Electronic Dance Music Still Has Room For Growth Despite Predictions

Andy_Moor_DJ_2010Andy_Moor_DJ_2010It wasn’t that long ago when it looked like electronic dance music, or EDM, might be the savior of the music business, thanks to an impressive growth rate of 54% over the course of just three years. With overall CD and download sales slowing down, and streaming paid subscribers not increasing as fast as the industry expected, EDM looked like it was the record label’s shining star when it came to fertile new sales ground. The problem is, in the last year, the upswing has slowed to just 3.5%, but that doesn’t mean there still isn’t room for growth in the genre.

According to the IMS Business Report 2016, total EDM sales went from $4.5 billion in 2012/13 to $6.9 billion in 2014/15. In the past year, that growth slowed by quite a bit, increasing by just $200 million, which has a many in the music industry thinking doom and gloom again.

That outlook may be a bit premature, however, because even though the U.S. market seems to have matured, other high-potential markets are only now in the early stages of development. Cuba, South America, Vietnam, the Philippines, and China have all seen huge electronic dance music festivals and clubs launched this year alone. In fact, nine clubs out of 20 new entries into the DJ Mag Top 100 Clubs are in Asia, with four in China, and three in Jakarta. Even a club from the UAE was listed.

One of the reasons for all the optimism comes from the fact that out of all genres of music (and there are a lot), electronic dance music is one of the most transportable. Since it’s mostly instrumental (even if there’s a vocal, the lyrics often don’t play a big part in song), there’s no language barrier between countries as a result. This means that even when the genre has topped out in the major developed countries, growth can still continue in smaller and upstart markets, sort of like what happened with American jazz music of the 1950s and 60s.

While it might seem like most of the revenue growth is coming from live events, that’s not entirely true. Song streams and downloads play a significant part of the genre’s revenue makeup.

For instance, streams increased 33% in the U.S. last year to 15 billion, although that figure is somewhat tempered by the fact that album and digital track sales and genre market share fell. In the UK, however, streaming growth grew at a faster rate than any other genre in 2015, and EDM remained in the top three formats in terms of sales there. In France, a third of the radio stations dedicated more than 10% of their output to Dance tracks in Q1 2015, showing the format is alive and well there too. In fact, Europe in general loves the genre, since figures indicate that at least 1 in 7 people have recently attended an EDM event. [Read more on Forbes]

(Photo: Andymoore1980 via WikiPedia)

The Seamy Side Of The Music Business Circa 1980

PlayolaI 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.

May 27, 2016

5 Tips For Increasing YouTube Engagement

YouTube EngagementYouTube EngagementEven 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.

Making Sense of Streaming Income

iPhone MusicIn 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.

A Million Isn’t What It Used to Be

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.

The Sound Recording Royalty

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 type of service (on-demand or webcast)
  • The type of tier (free or paid)
  • US or foreign (where the listener is accessing the song from)
  • Calculation variables

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.

The Middleman Factor

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.

Pirate Radio Stations On The Rise Again

Pirate Radio Coming BackOnce 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 Worried About Its Future

pandora-internet-radiopandora-internet-radioPandora’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 WorldwideCorvex 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 “pursuing a costly and uncertain business plan, without a thorough evaluation of all shareholder value-maximizing alternatives.”
  • Questionable capital allocation decisions” which may refer to the $450m purchase for Ticketfly last year.
  • The fact that senior management has sold off most of its stock, which certainly doesn’t give an investor confidence in the company’s future.
  • The fact that the company replaced former CEO Brian McAndrews with founder Tim Westergren, a move panned by many in the industry
  • Concern over Pandora’s direct deals with rights-holders, which were very costly.
  • and finally, Pandora’s poor stock price, which seems to have little hope of increasing.

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.

Flipagram’s John Bolton On My Latest Inner Circle Podcast

John Bolton FlipagramOn this week’s edition of my Inner Circle Podcast I’m happy to have digital music veteran John Bolton as my guest. John is the head of music at Flipagram, and prior to that he held a similar position at Muve Music, which is one of the larger streaming music services.

 

We’ll discuss what it’s like negotiating license agreements with the major labels, what makes Flipagram a new way for artists to make money, and his take on the future of streaming music.

 

In the intro I’ll look at the news that Universal Music Group is making $4 million a day from streaming music (guess how much trickles down the artists on the label), and Yamaha’s revolutionary TransAcoustic guitar. 

 

Remember that you can find the podcast at BobbyOInnerCircle.com, either on iTunes, Stitcher and now on Mixcloud and Google Play.

Twitter Won’t Count Photos And Links In 140 Character Limit

Twitter 140 charactersTwitter 140 charactersIf 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.

Facebook’s New Slideshow Feature Just For Music Videos

Facebook watchingFacebook watchingIt’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.

The Streaming Performance Royalty Rate Explained

Music 4.1 coverStreaming performance royaltiesArtists 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.

The Performance Royalty

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:.

  • On-Demand Nonportable—Subscription services accessible via desktop computers that only play music when a live Internet connection exists.
  • On-Demand Nonportable Mixed Use—Subscription services accessible via desktop computers that can play music whether the computer is online or offline.
  • On-Demand Portable Mixed Use—Subscription services accessible through portable devices, like mobile phones.
  • On-Demand Bundled Subscription—Subscription sold together with another product (like a cellphone) for one price.
  • Free Nonsubscription Ad-Supported Services—Services that offer streaming music to end users for free.
  • Paid Locker Services—Services that provide continuous access for Internet-connected devices to recordings previously purchased by the end user.
  • Purchased Content Locker—Services offered for free to purchasers of permanent digital downloads, ringtones, or physical records from a qualified seller that allows the purchaser access to digital versions of the purchased content from an Internet-connected device.
  • Limited Offering Subscription—Subscription services that offer a very limited catalog of music (like from a particular genre or playlist), or services that offer streams of preprogrammed playlists.
  • Mixed Service Bundle—The sale of downloads, ringtones, locker services, or limited offerings together with nonmusic products (like a cellphone or Internet service) for one price.
  • Music Bundle—The sale of two or more products together for one price, like a CD, digital download, and ringtone.
  • Foreign On-Demand Free Tier—The payment received from a foreign PRO on streams from an on-demand service’s free tier.
  • Foreign On-Demand Subscription Tier—The payment received from a foreign PRO on streams from an on-demand service’s paid tier.
  • Foreign Webcast Free Tier—The payment received from a foreign PRO on streams from a noninteractive service’s free tier.
  • Foreign Webcast Subscription Tier—The payment received from a foreign PRO on streams from a noninteractive service’s paid tier.
  • Satellite Radio—The payment received from SiriusXM streams.
  • Cable Television—The payment received from the music-only channel streams offered by cable television providers.

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)

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