwriters that are suffering from existing copyright laws. Jennifer Higdon feels she’s not getting free market value for her compositions, which are played by orchestras worldwide.

Distrokid has created a new system for getting artists paid. This allows for multiple people to get paid, even with different percentages of ownership, instead of the current system of a single payment to one person that has to be divided after the fact.

Soundcloud is taking another step to becoming a full-fledged streaming service. It’s added a new radio-like feature similar to what other services have. Users have said it’s very “Pandora-like,” although I’m not so sure that’s a good thing.

That’s the News Roundup of what went on in the music industry last week. Let’s see what next week brings.

Engineer/Gear Manufacturer Steven Slate On My Latest Inner Circle Podcast

Steven SlateI’m very pleased to have engineer/gear manufacturer Steven Slate on Episode #117 of my Inner Circle Podcast.

Steven will discuss his journey from musician to engineer to manufacturing some of the coolest and most forward-thinking audio gear available today.

You’ll also hear all about what goes into to making a product like the Virtual Mic or the Raven control surface, as well as some very cool behind-the-scenes company history.

In the intro I’ll discuss how the balance of online music distribution is changing as there are now more streams than YouTube music views, and how the great little audio manufacturer Rane is being acquired by inMusic.

You can listen to it at bobbyoinnercircle.com, or via iTunesStitcher, Mixcloud or Google Play.

Best U.S. Cities For Music Fans

Top Cities For Music FansIf you’re a music fan or musician on the move, you probably want to know what the music scene is like in the various cities across the U.S. ValuePenguin set out to determine the best cities in the country for music fans by compiling 15 different data points (most of which aren’t specified) into 3 different categories. What the survey determined is fairly surprising. Here are the top 20 music cities in 2016, according to the study.

Top 20 Music Cities

Although the Nashville area at #1 isn’t much of a surprise, Honolulu at #2, Madison at #4, Albany at #6 and Pittsburgh at #9 are. More surprising is the fact that Austin, San Francisco, Portland and Asheville, all with seemingly robust music scenes, didn’t rank higher.

Here are the bottom 20 cities according to the study.

Bottom 20 Music Cities

Most of these are small populace areas, but it’s interesting that there are 4 city areas from California on the list.

Also part of the study was a look at the number of radio stations per population density providing discovery of new music. It should be noted that New York and Los Angeles didn’t appear in the top 5, despite have 428 stations between them.

Best Worst Radio Cities

Again this is very surprising since none of the top 5 cities appear in the top 40 best music cities (Champaign ranks #45).

Once again, the methodology of the study wasn’t detailed, so there may be factors that made the list lean one way or another. That said, it’s interesting to bust some myths on what we consider to be strong music towns, and be pleasantly surprised to find others that are thriving. Either way, there are more music fans in more places than you think, so never assume that a city doesn’t have it’s own scene. It may be much more robust than you would ever think.

Check out the website to find your city’s rank here.

The Album Is Dying, And Good Riddance

Album salesThe music business was once all about the single song, transitioned to the album, and looks to be transitioning back again, as album sales sink lower and lower. While the writing may be on the wall that the concept of an album may be as outmoded as a buggy whip, artists, bands and record labels continue to hang on to the idea rather than looking at the data before them. Like it or not, the album is clearly dying.

According to Billboard quoting the Nielsen Music mid-year report, album sales have fallen by 16.9% so far this year, but even more worrisome is the fact that albums by current artists aren’t catching on, falling by more than 20%. Digital album sales and CD sales continue to fall like a rock, with only vinyl sales increasing (although the growth has slowed to 11.4% with just 6.2 million sales – hardly enough to write home about in the grand scheme of things).

The fact of the matter is that in this Music 4.0 world we now live in, is there even a reason for an artist to automatically make an album without considering some other alternatives first?

