Tag Archives for " music publishing "
Here’s the music industry news roundup from the last week. Warner Music was in the spotlight, as was Sony/ATV publishing, but Spotify and YouTube couldn’t stay out of the news if they tried.
Warner Music signs with Vevo. Warners is the last of the big 3 major labels to do a deal with Vevo, but it finally happened, mostly because of Vevo’s “reboot” with a a redesigned logo and interface, new user profiles with social components, and a personalized video player offering recommendations.
Warners also partners with Vadio. Vadio’s curation platform, ChannelMaker, allows its clients to curate music video channels from a library of videos, and WMG is the first major to sign on.
How millennials act online. If your target demographic is millennials, then you’ll want to check out this infographic that shows when they’re most likely to buy and what content types they prefer, among other things.
Political campaigns and music licensing. Curious about what music a campaign can legally use? This is a great overview of the many possibilities (it’s not as cut and dried as you might think).
BuzzAngle’s mid-year music report. Music has changed a lot from last year to this year, and you can check out just how much in this report.
Google’s report defends YouTube. The major labels are at war with the platform, so Google put out his report to defend itself. As with everything, the truth is probably somewhere in the middle.
Spotify is starting to beat YouTube. When it comes to streaming music, people are beginning to prefer Spotify over Youtube, a trend that looks to continue. Remember, throughout history, convenience always wins in the music industry, and Spotify is way more convenient to use.
YouTube multi-channel networks were once hot, now they’re not. Disney-owned Maker Studios, home to PewDiePie, laid off staff last week, and the executive brain drain continues. YouTube once seemed unbeatable, but now seems very vulnerable.
Sony/ATV publishing gets permission from the EU to complete the Michael Jackson buyout. The speculation is that this won’t be good for songwriters in the long run. Also, expect it to change its name to simply Sony Publishing, as the company becomes a closer rival to Universal.
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.
Regardless of the era, the songwriter and publisher have made money, and continue to make money in three primary ways:
1. Mechanical royalties are paid whenever a song is digitally downloaded, a song is streamed from an on-demand service, or a physical CD or vinyl record is sold.
2. A performance royalty is paid whenever a song is played on radio, on television, or streamed over the Internet.
3. A synchronization fee is paid when music is used against picture.
This payment mechanism hasn’t really changed all that much in Music 4.1 from previous music eras, although it’s managed to become even more complicated than it was. What has changed is that during this period in which music sales are far less than half of what they were at their peak, publishing is the one area of the music industry that has held its own. How does that happen when sales, and therefore mechanical royalties, are down, you ask?
While it’s true that mechanical royalties are not nearly what they used to be now that CD sales are so low and downloads have decreased, they’re offset by the tremendous increase in performance royalties because music is now played on so many more broadcasts than before. The 500-channel cable and satellite television universe, along with satellite and Internet radio, provides more opportunities for music to be played, and as a result, more performance royalties are generated.
That said, music publishing income is derived from more sources than you think, and while some of it doesn’t appear significant by itself, it can all add up to a nice royalty check. Here’s an excerpt of a chart from the latest edition of my Music 4.1 book that shows a simple breakdown of when publishing royalties occur, how it’s collected, and the royalty rate.
As you can see, many of the royalties and fees are variable. Synchronization fees consist of an upfront fee which is usually negotiated by the publisher, and a performance royalty whenever the piece containing the music airs on television.
With a movie, the upfront fee is the only one that’s paid for any showings in the theater, but a performance royalty is paid whenever the movie is played on television afterwards.
Likewise, both printed sheet music and digital use of sheet music or lyrics are subject to negotiation. Ringtones are still a source of income not to be overlooked even though the market for them is far below what it was during their peak.
Publishing royalties come from more places than you think, but the rates are different over a wide range of scenarios, which makes it a very complicated subject.
Word came out over the weekend that Google was a clandestine bidder for Michael Jackson’s half of Sony/ATV Music Publishing, and the news had the music business wiping its collective brow in relief. Had that purchase happened, we might be looking at a very different industry landscape today.
To recap, last March a buy-sell clause was triggered in the agreement between Sony/ATV and the estate of Michael Jackson that allowed either party to buy out the other, which ended in Sony paying around $750 million for the Estate’s 50% ownership in the company.
At the time it seemed inevitable that the negotiation would go that way, although it was rumored that the Jackson Estate actually had a deep pocket investor who could put up the needed cash to take the deal the other way.
What we didn’t know then was that Google was also a buyer in the mix, and you can bet that was a major factor in Sony pushing hard to get the deal done. In retrospect, it’s surprising that it only cost Sony $750 million, in that it’s conceivable that Google’s presence could have easily pushed that figure much higher.
Now think for a second what the ramifications of Google owning part of Sony/ATV would be today. First of all, it would be part owner of the largest music publishing company in the world – one that manages 4 million copyrights of some of music’s biggest publishing moneymakers, like The Beatles, Taylor Swift, Michael Jackson, Ed Sheeran, James Brown, Elvis Presley, Oasis and Eminem.
What do you think would happen when it came time to negotiate the next licensing agreement with YouTube (which Google owns) and Google Play? It stands to reason that Google/Sony would give itself a sweetheart deal in such a situation, right? Imagine how the rest of the industry would have reacted to that one. [Read more on Forbes…]
One of the hopes that digital music brought was for a faster and more accurate way for everyone in the food chain to get paid. That sounds good on paper, but unfortunately hasn’t quite panned out the way anyone in the industry expected. While it’s true that it’s easy to count online sales and downloads in the digital realm as well as streams and views, digital accounting lags far behind the expectations of artist, label or publisher alike. But now, music’s big data problem is beginning to be changed thanks to the efforts of companies like Kobalt Music and DistroKid, a trend that hopefully will be adopted by the rest of the industry at some point.
One of the major problems in the current world of music big data has been that although the streaming services could provide accurate info to labels and publishers, it came in a format that was incompatible with their accounting systems. That meant that all those reams of data (more than ever, thanks to the services ability to granularly collect everything) was delivered in stacks of hard copy, which then had to be manually input into the label or publisher’s system. And of course, the problem was that the person doing the inputting was often an intern or a low-on-the-totem pole employee who was not equipped to deal with some of the more complex decisions that would come up in the course of inputing, which lead to inaccurate statements for artists and songwriters. And let’s not forget the inevitable human error that goes along with manual data entry that didn’t help matters.
This is a problem that continues to plague the majority of the industry every quarter, and in some cases, every month. In fact, many publishers secretly complain that the cost of the manual labor involved exceeds their revenue in many cases. Still, it’s their fiduciary duty to carry on despite these difficulties.
Now to be fair, accounting software systems are expensive, usually custom designed, and take a very long time to both implement and overcome their inevitable growing pains. While changing to something that’s more digitally compatible is in everyone’s best interest, it’s still a painful process, both financially and morale-wise. It’s not a remodel, it’s almost a full tear-down and rebuild.
However there is a light at the end of the tunnel. A few years ago Kobalt Music, lead by Swedish entrepreneur Willard Ahdritz, launched the Kobalt Portal, the first online dashboard that Kobalt artists and songwriters could use to discover their earnings in a timely fashion. In fact, the portal has now been turbocharged so it can even report in real-time, an innovation that has attracted over 8,000 artists and songwriters to the service, including such heavyweights as Paul McCartney, Prince, Gwen Stefani, Bob Dylan, Tiesto and Kelly Clarkson, among many others. [Read more on Forbes…]