A blog for musicians and music industry people. It is a free educational resource and it is also the way I advertise my music consulting services. I am an entertainment professional with deep roots in the music industry. Throughout my music career I have been a major label A&R representative, a music supervisor, an artist manager, a reality show producer, a bass player and the head of a digital record label.
Posts Tagged ‘Music Licensing’
New Zealand PROs collaborated on an all-in-one music performance license. Also, artists were urged by music companies not to update to the latest version of iOS. And Pandora reported it has seen no negative effects from the release of iTunes Radio.
OneMusic Transforming New Zealand’s Licensing System
New Zealand’s APRA and PPNZ Music Licensing combined their licensing services to created OneMusic, a new single public performance license that will give all establishments and music users the right to publicly use licensed music and ensure music creators get appropriate royalties, said Music Week.
OneMusic is the first all-in-one music licensing system in the world and will replace the old license offered by the two PROs. Chief Executive of PPNZ Damian Vaughan said the new model was designed to decrease the confusion of collecting royalties for songwriters, publishers, record labels and performers: “Our customers were telling us that the international norm, which is a two-[license] model, was frustrating and confusing … APRA and PPNZ exist to represent different rights holders, so we have always operated independently and have calculated fees in different ways. Too many customers were not even aware they needed both [licenses]. So now we’re dealing with the complexities behind the scenes. That’s our job.”
Anthony Healey, Director of New Zealand Operations for APRA added that the process of creating OneMusic was enlightening for the two organizations and allowed them to see how significantly rights management has changed in the Digital Age: “We need to focus on simplicity in everything that we do for our customers … The idea of dual performance rights is complex for the music industry itself let alone the general public that just want to get access to music legally.”
The new licensing model will also help retailers ensure they are not accidentally breaking the law or over-paying when they play music in their establishments. New Zealand Retailers Association CEO John Albertson stated, “Not everyone has known they needed two music [licenses] and indeed sometimes it seemed over the top to be charged twice to play music. We’ve had a look at how much our members will be paying now based on the OneMusic calculations and it seems reasonable.”
Musicians Urged to Wait on an iOS7 Upgrade
The release of Apple’s latest operating system for iPad, iPhone and iPod touch proved exciting for many musicians, who imagined it might finally bring them a mobile operating system for making music that was equal to a desktop OS. But publications and software developers urged those that use their devices to create music to wait to upgrade until some major bugs have been worked out, according to The Music Network. App developers at Audiobus were the first to offer a warning: “iOS 7 audio is not ready. There are a wide variety of bugs that are causing performance problems, crashes and other problems in a large number of music apps.”
The most serious problem is that incoming calls can interrupt audio recording. Other bugs involve the inner-app audio, USB audio interfaces and general functionality of the apps.
Create Digital Music warned that this is not a problem specific to iOS7: Music app users have always had to be wary of OS updates, because music apps use a lot of low-level audio performance and networking functions that make them particularly susceptible to even the slightest OS changes. However, the website noted that artists need not panic; they just need to wait to install new OS features until the issues with audio applications are resolved by Apple.
An Audiobus spokesperson agreed: “I’m sure Apple is doing everything they can to fix bugs as fast as possible and I trust they’ll fix all the things I’ve mentioned above in the next point releases.”
iTunes Radio Having No Early Impact on Pandora
Pandora’s September statistics showed increases in listener hours and monthly active users, showing that – at least in the first two weeks since its release on September 18 – Apple’s iTunes Radio has yet to make a major impact on the leader in streaming radio.
Billboard revealed that last month, Pandora enjoyed 1.36 billion listener hours, a 0.7 percent increase from August and an 18 percent increase from the same period in 2012. New listeners were up 0.8 percent during the month and 25 percent from the same time last year. While increases were very small, they were within the realm of what is normal for Pandora. The only factor that likely inhibited the company’s growth was the introduction of the mobile listening cap.
Still, iTunes Radio made a big impact: Over 11 million people tried the new service within its first five days. But how many of those people will become frequent and regular listeners remains to be seen.
One element iTunes Radio has going against it – at least for now – is its limited geographical scope. Pandora is available outside the U.S. in recently-added music-loving countries like Australia and New Zealand and also in other areas, whereas iTunes Radio is currently only in one country.
And Pandora’s lead over its Internet radio competitors is huge, which will make a real takeover of the market by Apple challenging. Figures for August show that Pandora had 911.9 million session starts, and Clear Channel was in second place with only 167.9 million session starts.
Yet Billboard pointed out that Internet radio is a major growth industry, and many small companies have still been successful at entry despite Pandora’s command. Songza recently raised $4.7 million for its advertising business, and Earbits signed up 12,000 indie artists and over 600 labels. France’s Radionomy became available in the U.S. in 2012 and now streams over 45 million hours per month. Because many small music services have found success in the market, iTunes Radio’s presence could still grow significantly in the coming months.
Pandora won one of its several on-going music licensing lawsuits involving ASCAP. And former Wall Street banker John Langdon released a comprehensive white paper revealing the surprising value of the Electronic Dance Music (EDM) industry. Also, Daft Punk’s latest album helped spark the French music industry’s first positive sales results in a decade.
Pandora Keeping its Streaming Music Licensing Rights
Pandora Media won another royalties dispute in a Manhattan federal court on September 17, The New York Times reported. A judge ruled that the American Society of Composers, Authors and Publishers (ASCAP) cannot stop Pandora from obtaining licenses for all songs in its catalog.
Major music publishers have recently been trying to improve royalty rates for digital music by giving performing rights organizations (PROs) limited rights to their songs. As an example, Sony/ATV said it earned a 25-percent higher rate by licensing its songs directly to Pandora on its own behalf. This ruling will limit the effectiveness of this tactic and also hurt PROs’, who could be blamed for failing to bring their members higher royalties.
Pandora’s argument in this case was that allowing publishers to withdraw digital rights from ASCAP would violate ASCAP’s long-standing rule that it must license songs to any service that makes a request. The judge’s ruling states that ASCAP has to offer all songs in its catalog to Pandora until the end of their contract in 2015. The close of this case comes several months before a larger rate-setting trial between Pandora and ASCAP, which starts on December 4.
Pandora’s assistant general counsel Christopher Harrison offered a statement on behalf of the Internet radio provider: “We hope this will put an end to the attempt by certain ASCAP-member publishers to unfairly and selectively withhold their catalogs from Pandora.”
