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November 10, 2016

Understanding Your Fanbase

Understanding Your FanbaseYour place in our current music world is totally dependent upon the development, care, and feeding of your fanbase, and this excerpt from my Music 4.1 Internet Music Guidebook will help you better understand your audience so you can grow it.

First of all, understand that your core fans or “tribe” is only a piece of your total audience. Your audience can actually be broken down into the following two categories:

your casual fans and your core fans.

Your total audience, or your fans, is fervent about a particular small niche of music that’s usually a subcategory of a larger genre, which means that they love speed metal (as opposed to the much larger metal or hard-rock genres), bluegrass (as compared to the larger country-music genre), or alien marching bands (as opposed to either of the larger alien-music or marching-band genres).

If you’re an artist in a particular niche, your audience will automatically gravitate toward you, but still might not be your fans. This includes casual fans, occasional listeners, and people who like what you’re doing yet aren’t particularly passionate about it.

Although this part of your audience can’t be ignored, it’s probably not a good idea to expend all your energy on it. They’re aware of you and will probably give you a try with every release, unless they’re disappointed too many times in a row. They can be turned into passionate fans though. One “hit” song or album, a change in image, or a change in general perception, and they become the passionate critical mass needed for the breakout that turns a respected artist into a true star.

In Music 4.1, your most important core audience contains your most passionate fans, or your “tribe.” They’ll buy whatever you have to sell, work for free, recruit other fans, and basically do anything you ask. All they want is access to and communication with the artist, which is the basis of Music 4.1.

In the end, every fanbase has the same characteristics:

  • Your audience consists of your casual fans and your core fans
  • Fans may like an artist but may not be particularly passionate
  • Your core fans (true fans, uber-fans, super fans, tribe) are very passionate about everything you do
  • Most of your energy should be directed towards your core fans

Understanding exactly who makes up your audience will help you grow it.

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.

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.

A Streaming Music Royalty Primer

Music 4.1 coverStreaming music royalty rates are such a morass of different percentages and possibilities that few people on the planet totally understand everything, and the ones who do are attorneys working in that narrow end of the music business. Even label and publishing execs who have been in the business for 20 or more years can be confused. That’s one reason artists and songwriters frequently cite low rates on what seem to be a large number of streams. It’s also why an average royalty rate is used in articles about this side of the business. Here’s an excerpt from my new Music 4.1 book that tries to clarify some of the misunderstandings by starting with the streaming royalty basics.

“Let’s see if we can at least make sense of why it’s frequently impossible to determine what an exact streaming royalty rate is.

First of all, there are two basic variables to remember that everything streaming works from:

1. There are two kinds of streams—noninteractive or webcast (Pandora), and interactive or on-demand (Spotify). On-demand pays more because it generates more money.

2. There are two tiers for each stream—premium (paid subscribers) and freemium (ad supported). The paid tier generates a higher revenue per subscriber than the free, ad-supported tier.

With this in mind, there are two different copyrights for each stream (the same as for a CD, vinyl record, or download), regardless of the tier, which provide a royalty stream:

1. A sound recording royalty (that the owner of the sound recording gets)

2. A composition royalty (that the publisher and songwriter get)

You can think of the sound recording as what you hear played on Pandora or Spotify (or a CD, vinyl, or download for that matter), while the composition is the notes and lyrics on paper.

Within those parameters there are a tremendous number of variables that can occur, all of which affect both the payout for the sound recording and the composition. Let’s explore the different types of streams first.

The Different Types of Streams

What most artists and bands don’t realize is that there are two types of streaming services, and they each operate differently and therefore pay at a different rate.

Noninteractive Streams

The first type of streaming is called a noninteractive or webcast stream and comes from either a platform that acts as an online radio station, like iHeart Radio or any traditional broadcaster with an online presence (like your local radio station), or a service like Pandora where the user has a certain amount of control over what plays but can’t directly select a song or make it repeat. Streaming platforms in this category include services like Pandora and Last.FM. SiriusXM and the music channels on cable television also fit into this category.

All noninteractive streaming services must obtain a congressionally created “compulsory” license with the rate set by an entity called the Copyright Royalty Board (CRB), which I write about in more depth later in the “How Royalty Rates Are Set” section. The CRB recently set the rates for 2016 and beyond for radio broadcasters with terrestrial radio stations at $0.0022 ) per stream. Noninteractive platforms like Pandora pay $0.0022 per stream from a paid subscriber and $0.0017 per stream on the free tier.

