Members Poker99 Posted March 29, 2011 Members Share Posted March 29, 2011 http://www.hypebot.com/hypebot/2011/03/streaming-may-topple-music-industry-iceberg.html#tp The IFPI reports that digital sale grew a meager 5.1% last year and that in the U.S., growth was almost flat at 1.2%. These numbers and chart that accompanies them aren't that shocking, but they do illustrate why the major labels are both excited for Google and Spotify to come to the market, yet terrified about what may happen if they really succeed. If and when Spotify does launch in the U.S. and becomes very popular, Peter Kafka writes, "then CD sales – which still make up the majority of the industry's sales – could plummet even faster." And what happens if CDs plummet and digital downloads go stagnant? Music royalties will continue to decline too. Yesterday, Hypebot revealed that for the first time, PRS for Music reported a 1% annual fall in total music royalties. Now, PRS suspects that digital piracy and a fall in high street sales are to blame for this decline, but in the humble opinion of industry thinker George Howard, they are making a glaring omission with respect to why the royalties might be down: "lack of royalties due to streaming." The way Howard sees it, we're seeing a rapid acceleration of streaming. While consumers don't care whether they get a download or stream, it makes a big difference for an artist, as the payouts are greatly reduced. "Thus," he concludes, "streaming – not 'piracy' or 'street sales' – is what's causing the decline in royalties." The 1% decline is only the beginning of what could be a much larger trend: the toppling of the music industry iceberg.As icebergs, no matter how large, drift towards warmer latitudes, they inexorably dissolve. "The progression is barely visible but, at some point, as the exposed part liquefies under the sun, the iceberg's center of gravity moves upward and it suddenly capsizes without warning," Frédéric Filloux writes. In other words, if streaming does boom in popularity, and artists and labels aren't prepared for "the days when their margins from downloads are obliterated," Howard says, the iceberg, i.e. industry profits, could become unstable and topple over suddenly. In fear of this future, the major labels are backing plans from Apple and Google to create music lockers that add value to digital downloads. However, this business model is still based on the notion of fans buying music, "a track at a time," Kafka explains further. "I'm not sure how that pushes the digital sales curve up again."Howard concludes with this question: Are artists and content holders bracing themselves for the days when they are only getting revenue from streams? "I hope so," he says, trying to maintain his usual optimism about the future of music. "But," he forewarns, "I wouldn't be building on the iceberg right now." It's a catastrophe waiting to happen. Sometimes, when an iceberg melts, the resulting change in shape causes it to list slowly, like the record industry right now. However, icebergs can also become unstable and topple over suddenly.Like what could happen to the record industry if streaming booms too early. Link to comment Share on other sites More sharing options...
Members richardmac Posted March 29, 2011 Members Share Posted March 29, 2011 If you think about the numbers... Let's say that Artist A puts a song up for streaming. Let's say that he gets $.0003 per stream from Spotify. Roughly 1 penny per 33 streams. So to earn $1, he needs 3,300 listens. Or he needs two people to buy it on iTunes. Which would be more than a dollar... So round it and say that about 2,000 streams is like 1 sale on iTunes. It's funny when you look at the numbers. Is it easier, in this day and age, to get 2,000 people to listen to your song, or to get 1 person to buy it? I don't know. Will Spotify and the rest be good or bad for small time unknown artists? I don't know. How does Spotify decide what to pay an artist? I don't know! I'm on Spotify and looking at my CDBaby sheet, I made $.00692194 and $.00061553 and $.00029927 on individual song listens the other day. I'm rich! If you move the decimal. A lot. What I don't get is that they're all different. I could Google "how does Spotify pay" but the money doesn't make it worth my time. Link to comment Share on other sites More sharing options...
