Sunday, June 30, 2013

The Music Industry

Radio Digs Its Own Grave As Cultural Currents Shift
(By Bob Lefsetz, Variety, 21 June 2013)

The major music business, the “new music” business, is built upon radio, it depends upon it.   There’s a fiction that we still live in a monoculture. This concept has been blown apart on television, where there are five hundred channels available, but the Luddites in radio still believe the Internet didn’t happen, that we’re all prisoners of the dial, where there are few stations and little innovation.  There are radio alternatives (i.e., Pandora and the forthcoming iTunes Radio). Please don’t confuse Spotify and Rdio and Deezer and MOG/Daisy with radio, they’re nothing of the sort. Oh, they might have a Pandora or iTunes Radio component, but these streaming services are retail replacements, lending libraries wherein for 10 bucks a month you can go into the store and borrow anything you want, as long as you return it. Also, you’re not limited to one album at a time.

The radio alternatives represent market fragmentation. Because Internet in the car is not yet here on a widespread basis, they’ve had little impact on car listening. … Then again, we’ve experienced tapes in the car, CDs and iPod hookups. Terrestrial radio listenership is not close to what it once was. Radio used to dominate; it’s still the biggest player, but its market share has receded dramatically.
Sirius XM benefits from its automobile deals. That was the essence, even more than the programming. At this point, 10 years past launch, almost all cars are satellite-ready. Not everybody pays, but subscriptions exceed 20 million.  When Wi-Fi hits the car, or whatever type of cheap Internet access deploys in automobiles, Sirius XM will be challenged too. Right now, Sirius XM’s Internet play is laughable.  Most people under age 20 have never experienced good radio. So when baby boomers and Gen X’ers start waxing rhapsodically about their old-time favorites, wanting them to come back, it’s the equivalent of wishing that musicvideos would come back to MTV.  Insiders believe that there’s no revolution in terrestrial radio because the owners know it’s headed into the dumper. They’re just milking it for all they can before it falls off a cliff. So if you’re waiting for format innovation and fewer commercials … you’ll be waiting forever.

The challenge of Spotify/Rdio/etc. is … to tell their subscribers what to listen to. That’s what traditional radio has done best. So far, these services have not succeeded because they’re run by techies, and curation is all about human effort, not algorithms, otherwise we’d all be in relationships determined by computers.  Terrestrial radio sells records and builds careers. Just not as well as before. The reason we see so few diamond-sellers isn’t because of piracy so much as the fragmentation of the audience. In the old days of the walled garden, of radio and MTV dominance, if something got airplay, it went nuclear; now radio just plays to its niche.  There’s very little innovation in the music played on alternative and active rock stations. Hip-hop killed rock and roll, but rather than innovating, rock and roll stayed the same. And now electronic music is killing hip-hop. Sure, kids want something different from their parents, but even more, they want to own the scene, they don’t want to be dictated to, they want something that’s testing the limits!
Look at trends. Ten years ago the major labels said no record ever broke on the Internet. Look at Psy’s “Gangnam Style”! Radio is dying and YouTube and other alternatives are growing.  We, as a culture, want to feel included. That’s what the radio of yore was all about. To grow mass, you’ve got to make us feel included. In other words, it’s all about culture. Talk radio has culture. As does public radio. After that, it’s a vast wasteland of sold-out stations with the same fl aw of network TV. … Trying for broad-based appeal, they appeal to no one, and cede their market to excellence. HBO and the cable outlets killed networks with quality. … If you don’t think new services will kill terrestrial radio, you must like inane commercials, you must like me-too music, you must think airplay on one of these outlets will sell millions of albums, but that almost never happens anymore.


The Reality Of The Music Business Today: 1 Million Plays = $16.89
(By Derek Thompson, The Atlantic, 25 June 2013)


"My Song Got Played On Pandora 1 Million Times and All I Got Was $16.89" is the eye-catching headline by David Lowery, a musician who wrote "Low," which is earning him just over a thousandth of a cent per Internet radio play.  Which is the law. The Library of Congress Copyright Royalty Board decides how much Internet radio companies like Pandora must pay artists like Lowery. And even that microscopic number is high enough that Pandora, which earns 80 percent of its revenue from digital advertising, has lost money in five of the last six quarters.


