David Byrne: Record companies siphoning money from streaming instead of paying royalties

[blue2blue]

David Byrne calls for more transparency in how much labels keep from streaming -- and for different accounting and compensation between stream royalties and physical sales -- since many labels use the same formulae for streams they use for physical manufacture and sales, even though the cost structures are entirely different.

 

Byrne -- once pointedly a critic of music streaming -- actually praises Spotify for attempting to illuminate the murky record industry 'black box' payment structures -- putting the onus largely on labels that exploit contract clauses designed around old models of manufacturing and sales.

 

While fully independent artists can keep as much as 70% and Spotify keeps about 30% -- Byrne points out that many label artists keep as little as 15% of that total -- amounting to about 10% or even less of what Spotify pays to rights holders (split between label and artist).

 

David Byrne: Record companies siphoning money from streaming websites instead of paying royalties

 

 

[Vito Corleone]

Labels screwing the artists? Whoda thunk?

[blue2blue]

 

Well, there was a lot of misinformation circulating for a while -- some people seem dedicated to muddying the water as much as possible for reasons known only to them and their accountants -- and, of course, the record biz, particularly the majors, pretty much do everything they can to keep people from getting the details on how the 'Black Box' works.

 

Forbes: Inside The Black Box: A Deep Dive Into Music's Monetization Mystery

[Bucksstudent]

David was an early advocate for streaming because he thought it would be a middle ground between legal and illegal downloading. It certainly hasn't deterred piracy at all.

 

Streaming is barely worth it for the artist. Of course, printing CDs is barely worth it for the artist. The solution will always be to tour if you want to make money from your music.

[Vito Corleone]

I was reading a biography on Billie Holiday recently (she would have turned 100 this year!) and man, did the labels ever screw the artists back then. They made almost nothing at all from record sales and radio/jukebox play. The only money to be made was from live performance or branching out into appearing in movies and such.

 

 

[blue2blue]

David was an early advocate for streaming because he thought it would be a middle ground between legal and illegal downloading. It certainly hasn't deterred piracy at all.

 

Streaming is barely worth it for the artist. Of course, printing CDs is barely worth it for the artist. The solution will always be to tour if you want to make money from your music.

 

He's something of a visionary and I remember reading his comments about the future of music in the 80s. But I think it was those high hopes that probably produced a public outlash at streaming and the music biz only a couple years ago. David Byrne: 'The internet will suck all creative content out of the world'

 

I suspect that, as he dug into the details -- and it's tough digging as he well notes -- he realized that neither streaming-as-distro-model or even the extant stream providers were the core of the problem.

[Phil O'Keefe]

[Phil O'Keefe]

David was an early advocate for streaming because he thought it would be a middle ground between legal and illegal downloading. It certainly hasn't deterred piracy at all.

 

Based on... ? Do you have any links that support that with numbers / research, or is that just your gut feeling?

 

Streaming is barely worth it for the artist. Of course, printing CDs is barely worth it for the artist.

 

Both can be financially "worth it" but it comes down to numbers. If you have big numbers, you're fine... if you don't, then it's "not worth it."

 

The solution will always be to tour if you want to make money from your music.

 

Again, it's all about the numbers. If you're big enough that you can consistently draw X number of people, then you can get gigs at the X level. If you're popular and in-demand enough that you can negotiate bigger gigs and get a good deal, then yes, you can make money touring... but it's not the only way to make money from music.

[WRGKMC]

I was reading a biography on Billie Holiday recently (she would have turned 100 this year!) and man, did the labels ever screw the artists back then. They made almost nothing at all from record sales and radio/jukebox play. The only money to be made was from live performance or branching out into appearing in movies and such.

 

 

Those other methods all had their own ways of screwing artists up, down and sideways as well.

Just got to face the fact that allot of musicians suck at business. My first advice to anyone wants to get into music should take business courses as well because you're either going to be running your own business or be dealing with allot of business who know how to screw you over if you cant read the fine print.

 

Allot of musicians back in the day just weren't very literate when it came to signing deals and that's how many got screwed. They thought fame would pay the bills. The money they did get may not have been saved or invested either.

 

Fame can lead to better pay if you know how to use that power, but in most cases its the guys who can wheel and deal who make money in any business. Crying about poor decisions after the fact is sour grapes. If you want to perform so bad you're willing to do it for peanuts, then maybe it is a lesson you need to learn if only to make wiser career choices in the future.