Members sventvkg Posted March 29, 2011 Members Share Posted March 29, 2011 Richard, I was astonished to find my music on Spotify whereas I hear it's a difficult process and you have to be approved to get on Pandora. Pandora will be over once Spotify starts here. So yes, I think it could be good for indie artists but it's a non starter because as long as you have your music on soundcloud, soundclick or Bandcamp you can direct your fans to it. If you are a small outfit that's really the only way they are going to find you. Word of mouth and your own advertizing. As far as the Royalty rate for streaming goes, I believe that's what's holding streaming up in the US and I can't understand why they can't work it out so it's fair. I mean there isn't the overhead associated with terrestrial radio and I can understand why the royalty rate isn't the same for streaming but there does need to be a number in place that's fair compensation. I mean, if Gaga gets the streams she should be compensated, right? That royalty rate they have now is a joke. However this gets into the larger discussion that artists are moving more into a brand rather than just selling recorded music and it's about giving to the fans first than earning the right to get paid..Lefsetz goes into this in detail in one of his latest letters and it's definitely an opinion. Don't know how it's going to shake out yet. As a songwriter the saying is that Licensing is the new Record deal, so maybe notariety gained from having your music out there and streamed will get your tunes on TV, games, Online shows, and movies thus gaining you an audience that will come see your shows. Maybe that's part of the new way an artist will make a living? Seems the Cribs and Bentley Days are over no matter how you slice it. Personally i'm fine with not getting rich as being able to make a living through my music is a gift alone. If I can attain that goal, I'll be a happy man. Link to comment Share on other sites More sharing options...
Members Poker99 Posted March 29, 2011 Author Members Share Posted March 29, 2011 I mean there isn't the overhead associated with terrestrial radio and I can understand why the royalty rate isn't the same for streaming but there does need to be a number in place that's fair compensation. I mean, if Gaga gets the streams she should be compensated, right? That royalty rate they have now is a joke. The problem is they won't be making any money if they pay a higher royalty rate. Hey by the way, how do you know if your songs are on Spotify? Link to comment Share on other sites More sharing options...
Members richardmac Posted March 29, 2011 Members Share Posted March 29, 2011 I logged into CDBaby and looked at my digital sales (and was surprised to see streams in there from Spotify, too.) I think it's cool in a way. I mean, I'm not making any "real" money anyway. I highly doubt that Spotify is cannibalizing my sales. It is weird, though, because it's been ages since I've actually done anything close to promotion. In terms of how my music got on Spotify, it wasn't me, so I have to assume it was CDBaby. I clicked the little box that basically says "Put me everywhere." And yes, once Spotify hits the US, Pandora will be dead. Link to comment Share on other sites More sharing options...
Members sventvkg Posted March 30, 2011 Members Share Posted March 30, 2011 I would assume CD baby is how I got on Spotify as well. I only found out because I was using it while I was over in Europe so I typed my own name in to see if I came up! the group of people I was hanging out with had their jaws drop to the floor when I came up. I was surprised as well Link to comment Share on other sites More sharing options...
Members Poker99 Posted March 31, 2011 Author Members Share Posted March 31, 2011 the group of people I was hanging out with had their jaws drop to the floor when I came up. I was surprised as well hahaha people outside the music biz realities are funny lol Link to comment Share on other sites More sharing options...
Members ermghoti II Posted March 31, 2011 Members Share Posted March 31, 2011 I read something in the title about topless music industry. That would have been good. Link to comment Share on other sites More sharing options...
Moderators daddymack Posted March 31, 2011 Moderators Share Posted March 31, 2011 I read something in the title about topless music industry. That would have been good. I dunno..think Meat Loaf or Elton John and it stops sounding so good Link to comment Share on other sites More sharing options...
Members ermghoti II Posted April 1, 2011 Members Share Posted April 1, 2011 I dunno..think Meat Loaf or Elton John and it stops sounding so good I dunno, meatloaf has quite a rack. Link to comment Share on other sites More sharing options...
Members richardmac Posted April 1, 2011 Members Share Posted April 1, 2011 I dunno, meatloaf has quite a rack. UGH! That is disturbing! Link to comment Share on other sites More sharing options...
Moderators daddymack Posted April 2, 2011 Moderators Share Posted April 2, 2011 I dunno, meatloaf has quite a rack. maybe if I was barbecuing... Link to comment Share on other sites More sharing options...
Members ermghoti II Posted April 2, 2011 Members Share Posted April 2, 2011 maybe if I was barbecuing... Let's do the Time Warp again! Link to comment Share on other sites More sharing options...