"Pandora is barely giving anything of worth for using the songwriters and artists' music," Gizmodo writer Casey Chan points out. Which is true. But ironic, since it was just four years ago that Gizmodo writer Sean Fallon pointed out, also correctly, that "excessive royalty rates were the main reason sites like Pandora hovered near the brink of collapse [in 2008]."  We all want our favorite musicians to be rich and also would prefer to pay nothing to listen to them over the Internet. When we hear that our musicians aren't rich, we feel indignant. When our Internet music sites threaten to close down because of "excessive royalty rates," we feel indignant.  The solution is to abandon all hope ye who enter the Internet as a means of making a million dollars with streaming music. Even if Pandora quadrupled the royalty rates paid to Lowery, it'd barely pay for three days rent. If you want to pay a musician, there is an easy fix. Go to a concert. 

Streaming Services Really Are Saving The Music Industry, Global Sales Prove
(By Kyle McGovern , Spin Magazine, 27 February 2013)
Here's something you don't read every day (and certainly not in the last 13 years): The music industry's global revenue increased in 2012. According to a study released earlier this week by the International Federation of the Phonographic Industry, global sales rose 0.3 percent last year, the first sign of industry growth since 1999 (via the New York Times).  Last year's total revenue amounted to $16.5 billion. That's nowhere near the industry's more-than-a-decade-ago peak of $38 billion, but it's something.  “It’s clear that 2012 saw the global recording industry moving onto the road to recovery,” Frances Moore, chief executive of the IFPI, told the Times. “There’s a palpable buzz in the air that I haven’t felt for a long time.”

On the whole, things are looking a little less apocalyptic for the music industry. Nielsen SoundScan's year-end 2012 report revealed that if you don't distinguish between format (album or track) or delivery method (physical or digital), then last year, Americans actually bought more music than ever before. Factor in that piracy is on the decline, streaming services such as Pandora are on an upswing, and iTunes has sold more than 25 billion songs, and suddenly the sky isn't falling quite so hard.
Of course, the biggest issue with streaming services comes with the awfully low payout for the artists. As our own Marc Hogan pointed out last month, "While the average musician might earn 7 to 10 cents on an iTunes download, artists receive a fraction of a fraction of a cent each time their songs are played on streaming services." So while someone like Psy earned $8 million on his 1.2 billion views for "Gangnam Style," cellist Zoe Keating received less than $1,700 for the more than 1.5 million plays that she racked up on Pandora in six months.  “At the beginning of the digital revolution it was common to say that digital was killing music,” Edgar Berger, chief executive of Sony Music Entertainment's international division, said to the Times. On the contrary, Berger added, it could be argued "that digital is saving music." Not something you'd expect to hear back in 2000, so it's understandable that industry bigwigs would be excited.

As the Hollywood Reporter notes, digital income did indeed bolster the growth. Revenue from downloading and subscription-driven outlets jumped nine percent in 2012, generating a total of $5.6 billion.  The IFPI also found that subscription-based streaming services — including Spotify and Rdio, among others — fattened in 2012. Last year, the number of subscribers to said services ballooned by 44 percent, amounting to a total of 20 million users.  Meanwhile, another study, this one from the NPD Group, estimates that file-sharing declined "significantly" last year (via THR). NPD Group reports that 11 percent of Internet users ages 13 and older used a P2P service to download music in 2012, down from 13 percent in 2011 and 20 percent in 2006.  Overall, NPD claims that last year saw a 26 percent decline in illegally downloaded music.  Looks like the industry really does rely on streaming services for support. Well, streaming services and Adele. The Oscar winner's diamond-certified 21 ranked as the best-selling album of 2012, with 8.3 million units sold. That EGOT can't be far off.


