Who Killed The Music Industry Pt1

Who killed the music industry?
| PandoDaily
http://pandodaily.com/2013/08/05/who-killed-the-music-industry-an-inte...
An Explainer Music Production for PandoDaily
Explainer Music is: David Holmes (story, lyrics, development), Andrew Bean (music, development, design), and Sharon Shattuck (video, desi No hotlinking please. No hotlinking please. No hotlinking plea
What do you want to learn about?

Part II: CH-CH-CH-CHANGES "Personal Brand Blues" (VIDEO!) Part I: GLORY DAYS Why did the industry tank? Introduction How do artists get paid from iTunes? How royalties work ...what about Pandora? How much do artists make? ...and Spotify? How has touring changed? Where do we go now? New revenue streams
Part III: I CAN SEE FOR MI
Is YouTube a "Spotify-killer
Since 2000, the amount of revenue created from selling or streaming music in America has been cut in half, from $14.3 billion to $7 billion, according to that most despised trade organization, the Recording Industry Associatio of America, or RIAA. And yet listeners have more access to music than ever, and theres nothing to suggest that demand for music is down.
1 of 17
8/12/2013 9:29 AM
Who killed the music industry? | PandoDaily
So what or who is to blame? Is it Apples fault for launching iTunes and forever severing songs from albums? Is it the record executives fault who, facing this shift from $17 albums to $0.99 singles, continued to rely on old, byzantine licensing and sales models, even as their industry hemorrhaged money before their eyes? Is Internet piracy to blame, with Napster forever changing the way we find and consume music, and BitTorrent bringing about the record industrys worst nightmare? What about Internet radio stations? Are the rock-bottom royalty payments the result of corporate greed or government meddling? Do we blame Spotify and other music streaming services for striking opaque, unsustainable deals with record labels? And what about the unchecked proliferation of copyrighted material on YouTube and other platforms? For this explainer, we looked to identify and unravel the complex network of industry stakeholders -- the rightsholders, including performers, songwriters, record labels, publishers, and licensing agencies, all of whom play a part in the process of making music, and all of whom expect a cut of the proceeds. There are the digital music sellers like iTunes and Amazon, which have supplanted brick-and-mortar stores and play by a different set of rules. And finally, the webcasters and streaming services, which struggle to achieve profitability even though they only pay artists fractions of pennies per song per play. Follow us on a trip through recent music history as we try and figure out how we got here, where were headed, and whether todays industry slump is a disruptive dip or the new normal.
The myth of the industry's heyday
"The system's set up so almost nobody gets paid." -Courtney Love, June 2000
2 of 17
8/12/2013 9:29 AM
percentlabel/publisher $23,000. record to He the was distributor. 30 years (it can At old. the also Despite time depend it critical wasnt on the success uncommon contract and between for sold a out CD the clubs, torecord cost the upwards frenzied of Washington 17 bucks. InDC-based that case, the this, the band owns post-punk-emo-dance Not label artist that and would Morrison streaming receive isservices $2.72 complaining. band per didnt like CD. Spotify, enjoy I get the this but financial memo well get that success tothere that). of are Despite so some many the bands other who indie maybe musicians did make of his a era, lot of whos dough variability music The from year? manufacturing was2003: of palatable contracts, iTunes CDs, enough there hadMorrison barely to are sell a few come cars says, trends in out TV questioning of and commercials. the data gate. points whether that these paint artists a are rewriting history. Are they can pay the mortgage YouTube nostalgic picture But the of musicians for didnt how the sales exist. money didnt revenue Neither they get to was once did keep dispersed. Spotify made all that or or did cash. Pandora they There simply were miss recoupable out on a cultural expenses moment? paid out You of their always share remember to
none of its work they
forever but theyll never cover Radio. fun more recording, Napster than you had touring, remember shut down and music payout, and itvideo would he adds. expenses. be a yearThe lead singer of Hole, Courtney Love, wrote the definitive before In takedown 1995, BitTorrent on ofaverage this model would 35 percent all take the off. way of In the back other retail in words, 2000. price of even She a CD estimated went to that theif store, a band made an album, a million own thesold house...The