Members Fat_Tone_77 Posted April 7, 2011 Members Share Posted April 7, 2011 Don't know that much about Spotify but it seems to me that the more people that hear your music, the better. It can help you monetize through your other traditional channels. Phil Link to comment Share on other sites More sharing options...
Members Poker99 Posted April 8, 2011 Author Members Share Posted April 8, 2011 With Amazon.com’s recent announcement, the topic of streaming and downloading has become a front-and-center topic. Rumors are also, of course, flying about the imminent launch of similar services from Google and Apple. Given all of this it's imperative for the informed artist to not only understand the landscape of streaming, but also how this delivery change impacts revenue models.To this end, this week we focus on illustrating two points of view in our articles. While these articles both examine the same topic, and, ostensibly at least, appear to come out on different sides, the reality is that there are likely both positive and negative impacts as a result of these changes. One thing however is certain, these are disruptive times in the music business, and with disruption comes opportunity…seize it!I’m an optimist; a glass-half-full type. I believe in opportunity that comes from disruption.I believe that there will always be people making music, and that there will be methods for these artists to monetize their creations, and that there will be business opportunities for those interested in working in the music business to innovate and make money.However…I don’t believe people are adequately assessing the current situation with respect to the trajectory of the music business (and, by that, I mean today’s music business, and not what it might become — by the way, no one knows what it might become).There was a good piece that ran yesterday, written by Frédéric Filloux, entitled “The NYT’s Melting Iceberg Syndrome."While I tend to agree with the article’s assessment of the NYT’s digital operation, what really struck me was the relevance of the Melting Iceberg Syndrome and its relationship to the current music industry.Mr. Filloux sums up the theory well:…no matter how large the iceberg is at the beginning, it inexorably dissolves as it drifts toward warmer latitudes. The progression is barely visible but, at some point, as the exposed part liquefies under the sun, the iceberg’s center of gravity moves upward and it suddenly capsizes without warning (that’s why there is no permanent manned base on icebergs): “As an iceberg melts, the resulting change of shape can cause it to list gradually or to become unstable and topple over suddenly”. (From The use of catastrophe theory to analyze the stability and toppling of icebergs Annals of Glaciology, 1980).What prompted me to write this piece was a piece on Hypebot entitled, “Another Industry First: Music Royalties Fall 1%.”While the title of the article isn’t surprising, what is surprising are the reasons PRS ( a Performing Rights Organization in the UK) assumes royalties were down: “PRS suspects that digital piracy and a fall in high street sales are to blame.”There is, imho, a glaring omission with respect to why royalties might be down: lack of royalties due to streaming. It’s this issue that really resonates with me with respect to The Melting Iceberg.I’ve written at some length about the rapid acceleration of streaming. In an era of constant connectivity and universally available content, there is no distinction from a user’s perspective between streaming and downloading.There is however a distinction from an artist/content owner’s perspective.Put simply, if you’re an artist who is used to getting ~$7 for the sale of a ~$10 download from iTunes (or ~$.7 for the sale of a ~$1.00 single), your revenue is being diminished by several orders of magnitude when that same album/song is streamed.While the figures change in terms of payments depending on if the stream is interactive (ala rdio, spotify, etc) or non-interactive (ala Pandora), in both cases the payment from streams is a number that has a decimal point, and then several/many zeros before a number that’s not a zero pops up (e.g. $.000x or $.000000x).Thus, streaming — not “piracy” or “street sales” — is what’s causing the decline in royalties.And, I do very much believe that the 1% decline is the tip of the proverbial melting iceberg, and that the iceberg is indeed listing, and that the days of artists/content holders seeing royalty payments even approximating amounts they’ve been accustomed to from the sales of downloads are rapidly coming to an end.Certainly, direct to fan models offer some support, but, again, when customers begin demanding streams as opposed to buying downloads, artists will need to evolve and service the customers via a stream, and this will materially impact their revenue models.In fact, it could obliterate the direct to consumer model. The very thing that makes direct to fan so compelling — cutting out the middleman in order to have a higher margin for downloads — is fundamentally altered. When (eventually – sooner rather than later) a customer comes to a favorite artist’s site, and wants to stream the music, will they really pay more to do so from an artist’s site than they do as part of a Spotify/rdio subscription? Will they pay at all?No. Of course not. The value proposition is all off.This doesn’t mean that others (subscription, exclusive tracks, tix, merch, special packages, whatever) won’t fill some of the void, but those hefty margins that occur currently when a customer downloads directly from an artist’s site will soon(ish) be a thing of the past.Sorry for the doom and gloom. Maybe I’m wrong (I’m not).As I’ve said, there will be new models that emerge (and, yes, there could be an increase in volume of streams that will offset some of the decline in revenue loss, but there’s going to have to be a massive increase of streams; I don’t see it), but I feel very compelled to at least raise the question: Are artists/content holders preparing themselves for the days when their margins from downloads are obliterated and they are only getting revenue from streams?I hope so, but I wouldn’t be building on the iceberg right now. http://blog.tunecore.com/2011/03/part-1-the-melting-iceberg-syndrome-and-the-music-business-1.html#tp Link to comment Share on other sites More sharing options...