Albums are expensive and time consuming to make and, for the most part, amount to a lot of wasted effort as consumers only listen to one or two songs (the singles) anyway even if they buy the album. Most people that get their music from a streaming service will end up cherry-picking the most visible songs (again, the singles), and will never experience the rest of the album cuts anyway. Even if they do, chances are they’ll only listen to each a few times at most, and in most cases, not at all. That’s a lot of wasted effort for so little in return.

The Album In The Age Of Digital
The album concept may actually have been over for a lot longer than it seems, since the sales numbers have been propped up artificially since the beginning of the digital age. Track equivalent-albums, where 10 downloads equal one album sale, never really represented a true album of 10 songs. Most of the time one or two songs that happen to be from the latest album release were downloaded over and over again, but to label bean counters, that somehow amounted to a purchase of a real album. Move ahead in time to the present and stream-equivalent albums (or SEA, where 1,500 streams equal one album sale) presents the same dilemma.

While this might have made a convenient apples sort-of to apples data point that made a balance sheet look good, the problem is that it doesn’t reflect the reality of 80 to 90% wasted resources, since most of the songs of an album are ignored both internally by the label’s marketing department, and by potential listeners. Still artists and labels insist on making a product that’s increasingly becoming irrelevant to current audiences. [Read more on Forbes…}

Music Industry News Roundup #2

Music Industry News Roundup It appears that Music 3.0 blog readers liked the News Roundup concept, so here’s the second addition, although it’s a bit abbreviated because of the July 4th holiday.

Google Play offers 4 free months. If you’re a brand new subscriber, you can get Google Play and YouTube Red bundled together for what amounts to $40 value for a free trial. There is a catch though. If you’ve ever been a subscriber, even for a free trial, you’re not eligible.

How well is YouTube Red doing? Much better than you think, according to analyst Mark Mulligan. He says it’s reaching between 5 and 10% month over month growth, and there’s an appetite for the service, especially in the U.S. That said, it’s still only reaching slightly less than 90% of the current YouTube users, so some aggressive marketing is needed.

YouTube Red is going cheap. As a result, Red is trying to drum up business with a $0.99 for 3 months. The catch? The Christmas holiday season doesn’t apply. These 3 articles show that Google/YouTube is starting to get more aggressive in the marketplace, which will affect both Spotify and Apple Music. Price war, anyone?

People still refuse to pay for music. According to a BPI Briefing study, 2/3rds of adult Internet users stream music at least once a month. The bad news? Only 1 in 10 are willing to pay for it. Most surprising? It’s people between 16 and 24 that are more likely to pay for it.

Facebook changes its Newsfeed again. Everyone but consumers seem to be up in arms about Facebook’s new Newsfeed algorithm. The new one places more emphasis on posts from family and friends first, and posts that entertain and inform second. Ads and commercials come in last.

When music becomes more popular faster. An interesting article on Poly-Graph shows how there have been more music videos that exceed a billion views recently. How much so? Out of the 17 that have passed a billion, 15 have come in the last year. Adele’s “Hello” made it in only 87 days!

Automated rights might not be the way to go. Anti-piracy firm Rightscorp is questioning its own viability after some dismal first-quarter financial results. The company is hired by record labels and publishers to collect money from copyright infringers, but the pirates are either getting better at it, or it maybe piracy just isn’t as bad as it used to be.

The Consent Decree still stands. What may be the biggest story of last week, the U.S. Department of Justice refused to change what’s known as the Consent Decree. Music publishers want to be allowed to negotiate their US digital rights outside of the blanket licences offered by ASCAP and BMI, but the DoJ ruled against it. What more, the DoJ ruled that both ASCAP and BMI must accept 100% licensing – meaning that if a licensee clears a track with one writer, it doesn’t need to bother doing so with his or her co-writers or co-publishers. Publishers and songwriters aren’t happy, to say the least.

That’s the News Roundup of what went on in the music industry last week. Let’s see what this has brings.