 

The music business is tough and many lessons are learned the hard way. The wise man wont continue to make the same stupid mistakes and in fact may learn from others more experienced then himself and avoid making those mistakes all together. If you haven't got battle wounds and are earning a living in the trade then you should give yourself a pat on the back. Just remember its just as important to help others to avoid those mistakes as it is to avoid them yourself.

[Bucksstudent]

 

Based on... ? Do you have any links that support that with numbers / research, or is that just your gut feeling?

 

 

 

Both can be financially "worth it" but it comes down to numbers. If you have big numbers, you're fine... if you don't, then it's "not worth it."

 

 

 

Again, it's all about the numbers. If you're big enough that you can consistently draw X number of people, then you can get gigs at the X level. If you're popular and in-demand enough that you can negotiate bigger gigs and get a good deal, then yes, you can make money touring... but it's not the only way to make money from music.

 

I'm not going to bother. I happen to know for a fact that Spotify hasn't stopped piracy. Sure, a lot of people use Spotify, but they don't have everything available for streaming. People would rather have something for free rather than pay a monthly fee. Despite Netflix and Hulu, movie piracy is still pretty rampant. If you disagree, fine.

 

Of course, if Spotify charged a larger fee and the record companies paid out more, then artists would make more money from streaming. Do you see that happening? I don't.

 

I never said touring was the only way. I said it will always be the way to go if you want to make money from your music, though. There's a difference. The era of Brian Wilson and Steely Dan are over. You can't sit in a studio and make millions as easily as before. It doesn't matter if you have a large following. I know all of the local prominent musicians in my area, and they've made much more touring and playing local gigs than they ever have from CDs or downloads.

[epi56ebony]

Oh poor poor David Byrne.

 

Hey wait David, I have an idea. Maybe you should call up Tina, Chris and Jerry, say you were sorry for being such an a$$ and being stingy with the songwriting credits and go out on that big TALKING HEADS REUNION TOUR. Then you get lots and lots of money. Sell t-shirts and programs, sell a live bootleg of every show on the Talking Heads website, sell archival live shows and you'lll fill up your bank account.

 

and then you'll stop whining about your payments from streaming

 

but first you'll have to call up Tina, Chris and Jerry.

 

oh lets remember, the biggest hit from any of the members was Tom Tom Club's Genius Of Love. anything from David? nope.

[Bucksstudent]

Oh poor poor David Byrne.

 

Hey wait David, I have an idea. Maybe you should call up Tina, Chris and Jerry, say you were sorry for being such an a$$ and being stingy with the songwriting credits and go out on that big TALKING HEADS REUNION TOUR. Then you get lots and lots of money. Sell t-shirts and programs, sell a live bootleg of every show on the Talking Heads website, sell archival live shows and you'lll fill up your bank account.

 

and then you'll stop whining about your payments from streaming

 

but first you'll have to call up Tina, Chris and Jerry.

 

oh lets remember, the biggest hit from any of the members was Tom Tom Club's Genius Of Love. anything from David? nope.

 

I actually appreciate that he hasn't gone that route. His solo music is better than anything the Tom Tom Club did, IMO. The Heads album with different singers was a disaster as well. Plus, he does a lot of Talking Heads songs in his set. He's still moving forward in his career instead of stagnating.

 

I don't think he's pitching a fit over royalties for himself, because he's very well off. I think he's trying to stand up for other artists. His idea for streaming was that it would provide an affordable means to listen to music so students and people of lesser means wouldn't resort to piracy, but also allow people to discover new or lesser known artists and these musicians get paid.

 

That being said, I'm indifferent to music streaming. I support piracy, and I know fewer people who don't pirate than people who do. I also support the artist when I can and own a sizable collection of CDs and vinyl and other merchandise. I encourage everyone to buy music, but I also encourage exploration and those who cannot afford music to download all they want. I rarely buy albums for over ten dollars, because ten dollars is a lot of ramen noodles. People are free to disagree with me, of course, but that won't stop piracy and it won't change my POV.

[epi56ebony]

Streaming royalties only help the big artists who no longer are in debt to the record company otherwise if you are a small artist, let's say Lone Justice in the 80s you get nothing as all the income goes to covering your debt to the record company.