Members flatfinger Posted April 8, 2011 Members Share Posted April 8, 2011 And, I do very much believe that the 1% decline is the tip of the proverbial melting iceberg, and that the iceberg is indeed listing, and that the days of artists/content holders seeing royalty payments even approximating amounts they’ve been accustomed to from the sales of downloads are rapidly coming to an end. The only logical conclusion that can be drawn is that those who hold and control the channels of distribution are betting that the consumer will be quite content to consume content that is already in existence. There is a plethora of music in the database , a very large amount to be explored . The legacy catalog is seen as the golden goose ; already at hand and in their possession. The stockholders of the corporations don't spend any time contemplating whether the business models of the companies they are betting on put a choke hold on quality content creation. They only care about a return on investment , and the means is of little concern . Of course a stranglehold on the channels of distribution also puts one in a position to force the few who insist in continuing to create to do so from a position akin to a sharecropper of old ..... All and all , If current trends continue, the future seem so bright that you can go ahead and leave your sunglasses at home !!! Link to comment Share on other sites More sharing options...
Members flatfinger Posted April 8, 2011 Members Share Posted April 8, 2011 Don't know that much about Spotify but it seems to me that the more people that hear your music, the better. It can help you monetize through your other traditional channels. Phil But what if the potential customer can stream you content at will , at all times ??? Why would they then come to your web site or traditional channels ? what would motivate them ? Link to comment Share on other sites More sharing options...
Members richardmac Posted April 8, 2011 Members Share Posted April 8, 2011 Why would they then come to your web site or traditional channels ? what would motivate them ? Oh, you KNOW the stock/canned answer for this one! Repeat with me: "Listeners will go to artists websites and follow artists on Twitter and Facebook because they want to have a personal connection with artists and hear what they had for breakfast, what color their pee was first thing in the morning, whether they pooped or not, what TV show they are watching, some lyrics from the new song they're working on, and whether they're imagining someone else when they're banging their girlfriend." Isn't that what the gurus tell us? If not, I need to stop using Twitter in the bathroom... Link to comment Share on other sites More sharing options...
Moderators daddymack Posted April 8, 2011 Moderators Share Posted April 8, 2011 Oh, you KNOW the stock/canned answer for this one! Repeat with me: "Listeners will go to artists websites and follow artists on Twitter and Facebook because they want to have a personal connection with artists and hear what they had for breakfast, what color their pee was first thing in the morning, whether they pooped or not, what TV show they are watching, some lyrics from the new song they're working on, and whether they're imagining someone else when they're banging their girlfriend." Isn't that what the gurus tell us? If not, I need to stop using Twitter in the bathroom... 1) TMI... 2) WTMI As most of you know, I do not buy into any of this social media stuff as far as my musical or personal life. I already dedicate much of my time to writing, practicing and moderating here, plus work, a relationship, family, friends, drinking, gambling... Honestly, the whole SM concept seems to be shallow to me on all counts. Yeah, I'm old, a luddite, whatever, but really...just because you can do something, doesn't mean you should. Really, what does any of this have to do with whether or not some one likes my music? Why does anyone need to know what I like to eat? Boxers or briefs? Vampires or werewolves? Hi-tops or oxfords? This is how I will have to sell my music? Borscht! Link to comment Share on other sites More sharing options...