ASCAP’s attorney John LoFrumento said that in spite of Pandora’s win in this case, he and his client are optimistic about improving the financial climate for songwriters and creators in the future: “The court’s decision to grant summary judgment on this matter has no impact on our fundamental position in this case that songwriters deserve fair pay for their work, an issue that the court has not yet decided.”
Pandora has over 70 million regular users. In the past year, it has come under attack by the music industry for its attempts to decrease the licensing fees it pays. In 2012, the company also backed the failed Internet Radio Fairness Act in part to help it reduce costs and increase advertising revenue, a practice that has continued to increase the value of its stock.
EDM Study Exploring the Value and Rapid Growth of the Genre Released
The first-annual white paper analyzing the reach, influence and worth of the thriving global Electronic Dance Music (EDM) industry was released on September 16 by long-term Wall Street analyst John Langdon and his firm Massive Advisors LLC. Electronic Dance Music (EDM): The Digital Pangaea revealed the EDM market to be worth $15 – $20 billion and represents one of the most extensive studies ever done of the macroeconomic impact of this segment of the music business and its overall culture, according to information released by Yahoo/PRNewswire.
EDM has been steadily growing for the past few years and recently found its way into the mainstream. Still, there have been very few studies done of its impact on the overall music industry. In his report, Langdon compiled public and exclusive data statistics to offer a clear picture of the dance music market.
The white paper also illustrated that EDM is still largely misunderstood and often ignored around the world by music distributors, acoustic manufacturers, brands and governments. While the overall EDM market is worth as much as $10 billion, the biggest acts and companies earned approximately $4.5 billion in sales last year. And digital music revenues in the space grew by 9.8 percent. There was also a 17-percent increase in festival attendees at the top five global festivals as well as a 33-percent rise in the number of festivals thrown. Massive Advisors also found that between 2009 and 2013, attendees at EDM festivals increased from 1.9 million to 3.4 million.
French Music Industry Growing Thanks to “Homegrown” Artists
The success of French duo Daft Punk’s blockbuster album Random Access Memories has contributed to a major turnaround for the music business in the group’s home country, stated The Guardian. France’s industry recently posted its first positive sales figures after a decade of deep decline.
The French record industry saw a 22.7 increase in sales for the second third of 2013, compared with the same period in 2012. Total record sales in France in the first half of this year are up 6.1 percent from last year at the same time, including CD sales and revenue from digital downloads and streaming. A large percentage of these sales can be linked directly to Daft Punk’s latest release.
The major French music industry group the Syndicat National de L’Édition Phonographique expressed “cautious optimism” at a recent press conference, crediting Daft Punk with also driving French music fans to buy more music by other French-born artists. Nine of the top 10-selling albums in France during the first half of 2013 were made by French artists.
Amazon also announced that Random Access Memories is its best-selling vinyl LP of all time worldwide. In the UK, the album sold 165,000 copies the first week after its release. “Get Lucky” is also the French single that most quickly earned one-million sales in the UK, beating out DJ David Guetta’s former record.
French music companies have taken a major hit in the past decade, and many firms have had to ask for government assistance to stay in business. In light of the industry’s upturn last week, culture minister Aurélie Filippetti announced he was working on two new contracts related to online music and its placement in television and radio.
Google finally launched its streaming music service Google Play “All Access.” And digital music entrepreneur Marcus Taylor asked whether or not the music industry was really ready for the challenges of mobile. Also, Warner Music reported its first profit in five years.
Google Play’s “All Access” Hitting a High Note with the Industry
The long-awaited on-demand subscription music service from Google, “Google Play Music All Access” finally launched on May 15 at the company’s I/O conference in San Francisco, reported Tech Crunch. With versions for the Web and mobile devices, it presents millions of instantly-playable songs, charts and playlists, instant radio stations and recommendations for the same price as Spotify Premium ($9.99).
News of the release leaked first on The Verge, when reporters from the site found out Google had signed licensing deals with all major record labels. Google initially launched its Google Play music locker service in 2011.
Google’s due diligence at building relationships with those in the music industry as it launched All Access has made it very popular with label heads. But Richard Waters and Andrew Edgecliffe-Johnson of the Financial Times wondered last week whether All Access will be enough to overcome the past problems Google has had getting along the music industry and to build a real audience that is willing to pay out of its gigantic user base.
One detail that will help its cause is that Google has, according to sources, agreed to make all payments up front for licensing. Apple has not yet included this type of promise in any of its proposed deals for its potentially upcoming iRadio service. And an unnamed music industry executive said another problem between Apple and labels is a disagreement over whether Apple should still have to pay if a listener wants to skip over tracks.
All Access has found a creative way around skipping that benefits labels and users. Listeners can pick a specific song they like and create an entire “station” made up of similar music. Then they can view the upcoming tracks on the playlist, reorganize and skip to their hearts’ content. Pandora’s monthly premium service costs $6 less per month than Google Play and does not offer this type of flexibility.
The music industry is also pleased that Google is not trying to out price its competitors. While it is offering a limited-time offer of $7.99 per month for All Access (until June 30), it will eventually be the same price as Spotify Premium. Google’s philosophy is that if it uses a business model similar to Spotify and taps into Google’s huge user base, it will be able to make subscription music services more popular. The IFPI recently reported that subscriptions now make up 20 percent of the digital music market in Europe and just 10 percent globally.
One industry executive said that there are still those in the music industry that are skeptical as to whether Google’s subscription service will succeed: “It’s Google, so you have to take it seriously. It’s kind of down to the service itself – how user friendly and intuitive it is, and how they market it. They have a mixed record in that regard. Google Play has been OK but has not been a game changer. The brand Google doesn’t have a great association with music.”
The Music Industry: Ready for the Mobile Boom?
Has the music industry really noticed how popular mobile music has become? And is it ready to respond? This is a question Marcus Taylor, founder of the digital music marketing company Venture Harbour asked after analyzing the recent changes in his and other music fans’ listening habits in an article posted on The Music Void.
Taylor looked at the analytics for his own company website and realized that since the beginning of 2013, one-quarter of his traffic had come from mobile devices, whereas two years ago, mobile traffic made up only six or seven percent.
With potentially one in four fans or customers coming into websites through a mobile device, his opinion is, the music industry may not be taking the world’s steady shift towards mobile devices seriously.
