Music Marketing

Posted By Rick Goetz on July 6th, 2013

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 ‘SOPA’

MTV, Copyright Law and Pay-What-You-Want News, March 17, 2012

Posted By Julia Rogers on March 17th, 2012

Initiatives to bring more money to artists took the spotlight this past week as Viacom announced its upcoming Artists.MTV ecommerce solution and a court ruling against music piracy in India forced the shutdown of 104 sites offering unauthorized music. Also, blogger Aaron Colter analyzed how the “pay-what-you-want” business model could reform the music industry.



Artists.MTV Poised to Create New Revenue Streams for Musicians


MTV is in the process of building new artist-focused ecommerce sites where they can sell MP3s, concert tickets and merchandise, according to an article published by BloombergBusinessweek. The new Artists.MTV websites will be ready for musicians to build in May, and Viacom, Inc. hopes they will help MTV build a stronger business relationship with performers than has previously been possible. Many analysts note that this move could also could serve to re-connect the network – which has in many ways moved away from music towards reality programming and other forms of entertainment in recent years – to its musical roots.


Artists will be able to control their own sites and upload music, videos and photos as well as link them to Facebook and other social media sites. Vice president of digital music strategy at MTV Music Group Shannon Connolly said that Viacom’s hope is to streamline musicians’ online presence and also create a viable revenue stream for artists to help them overcome the challenges they have had in recent years making a real living off touring and traditional recording:  “We felt like the world needed a place that’s comprehensive and thorough and that allows artists to connect with fans at scale … The goal is to help artists get paid.”


Artists.MTV will also be linked to the VH1 and CMT music channels and will share advertising revenue earned through the pages with the musicians themselves. Artists will also get most of the revenue from MP3, tickets and merchandise sales thanks to a partnership with Topspin Media. Those signed to labels will also be able to send traffic to their other sales outlets. There will also be a “Tip Jar” feature on all pages, 100% of which will go to the artists.


Unsigned acts as well as mega-artists will both be able to create pages. MTV currently hosts approximately 10,000 artists pages. But the Artists.MTV project will increase this number to over one million pages at the time of public launch in the fall.


Connolly said the long-term goal is to make every artist searchable through the new network:  “Music fans should be able to search for any artist and never strike out … You should always get a result.” And MTV’s hope is that by creating a streamlined, artist-friendly web page setup process, more musicians will be drawn to participate:  “The pages will also allow artists to post once and publish everywhere.” Users will be able to choose whether they centralize their posts and updates through Facebook, Twitter or a variety of other online sharing services.


Viacom will also not demand that artists use specific retailers. They can connect pages directly to any digital music store to sell their tracks, connect to their preferred tour promotion website or send visitors to music videos on Vevo,com, YouTube or any other video services. Connolly said, “The goal here is to give artists the opportunity to monetize what they do.”


There will also be an opportunity for artists to be featured on Viacom’s TV channels. Starting in May, MTV, VH1 and CMT will each select an artist each month to showcase on the air through music videos, other TV shows and in promos. This announcement was made at the South by Southwest festival this past week.


MTV has already signed up high-profile artists to pioneer Artist.MTV. The pages will officially launch to the public in September, around the time of MTV’s Video Music Awards.


Over 100 Music Pirates Punished by Major Court Ruling in India


All 387 ISPs in India were forced by court ruling to block 104 sites that provided illegal music last week, providing a big win for proponents of SOPA-style legislation worldwide. However, an article on TorrentFreak stated that while many organizations within the music industry abroad celebrated, the Indian music business would like to see rulings like this as an opportunity to teach pirates and others with a passion for music about copyright law and how to properly adhere to music licenses.


MPAA Chairman and CEO Chris Dodd praised the ruling, saying, “Content theft is a global problem and we must have a global commitment to solving it. This is an important opportunity for the Indian government to move forward with strong protections against online theft.” He also added that he hoped the film industry would continue to show similar proof that it is possible to be both “pro-technology and pro-copyright at the same time.”


While the recent ruling in India may seem like a victory for SOPA and other legislation, it is not necessarily groundbreaking. India has had site-blocking legislation in place for quite some time. In fact, Indian film companies have won cases in the past – though not on as large a scale as the most recent ruling.


At the Calcutta High Court, 142 music companies affiliated with the IMI – India’s answer to the RIAA trade group – got licenses to bring about the shutdown and cooperation of every last ISP. And implementation will be just as thorough:  ISPs will have to implement both DNS and IP address blockades to prevent pirates from accessing a DNS outside India. Deep Packet Inspection will also be monitoring the process to make sure the domains stay blacked out.