copies, before Now, 27 percent after technology went to a decade on thetour, record turned spent and company, made everything working two 16 various music upside percent videos, day down, tojobs the the itartist, including band 13 might percent a stint break at to the the even, Huffington but the record Post and label singing wouldin his home systems set uptake so wasnt church manufacturer $6.6 million: easy choir, for Morrison (even successful though and rock it the only Dismemberment bands costs to $0.10 turn ato profit. Plan $0.15 are Last to releasing make a CD) their and first 9 studio album since 2001, entering an industry year, in athats New been York further Magazine upended piece by about iTunes, the economic streaming, and piracy. But before getting into how the current paid. realities system Worst works, of facing all, after its musicians, instructive all this,Nitsuh the to band look Abebe owns back asked, none on how of its thework. music . industry . they can operated pay the in mortgage the pre-digital forever days. but theyll never own the house. . . The systems set up so almost nobody gets paid. How do royalties work? Musicians can complain all they want about piddling Spotify and Pandora payments, but look at some of the There are payouts piss-poor three situations artists from in which the pre-digital a rights holder days can received. receive R&B royalties star Toni (OK, Braxton four if told you count ABC News sheet music, that despite but lets not): Royalties generating $170 are million generated dollars when in worldwide music is purchased sales, she(mechanical only saw $1,972 royalties of that ), when over her music entire is heard career. inThats a TV show or moviepercent. 0.00116 (synchronization She declared royalties bankruptcy ), andin when 1998. music And is while performed Braxton, (performance a big seller in royalties the 1990s, ). admits that her spending habits were a factor in going bankrupt, her record label didnt do her any favors. Who gets paid? Big companies bleeding artists dry is by no means a new phenomenon. There are five different parties that can claim royalty payments for a song: First, there are the performers and the songwriter(s). Then there is the record label, which records, distributes, and promotes the album, and the publisher that owns part or all of a songs copyright, and licenses it for commercial purposes. (Most major publishers are owned by or closely affiliated with major labels). Next, mechanical rights agencies like the Harry Fox Agency collect the royalties on purchased music and distribute them to songwriters. And finally, groups called performance rights organizations like ASCAP and BMI collect the performance royalties. Thats a lot of mouths to feed. How much money does each party get?
almost nobody gets
3 of 17
8/12/2013 9:29 AM
4 of 17
8/12/2013 9:29 AM
Tech companies take over the music industry
"Make no mistake. These are the same old industry bods trying to get a stranglehold on the delivery system..." -Nigel Godrich, July 2013
It's not easy being a musician in these wild and crazy Internet times. Twitter, Kickstarter, YouTube... Enjoy a musical interlude starring an out-of-touch songwriter navigating New York's music scene, both on and offlin
No hotlinking please.
5 of 17
8/12/2013 9:29 AM
Why did the industry tank? As noted above, the whole music industry is shrinking:
But before we get into the recent shrinkage, we cant talk about the music industry without talking about Napster In 2002, then-president of the RIAA Hilary Rosen said, without equivocation, that Napster hurt record sales. the surface, she might be right. Between 1999 and 2001, when Napster was operating, the revenue generated by the music industry dipped from $14.6 billion to $13.7 billion:
6 of 17
8/12/2013 9:29 AM
andthe surprisingly, First On you'll Rolling off, other remember get Stone the hand, a percentage International article radio that there stations celebrating of the are Federation gross. twoiTunes kinds of Thats the of 10th royalties: Phonographic a anniversary, far cry, songwriter he says, Lowery Industry Steve from Knopper says (IFPI) thehe days and received writes, when the RIAA Steve around a band say Jobs, could $1,300 itsApple's had be from guaranteed an fou radio and enormous royalties last a $10,000 year chieffor and executive, effect. payout Low. performance For regardless In saw example, other Napster, royalties, of words, the whether MP3s IFPI comparing a point says 500 andthat people the that royalties often Internet after showed cracking from a different upterrestrial or down 10way. people on radio peer-to-peer By showed late to 2002, Pandora up. piracy he is believed like in France, comparing music the fans apples clearly countrys to oranges, wanted iTunes or Kurt tosales download Cobain rose to 22.5% songs the Jonas for they singles liked Brothers. in and anTerrestrial 25% affordable for digital radio and albums. easy paysway songwriters But rather Europes than more driving Institute and its torates for Tower are or not Best Buy mandated Of course, or some by theres indie the government. at record least one store aspect Pandora to buy of them pays touring on performers $15-to-$18 thats improved more CDs. and with But its during technology: rates are this mandated period, I want the by you the record to government. think industry abouthad One no affordable, play running, on Pandora booking, easy and counts maintaining legal as option one person a tour allowing without listening. this email to One happen. or terrestrial a cell Jobs phone, saw radio opportunity. play Morrison couldsays. reach It millions makes me at athink time. of Its a Christopher shame that the Columbus new models or Vasco prioritize da Gama. the performer You disappear over the forsongwriter months at a (thats time. why Adam Lambert left RCA. His Jobs fought label wantedmusic him to executives make an all-covers hard on pricing. album.) But But inits theaend, lot easier the industry to get on caved, Pandora desperate than to toget convince on FMa radio new generation without major raised label onassistance. Napster to Even start paying 2013s for out-of-nowhere music, even if success it was story on Apples Macklemore terms. But needed by ceding