Music Industry Sales Rise, And Digital Revenue Gets The Credit
(By Eric Pfanner, New York Times, February 26, 2013)

The music industry, the first media business to be consumed by the digital revolution, said on Tuesday that its global sales rose last year for the first time since 1999, raising hopes that a long-sought recovery might have begun.  The increase, of 0.3 percent, was tiny, and the total revenue, $16.5 billion, was a far cry from the $38 billion that the industry took in at its peak more than a decade ago. Still, even if it is not time for the record companies to party like it’s 1999, the figures, reported Tuesday by the International Federation of the Phonographic Industry, provide significant encouragement.  “It’s clear that 2012 saw the global recording industry moving onto the road to recovery,” said Frances Moore, chief executive of the federation, which is based in London. “There’s a palpable buzz in the air that I haven’t felt for a long time.”
For years, the music industry’s decline looked terminal, with the record companies seemingly unable to come up with digital business models that could compete with the lure of online piracy. Last year, however, digital sales and other new sources of revenue grew significantly enough to offset the continuing decline in CD sales.   “At the beginning of the digital revolution it was common to say that digital was killing music,” said Edgar Berger, chief executive of the international arm of Sony Music Entertainment. Now, he added, it could be said “that digital is saving music.”
Digital revenue comes in a variety of forms. Sales of downloaded singles and albums, from services like Apple’s iTunes, continue to grow. More promising for the industry, however, are subscription-based offerings, including Spotify, Rhapsody and Muve Music. The number of subscribers to services like these grew by 44 percent last year, to 20 million, the federation said.  Several new entrants are expected soon, including subscription services from Apple and Google, promising additional subscriber fees and licensing revenue for the record companies. Other sources of revenue, including royalties from musical performances and marketing uses of music, have also been growing.

The industry’s state of health remains highly uneven around the world. Over all, eight of the 20 biggest music markets showed growth last year, but in some countries that the industry classifies as “emerging,” like Russia and China, piracy remains endemic and legitimate digital services struggle.  There are also worrying signs in some more developed markets that had previously been relatively robust, like Britain. There, the recent bankruptcy of the leading retail music chain, HMV, has prompted fears about an acceleration of the decline in CD sales.  In the United States, sales slipped slightly last year. But Enders Analysis, a research firm in London, predicted in a separate report published Tuesday that a turnaround there would begin this year, with revenue rising to $5.35 billion from $5.32 billion. Alice Enders, a senior analyst at the firm, said growth in the coming years was likely to remain slow as CD sales continued to plunge. Still, given that industry executives had grown accustomed to more than a decade of falling revenue, the performance last year was encouraging.  “It’s huge,” she said. “It’s a milestone.”
Even if the music business never bounces back to anything near its former size, it could still return to robust profitability in coming years, Ms. Enders said. That is because the shift to digital delivery of music lowered the record companies’ costs.  Record companies were initially reluctant to embrace digital methods of distribution, seeing only the threat from online piracy, rather than the opportunities of new business models. Over time, digital business models that were initially dismissed — free, advertising-supported music like one of Spotify’s services, for example- were brought back in from the cold.  By last year, according to the industry federation, the music business generated 34 percent of its revenue from digital sources, putting music substantially ahead of other media. In several countries, including the United States, India, Norway and Sweden, digital sales already make up more than half of music revenue.

Now music executives, having been written off as dinosaurs, are finding their skills and knowledge back in demand.   Book publishers in London and New York, for example, have been hiring digital experts away from record companies, analysts say, as they seek to build up their e-book businesses.  Had the music industry been more open to change in 1999, some analysts say they believe, it might not have taken more than a decade to get to this stage.  “If there is a lesson to take away, it is probably that the earlier you can embrace new business models and services, the better,” said Paul Brindley, chief executive of Music Ally, a consulting firm in London. “Whether this is signaling a turnaround that will lead to inexorable growth, who knows? But it does at least signal a bottoming out, with room for growth.”