IFPI CEO Frances Moore commented, “This decision is a victory for the rule of law online and a blow to those illegal businesses that want to build revenues by violating the rights of others.” However, she added that she hoped the Indian government would use cases of website blocking as an opportunity to examine even further anti-piracy legislation, especially since one of the main sites – Songs.pk – has already managed to get around the blockade by re-launching as Songspk.pk.


Even though Indian record labels have been forceful about blocking sites, Apurv Nagpal, CEO of India’s major label Saregama stated that the goal was not to annihilate offenders, rather to acknowledge sites’ passion for music and help teach them how to obtain proper licenses:  “We don’t want these sites to be shut down. We want them to pay a license fee and flourish asa business … There are legitimate businesses in operation too. The scope is there, and we want these sites to be legal.”


Will “Pay What You Want” Save the Industry?


Trusting fans to pay what they want for music has been a radical and somewhat controversial topic since Radiohead released their first post-EMI album In Rainbows using this business model in 2007. And while many fans did download the songs without paying for them (playing out the music industry’s greatest fear), the album still brought in more revenue for Radiohead before its regular release than their previous traditionally-released album Hail to the Thief. And according to a post on Digital Trends by blogger Aaron Colter, this and many other examples signals that the “pay-what-you-want” idea could actually be helping to rebuild the future of the music industry.


Colter noted that the fact that digital sales surpassed physical album purchases for the first time ever in 2011 could provide the perfect opportunity for innovative musicians and industry leaders to get out of the rut of some of the long-standing, outdated business models that have been dragging profits down since the beginning of the Digital Age.


The pay-what-you want model has been big in recent years with Radiohead and other artists experimenting with the strategy and crowdfunding sites like Kickstarter, Pledge Music and others helping enlist the help of their fans to raise money for their dream projects. While some artists have been successful at adopting the model, Colter points out that others have not and that even Radiohead has now abandoned the idea, signifying that perhaps relying solely on consumers to pay when they don’t have to “may not be a sustainable practice for artists or record labels.”


And a lot of indie artists and entrepreneurial music startups have crashed and burned. The site Patronism launched in 2011 and offered a subscription-based service where fans could connect with their favorite bands by paying no more than $10. However, the company has been unable to expand beyond a roster of small, unknown acts. And the website Daytrotter changed from free downloads supported by ads, to private and ad-free subscriptions that start at $2 per month. The site claimed that the cost of recording and distributing free music via ad revenue was unsustainable. Those who have taken the pay-what-you-want approach agreed that the success of the model greatly depends on musicians making an extra effort to reach out meaningfully to fans who contribute, especially those that contribute the most.


Colter also pointed to Jared Mees, musician and manager of the Portland, Oregon-based label Tender Loving Empire. He started an online system called The Priceless Music Project in 2012, reaching out to IndieGoGo fans in an attempt to raise $48,000 to fund a pay-what-you-want site. He wanted to add the “guilt factor” of disclosing details the related costs bands have for producing a record, ongoing touring expenses and how much money the most supportive fan donated.


While his project only raised $4,000, Mees said that he still plans to add the model to his label’s website next year. He also added that he doesn’t think record labels will ever become extinct, even if they don’t get on board with new strategies, because they will always be strong “curators and consultants.” However, the breakdown of income for most indie artists is typically split between a few different sources. In Mees’ case it is 30 percent digital downloads, 20-25 percent physical albums, 20 percent show ticket sales, 15 percent licensing and 10 percent merchandise.


In his post, Colter also agreed that while big-name, intensely popular artists need a large team of professionals to stay afloat, the idea of the record label still could be changing from focusing on a large roster of musicians into revolving around a single artist. And he pointed to the example of DIY dynamo Amanda Palmer, who has managed to run her career the help of a small team by staying on top of online tools and connecting with fans worldwide through a rigorous touring schedule. She releases all her music by the pay-what-you-want creed through Bandcamp, sometimes donating proceeds to charity. And many agree that this model helps fans feel connected to artists in a meaningful way and encourages them to pay more.


And Palmer said that the key to any successful model is making it easy for the consumer:  “… I have a fundamental belief that people love to support artists. [W]e just need to work towards a system where the act is as simple as tossing a dollar in the basket of a musician whose street music you’ve been enjoying. Musicians need so drop any shame they’ve had in the past about asking. The asking has to just be second nature and feel as shameless and natural as the act of playing music itself.”


(For more on the concept of taking the shame out of making money playing music, take a look at the interview with Brian Meece of the crowdfunding site RocketHub published last October. As Brian said, “You want to push the ‘trade,’ not the ‘aid’ angle.”)