Interactive Streams

Interactive or on-demand streams are treated differently from the radio-style streams in that the rate is considerably higher (between $0.005 and $0.009, depending on how much the listener pays per month, among other factors). Services that provide interactive streaming include Spotify, Google Play, Tidal, Apple Music, and Slacker.

The down side here is that if you’re signed to a label, money from interactive streams is paid directly to them. You’ll then be paid by the label based on the royalty amount negotiated in your agreement with them. For instance, if you negotiated a 15 percent royalty rate, then you’ll be paid 15 percent of $0.005 (using that number as an average), or $0.00075 per stream.

If you’re not with a label, the money will be collected by SoundExchange or an aggregator like TuneCore, Ditto Music, or CD Baby if they distributed your songs to the online streaming services.

Average Streaming Type Royalty Paid

Interactive On-demand – $0.005 to $0.009 (average depending upon the tier)

Commercial Broadcasters – $0.0022

Noninteractive – $0.0022 (paid tier) $0.0017 (free tier)

On top of the royalty paid to the artist and label, there’s also a publishing royalty that varies yet again from the above rates, which we’ll cover in the next section.

You can see why artists, bands, musicians and even record labels can be confused about how much they’re receiving from streaming. As The Temptations once sang, it’s a “ball of confusion.”

This is just the tip of the iceberg when it comes to revenue splits and royalty payments from streaming music. It also doesn’t cover the publishing side of streaming, which is another issue entirely. That said, in the coming weeks I’ll go beyond the basics to explain more about how each streaming music royalty actually works.

You can read more from Music 4.1: A Survival Guide To Making Music In The Internet Age and my other books on the excerpt section of bobbyowsinski.com.

April 7, 2016

9 New Rules For Success In Today’s Music business

Success in the music businessWe’ve gone through a mighty change in the music business over the last 10 years, and it keeps on morphing and evolving every day. Since these changes are constant, many of the old school rules pertaining to success in the music business no longer apply.

Here’s an excerpt from the latest edition of my Music 4.0 book that outlines some of the new rules for success, as well as a few that may never change.

1. It’s all about scale. It’s not the sales, it’s the number of YouTube views (at least at the moment) you have. A hit that sells only 50,000 combined units (album and single) may have 50 million YouTube views. Once upon a time, a sales number like that would’ve been deemed a failure, today, it’s a success. Views don’t equal sales, and vice-versa.

2. There will be fewer digital distributors in the future. It’s an expensive business to get into and maintain, so in the near future there will be a shakeout that will leave far fewer digital competitors. Don’t be shocked when you wake up one day to find a few gone.

3. It’s all about what you can do for other people. Promoters, agents, and club owners are dying to book you if they know you’ll make them money. Record labels (especially the majors) are dying to sign you if you have have an audience they can sell to. Managers will want to sign you if you have a line around the block waiting to see you. If you can’t do any of the above, your chances of success decrease substantially.

4. Money often comes late. It may not seem like it, but success is slow. You grow your audience one fan at a time. The longer it takes, the more likely the longer the career you’ll have. An overnight sensation usually means you’ll also be forgotten overnight. This is one thing that hasn’t changed much through the years.

5. Major labels want radio hits. They want an easy sell, so unless you create music that can get on radio immediately, a major label won’t be interested. This is what they do and they do it well, so if that’s your goal, you must give them what they want.

6. You must create on a regular basis. Fans have a very short attention span and need to be fed with new material constantly in order to stay at the forefront of their minds. What should you create? Anything and everything, from new original tunes to cover tunes, to electric versions to acoustic versions, to remixes to outtakes, to behind the scenes videos to lyric videos, and more. You may create it all at once, but release it on a consistent basis so you always have some fresh content available.

7. YouTube is the new radio (but it may include Facebook soon). Nurture your following there and release on a consistent basis (see above). It’s where the people you want to reach are discovering new music.

8. Growing your audience organically is best. Don’t expect your friends and family to spread the word, as they don’t count. If you can’t find an audience on your own merits, there’s something wrong with your music or your presentation. Find the problem, fix it, and try it again. The trick is finding that audience.

9. First and foremost, it all starts with the song. If you can’t write a great song that appeals to even a small audience, none of the other things in this book matter much.

Finally, remember that making a living is the new successSuperstardom is more difficult to come by than ever, and the artistic middle class continues to shrink. Today, if you can make your living strictly from making music, you’ve accomplished a lot and have a lot to be proud of.