He searched various brands, artists, labels and other music companies across the Web using his mobile devices and discovered that most have not yet built up mobile-friendly environments. Many of the world’s biggest bands, instrument manufacturers and music stores still have not figured out how to create a mobile experience that caters to the needs of mobile customers.
Taylor said, there are a lot of low-cost and simple options for anyone that wants to build up a friendlier mobile presence. Companies, bands and labels can just make a few simple coding changes to their existing website. They can also redirect users coming in from a mobile device to a mobile-optimized version of the website (the technique used by companies like Gibson and Music Job Board).
And Taylor wondered, with stats increasingly and quite obviously pointing to the huge growth of the mobile market, “What are we waiting for … Do we need 50% of our traffic to come from mobile for it to become a worry? Do we need to double check that this isn’t a phase?”
Warner Music Group Finally in the Black
Warner Music Group Corp. finally reported a profit for the first time since 2008 on May 14, revealed the Associated Press. The label houses artists such as The White Stripes and Blake Shelton and attributed its success to benefits from increased digital music sales.
The label’s latest turnaround could also present further evidence that the recorded music industry is finally recovering from the tailspin it has been in for more than ten years.
Net income reported in Warner Music’s second quarter ending on March 31 was $2 million. Last year at this time, it experienced a $36 million loss. The last profit posted by the company was $23 million, in the quarter ending December 2008.
Revenue at Warner was up eight percent, climbing to $675 million. And digital revenue increased by 20 percent. The percentage of revenues from digital sales from sources, including digital download stores and streaming services, was up by almost four percent.
CD sales have gone down by over 50 percent since their highest point at 2000, which contributed to the same cut in industry-wide revenue.
Warner Music also renegotiated its debt interest in November, which could have helped nurture its latest profit. Because the company still has publicly-traded debt, it must release its financial results each quarter.
A Nielsen study found that untapped resources within the music industry could increase revenue by billions of dollars. And Twitter hinted that its new music discovery app could release later this month. Also, a report showed that retitling is steadily becoming one of the top problems faced by artists and publishers.
Fan-Artist Connections and Premium Content Key to Increased Music Revenue
The billions of dollars in revenue lost by the music industry in the past decade could be recouped by allowing music lovers to connect more personally with artists and by offering premium content to fans, according to Billboard and a Nielsen study.
The study was revealed on March 12 at the SXSW panel “The Buyer and the Beats: The Music Fan and How to Reach Them.” The survey was of 4,000 music consumers, including PledgeMusic users and fans attending SXSW. The questions explored how enthusiastic the different types of consumers were to connect with artists through exclusive music merchandise and premium content.
Nielsen discovered there could be incremental revenue totaling anywhere from $450 million, to $2.6 billion if artists, managers and labels improved the products and unique experiences offered to fans. Chief Analytics Officer at Nielsen Entertainment Measurement confirmed the findings: “Fans want more … There is an unmet need there. There is a desire to engage at a different level than what they have.”
Of course, the concept of building highly-personal relationships between artists and fans is not a new concept. Crowdfunding sites like Kickstarter allow artists to enlist the direct support of fans as they work on new projects and, in turn, offer these fans special goods and experiences that get sweeter for fans the more money they contribute. For example, if more artists capitalized on these types of platforms, instead of getting just $15 for a CD from a die-hard fan, an artist could get $300 in exchange for a CD, a t-shirt and a 30-minute Skype conversation.
Nielsen’s findings extended beyond crowdfunding and superfans. Even less engaged fans will pay for premium content if it is offered. Over half (53%) of the most active music buyers said they would pay for exclusive content while a band they like is recording a new album. And while those that spent less on music overall were less interested in paying money for premium content, 22% of listeners that spend an average of $73 per year still admitted they would spend money on special content.
Zack stated, 80% of survey takers were referring to major label artists when they said they would pay extra. However, those that spend a lot of money on music annually were more likely to be interested in indie artists than those that spent less.
But even if more artists take advantage of crowdfunding sites like Kickstarter, there could be a problem when dozens or hundreds of artists are fundraising at the same time. CEO of PledgeMusic Benji Rogers took part in the study and said that “donor fatigue” could be a real problem if too many bands are constantly asking their fans for money: “I think we have to change the conversation. Part of what we did different at PledgeMusic was we didn’t show the financial target. One of the reasons is, I don’t think it’s about the money. [Fans] want experience.”
Twitter Working on a Music Discovery App
Twitter has a standalone music discovery app in the works, thanks to technology attached to its recent acquisition of the music discovery service We Are Hunted, said CNET. The app will be called Twitter Music and could be available on iOS as early as late March.
Twitter Music offers up artist suggestions based on user behavior and is personalized based on which accounts users follow on Twitter. Songs stream through the app courtesy of SoundCloud.
The release of Twitter Music will coincide with the overhaul of Facebook’s music section of its News Feed. The app provides proof that Twitter is finally working towards becoming a comprehensive media company and acknowledges how integral music has been to, in particular, attracting new, younger users to the platform. Pop stars are incredibly popular on Twitter and some are followed by tens of millions of fans. The TwitterMusic account already has 2.3 million followers.
Twitter also released a video sharing app in January called Vine, but the Twitter Music app will, firstly, be different because it will have Twitter branding. Once launched, the app will feature a guided tour. Once signed into the app, those with Twitter accounts will get personalized music recommendations. Non-Twitter users will also be able to use the app, which could convert new users. Twitter Music is also very artist friendly and will allow users to follow artists on Twitter directly from the app.
The We Are Hunted free music discovery service technology will run Twitter Music. We Are Hunted was started by a group of Australian software developers in 2009 and is still available, though it was acquired by Twitter sometime within the past six months. The service builds a Billboard-like chart for online music and tracks popular songs on blogs, social media, message boards and BitTorrent. Through the service, users can stream music, build playlists and share songs through social media.
Industry experts continue to speculate whether or not an influx of new users on Twitter Music will be enough to make it competitive with the many other popular companies that offer music discovery features, especially since it will not provide offline storage of songs and other attractive features. Pandora has over 67 million users and Spotify has 24 million and growing. Facebook also made music discovery a major focus of its latest news feed redesign, and, of course, Google is in the process of securing licensing to create its own subscription music service.
However, Twitter Music could boost successful artists’ abilities to forge new relationships with their fans on a platform they use many times daily.
Is Retitling a Real Threat to the Music Industry?