Lastly, Colter discussed the importance of using technology as a means of empowerment. Being a musician has not been a money-making scheme or even a very stable source of income for most that choose that path. However, he said, “… with the democratization of platforms that help bands reach fans and distribute their music, there’s never been more potential for a musician to cultivate a dedicated number of supporters. Combined with the right tools and the tenacity to engage listeners, musicians should feel more empowered today than ever before.”


And while the pay-what-you-want method might not be proving to bring great wealth to those who implement it, Colter concluded that the basic concept of “a direct exchange between creator and consumer” will likely be the way the music industry will continue to save itself in the future.

Vevo, Noel Gallagher and the RIAA News February 11, 2012

Posted By Rick Goetz on February 11th, 2012

Last week, Vevo’s real benefit to artists and the music industry was called into question by music publisher Matt Pincus amidst news of its revenue boom in 2011. And Noel Gallagher and music industry experts weighed in on the factors that lead some popular bands to quickly fade into obscurity. Also, the president of the Recording Industry Association of America (RIAA) criticized Wikipedia and Google for their part in taking down SOPA and PIPA.



2011: A Boom for Vevo and Major Labels, a Bane for Indie Artists and Publishers


The thriving online video service Vevo – which provides about 40% of the content streamed on YouTube — earned $150-million in revenue in 2011, causing many to be hopeful about the future of music video monetization and another potential area that could rebound in the music industry. However, according to a piece written by Matt Pincus, the founder and CEO of the independent publishing firm Songs Music Publishing and published on The Wrap,  independent artists and publishers have yet to see a dime, and it is time for everyone to rethink what is fair.


As Pincus pointed out, what isn’t being said about Vevo’s boom is that despite this $150-million gain, most independent publishers and their songwriters have not ever been paid by Vevo. He says this is because major record labels have stated they have the right to license songs to Vevo on publishers’ behalf, stating that if they are paid, they will take on the responsibility of passing money onto publishers in the same way they do with revenue from tracks on iTunes. But in the case of Vevo money, they have failed to actually come through on that promise.


According to Pincus, record companies are able to get away with this because of the “Controlled Composition Clause” that is within their artists’ recording contracts that usually features unclear language and applies to songs that are written specifically for artists’ records and “controlled” by the artist as well as producers, co-writers, etc. This clause claims to give labels a free sync license that allows them to use music videos that feature the “controlled” songs for promotional uses (uses that don’t bring the labels direct payments). The language was originally added in order to cover videos shown on MTV, but now labels are able to use it to avoid paying indie publishers for videos aired on streaming music sites like Vevo.


Pincus’ article noted that the purpose of videos has changed significantly since the early MTV days, when labels were not paid by broadcasters. Now, videos represent a very real source of revenue for labels, which calls into question the idea of giving labels the right to manage licenses with Vevo for controlled songs. (Incidentally, Songs Music Publishing represents over 300 songwriters, many of which are recording artists. And none of the Controlled Composition Clauses these Songs songwriters have grant a free license to labels for Vevo videos.)


Pincus concluded that labels are not actually legally sanctioned to issue a gratis license for videos featuring songs that are not controlled, whether to Vevo and other streaming sites or to any other entity. When there is no contract between a label and a songwriter, music video rights cannot be granted to the label. And while the case settled between the National Music Publishers Association and YouTube last year finally gave independent publishers some much-deserved net ad revenue from YouTube, Vevo was somehow left out of this decision.


So, as Pincus asked, “Are record companies to blame for relying on shoddy language to withhold royalties, or is it Vevo’s responsibility to insure that the songwriters that helped it pull in $150 million this year share in their success?”


Noel Gallagher and the Industry, on Adele and Why Artists “Fall off Cliffs”


Singer/songwriter Noel Gallagher recently told the Mail that, despite Adele’s huge success the past few years, he predicts she – like so many other female artists before her – will have a short shelf life:  “I feel sorry for girls in the music industry. They do have a very short shelf life. For instance, Duffy: who? Gone. She was massive. And I don’t doubt for a second that the same thing will happen to Adele.”


While Gallagher expressed his belief that female artists have a shorter career trajectory than male artists, a music industry lawyer interviewed by The Guardian stated the situation is not unique to women; wildly popular artists on both side of the gender line often fizzle out, and often with good reason:  “Duffy is an interesting case … because her story applies to a lot of artists. Buoyed by success, they immediately think, ‘Why am I giving 6% of record royalties, a third of my publishing and a 20% management commission to other people? I am a genius! I will do it myself!'” And this thinking is what led Duffy to leave her record label, manager and her producer, who had co-written and performed on a majority of her platinum-selling album. As the lawyer pointed out, artists that fall out of the spotlight often go on to make “a bad record without any guidance from professionals. And then they wonder why it’s all gone wrong.”