a leg up. pricing, You the recordcannot really companies get alost radio control hit at of this their point product. without Now major albums label were backing, back Billboards down to an Gary affordable Trust $9.99. told NPR. Singles were $0.99. On top of that, virtually any song was available as a single, not just the tracks chosen by the record label. Gone were ...and Spotify? the days of dropping $15 on one album for only a couple songs you liked. Just as newspapers became unbundled around the same time, with the expensive foreign bureaus no longer subsidized by the cheap, popular gossip pages, Unlike Pandora, theSpotifys album was performance similarly disrupted. royalty rates An artists are not 8-minute mandatedinstrumental by the government Krautrock because song it was isnt noalonger radio subsidized station -- users by the listen bubblegum to what they pop hit want, on when Side A. they want it. Instead they pay out royalties and licensing fees based on pre-arranged agreements with record labels (Spotify would not comment on the details of these). To make The data matters more supports confusing, this consumer Spotify pays shift:artists Since in 2004, proportion when the to RIAA their popularity began calculating on the service, digitalclaiming sales, digitallyWe will pay downloaded out approximately singles 2 have percent outsold of our albums gross royalties in terms of forboth an artist revenue whose and music units represents sold. approximately 2 percent of what our users stream. Therefore its difficult to say exactly how much an artist makes off Spotify, although we do have some anecdotal evidence. Lowery says Spotify pays about .6 of a penny per play, and estimates from a recent New York Times article came out to be about the same. But thats only for paid-tier customers. Streams from
7 of 17 8/12/2013 9:29 AM
non-paid customers, the article notes, pay out 90 percent less. And as always, the record companies take a cut. To recap: Heres where we stand with iTunes, Pandora and Spotify royalties (because the numbers are dependent on individual contracts and licensing deals, these are estimations): Per track, iTunes pays $0.105 in performance royalties (15 percent of what the record label keeps) and $0.09 in songwriter royalties, totalling $0.19 per download. Pandora pays $0.0011 per play in performance royalties, of which approximately 45 percent goes to the artist, resulting in $0.000495 per play. The songwriter royalties are harder to estimate, but if we go by Lowerys statement, its $42.25 for 1 million plays, or $0.000042 per play, resulting in a total of $0.000537 per play. A song would have to be streamed about 350 times to catch up to iTunes 19 cent per download rate. Spotifys negotiations are more opaque and variable so well have to go with the best estimates we have. For paid listeners, the average is about $0.006 per stream. Lets say half of that goes to the artist (thats how Lowery says his contract works), which would amount to $0.003 per play. But only 6 million of its 24 million users pay for the service. For streams from non-paying users, the rate is estimated to be only one-tenth of that, or $0.0003 per play which is actually worse than Pandoras rate. Thatd be over 600 plays to catch up to iTunes. Thats why artists like Thom Yorke have removed their music from the platform. Yorke tweeted, "Make no mistake new artists you discover on #Spotify will no[t] get paid. Meanwhile shareholders will shortly [be] rolling in it. Simples." Naturally, Graham James, Head of US Communications for Spotify, sees things differently. Spotify doesnt displace sales, he says. It helps drive them: If you look at the biggest albums of the past ten months: Mumford
8 of 17
8/12/2013 9:29 AM
9 of 17
8/12/2013 9:29 AM
10 of 17
8/12/2013 9:29 AM
11 of 17
8/12/2013 9:29 AM
12 of 17
8/12/2013 9:29 AM
13 of 17
8/12/2013 9:29 AM
The future
"Life finds a way." -Jurassic Park
New revenue streams If youve ever seen the show Friday Night Lights, youve heard the band Explosions in the Sky. Their dreamy jams are the backdrop for the shows most inspiring moments of athletic glory. Consequently, theyve become the go-to soundtrack for sports videos all over YouTube. Whether its a look back on a college wrestling teams season or a homemade highlight reel of Brazilian soccer star Ronaldinho, nothing adds drama to a sporting event like Explosions in the Skys reverb-y instrumental epics.
14 of 17
8/12/2013 9:29 AM
Martinez hopes that in the future YouTube will collect proper metadata their records off But as YouTube With so these many is videos the stakeholders biggest rack jukebox up and millions distribution online, of about views, says channels, copyrighted its 3 Elliott only its fair Studios difficult material for the Josh to band as predict soon Antonuccio. to as share what a some the If music Radiohead of that industry success, takes will right? their look records Enter like Spotify, people arent Brandon off even Spotify, a year Martinez. people from now. arent Maybe going major to necessarily record video labels is steal uploaded. will them. absorb Theyre Thatgroups way, going rights like to INDMUSIC holders YouTube wont to in listen have an attempt to tothem. play to catch-up shore up influence and revenue (Martinez says such an exit down for all histhe company videos is that not feature out-of-the-question). their work. Meanwhile, Or maybe his the going to necessarily tracking Martinez Indeed, majors will where runs move INDMUSIC, do listeners