 

Most of the smaller artists get paid when they get an advance.

 

The record company pays for videos and then charges it back to the artist.

 

Tour Support Money, you owe the company for this financial outlay.

 

Advertising, marketing anything that is out of pocket for them is charged back to the artist who must recoup [i.e. sell enough records or enough downloads, streams to pay back the record company for their financial outlay]

 

If an artist is dropped from the label and never sells enough records to get out of debt they still get to keep the advance. But any income coming in will be tied to reducing the 'debt' of the advance.

 

So small indie artists who never become Arcade Fire, at least get to keep their advance, that's real money in their pocket.

 

So that is why Taylor Swift and David Byrne are trying to change the system and royalty rates on streaming and downloads because that is real money that is paid to them. The record company has recouped all the money they advanced or spent on these artists. So it's really disingenuous of Taylor to act like she's helping the little guy.

 

She's helping the Jay Zs, Beyonces, Kanye, Eminem, U2, Adele, The Beatles, The Rolling Stones, Elvis, Frank Sinatra. That's who she's really fighting for.

[blue2blue]

Well, I doubt streaming will wipe out piracy, but it seems clear that if one gives people a halfway decent streaming experience, that a lot of people actually will subscribe. (And having been on 7 services over the last decade, I'd rate Spotify somewhat above that but not tops in the stream-o-sphere, unless perhaps one is into the social media hook-ins they have.)

 

And seeming proof of that is that, in the first 3 months of this year alone, Spotify saw a 33% increase in paid subscribers.

 

That said, if you do it wrong, all the glamour and glitz and hype in the world won't save you. As I probably noted above, Beats bought over 500,000 subscribers when it bought MOG -- but by the end of about 11 months of business at the end of last year -- and even with Apple leadership calling the even-then-probably-doomed Beats Music 'the future of music' -- Beats had sunk down to only about 300,000.

 

 

 

[blue2blue]

Here's an interesting analysis of the Apple move:

 

Apple Paid $500 Million For Beats Music, $2000 Per Subscriber

[techristian]

Basically Byrne wants more than 15% from his label which uses Spotify. He claims that they use the old model, which would includes expenses of distribution . Since there is no distribution expense from Spotify, he only wants a larger piece of that revenue received from Spotify. His request is not unreasonable.

 

Dan

[epi56ebony]

Basically Byrne wants more than 15% from his label which uses Spotify. He claims that they use the old model, which would includes expenses of distribution . Since there is no distribution expense from Spotify, he only wants a larger piece of that revenue received from Spotify. His request is not unreasonable.

 

Dan

 

Sure, it's not an unreasonable request as long as it's not in conflict with the contract he has with the label.

 

Some heritage artists signed contracts which never accounted for all the new methods of digital delivery. Many like The Allman Brothers and Cheap Trick sued the label because their royalties were based on physical media. So the labels had no basis in contract to back up how they paid them for digital sales [as usual from the "pirate" labels they gave them as little as possible] hence the lawsuits which are being settled out of court. The Allmans and cheap Trick are not the only heritage artists suing. There's been a lot and giving the labels a well deserved headache.

 

Universal Music also misinterpreted Eminem's contract for royalty payment on downloads/streaming and lost their case.

 

What is never reported in the Media is that the Record Labels are actually the biggest pirates worse than Napster and Pirate Bay. Their whole system is to ripoff any artist that doesn't make Taylor Swift money and funnel that money into bonuses for executive, who for the most part, don't have a creative bone in their body and really don't deserve what they are getting.

 

But he who holds the checkbook [and the accounting figures]...

[blue2blue]

Basically Byrne wants more than 15% from his label which uses Spotify. He claims that they use the old model, which would includes expenses of distribution . Since there is no distribution expense from Spotify, he only wants a larger piece of that revenue received from Spotify. His request is not unreasonable.

 

Dan

 

Nice sum-up. I think most of us agree.

 

Of course, if one is not under the burden of being signed to a label or someone else's label, one gets to keep 100%.

 

But, also, of course, the 'black hole' doesn't just 'steal' from signed artists -- it redirects money from the pool (seemingly) earmarked for artist compensation into a sort of revolving slush fund for 'desirable' labels that can use their rosters as a bargaining chip to extract big signing and regular re-signing fees from the services, taking it 'off the top' in a very real sense.