The article “When bands fall off cliffs,” written by Rob Fitzpatrick in October, 2011 explored the many reasons for the “band collapse syndrome” and pointed out that a lot of bands and artists that have exploded onto the scene and received critical acclaim have faded away in the 2000s, citing examples including the Kaiser Chiefs, MGMT and Glasvegas.


Interestingly enough, when approached by The Guardian to discuss how it feels for record sales to drop, none of the bands discussed in the article would comment, likely, as the Fitzpatrick speculated, because “admitting a failure is tantamount in the eyes of the music industry to condemning yourself for ever,” but also possibly because the artist is typically the last one to realize it’s over. However, an unnamed A&R rep for a label put it this way:  “Well, I’ll tell you precisely what it feels like … It feels shit. But the second album by every single band I’ve ever signed has flopped miserably, and no one really understands why. When you sign a band, everyone at the label is very excited, but as soon as it starts going wrong every bastard runs to the hills and the A&R man is the only one left.”


Wikipedia and Google Targeted by RIAA President


Wikipedia and Google are in charge of the future of how copyrights, infringement and anti-piracy legislation is handled, according to an op-ed piece written by RIAA president Cary Sherman in The New York Times on February 7. In his critique, Sherman called out the guilty parties and blamed them for sinking SOPA and PIPA, each of which he sees as a solid and well-balanced piece of legislation.


As Sherman stated – and what became the center of his argument, “Misinformation may be a dirty trick, but it works …Wikipedia, Google, and others manufactured controversy by unfairly equating SOPA with censorship.”


He added that policy makers were not going into the process of working out this new legislation without considering all sides of the argument or with the intent of promoting censorship or anti-constitutional values, or to further cripple the already ailing music industry:  “Policy makers had recognized a constitutional (and economic) imperative to protect American property from theft, to shield consumers from counterfeit products and fraud, and to combat foreign criminals who exploit technology to steal American ingenuity and jobs. They knew that music sales in the United States are less than half of what they were in 1999, when the file-sharing site Napster emerged, and that direct employment in the industry had fallen by more than half since then, to less than 10,000. They studied the problem in all its dimensions, through multiple hearings.”


Sherman pointed the finger at Wikipedia founder Jimmy Wales for riling up the under-informed masses to protest, creating a “digital tsunami” that stopped legislation that on many levels could have been a positive step towards bringing more money to artists and creators and taking it away from undeserving parties. He asked, about the “11th hour” shutdown of the legislation, “Was this the result of democracy, or demagoguery?”


And Sherman continued his argument by pointing out that Wikipedia and Google’s rallying – “as two of the world’s most popular Web sites” – was an “abuse of trust and a misuse of power:”  “When Wikipedia and Google purport to be neutral sources of information, but then exploit their stature to present information that is not only not neutral but affirmatively incomplete and misleading, they are duping their users into accepting as truth what are merely self-serving political declarations.”


And finally, Sherman presented a rallying cry/call to action of his own:  “Perhaps this is naïve, but I’d like to believe that the companies that opposed SOPA and PIPA will now feel some responsibility to help come up with constructive alternatives. Virtually every opponent acknowledged that the problem of counterfeiting and piracy is real and damaging. It is no longer acceptable just to say no …We all share the goal of a safe and legal Internet. We need reason, not rhetoric, in discussing how to achieve it.”

Music Business News, January 21, 2012

Posted By Rick Goetz on January 21st, 2012

This past week in music, industry analysts highlighted trends that have emerged during the Digital Age as experts claimed January is the best month for artists at all levels to release an album, and a study of the Billboard chart system showed that artists who show up on these charts only spend about five years there. Also, the file-sharing giant MegaUpload was finally shut down by the U.S. Department of Justice and labeled a “mega conspiracy.”



Want to Make it Big? Release Something in January


January has long been labeled a “dead month” in the music industry. But a study of artist releases – both major label and independent – conducted by the Independent showed it could actually be the perfect time for particularly emerging or lesser-known bands to sell more albums and register on the charts. And scoring a #1 hit is a good move for any band, as it increases sales, radio airplay and can garner better spots at live music festivals.


