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Happy New Year, and here’s the first Music Industry News Roundup of the year for the week of January 6th, 2017. We’re just coming off a major holiday and things are slowly ramping back up. Let’s see what happened.
The Blackstone Group acquires SESAC. Just think about that for a second. A big investment group now owns a performing rights organization.
SoundExchange could lose a lot of revenue this year. The government collection agency is losing out thanks to direct deals with labels and publishers by Pandora
Chinese giant Alibaba is about to spend over $7 billion on entertainment content. Move over Apple, Google, Amazon and Spotify – you’ve got competition and it has deep pockets.
It looks like Facebook is getting close to their own version of Content ID. That means that content creators can finally get paid for their music and videos playing on the service. Word is that it won’t actually be released until the Spring though.
Indie labels claimed 35% of the market last year. Good news for DIY artists and labels not affiliated with majors, but this is based on rights ownership, not revenue.
A vinyl pressing plant is going out of business. It’s pretty hard to do in this market environment, but Canada Boy Vinyl can’t make a go of it.
YouTube lost it’s dominance to streaming music. People are now finding streaming networks way more convenient than the YouTube experience.
A full-time YouTuber shows how much money he makes. And of course he does it on YouTube. Doesn’t make all that much, but he’s not a very big channel either.
George Michael Best-Of Sales skyrocket. They improve by over 5,000% in the UK alone.
Speaking of the UK, the biggest album seller last year wasn’t a musical artist. It turns out it was a 56 year old game show host. Well, that’s probably the demo that still buys physical product.
That’s the Music News Roundup of what went on in the music industry last week. Have a great 2017!
It looks like you can expect a lot more from Facebook in 2017 in more ways than one. The company is advertising for an in-house composer to add to its in-house sound design team. According to the advert:
The in-house Music Composer role requires 10+ years of professional experience in the music industry, plus experience in ProTools and the ability to “work closely with a wide variety of sound artists”.
“CANDIDATES MUST HAVE EXCEPTIONAL COMPOSITION SKILLS AND MASTERY OF MODERN PRODUCTION TECHNIQUES. THE ROLE COMBINES MUSICAL RECORDING AND COMPOSITION CHALLENGES WITH PROJECT MANAGEMENT LEADERSHIP.”
The link turns out to be dead, which either suggests that the position is now filled, or that it was getting to much visibility. Facebook is under fire for still not having a way for artists, labels and publishers to get paid for songs and videos that are played on the network, so everyone is a little chagrined at the fact that the company is trying to develop what looks to be in-house production music first.
That said, rumors still persist that 2017 will be the year that FB finally puts their own version of YouTube’s Content ID in place, which will compensate creators when their works are played on the platform.
This is much more problematic than it sounds given the fact that Facebook measures video views much more liberally than YouTube, so potentially it will be paying out more as a result, even if the royalty rate is the same as YouTube. The royalty will undoubtedly be higher though, since the music industry views YouTube’s 45% cut way too high and out of line with the other delivery systems, so any license from the major labels or publishers will no doubt go beyond that rate.
That said, it should be interesting to see exactly what Facebook has in mind for its new composer in residence, and how the sound design team will be implemented.
If you want to start a music label executive ranting and raving, just mention YouTube. It’s currently public enemy #1 to the music industry thanks to its relative intransigence over royalty payouts that execs and artists alike feel are way too low. That’s a good reason why Youtube may think its brand new hire of music business insider Lyor Cohen as head of global music will help smooth over its difficulties with the labels, but that line of thinking will probably turn out to be somewhat misplaced when the dust settles.
Cohen comes from his own indie label, 300 Entertainment, after years as a senior exec at Universal Music subsidiary Def Jam, then Warner Music. At Warners, he helped oversee that company’s transition to digital distribution, being instrumental in signing licensing agreements with both Spotify and YouTube, so on the surface this looks like a great hire. Get an insider who knows everyone in the business and how the game is played, and YouTube’s trouble may be soon over, or so the thinking probably went.
The problem is that Cohen isn’t exactly a beloved figure in the industry, so he’ll not be welcomed with open arms to any negotiation, especially if he’s there to play hardball and keep the status quo regarding the royalty rate. Right now YouTube pays only 55% of ad revenue for monetized views, while other music distribution services are in the 70% range and even higher. That’s where the music industry wants to be, but YouTube doesn’t feel compelled in the least to acquiesce, and why should they? If a major label withholds a license, its songs will still find their way onto the platform thanks to the many fans uploading their own videos with the songs attached. YouTube is immune from any copyright infringement prosecution thanks to the Safe Harbor provision of the Digital Copyright Millennium Act.
While it’s possible to identify videos with unlicensed music via YouTube’s Content ID system, most labels feel that it doesn’t identify enough of them, leaving millions of possible monetizable videos views unreported. An improvement to the algorithm is something that the industry is also demanding.
Reportedly, all three major label’s license agreements with YouTube are now out of contract and updated versions of these agreements are currently on the table. Presumably, that’s what YouTube wants Lyor Cohen to handle, but unless he brings a substantial royalty increase with him, you can be sure that the company will continue to remain in the cross-hairs of the music industry, even with an insider at the helm.[This article originally appeared on my Forbes blog]
The 3 major labels are furthering their attack on YouTube, the platform they love to hate.
With licenses up for renewal soon, the majors are trying their best to gain some leverage in the negotiation, so they have filed a submission to the US Copyright Office claiming that YouTube’s Content ID is ineffective in identifying uploads using content illegally using their copyrights a great deal of the time.
Content ID is YouTube’s secret sauce in that it’s the content recognition technology that allows the copyright holder to identify and monetize unauthorized uploads of copyrighted material.
Universal Music Publishing claims that it fails to identify as much as 40% of its compositions, according to an article in the Financial Times.
YouTube, of course, claims that Content ID is successful 99.5% of the time. Even if that were true, 0.5% still represents hundreds of thousands of unlicensed uploads, so there’s a lot of money being left on the table.
Ultimately, the labels would like the 55/45 revenue split with YouTube to be increased, since all other music streaming platforms are in the 70+% range. YouTube has little incentive to change, however, since even if the labels pull their licenses, the user generated uploads will continue, so the label’s vast catalog of music will still remain on the platform.
If it’s true that Content ID doesn’t catch 40% of the unauthorized uploads, that only puts YouTube in a stronger negotiating position. One should never bet against the major labels in a negotiation, but in this case, my money is on YouTube coming out on top.
Content creators have been complaining for months that many of their YouTube videos have been showing up on Facebook posted by someone else – an action called “freebooting.”
In an effort to alleviate the situation, Facebook has now officially launched its version of YouTube’s Content ID called Rights Manager.
This is an admin tool for Facebook Pages that lets them upload video clips, then monitors Facebook news feeds for copies of these videos that might be later illegally posted to Facebook. It can then either automatically report them as violations to be deleted or notify the original publisher.
Rights Manager allows copyright owners to set up whitelists of Pages that are allowed to distribute their videos, and upload unpublished videos they don’t want anyone else using even if they haven’t posted them themselves.
It will also show what Page posted a video, how many views it has gotten, and sort alerts about freebooting by these parameters, too.
Live videos can be monitored as well, which is designed to prevent people from rebroadcasting pay-per-view TV content like boxing matches, which has become a huge issue that has put Periscope in the television industry’s crosshairs.
Rights Manager isn’t available to all Facebook users yet, although content owners can now apply for access.
Interestingly, there’s been no discussion about monetizing Facebook videos yet, although it seems like only a matter of time now that Rights Manager is in place.