Engineer/Producer Tony Shepperd On My Latest Inner Circle Podcast

Tony ShepperdEngineer/producer Tony Shepperd has had an interesting journey in the music business that has taken him from Los Angeles to Nashville and back again.

Along the way he’s mixed projects for a variety of household names like Whitney Houston, Kenny Loggins, Barbra Streisand, Michael Jackson, Lionel Ritchie, and many more. Tony is also about to get into the world of audio hardware with the launch of a very cool new summing box.

This is a guy who can make even inexpensive gear sing (as you’ll hear in a couple of his stories), so it’s well worth the listen.

In the intro I’ll talk about how Brexit may affect the music business, and if having too many tonal choices is actually a good thing.

You can listen to it at bobbyoinnercircle.com, or via iTunesStitcher, Mixcloud or Google Play.

Buying Tidal Is A Terrible Waste Of Apple’s Money

Apple Buying Tidal?A report from the Wall Street Journal yesterday has Apple in talks to buy Jay-Z’s Tidal streaming service, and even though Tim Cook’s company has a truck load of cash on hand, this is one acquisition that seems to be a waste of money.

When Apple purchased Beats two years ago for around $3 billion, the company received not only infrastructure that was later used to launch Apple Music, but also executive talent in Jimmy Iovine and Ian Rogers (who has since departed), and branding recognition from Dr. Dre. The general consensus is that the company vastly overpaid for what it received, but at least you could look at the deal and see that it made some sense because a few pieces fit into the larger picture of what Apple was trying to do.

Not so with Tidal. It’s a company reportedly in executive disarray, so there’s no operational talent to acquire. Apple already has all the infrastructure it needs for streaming delivery, so there’s nothing to be gained there either. Tidal does have a high resolution CD quality audio tier, but Apple has been collecting hi-res masters for its Mastered For iTunes program for more than three years now, so it’s even ahead of Tidal in this area, so that’s not a fit either.

Maybe the one thing that might be interesting to Apple is that fact that Tidal has 4.2 million paid subscribers, many of them attracted to the service because of Jay-Z’s brand, and exclusives from Beyonce, Rhianna, Kenye West and Prince. Buy Tidal and you get the users, but who’s to say that those subscribers can easily be retained?

Granted, if the price was right (meaning very low – $100 million or less feels right), it may be a worthwhile gamble for Apple, if for no other reason in that it takes it off the market (although none of Apple’s deep pocket competitors seem to be interested). [Read more on Forbes…]

July 1, 2016

Apple Music’s Not Catching Spotify Anytime Soon And That’s Not Good

apple-music-1 yearAs Apple Music reaches its first anniversary, the service is now up to 15 million paid subscribers, second only to Spotify’s 30 million. That number may not be as rosy as it seems though, since it may be well below what many in the industry initially expected.

A recent report from Cowen & Co. predicted that U.S. revenue from all streaming services will double by 2021, but Spotify is still expected to hold the subscriber lead during that period and not Apple Music.

One of the reasons why the service can be considered to be underperforming is the fact that Apple iTunes has more than 800 million accounts with credit cards already on file, and all of them had the ability to take advantage of a 90 day free trial of the service when it launched. While it’s true that Apple Music has worked it’s way up to 15 million paid subscribers from an initial 6.5 million, that’s still less than 2% of the potential audience once considered easy to tap.

While there was no official prediction on the number of conversions from iTunes to Apple Music, you can bet that not many in Apple upper management were counting on a figure that low. It’s difficult enough to get buy-in from consumers who aren’t already your customers, but when you can’t even get your most loyal customers who’ve spent money with you before (and a lot, in some cases) to sign on, you’ve got a problem.

Granted, there are some territories where an additional $9.95 per month (or the currency equivalent of the territory) might be considered a hardship, but the fact of the matter is that there are over 580 million iPhone users worldwide, which is an expensive purchase no matter what part of the world you live. Even using that total, 15 million subscribers still brings the conversion rate to slightly above 2.5%. [Read more on Forbes...]