Just some quick stats for your Monday. According to Nielsen’s US Music Mid-Year report, the United States is consuming more music via streaming platforms than ever before.
Key stats from the report are:
“On-demand song streaming activity is reaching new milestones, with volume surpassing 400 billion, which is offsetting declines in album and track sales. On-demand audio streaming volume is up 45%, having already exceeded 268 billion so far in 2018, and on-demand video streaming volume is up 35% year-over-year.”
Some of us have noticed that the introduction of new record labels popping up all over the place. A few years back reading that a new record label was opening up was on par with an announcement of a new Blockbuster Video opening its doors; it just wasn’t going to happen. Not surprisingly, a lot of the labels that are popping up are actually old shuttered labels that closed their doors a decade or so ago when they were unequipped to handle the digital music revolution. Now, with their parent companies (read the opening of a new label announcements with some skepticism, as they are often funded by a pre-existing major) finally reaping the benefit of deals struck with streaming platforms and the overall ease for consumers to stream music, revenue for labels is catching up. With a better formula in place to collect revenue from the streaming platforms and with the number of consumers steadily rising, it is not surprising to see a renaissance of sorts for record labels.
Let’s just hope that they have learned from the past and that the structure of deals for artists that are clamoring to sign are fair (or at least close to it).
Update: Check out what Coldplay’s Manager has to say about the Spotify Conundrum: CLICK HERE FOR DIGITAL MUSIC NEWS ARTICLE
To stream or not to stream? That is the .0007 cents per stream question.
Recently top name bands like Coldplay, The Black Keys and Arcade Fire have spoken out against streaming. Citing the “gross underpayment” to artists per stream, bands are pulling their music from sites like Spotify or simply prohibiting the placement of their songs altogether.
Let’s look at some projected numbers from streaming on Spotify (courtesy of Digital Audio Insider):
Spotify Per-Stream Payouts August 2009 to March 2011
Smallest: 0.02056 cents
Largest: 1.1456 cents
Average: 0.2865 cents
These numbers are strictly estimates and we have heard that some of the deals that major labels have entered into with Spotify have the per stream at a MUCH lower number then those above. Regardless, to make some actual money through Spotify, an artist will need millions of streams. No problem for Justin Beiber and Lady Gaga, but what about the little guy? Apparently, it’s not just the little guy that is worried/pissed. As mentioned above, Coldplay and The Black Keys have been very vocal about their overall disdain of streaming providers. In a recent VH1 interview, The Keys drummer said the following:
“We decided for this album, to not allow streaming services to stream the entire album,” Keys drummer Patrick Carney said. “It’s becoming more popular, but it still isn’t at a point where you can replace royalties from record sales with royalties from streams. So it felt unfair to those that purchased the album to allow people to go on a website and stream the album for free whenever they want it.”
Independent labels and artists are outraged with the seemingly enormous underpayment to artists and there are consistent stories of indies pulling their music and catalog from the site. The question remains however, will their protest pay off or are they really missing out on a new untapped method of reaching millions of fans?
The founders of Spotify continuously hammer home the message that their’s is a music discovery tool. By having all the published music in one spot, fans will be able to discover deeper cuts or new artists or even new genres of music that they didn’t already appreciate. Following their logic, once you discover these things your are more apt to actually go out and purchase your new discoveries or better yet, go to a show the next time the “new” band is in town.
From personal experience, I actually tend to side with Spotify (probably not the most popular opinion on this site). You can stream virtually every song known to man somewhere on the Internet. Whether it is on YouTube (the new radio for kids), Pandora, blogs, hacker/torrent sites or on artists’ websites, you can typically find a song if you really work Google over for a while. Spotify puts it all in one handy dandy place for you. Then it takes it a step further. In its recently updated version the artists’ radio stations suggest similar music to that of the artist, album or track you originally searched. I have found this to be a great way (much better than Pandora) to discover new music that I like and then support.
This is not the first time that the music industry has had to deal with a game changer (not even close to the first time). As we have mentioned ad nauseum on this site, the Internet fundamentally changed the music industry. Moving at a painfully slow pace, the label infrastructure was not ready for the shift. Look what happened to them. Now that the Internet is out of its infancy and new and creative ways to bring music to fans are being created on a daily basis, will the existing labels and, more significantly, the independent artists be ready to play ball? Or will they stamp their feet and and cry “UNFAIR, DO OVER!”?
Rather than complaining about the system in place and the uber small price per stream (which we agree is way to small and should be changed a bit), we suggest that bands get creative with streaming networks. Give fans extras and incentives to stream. Be discovered and it should lead to better results for your music.