Since 2006, January releases have catapulted quite a few independent bands and artists to #1 on the charts, including The Arctic Monkeys in 2006 (Whatever People Say I Am, That’s What I’m Not) and The View in 2007 (Hats off to the Buskers). And Adele’s #1 success in January, 2008, 19 inspired her to release her album 21 in January 2011, an album which sold 200,000 copies in its first week and made her the best-selling artist of last year.


What is the advantage for artists of a January release? The biggest benefit is that sales of just 30,000 albums can earn them a #1 spot, whereas in other months, that sales figure would have to be about three-times that much.


This year, new artist Lana Del Rey is hoping to replicate Adele’s formula for success by releasing her debut album at the end of this month. However, in competition with her will be Adele herself as well as more established artists Bruno Mars and London indie band The Maccabees, all releasing their third albums the same week.


Experts say the real reason January can be such a prime month for new artists in particular to get noticed is because it is during this time of year that the media and music fans are hungriest for something new. According to John Hirst from HMV, there has typically been six weeks of silence after Christmas and “…When no one’s released a record for two months the public’s appetite is for something new. It’s easier to get media attention and positive reviews so an album can over-perform.”


How Long is the Career of a Billboard Artist?


Artists who make Billboard charts are there for only about five years on average, according to a study  spend on average only about five years  A recently-released professional study conducted by Storm Gloor, MBA at the University of Denver’s College of Arts and Media (CAM) and published in the 2011 Music and Entertainment Industry Educators Association (MEIEA) Journal. And according to Gloor, more than one-third who make the charts will be “one-hit wonders.”


This study is based on analysis of Billboard charts and other pop music data and is phase one of a research project designed to figure out how artists’ popularity and the length of their careers have been impacted by the huge music industry shift brought on by the digital revolution and other major events of the past 15 years. This first part of the study analyzed over 50 years of Billboard music charts.


The official results were that artists stay on Billboard charts in some capacity from 3.95-6.16 years and that 34-percent of those whose debut albums – of any genre –hit the charts only appear there once. However, with pop artists, that figure is 50 percent.


Gloor said the results of this study will be particularly important to aspiring artists who want to plot out real, long-lasting careers in music:  “The research is important to aspiring artists in understanding their own long-term planning in light of such realities. They need to know what they are facing as they start planning for their careers and beyond.” He also said this information could help labels, as they will be able to use it to create more effective promotional strategies for their artists going forward.


The second part of Gloor’s study will involve an examination of music business trends and how they affect the popularity of artists who make the charts. According to Gloor, his initial findings have been that artists who chart might gain national popularity faster, but will not likely stay in the spotlight for long.


MegaUpload Shut Down by Feds


One of the world’s most formidable file-sharing websites MegaUpload finally bit the dust on Thursday as it was shut down by the U.S. Department of Justice for violation of piracy and copyright laws. The feds issued an indictment declaring that MegaUpload was a “mega conspiracy” and labeled it a global criminal organization stating its members “engaged in criminal copyright infringement and money laundering on a massive scale.”


The indictment also charges MegaUpload executives with earning $175 million through subscription fees and advertisements and taking $500 million in royalties from movie producers, authors, musicians and other copyright holders.


According to an article in The Washington Post, prosecutors stated that the company attempted to hide the fact that they were paying users to upload illegal movies and music and used the financial windfall this practice created for a “lavish lifestyle.” Federal agents confiscated dozens of luxury autos, including site founder Kim Schmitz’s, aka “Kim Dotcom”’s Rolls-Royce, which sported the license plate “GOD.”


Of course, MegaUpload is just one of a number of services that provide file sharing online. Sites such as Mediafire and Rapidshare and also cloud storage services like Box.net and Dropbox also offer easy ways to share content. This shutdown and the potentially impending SOPA and PIPA bills – which brought about internet-wide protests by Craigslist, Wikipedia and Google last week – has many running legitimate services concerned about their future and whether or not the government has the right, even in the absence of a passed bill, to shut sites down for hosting pirated content without allowing the companies to defend themselves in court first. As Eric Goldman, a professor of intellectual property law at Santa Clara University said, “They will wonder if they have done anything different from MegaUpload, and does that mean the Feds will come through their door?”


One detail that made MegaUpload different was that it managed to get celebrities on board to support it with its online marketing campaign featuring Kanye West, Lil’ Jon, Sean “Diddy” Combs as well as Russell Simmons and director Brett Ratner, who all professed their love for the site in a series of promotional videos.


The indictment against MegaUpload was unsealed Thursday, but was issued by a federal court in Virginia on January 5. The Justice Department released a statement with the indictment:  “This action is among the largest criminal copyright cases ever brought by the United States and directly targets the misuse of a public content storage and distribution site to commit and facilitate intellectual property crime.”