The music industry has been intensely focused on curbing piracy for the past decade, but retitling could be just as much of a threat to artists’ and publishers’ royalties. An infographic published in Memeburn revealed how ingrained retitling is and the negative effects it could have if it continues to grow.
“Retitling” refers to the phenomenon where a music licensing company re-registers a song under a different title with a PRO, so that royalties are tracked separately for different sync placements and the music licensing company gets a share of the placement royalties.
The infographic report was originally published by The Music Licensing Directory and points to the complexity of the retitling problem, especially when it comes to existing artist, label and publisher contracts. The report said: “Sync placement is the strategic airing of a song across different mediums, such as television shows, films and games. The person who decides which song to put where and when is the music supervisor and they deal with the music licensing companies directly.”
Getting a song into a TV show can be challenging, because the relationship between the artist and the music licensing company or publisher must be solid. Artists record the song, sign the rights over to one or many publisher(s) as part of an exclusive or non-exclusive deal. Then the publishers pitch the song to different music supervisors. When the deal is non-exclusive, the publisher will frequently retitle the song with a PRO, giving the artist writing credits and the publishing company publishing credits. This should technically provide a 50-50 split return on royalties. However in an exclusive deal, the publisher often only gets 20-35 percent.
Retitling regularly causes the same song or songs to go to many different publishers. So, the same song will get pitches to TV shows, films, games, etc. over and over again under different names. The result is, the music supervisor will not know who should get the publishing royalties.
Winston Giles, CEO/Founder of the Music Licensing Directory said, “Music supervisors are becoming more and more reluctant to accept retitled works, and some of the bigger studios and companies are now refusing to work with retitled works in their productions.”
And the infographic shows the extent of the problem: Of the over 1,500 companies worldwide that identify as music licensing businesses, 40% of them retitle tracks. And only 420 of the companies have been confirmed by Giles and his team to be legitimate.
However, digital fingerprinting technology could offer some relief and help eliminate retitling. It identifies a song’s data automatically and records its broadcast details. But Giles admitted, “Some royalty collection societies have begun the implementation of digital fingerprinting. However, there remains no industry standard and the adaption away from archaic cue sheets to the new technology has been very slow.”
Ultimately, technology alone will not solve the retitling problem. Artists will need to better educate themselves before signing any contracts in order to maximize their royalties.
Global music sales were up in 2012, thanks to continued digital innovation, while digital piracy rates dropped significantly. And Google started discussing licensing with labels in preparation to launch a new streaming music service to complement Google Play.
Positive Sales Could Mean Official Music Industry Recovery
The International Federation of the Phonographic Industry (IFPI) released a report in London declaring worldwide music sales had increased by .3 percent in 2012. Released on February 26, the report reveals the first official growth spurt since 1999, which could signify that the official recovery of the business is finally in progress, according to The New York Times. And analysts believe this growth is largely due to continued music technology innovation.
Total music revenue last year was $16.5 billion – significantly less than the $38 billion taken in when the industry was at its peak in the late ‘90s. However, the news is still heartening. Frances Moore, chief executive of the IFPI said, “It’s clear that 2012 saw the global recording industry moving into the road to recovery … There’s a palpable buzz in the air that I haven’t felt for a long time.”
The music industry has been in decline for years, as record labels and other companies that long followed old-school business models have resisted or struggled to adapt to new technology and come up with viable digital business plans that lure music fans away from acts of online piracy. But the fact that digital sales and other new revenue sources grew enough to offset the loss of physical CD sales in 2012 could mean that more businesses are finally embracing the digital revolution.
Edgar Berger, chief executive of the international branch of Sony Music Entertainment said, “At the beginning of the digital revolution it was common to say that digital was killing music … [But now it could be said] that digital is saving music.”
Digital revenue comes from diverse sources, including downloaded singles and albums from platforms like iTunes and Amazon, which have continued to rise in spite of the introduction of explosively-popular subscription streaming services. Spotify, Rhapsody and Muve Music attracted 44 percent more subscribers in 2012, bringing the total number of streaming music subscribers to 20 million. And there will likely be new services from Apple and Google in the coming months, as royalties from musical performances and marketing music uses also grow.
Despite increased revenue overall, there is still a disparity between the music economies of different countries. Eight of the 20 largest music markets grew last year, but in Russia, China and other countries that still have “emerging” markets, piracy is still a major problem that suppresses the success of legal digital services.
And some formerly thriving markets like Britain have experienced troubling decline. The bankruptcy of retail music chains like HMV have many experts concerned that CD sales will decline too rapidly for the digital marketplace to pick up the slack.
Sales slipped in the U.S. in 2012. But London-based research firm Enders Analysis released a separate report last week, which predicted that the U.S. market would rebound in 2013, going from $5.32 billion to $5.35 billion.
Enders Analysis Senior analyst Alice Enders said the reported growth is “huge” and a “milestone,” but that growth might be slow in 2013, because CD sales would likely experience a major fallout. She added that the music industry might not ever return to its previous size, but it could still become healthy and profitable again, particularly since switching to digital delivery of music has significantly lowered operation costs for record companies.
Labels, fearful of online piracy, notoriously resisted digital distribution. While they initially did not see the opportunities for profit it presented, they started to embrace the models they rejected, like free, ad-supported music services.
The IFPI report indicated that the industry earned 34 percent of revenue from digital sources last year, more than other media outlets. In the U.S., India, Norway and Sweden, digital sales already account for 50 percent of total sales.
Some analysts believe that if music executives had taken a progressive stance in 1999, growth would not have taken over a decade. Paul Brindley, chief executive of the consulting firm Music Ally stated, “If there is a lesson to take away, it is probably that the earlier you can embrace new business models and services, the better.”
Piracy Rates Down in 2012
Illegal downloading and file sharing was down in 2012, a report conducted by research firm NPD Group found. CNet reported that NPD’s Annual Music Study 2012 found that of the music fans surveyed, 40 percent of those that downloaded music via P2P services in 2011 admitted they had decreased this practice or stopped it altogether in 2012. The year 2005 was the high point of P2P file sharing network use, with 33 million people using them. In 2012, the use of P2P services overall decreased to 21 million.
A decrease in piracy was also seen in other areas. Songs burned from CDs owned by friends and family was also down by 44 percent. And the number of songs grabbed from digital lockers was down 28 percent.