in the opposite consume a company direction, more company that free becoming helps music has bands struck than even promote anywhere more deals obsolete with themselves else artists on -- the glorified like and web? Heems, monetize distributors YouTube. late onof the Accustream Das for Web. Racist, Remember who steal them. Theyre a few estimates independently-managed months that back 38.4% when of YouTube artists. you couldnt Meanwhile, views visit releases are YouTube music Spotify much videos. is without of growing his With work coming fast, more free but than across asmany online 4 billion a basketball streaming mixtapes viewscompetitors team then a day, monetizes orthats a tech lie 1.5 blog in through billion wait, dancing daily including music toone Harlem streams. from Apple. Shake? Meanwhile, And Mad ifPandora you Decent, look YouTube, has the at the 70 label touring, million past behind tenactive and years Baauers merchandise. users of music Harlem meaning history, Its Shake, every a its way never last to enlisted circumvent one wise of INDMUSICs them to bet the would against complex have help going to YouTube to onlisten to Apple. that campaign. to 20 songs It every didnt single want to day take to quagmire the catch videos up.ofdown; royalties on the andcontrary, licensingthe on thousands Spotify and ofPandora fan videos without generated listen toand them. millions of views helped propel the requiring song to the millions top ofof the TED-happy BillboardsTwitter charts (which followers began like including Amanda Palmer. YouTube Back views On YouTube, to as the a metric original payments around question: to that rights time). Who holders do come we blame? from pre-roll ads. The rates vary wildly from $0.0025 to $0.01 per view, putting it in line with Spotifys for Unfortunately, paid subscriber as streams. more and But more only content about creators half of these jockey videos for this aread generating Martinezs any Is it revenue the record crew at labels? all, did and one Like then better: newspapers, whos It found to say revenue, a they the way revenue survived to theres monetize isfor less being decades them. money funnelled At making tothe goto time around. the massive Iproper wrote Noprofits one that rights platform itdriven might holders? by be will tough a save scarcity for the of INDMUSIC content and supported to have similar by decades-old success with deals music other with industry artists. distributors but After every all, and nobody little licensers. bit plans helps. And for although a song to iTunes become torpedoed a recordthe shattering As industrys huge as meme. revenues, that giant But consumers by corporation following were is, the more it's same still than model just happy not on enough to a somewhat adopt people Apples smaller to handle brave scale new the with world's world. artists The video like shift uploads, Explosions was inevitable. in the Sky, INDMUSIC Martinez says. So isthat's pioneering where a we new come revenue in to path provide for a musicians: specialized the service. user-generated Even in dealing royalty. with And all while the Martinez MCNs isnt ready to (multi-channel Meanwhile, shareholders talk networks) about how and now, much VCs YouTube will revenue eventually is overwhelmed. hes created, lose patience he said with that INDMUSIC Pandora and is Spotify currently if they collecting continue adto dollars post on more losses, but than that 246,000 wont help YouTube the record videos, companies. and counting. Users will find other ways to listen to the music they love, either on YouTube or by stealing it. And while the back catalogs of thousands of beloved musicians are still under the control of the old guard, newcomers will continue to go the independent route if it means they get to keep more of their royalties. It all spells D-Day for the record labels. Perhaps the only hope is for the majors to make another act of desperation like in 2003 when they let Steve Jobs take control of their pricing and distribution. And if the major labels distribution channels go out of business, and their talent goes it alone, they may have no choice.
15 of 17
8/12/2013 9:29 AM
16 of 17
8/12/2013 9:29 AM
17 of 17
8/12/2013 9:29 AM

Who Killed The Music Industry Pt1

Uploaded by

Copyright:

Available Formats

Who Killed The Music Industry Pt1

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Who Killed The Music Industry Pt1

Uploaded by

Copyright:

Available Formats

Who killed the music industry?

An Explainer Music Production for PandoDaily

What do you want to learn about?

Part III: I CAN SEE FOR MI

Who killed the music industry? | PandoDaily

The myth of the industry's heyday

Who killed the music industry? | PandoDaily

none of its work they

almost nobody gets

Who killed the music industry? | PandoDaily

Who killed the music industry? | PandoDaily

Tech companies take over the music industry

Who killed the music industry? | PandoDaily

Who killed the music industry? | PandoDaily

Who killed the music industry? | PandoDaily

Who killed the music industry? | PandoDaily

Who killed the music industry? | PandoDaily

Who killed the music industry? | PandoDaily

Who killed the music industry? | PandoDaily

Who killed the music industry? | PandoDaily

Who killed the music industry? | PandoDaily

"Life finds a way." -Jurassic Park

Who killed the music industry? | PandoDaily

Who killed the music industry? | PandoDaily

Who killed the music industry? | PandoDaily

You might also like