Authorities were dispatched last week to arrest three MegaUpload executives employed by its two companies Megaupload Ltd. and Vestor Ltd. in New Zealand, including the site’s founder, Schmitz. The indictment also charged the two companies with running a “racketeering conspiracy, conspiring to commit copyright infringement, conspiring to commit money laundering and two substantive counts of criminal copyright infringement.”


In retaliation for the shutdown on Thursday, a hacker group named “Anonymous,” linked to the Twitter accounts @YourAnonNews and @AnonOps took down the websites for the Department of Justice and Universal Music as well as for the Recording Industry of America and the Motion Picture Association of America.


The Justice Department also seized 18 additional domain names linked to the case.

Music Business News January 14, 2012

Posted By Rick Goetz on January 14th, 2012

Big changes in the music industry took the spotlight this past week as the music industry filed suit against the Irish government and Billboard changed the format of its Top 200 for the first time in almost 60 years. Also, Dave Grohl talked candidly about the state of rock and why he believes record sales have been down.



Irish Government Embroiled in Music Industry Lawsuit


The Irish government is currently being sued by the music industry for failing to comply with the new SOPA-like EU copyright law that requires websites suspected of illegal file sharing to be blocked, according to an article on the TechEye website. And if the industry wins, Ireland will be the first country sued into insolvency over music piracy.


The suit has its roots in a 2010 lawsuit brought about by EMI that claimed Irish law did not hold up an order against an ISP for a music piracy site. The music industry stated that since the State had not held up copyright law, it could be held responsible for all the file sharing that goes on in Ireland, worth several trillion dollars.


Ireland has agreed to put a “statutory instrument” that would block websites and help them comply with EU copyright law as soon as possible. However, the music industry is planning to use the legal principle – already used in Italy – that allows a government to be sued for damages for failing to follow an EU directive.


Getting a conviction will be difficult, however, because the industry would have to prove that blocking websites actually stops piracy, then also show that the Irish government did not implement a system fast enough.


The New Billboard Top 200


2012 will mark the year Billboard finally made changes to its Top 200 list, which has had the same format since its inception in the mid 1950s. Now, deeply-discounted albums will not be counted, which could make promotion more difficult for labels, according to an article in the Los Angeles Times.


As an example, Lady Gaga’s Born This Way song hit U.S. pop charts last June, selling 1.1-million albums in its first week, marking the best debut sales since 2005. However, 440,000 copies of the song were sold by Amazon for 99 cents to promote its online storage service. And according to the new chart set up, these would not count as regular sales.


On January 13, Billboard posted an article about chart changes, stating that albums sold for less than $3.49 – selected because it represents half the wholesale cost of an album – will no longer be included as sales.


Billboard is a 117-year old institution and first began its “Billboard 200” chart in 1991, when it started using sales data from Nielsen SoundScan. And since its inception, this chart has been the most reliable music-purchase-tracking system in the U.S., providing an inside, “hype-free” look at sales and giving consumers and retailers raw numbers about an album’s popularity.


Of course, digital music has entirely changed the landscape of the industry, as album sales began their decline with Napster and then iTunes, which drove fans further online. And now, there are many more factors to consider besides just sales when gauging a band’s popularity, including YouTube views and Facebook friends. However, until this past week. Billboard has continued to present the raw sales numbers, digital and physical.


One of Billboard’s arguments for changing its system is inherent in the question of how inexpensive an album can be before it counts as essentially free and thus cannot really be called a real “sale.” However, the policy of not counting albums below $3.49 is only in effect for the first four weeks of their release. Proponents of this new system have noted that finding a new album for under $3.49 is uncommon, though Amazon has been known to offer new albums for under $2.99 in order to improve site traffic.


Because this new chart rule will alter the way album sales are calculated, it could actually change marketing. If the rule had been enacted in 2011, there would not have been a million-selling album debut. Lady Gaga would’ve only sold 660,000. Of course, no real money will be lost by artists or labels, because any money lost through deep discounting is lost by retailers. However, the new system could change the way emerging artists use digital and lower price points to increase sales and gain traction in the industry.


While some artists, managers and labels have had harsh words to say about the new system, others agree with Billboard when it claims to just be trying to accurately represent the changed the industry. Small label head Jeremy DeVine said, “I’ve been waiting for Billboard to crack down on these Amazon sales since they were first introduced …the sales are great for consumers and the artists, but from a chart perspective it treats a $10 album and a $1 with equal legitimacy … These kinds of quick sales paint unrealistic pictures of success for everyone involved.”