NPD said there were three reasons for lower piracy rates. First, free music streaming services that gave music lovers a robust listening experience attracted former illegal downloaders. Half of the people surveyed said they had cut back on illegal downloads or stopped completely because of increased options afforded by free, legal streaming.
Secondly, the music industry’s legal actions have driven a lot of P2P sites out of business. For example, former P2P giant Limewire shut down almost two years ago after being found guilty of violating copyright.
Third of all, many P2P sites have made users susceptible to viruses and spyware, which prove to be too high a price to pay for free music. Of those P2P users surveyed, 20 percent said they curbed their downloading behavior because a favorite site went offline or infected them with a virus.
Russ Crupnick, NPD’s senior vice president of industry analysis confirmed, “In recent years, we’ve seen less P2P activity, because the music industry has successfully used litigation to shut down Limewire and other services … Many of those who continued to use P2P services reported poor experiences, due to rampant spyware and viruses on illegal P2P sites.”
Google Approaching Labels to License New Streaming Service
Google, Inc.’s Android division is in negotiation with music companies to support launching a new subscription music-streaming service like Spotify, revealed insiders. The Wall Street Journal. These negotiations are happening alongside YouTube’s push to get licenses from music labels to start a paid music video subscription service.
If Google can cut deals with labels and publishers, the new streaming service would be an added feature of Google Music, which currently allows music lovers to share music from their legally-purchased catalogs online and buy new songs. Google Music users can stream songs through their PCs or mobile devices. The service has the best functionality on devices that use Google’s Android mobile operating system.
The music streaming market continues to grow, as more companies diversify their offerings. Apple is also having discussions in order to license music for a Pandora-like radio service.
Details have not emerged about how Google’s new YouTube-based video subscription service would operate, but representatives have been talking to online video creators about including their videos. The implications of this potential venture for Vevo, LLC – which has a partnership with YouTube to show most of the major music labels’ videos – are also unclear. Vevo gets 4 billion video views per month and has paid out over $200 million in royalties in the past three years.
Artists and music industry leaders discussed the state of royalties from streaming services this past week. And AEG was investigated for fair trade violations surrounding ticketing in the United Kingdom. Also, artist manager, music-industry executive and international consultant Jeff Rabhan made some detailed predictions about the future of the music industry.
Artists Streaming Royalties Still Paltry
Fans, artists and music industry entrepreneurs weighed in about streaming services like Spotify, Pandora and even YouTube in an article published in The New York Times. Together, they painted a picture of how streaming services are really reshaping the overall landscape.
Spotify began nearly five years ago in Sweden and has been seen by many of the future of digital music. Sam Broe, a music fan from Brooklyn, was one of the first to sign up when it hit the U.S. in the summer of 2011. Broe said that using Spotify’s premium service has helped cut his monthly music budget from $30 to $10: “The only time I download anything on iTunes is in the rare case that I can’t find it on Spotify.”
Spotify, Pandora and YouTube have caused excitement within the ever-digitizing industry, which continues to struggle with piracy issues. However, even as digital companies explode into multi-billion-dollar entities, meager royalties have caused artists and others to worry about their livelihood.
Indie cellist Zoe Keating illustrated what streaming is actually earning for artists in 2012. She posted spreadsheets to her Tumblr blog that explicitly showed the royalties she earns from different music services, all the way down to the ten-thousandth of a cent. After her songs had been played over 1.5 million times on Pandora over six months, she earned $1,652.74. And on Spotify, 131,000 plays earned her $547.71, about .42 cents per listen.
She stated, “In certain types of music, like classical or jazz, we are condemning them to poverty if this is going to be the only way people consume music.”
However, low streaming music royalties only continue to reinforce the music industry transformation that has been in progress for decades. Record royalties have been a fraction of the sale price since the age of 78 r.p.m. records. And services like iTunes have only brought artists 7-10 cents after retailers, record companies and songwriters take their cut, giving birth to the industry term “a river of nickels.” But streaming has turned nickels into micropennies.
Will these micropennies ever add up? Chief executive of BMG Rights Management Hartwig Masuch says that only those artists who are aggressive about playing live shows will ever be able to be successful professional musicians.
However, Spotify board member, co-creator of Napster and former Facebook president Sean Parker said he believes that Spotify will one day get enough paying subscribers to help bring the industry back to the lucrative days before his company Napster began to change everything: “I believe that Spotify is the company that will make it succeed … It’s the right model if you want to build the pot of money back up to where t was in the late ‘90s, when the industry was at its peak. This is the only model that’s going to get you there.”
For mega pop artists, streams of hits have actually been providing significant revenue. A Google executive said that Psy’s “Gangnam Style” earned $8 million from YouTube when it was watched 1.2 billion times. However, most artists do not go viral.
Also, each service pays a different rate. Pandora’s, for example, are set by Copyright Law. And while Spotify did not officially confirm its rates, many executives who have worked closely with the company said it pays about .5 – .7 cents per stream ($5,000 – $7,000 per million plays) under its paid service and often 90 percent less for plays under its free service. And despite the fact that Pandora and Spotify have grown sharply in value, they still have not added significantly to the American industry’s $7 billion-per-year revenue. Downloads from iTunes and others made $2.6 billion in sales in 2011.
Cliff Burnstein, owner of the company that manages Metallica said that as long as paid subscriptions keep going up, there is still hope for streaming services to make a positive impact: “There is a point at which there could be 100 percent cannibalization, and we could make more money through subscription services.” The point is estimated to be at about 20 million subscribers worldwide.
Top industry lawyer Donald S. Passman, author of All You Need to Know about the Music Business said that royalty rates will go up for artists in the same way they have every time new technologies hit the industry: “Artists didn’t make big money from CDs when they were introduced either … They were a specialty thing, and had a lower royalty rate. Then, as it has become mainstream, the royalties went up. And that’s what will happen here.”
AEG Struggling against Monopoly Claims in the UK
AEG and Live Nation are in a battle for control over Hyde Park, Wembley Arena, the Olympic Stadium and several of London’s other biggest venues, said an article in The Guardian. As a result, AEG is being investigated by the authorities and accused of raising ticket prices and giving fans few choices when it comes to buying tickets to see big acts.