Members richardmac Posted April 9, 2011 Members Share Posted April 9, 2011 I'm an anti-luddite and I agree with you. It's like many things - behind the BS stands a reasonably good idea - Fans would love to have a two way street of communication with their musical heroes. For example, if I emailed Peter Gabriel and said "Where did you get the idea for 'Shock the Monkey' and he emailed me back a reply, I'd be thrilled! I once got an email from Steve Wozniak out of the blue because of a forum post I'd made in an educational technology forum (it was a positive post BTW.) I printed it out and I still have it. Interaction of any kind with our heroes is a big deal. So the same thing would apply to Twitter, Facebook, and so on. So what the NMBG's (New Music Biz Gurus) have done is taken that idea to the extreme. The biggest problem is that if you're an unknown you're NOBODY'S hero. This relates to several previous threads where I've argued that 90% of the advice out there assumes you have a large fan base already and 90% of the artists out there don't. A website is important because it can contain samples of your music (or links to samples) as well as information on how to contact you. You can also include information on your upcoming shows, and IF there's any important news (like a review in the local paper) then you can link to it and share it. The idea that you have to be on there all the time kicking out info so that your "fans" don't forget about you is shallow and stupid. If you're going to do anything like that, it probably makes the most sense to release a song per month or something. Something that actually has value. Link to comment Share on other sites More sharing options...
Members flatfinger Posted April 9, 2011 Members Share Posted April 9, 2011 But as long as they are streaming my music, and I am getting paid, then so what? Didn't you read the small detail about how instead of making $6 for a cd with 10 songs you make $.06 X 10 songs ?? I guess the bottom line is no one really wants to pay anymore than they have too . I'm not an expert ,but my Impression was that a gazillion streams paid enough buy a dinner at denny's ... Link to comment Share on other sites More sharing options...
Members Poker99 Posted April 9, 2011 Author Members Share Posted April 9, 2011 So what the NMBG's (New Music Biz Gurus) have done is taken that idea to the extreme. The biggest problem is that if you're an unknown you're NOBODY'S hero. This relates to several previous threads where I've argued that 90% of the advice out there assumes you have a large fan base already and 90% of the artists out there don't. Yes but the crowd of wannabe's desperately want to believe them. They give them what they want, which in turn gets them more readers. Link to comment Share on other sites More sharing options...
Members richardmac Posted April 9, 2011 Members Share Posted April 9, 2011 Yes but the crowd of wannabe's desperately want to believe them. They give them what they want, which in turn gets them more readers. Uh-huh. Thus the "Dream Merchant" label. You know, in a way, what they're doing isn't that much more different than selling lottery tickets. But we don't bag on lottery ticket sales. Probably because we imagine that everyone is more aware of the crappy odds. In Florida people play the lottery and the proceeds go to education. But what the state government did is essentially subtract the same amount from what they were already spending per student... so it was a shell game. On the other hand, it is easier and more possible to achieve "partial success" by following the dream merchant advice. Certainly some of the strategies do work to some extent. If I'd never listened to anyone's advice, I would not be making money selling music online right now. Granted, it's chump change, but in this economy every little bit helps. I have one gig that pays for lawn service - the money I make at the gig pays for the money I spend on lawn service. It's not a great gig but I'd rather play music than be out in the hot sun killing weeds. Link to comment Share on other sites More sharing options...
Moderators daddymack Posted April 9, 2011 Moderators Share Posted April 9, 2011 Didn't you read the small detail about how instead of making $6 for a cd with 10 songs you make $.06 X 10 songs ?? I guess the bottom line is no one really wants to pay anymore than they have too . I'm not an expert ,but my Impression was that a gazillion streams paid enough buy a dinner at denny's ... on the plus side though, I didn't spend any upfront money on art, replication, printing, etc. to make that $.06... Link to comment Share on other sites More sharing options...
Members richardmac Posted April 9, 2011 Members Share Posted April 9, 2011 It's more like $.0006, by the way. Link to comment Share on other sites More sharing options...
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