Dave Grohl, on the Loss of the “Good” Record


In a recent Q&A with Billboard, music innovator Dave Grohl of the Foo Fighters talked about the current music climate and what he believes to be the real reason behind low music industry sales:  a majority of the music just isn’t good enough.


The Foo Fighters had a great year in 2011, releasing their critically-acclaimed seventh album Wasting Light, earning six Grammy nominations and embarking on a successful worldwide tour. And while Grohl admitted to having “the best year of his life,” he did have some choice words to say about why the music industry might be failing:


“Someone asked me recently, ‘What do you think the problem with the music industry is?’ I said, take the Adele record, for example. It’s an amazing record and everybody’s so shocked that it’s such a phenomenon. I’m not … You know why that record’s huge? Because it’s f–king good and it’s real. Now imagine if all records were that good. Do you think only one of them would sell? F—k no! All of them would. If all records were that good the music business would be on fire, but they’re not.”


But the focal point of the interview was a question has been cropping up for decades:  “Is rock dead?” And Grohl’s response was that, while he believes most rock is not making the cut, he is not going to be joining so many other of the world’s best musicians by answering that question “yes:”  For years, usually about once a year, you have a rock band that comes out and says, ‘We’re gonna save rock’n’roll,’ and then you’ll read an article asking, ‘Is Rock Dead?’


Grohl adds, “There’s always gonna be rock’n’roll bands, there’s always gonna be kids that love rock’n’roll records, and there will always be rock’n’roll. I travel all over the world and play music, and it’s easy to think rock’n’roll has gone away when you’re in a country like America. We just got back from a trip Down Under, we did a tour of Australia and New Zealand where we were pulling 40,000-50,000 people a night, selling out stadiums. To me, that means rock’n’roll is alive and well. The thing that will never go away is that connection you make with a band or a song where you’re moved by the fact that it’s real people making music.”

Music Business News, December 3, 2011

Posted By Rick Goetz on December 3rd, 2011

Napster officially called it quits and folded into Rhapsody last week. Also, in the wake of the EMI sale, experts discussed whether or not the music industry will never reach a point where one major label controls it. And finally, several analysts and legislators explored the complexities of SOPA legislation.



Napster and Rhapsody Merger Finalized


Napster had its last day on November 30. As of December 1, it officially merged with the #1 American on-demand music service Rhapsody, a month after the company finally bought the digital music company from Best Buy.


Of course, Napster has been a controversy in the music industry since its launch in 1999 as a peer-to-peer file-sharing service designed to help users swap music files. It only lived in its original incantation for two years before it was shut down by court order. Music industry trade groups including the Recording Industry Association of America filed hundreds of lawsuits against its users for copyright infringement and illegal downloading.


While it has been over 10 years since the original Napster ceased to exist, what many in the music business have called “the Napster effect” has profoundly shaped the way the digital music space has evolved. The company’s model brought to light a major supply-and-demand problem:  Consumers did not want to pay $20 for an entire CD when all they wanted was a few songs off that CD. They also wanted a simple and inexpensive way to get digital tracks. The death of Napster brought about the birth of services like iTunes, Rhapsody and others that would follow.


Rhapsody was founded in 2001, and currently allows its users to download unlimited songs for $10 per month. It has 800,000 subscribers.


Financial terms of the Napster/Rhapsody merger were not released.


Will One Corporation Ever Control the Music Business?


The answer is “not entirely,” according to many entertainment industry experts. Many in the music business have been concerned about an impending monopoly by major record labels ever since EMI was put up for public auction and sold to Universal Music Group (UMG), who bought the record label component, and Sony/ATV, who purchased its publishing division.


Professor Nick Baxter-Moore of Brock University in Ontario, Canada said, “… It might be argued that one reason why EMI wasn’t sold as a whole to either [Sony/ATV or UMG] was to avoid regulatory obstacles being thrown up to block the sale.”


Still, the purchase of EMI has brought the number of major record labels down from four, to three:  UMG; Sony/ATV; Warner Music Group. What were referred to as the “Big 5” became the “Big 4” in 2004 with Sony’s acquisition of BMG. The reduction to three has had many seeing the possibility of a recorded music monopoly in the near future.


However, Baxter-Moore and others feel that, while many are declaring the downfall of the music industry, it will never get to a point where any one major corporation has control:  “We might get to a point whereby two corporations exercise a duopoly – a situation in which two major firms control the majority of the output of a given industry – that would arise if, or rather when, either Universal, or, more probably, Sony acquires Warner Music Group.”