The live music market has been taken over by U.S. companies Live Nation and AEG. In 2012, Live Nation coordinated ticket sales for tours by Bruce Springsteen and Coldplay. While Live Nation recently took over the rights to shows at the Olympic stadium in East London, AEG has managed to snag exclusive rights to other huge venues like London’s 02 Arena, Caesar’s Palace’s The Colosseum in Las Vegas and many festivals, such as Coachella. AEG also owns LA Galaxy and is an L.A. Lakers investor.
But it was AEG’s recent ability to take over Wembley Arena, which had been controlled by Live Nation for seven years that set off alarms. The Office of Fair Trading (OFT) started officially investigating AEG in early January, concerned that the Wembley deal in particular might lead to a “substantial lessening of competition” within the live music industry of London.
A regulator decided in 2000 that Live Nation and Gaiety Investments needed to get rid of Hammersmith Apollo and The Forum before they could buy into Academy Music Group. One music industry source said AEG is facing a similar problem: “If AEG have control of the management of the two biggest venues there is of course the issue that they could look to impose ticket price increases, and exert more control over the artists and types of events.”
A Live Nation insider claimed that the company is grabbing venues to keep up with the ever-increasing demand for live music: “Live Nation is in favour of anything that promotes competition, choice and access to different music genres for audiences, not just in London, but across the UK … The company is committed to meeting that demand in 2013, including in the Olympic Park.”
Paul Bedford, the head of live events at a company that has helped set up festivals such as Creamfields and Field Day in Victoria Park said small ticketers will be critical to keeping live music alive in the UK: “It would be a crying shame for everyone if all the parks and key venues put out contracts to just one operator. Smaller, independent players are like indie record labels, fleet of foot [compared] to the major companies and essential for discovering new talent.”
Jeff Rabhan, on the Future of the Music Industry
Jeff Rabhan weighed in about what the future will hold for the music industry in a guest post in the ReverbNation blog. As an artist manager, music industry executive, international consultant and Chair of the Clive Davis Department of Recorded Music at NYU’s Tisch School of the Arts, he discussed what the climate could look like in the next few years for those looking to make careers for themselves in the business, which has changed more in the last ten years than it has in the previous 50. He explored four key areas: record labels; live shows; radio; licensing.
In terms of major record labels, Rabhan believes their rosters will shrink significantly, and they will shift focus to only acts that are a fit for radio. Labels will likely specialize in certain genres of music: “Imagine a Sony Music that only releases female pop records like Beyonce, Adele, and Shakira. Or an Interscope that becomes a hip-hop only label.” And this will open up the playing field for independent labels, who have already started grabbing more of the marketplace. They earned 32.6 percent of U.S. album sales in 2012, according to Soundscan.
And a “catchy song” will not be enough anymore to attract label attention. Artists will be responsible for building an interesting story for themselves that will appeal. Rabhan advised artists that are still looking for a record deal: “Continue to think global but start by acting local. Take a look at the labels in your area that may be a good fit first and truly assess if you belong on a major label. Chances are you don’t in the new world.”
Rabhan also said that live music will start moving towards the online environment. Mega artists are currently making most of their money off concerts and brand partnerships. And the way fans and artists perform live is already changing. Most are buying tickets to shows online, causing the death of hard ticket stubs.
And the fan experience is also changing significantly. Fans are not seeking the live experience at large arena and stadium shows anymore. Instead, they are flocking to online “venues,” watching festivals like Lollapalooza and Coachella as they stream live on YouTube and attending personal artists’ online performances.
Rabhan predicted that streaming concerts will continue to grow, especially for arena shows, because fans “would rather enjoy the show in the privacy and comfort of their own home and … because it gives artists another income stream.”
This means artists need to get comfortable with technology: “Posting flyers to get the word out and making tickets available only at the venue hurts your chances of reaching maximum fan potential. Work with your venue to sell tickets online or experiment with streaming shows for a small fee either live or after the fact. Get creative with your YouTube channel and make live content a bigger part of your fan experience.”
Even though terrestrial radio is still the top way people discover music, that situation could already be changing. But is local radio or Internet radio/streaming a better option for artists?
The Internet Radio Fairness Act (IRFA) could reduce royalties paid through services like Pandora, and record labels and artists feel it will strip rights holders of income. Rabhan predicts the bill will not pass. But the debate over it will still affect the future of radio. While radio will likely always exist, the way people access it will change as wireless service becomes more widespread and networks gain more power.
“Look for smarter recommendation-based software and more interactive and personalized experience – a theme that will repeat itself over and over in the growth of digital media and the technological advances that accompany it.”
This means that artists searching for exposure through radio will likely not get it unless they have a major label. And even now, “the sea of artists found on Spotify makes a breakthrough difficult and new artists are rarely ‘discovered’ via recommendation-based software platforms like Pandora. Look for local radio, specialty shows, college radio and a strong, creative Internet presence to get your music out.”
Rabhan stressed that the future for music licensing looks bright, as the opportunities for television, film and video games music placement grow. Though TV and film license fees have declined, artists are making up the loss through video games and using them to reach new audiences.
Also, the Internet is getting smarter, and many outlets are creating exclusive content that can only be found online: “Artists can now have their songs placed on everything from a Hulu original series to a series on Netflix.”
What will become of YouTube? It will be getting an overhaul in the next few years and add premium content and niche channels. Rabhan said, “YouTube has the potential to become the go-to platform for building business media in the future. They aim to develop channels that are topic specific and interactive – meaning viewers will get exactly what they want.” And the company’s investment in its future will help it form partnerships with other companies and products like Google.
This means artists will need to create lists of outlets, gaming properties, shows and online networks where they can pitch music: “Unsigned, up-and-coming acts regularly get placements on networks programs these days and that trend is going to continue. Make music licensing a centerpiece of your story.”
Last week was marked by music catalog deals as Google added access to 5.5 musical works across 35 countries, and Universal prepared to sell off EMI assets. Also, L.A. Weekly’s annual “Music Issue” spotlighted innovative DIY artists and entrepreneurs.
Google Granted Access to Millions of Tracks
Google, Inc. signed a new licensing agreement with Armonia a Spanish/French/Italian collection of European publishers, artists and composers that will give the company’s customers the rights to listen to 5.5 million musical works in 35 countries from artists such as Lady Gaga and Rihanna. The new license will allow music fans in Europe to use Google Play and its other music-related features.
The deal’s terms are “in line with industry standards involving Google rivals like Amazon and Apple’s iTunes,” SACEM representative Catherine Kerr-Vignale reported to The Associated Press. Kerr-Vignale added that Amazon and Apple have European licensing agreements that vary by country, whereas Google has a uniform agreement that is the same in the 35 countries it will serve in Europe and also includes UK and American sections of Universal Music’s publishing library and Sony’s Latin arm.