Recently I was on a panel at Northwestern Law School with another lawyer, a musician (who happens to ba lawyer too) and an ASCAP representative. Our topic was the effect that cloud or subscription based music services will have on performers and songwriters. While I definitely had my own opinions on the topic, it was ear/eye opening to hear from my fellow panelists.
Most music lovers seem to have their own private way to listen and enjoy their music. While there is a lot of overlap amongst listeners (iPods, satellite radio, pandora, car radios, home stereos) everyone has their own unique method to purchase, stream, listen and (now most importantly )travel with their collection. In the past we would break out our record collection and play records in the family room. Then came the cassette and the walkman. Our record collections became somewhat mobile and we could grab our favorite tapes and walk around or drive while listening to our collection of music. Technology allowed for better sounding recordings to travel along with us with the invention of the CD. However, like one of my panel compatriots aptly pointed out, a music fan was a prisoner to his cd collection; still rather bulky and highly scratchable, you would have to lug a box/book of cds with you on each road trip and hope that they did not fall between the seats or get scratched on the dashboard.
Enter the MP3. A computer file that is quickly dowloaded and containes cd quality sound. The digital album revolutionized the way we consume music. As with most revolutions, the infrastructure that existed prior to the revolution (the big music label system) fell. Brilliant entrepreneurs and crafty opportunists from Apple to Napster entered the fray and came out making billions of dollars from the shift. For the everyday consumer of music, it became easier to listen to music wherever you wanted to do so. Your entire record collection can now fit into the palm of your hand, be programmed to your car’s stereo or be shared with people in your office with a click of a button.
Now that the digital age of music is over a decade old, there is yet another shift occurring. Technology again is making it easier for people to listen to their music collection regardless of where they are. The clouds have come rolling in.
Pandora has already helped put the cloud on the map with approximately 80 million users (1 new user every second per the www.digitalmusicnews.com). But services such as Spotify, Sony’s Qriocity and Google’s delayed cloud service will take it one step further. While Pandora allows you to listen to music based on bands or songs you tell it you like, the cloud subscription services allow you to pick all of your music. Essentially, you will no longer have to actually purchase a song, let alone an album. Rather, you will pay a monthly fee that will allow you to pick your favorite songs, categorize them, rank them, etc. and, most importantly, take them with you. Whether you are listening on your hand-held device (smart phone or iPod type device), on your computer, in your car or listening to your home stereo system, your music will be there waiting for you. As long as you keep paying the monthly fee, that music will be with you.
As a consumer, I think cloud based systems are the bees knees. Technology should make things easier and better. Allowing me to go from my office to my car without missing a beat of the song I was just listening to (I’m very fast) and without plugging anything in, is amazing. As a lawyer who represents musicians and songwriters, I’m worried. For interactive internet based music providers (where the user gets to select the songs he/she wants to listen to) the royalty rates are negotiated between the labels/publishers and the cloud provider. This means that the labels and big publishers negotiate pre-determined revenue shares for each stream of a song; typically a teeny tiny fraction of a dollar (in England the rate is thought to be around 0.00085 pound). A famous example of how potentially horrible these rates can be is the report that Lady Gaga who had over one million streams of Poker Face on Spotify in the UK earned $167.00 (click here for more on that).
The labels and publishers in the US are fighting for more per stream. But don’t go rooting for them quite yet. They are negotiating deals so that they actually get an equity or ownership stake in the cloud based service. So while it appears as though they are fighting for the artists (which some of them might actually be doing), they are also positioning themselves to make as much money as they can in the process. If the clouds make it unnecessary to ever download and actually own a song, how are the songwriters and artists going to recapture that lost income? As of now, the songwriter lobbyists are doing a good job of asking that question and fighting to establish fair payments for musicians.
The laws in place that cover interactive internet radio and subscription services did not imagine the day when streaming would eclipse downloads. That day has clearly arrived: “Streams of music are eclipsing everything,” Universal Music Group UK chief David Joseph recently told the Guardian. “It’s a different digital currency to downloading. You’re dealing with 175 million single tracks bought a year compared to 7 billion streams of music.” (from The Digital Music News). Just as technology has adjusted, the laws dealing with fair payments to the providers of content need to be modified.
The bottom line is that just as the cassette replaced the record, the cd replaced the tape and the mp3 replaced the cd, the cloud is going to replace the downloaded mp3. The clouds are rolling in and the artists may be left in the impending dark.