He also believes that the strength of indie labels means they will never fully go away and allow for a single label to control output:  “We might see a recording industry in which Universal and Sony and their many and respective subsidiaries control about 70-75 percent of the market (as long as neither one controls, by itself, 50 percent) and with national, regional and indie labels accounting for the other 25 percent.


While major labels are being purchased for huge figures, independents have slowly been brought into the spotlight in recent years, almost to a level of being competitors of the bigger labels. For example, Arcade Fire’s album The Suburbs, released on Merge, was one of the top-selling albums of 2010, and Adele’s 21, attached to XL was by far the most popular. Both these indie labels have been around for almost 20 years and have adopted business models similar to the majors because they release some music they feel will be more widely popular so that they can fund the release of records from emerging or fringe artists.


As Baxter-Moore asserts, while monopoly may not be inevitable, the EMI purchase could still cause some complications for artists and industry professionals:  “Corporate concentration is bad for any industry … The sale of EMI, whether in one piece or two, contributes to further concentration of the music industry … History tells us this is bad news for musicians, for the music product, and for audiences and fans.”


The Stop Online Piracy Act (SOPA) Legislation:  It’s Getting Complicated


Critics within congress of the Stop Online Piracy Act (SOPA) officially introduced a “legislative framework” for an alternative bill that they hoped would address some of the concerns many have had about the legislation on December 2. Their proposal was to update U.S. trade laws to implicate that downloading protected content – like a song, album or a movie – from a foreign-owned website would be treated the same as illegally importing foreign hard goods.


SOPA has caused some controversy since it was introduced. Critics have complained the bill directly attacks the freedom of online speech and hinders technological innovation. But proponents claim it is a necessary solution to the huge and growing problem of online piracy, citing stats that show that forty billion music files were shared illegally in 2008 – 95 percent of all music downloads worldwide – and that three-quarters of the video games released in late 2010 and 2011 were acquired illegally.


According to a recent editorial in The New York Times, “Musicians, moviemakers, authors and software designers are not the only victims. Piracy’s cost is measured in less innovation and less economic activity, as creators lose hope of making a living from their creations.” Still, the editorial stressed that legislation needs to be “tightened,” and that infringement as defined by SOPA is too broad and could actually cause some domestic websites that are not breaking any laws to be shut down unjustly.


Under the bill, copyright owners could tell direct payment providers like Visa or advertising networks like Google to shut down a website by filing a notice that the site or even just “a portion” of it “engages in, enables or facilitates” intellectual property infringement, or is ignoring this infringement on purpose. Once accused, websites would have five days to prove innocence. And companies like Google and Visa would be immune to being sued by websites that were cut off wrongfully. So, technically, copyright owners could prevent a website from earning money with one accusation. Provisions could affect websites that are already protected by the 1998 Digital Millennium Copyright Act, which protects U.S. sites with massive amounts of under-controlled like YouTube as long as they take down copyright-infringing material when it is brought to their attention.


The SOPA legislation – as well as similar legislation in other countries like Belgium, Italy and Finland that is already being enforced – was largely inspired by the need to stop foreign, “rogue” websites like the Pirate Bay in Sweden, a bit torrent site that has already been coming up with workarounds to allow it to continue to provide illegal content to its users. According to Torrent Freak, “The Pirate Bay Dancing” add-on has already been created by a group of coders called “MAFIAAFire” in order to redirect Pirate Bay and other bit torrent websites to new domains so if their domains are seized by regulators, their content has new homes. Undoubtedly, regardless of which shape new legislation takes, these types of workarounds will be inevitable.


The newly-shaped bill introduced in Congress on December 2 was designed to address many of the concerns about free speech and commerce. U.S. Senators and Representatives who worked on the new framework said they believe that creating a “21st century trade policy” will help prevent infringement while “ensuring the continued free flow of legitimate commerce and speech.” The revised bill would make it possible for a U.S. copyright holder to petition the International Trade Commission to investigate digital imports. That organization would then decide whether the company was violating intellectual property rights. According to these legislators, getting behind the trade laws helps them stay away from the “pitfalls” inherent in the original SOPA, which they claim gives the government too much power to control the internet based on little more than suspicion, does not provide clear definitions for the justification of shutting down an entire site and hinders the openness and innovation that drives the Internet.


In an official joint statement, the group of Representatives and Senators who came up with the new framework said, “By putting the regulatory power in the hands of the International Trade Commission – versus a diversity of magistrate judges not versed in Internet and trade policy – we will ensure a transparent process in which import policy is fairly and consistently applied and all interests are taken into account …When infringement is addressed only from a narrow judicial perspective, important issues pertaining to cybersecurity and the promotion of online innovation, commerce and speech get neglected.”