Armonia is the pan-European organization for online licensing and comprises the Italian Society of Authors and Publishersm its French and Spanish sister organizations SACEM and SAGE and Universal Music Publishing International. New access to tracks by major artists will make it more competitive with other major digital music providers.
TechCrunch writer Darrel Etherington noted that because Google Play still features a great deal of content only available in the U.S., many outside the U.S. have had to use workarounds, like those detailed in a recent blog entry on the Geniusgeeks site.
Of course, this deal is also important to getting more royalties into creators’ hands and encouraging music fans to engage in legal online music consumption. Sami Valkonen, head of music licensing at Google said, “Licenses such as this are important in ensuring that artists and rights-holders are rewarded fairly for their creative endeavors, and digital service provides are able to bring innovative services to market for the benefit of European consumers … Armonia is a welcome development in the ongoing reform of pan-territorial licensing in Europe in helping simplify and speed up the music-licensing process, which is crucial in fostering ongoing rapid innovation by digital music service providers.”
Over Nine Industry Players Vying for EMI Assets
Major music industry companies and executives including Warner Music, Simon Fuller and Island Records founder Chris Blackwell expressed interest in buying pieces of EMI from Universal Music Group, as reported by an article on November 14 in the Financial Times. Universal has been forced into selling some EMI assets in order to satisfy the misgivings of regulators as part of the $1.9 billion deal it made to buy EMI’s recorded music division.
However, as auctions loomed, Billboard reported that John Rudolph, formerly the CEO of Bug Music as well as Lava Records founder Jason Flom will be partnering up to bid for pieces of the pie. Sources continued to report last week that UMG’s bankers were still getting signatures together for non-disclosure agreements and will likely not likely start to make deals until this coming week.
The European Commission agreement stipulates that EMI’s assets have to be sold to buyers with deep experience running and managing a music company. However, some have said that becoming a qualified buyer could be as simple as a company with money hiring a former label president to work with them.
Flom was a high-level A&R executive at Atlantic prior to founding Lava Records in the 1990s and has worked with Kid Rock, Tori Amos, Skid Row, Matchbox 20 and many others before moving onto Virgin in 2005 and eventually becoming the CEO of Capitol Records Group.
Rudolph left the large independent publisher Bug Music in 2011 when it was sold to BMG Rights Management for over $300 million. When he was CEO of Bug, he managed over 35 acquisitions, including the acquisition of the Windswept catalog and a deal with Kara DioGuardi’s Talenthouse company.
BMG Rights Management will likely also join Fuller, Flom, Rudolph, Blackwell and Warner in the EMI bidding process.
L.A. Weekly Spotlighting How to Make It in the Music Industry
L.A. Weekly’s 2012 Music Issue addresses how to make it in the music business, with a spotlight on notable DIY artists and groundbreaking executives who have learned how to make a living and find an audience in the modern industry climate.
The Issue points out that being a successful musician and music entrepreneur in 2012 means not only having deep talent, but also being willing to work hard and being able to employ innovating marketing techniques. L.A. Weekly highlighted indie artists including Stolen Babies, Jhene Aiko and Spaceships, label owner Leeor Brown and party promoter Perish Dignam as examples of those who are succeeding thanks to “passion and unique branding.”
As just one example, Philadelphia-born Perish Dignam is a party promoter who has traveled nationwide, studying industrial design, engineering and psychology. On his own since age 15, he developed a big social-media following before starting up his regular “Swoon” parties, which are much like steam-punk carnivals and feature women in bikinis with power tools, fire dancers, etc. Those music fans who show up with elaborate costumes and professional photographers are granted free admission. He funds the parties almost entirely on his own, then puts profits back into more parties to allow him total creative control. He designs all the sets, manages performances, hires staff and sells tickets.
And the EDM juggernauts the Flemming Brothers run a dance-party “enterprise,” Do Lab. Together, Jesse and Dede and Josh created the huge Do Lab movement in Southern California through multiple marketing techniques and will soon head to Egypt to tour. Youngest brother Dede said he believes the business works, because the brothers each accept responsibility for very specific aspects of creativity, development and business management. His brothers shape the vision and he takes care of the “logistics:” “We have these roles … so we can support each other.”
And as L.A. Weekly pointed out, the “DIY movement” is not a new phenomenon. Artists like Dr. Dre and others have been going their own way for decades. Dre’s album The Chronic was released 20 years ago. Before being picked up by Interscope, it was a self-funded project: “It took nontraditional sales tactics and the deep pockets of an incarcerated drug dealer to make it famous. Then as now, the do-it-yourself spirit was critical.”
Kevin Weaver is the Executive Vice President of the Atlantic Records Group. He is responsible for overseeing the creation and placement of music and artists in film, television and video games. Kevin is also in charge of developing and overseeing soundtrack projects, strategic alliances, licensing opportunities, and marketing initiatives. He has been working with sync licensing at Atlantic since the early-mid 1990s and has managed a variety of projects over the years that have significantly shaped the label’s and other labels’ music licensing business models.
Recently I talked to Kevin about how he got into music licensing, changes he has witnessed in the sync licensing market in the past 15 years and how modern music placement works.
Thanks for taking some time to talk to me, Kevin. How did you come to be Executive VP at Atlantic, and what does that position entail?
I started as an assistant at Atlantic in 1994 working for the Vice President of soundtracks an A&R. I subsequently became an A&R guy at Jason Flom’s label Lava Records in the middle of 1995. I signed some records and was doing A&R. But those records weren’t really happening. Because I was an assistant to this soundtrack executive, I had a ton of relationships in the film, television, advertising and sync communities. And I thought, “What do I need to do to turn these records around and make some value out of them?” I knew I had these relationships, and that no one was pushing content into the sync world; it was a very laid-back business at that time, where you had people at the special markets divisions of record companies fielding incoming requests via fax. There was no sexiness to it, and nobody that had direct relationships with the artists playing the middle. There was no one aggressively pitching and pushing the content for licensing.
I took out the records that I was A&R’ing as well as some of the other records that Jason Flom, who was my mentor for many years, was working with. Jason was very supportive and encouraged me to do this. With his support, I was able to go out and get in front of the relevant folks at the time who were using music in media and basically give them quality content while at the same time help with the process to make sure it was seamless and that things were getting approved quickly. Over the first couple years of doing that we were able to significantly increase the licensing income at Lava.
That subsequently led to me becoming the first shared Lava/Atlantic employee and executive. I started doing the same thing for the Atlantic content in addition to the Lava content. And I was also able to increase Atlantic’s numbers really significantly over a short period of time. And when Lava folded into Atlantic in 2002, at that point I became the head of the department at Atlantic and all the Atlantic affiliate and division labels.
Very few people have as much time in as you do. I remember when I was working on placement for a commercial a few years ago. And everyone was coming out of the woodwork claiming, “Sync and licensing? I do that!”And I knew you’d actually been doing it since the very beginning. How has that sync marketplace changed over the last 15 years that you’ve been working within it?
Obviously it’s become much more competitive. People have realized the value of these opportunities to break artists. The media around these opportunities can be critical if timed right – around the launch of the single or the record. We’ve found that we’ve been breaking records over the last handful of years by way of these opportunities while also putting money back in the till to support subsequent marketing and promotional efforts. And everyone has realized to a certain extent that with the decline in income in other areas of the music business, sync is still a major revenue supplier. The importance of sync has become even that much more significant now. And because of all those factors, everybody is out there aggressively chasing sync opportunities, and it’s become more competitive.
I’m fortunate because I’ve been doing this for so long and somewhat built the model of how this works at a record company. I have tons of relationships that go back 15-plus years. And it’s very important to me that the people I do business with feel good about that business at the end of the day and feel it was an easy process and positive experience. I’ve had people continue to want to come back and drink from this well because they know we have great records, are easy to deal with and get stuff done. Because of this, even though sync is a competitive market, we still do great business.
Do you find that the huge number of independent and unsigned artists and the many aggregators of DIY content have brought the overall price down for you?
It can, and it has a little bit. I think the quality of music that we’re creating with our artists speaks for itself. People who are willing to give their music away for free can hurt us a little bit, but I believe that we’re making really strong records over here, and that people are willing to pay for quality.
We do price super competitively around developing artists. I never want to lose a great opportunity because of money. The visibility is important, so we look at everything on a case-by-case basis. And if there’s a look we can deliver for an artist, but it means I need to waive a fee or help get something approved below fair market value; I’m always willing to entertain those requests and make those deals, if the marketing opportunity mitigates the loss of income on the fee. I’m competitive as it relates to pricing. Wherever there’s a smart marketing play, I’m willing to make the same kind of deal that an indie artist would make, as long as I feel like the visibility is worthwhile.
There have been so many placements since placements really exploded with that first iTunes commercial six or seven years ago. Do you feel the impact of getting music placed in a commercial has diminished because now we have seen it so many times before?
Not really. It really depends on the scope of the placement, how great the song is, and how well it’s used. At the end of the day, great music is going to react, and it just needs a platform. What I’ve found is that you don’t want to just give away music and not look at the place it’s being used and how it’s being used. If it’s a meaningful placement, it’s going to translate.
Going back to your earlier question about competition with independent music, what we have at Atlantic is the whole company going after a record at the same time. I’m not just out there in a vacuum getting placements. I’ve found that it’s very hard for a singular placement to move the needle in a significant way, even if it’s a huge placement where the song is used really well and has great visibility, without other drivers in place. Not many labels – especially smaller labels – are able to use placement opportunities as effectively as we are and work with the other departments within the label. This really makes a difference when it comes to the power of these placements.
What is standard practice once the Atlantic Group gets the placement? How are you supporting the placement with marketing, sales and promotion?
We connect the pieces. We use the artist’s social media platform to create awareness around it and connect the fact that the placement you’re hearing or seeing is the artist’s song. We bring back all of the info and a clip of every placement to every department in the company, so they have the actual use and can take that out to show folks. A lot of it is talking points that help build momentum. But, everyone can use these drivers to show radio, video, digital/new media and sales and show these different accounts and partners the visibility we have going on around an artist. Generally, that in and of itself is an incredibly useful tool, because people see a song is out there and getting plays in a significant capacity. And that helps them feel better about getting behind it as it relates to their specific area of the industry.
You have A&R roots. Do you feel that artists getting placements before they’re on a label contributes to their ability to get signed?
It can. Recently, we signed Christina Perri. She had a single “Jar of Hearts” out before she was signed to a major label. She had her song featured on Dancing with the Stars in a really significant way. She immediately released the song on iTunes on her own, and it sold a lot of digital singles over a short period of time, which immediately put her on the radar of a lot of major labels. She then went on the show and did a live performance of the song, which made an even more significant impact. She went on to sell a few hundred thousand singles around those two uses alone. Every label really jumped in and went after her based on the fact that not only was she getting visibility by way of sync placements, but also, it was reacting.
I think that’s the key to most of these placement situations: If somebody’s getting sync placements but it’s not doing anything – helping with their sales or online searches and hits – then there’s a disconnect, and there’s a reason there’s a disconnect. It’s not often that these placements are going to move the needle significantly without the other drivers I’ve mentioned earlier – having the company and all the resources at the company behind it connecting the dots. I think the Christina Perri example is the real anomaly there; without the real drivers, the use of the song on television a couple times still managed to really make an impact, which ended up getting her a significant record deal. That being said she’s needed the power and the machine of our company behind her to build on this initial success and visibility.
You know a lot about how music is placed in film, and sure you often get asked, “How do I get my music placed in film and TV?” What would your best advice for somebody who is trying to make it happen in their own?
To be honest with you, I think it’s incredibly hard. It’s a very relationship-driven industry. And one of the reasons I’m able to get so many placements is because of the relationships we have with the folks who control this various media. They trust us. And they know when we’re serving something up, it’s going to be at a certain quality level and easy to clear and use. So, that is something that really helps us get placements and visibility that other smaller independent folks don’t have the benefit of.
But the one thing that these people can do is try to be super targeted and really chase opportunities where their music has real relevance. And they should get to people via real relationships – getting to know people who know the right people. And then they need to be really easy to deal with. Anyone who is a pain in the ass, especially in the developing stages, is not going to get much support. And there aren’t going to be many fruits that come out of that. If they are easy to deal with, and the quality of their music is good, they have a much better chance.
To learn more about Kevin Weaver and the work he does, visit the Atlantic Records Group website.