My Song Got Played On Pandora 1 Million Times And All I Got Was $16.89
(By David Lowery,, 24 June 2013)


As a songwriter Pandora paid me $16.89* for 1,159,000 plays of “Low” last quarter.  Less than I make from a single T-shirt sale.  Okay that’s a slight exaggeration.  That’s only the premium multi-color long sleeve shirts and that’s only at venues that don’t take commission.  But still.  Soon you will be hearing from Pandora how they need Congress to change the way royalties are calculated so that they can pay much much less to songwriters and performers. For you civilians webcasting rates are “compulsory” rates. They are set by the government (crazy, right?). Further since they are compulsory royalties, artists can not “opt out” of a service like Pandora even if they think Pandora doesn’t pay them enough. The majority of songwriters have their rates set by the government, too, in the form of the ASCAP and BMI rate courts–a single judge gets to decide the fate of songwriters (technically not a “compulsory” but may as well be).  This is already a government mandated subsidy from songwriters and artists to Silicon Valley.  Pandora wants to make it even worse.  (Yet another reason the government needs to get out of the business of setting webcasting rates and let the market sort it out.)
Here’s an idea. Why doesn’t Pandora get off the couch and get an actual business model instead of asking for a handout from congress and artists? For instance: Right now Pandora plays one minute of commercials an hour on their free service. Here’s an idea!  Play two minutes of commercials and double your revenue! (Sirius XM often plays 13 minutes and charges a subscription).  I urge all songwriters to post their royalty statements and show the world  just how terrible webcasting rates are for songwriters.  The revolution will not be webcast.

* I only own 40% of the song, the rest of the band owns the other 60% so actually amount paid to songwriters multiply by 2.5 or $42.25)
**  I am also paid a seperate royalty for being the performer of the song.   It’s higher but also what I would regard as unsustainable.   I’ll post that later this week.

For frame of reference  compare Sirius XM paid me $181.00

Terrestrial (FM/AM) radio US paid me $1,522.00


Who’s On Top In Music? It’s Gotten Hard To Say
(By Chris Richards, Washington Post, July 25, 2011)
In pop music, being No. 1 doesn’t always mean you’re on top.  Earlier this year, the Oregon rock band the Decemberists reached the summit of the Billboard 200 albums chart with “The King Is Dead.” By selling a measly 94,000 copies of the album in its first week, the band snatched the top spot from the veteran California band Cake, whose “Showroom of Compassion” had sold an even measlier 44,000 copies the week before.  If seeing these two bands atop the Billboard 200 gave you the impression that they were the biggest names in music, you got the wrong impression.
In an era of iTunes and Amazon, Spotify and Pandora, album sales don’t tell you what they used to. With so many routes to our eardrums, how do we measure the actual popularity of pop music? It’s something various companies are scrambling to figure out.  “Album sales as representative of the success of artists is a failing metric,” says Eric Garland, chief executive of Big Champagne, a media marketing company that has aimed to track music’s popularity in the digital age for more than a decade. “It no longer adequately explains or offers real insight into the market dynamics.”
And those dynamics are still important. Even if albums aren’t selling, an artist’s popularity can still be monetized. With sponsorship opportunities and licensing deals on the line, managers need to know how much their acts are worth. Concert promoters need to know what venues an artist can fill and how much to charge for tickets. Labels need to know whether the money they’ve spent on marketing and promotion has been effective.  For the rest of us, the charts mean something else. “A chart provides a venue for fans to talk about who’s winning,” says Jeff Leeds, editor in chief of Buzzmedia Music, which runs a network of music blogs that include Stereogum and Idolator. “It’s not that different from the way polls in politics provide a venue for pundits and talking heads to talk about who’s winning or losing and why. . . . But like a poll, a chart is merely a snapshot, and is only as accurate as the methodology behind it allows.”
Last July, Big Champagne launched the Ultimate Chart in hopes of tracking the popularity of songs and artists across an array of platforms. Next Big Sound, a Colorado-based company founded in 2008, ranks popularity in the digital realm with two charts that are geared toward the industry. We Are Hunted, a Web site launched in Australia in 2009, aims to measure fan engagement by ranking the 99 most popular songs on Earth based on global impressions online and the “enthusiasm and sentiment” behind them.  The charts are free for all to see, but the data that drive them come at a price. Big Champagne and Next Big Sound make money by selling the data to managers, companies, promoters and record labels.
Rich Westover, vice president for promotion research and information systems at Island/Def Jam records, says he uses Big Champagne’s data to see whether the label’s artists are resonating with fans across demographic and geographic boundaries.  “When people ask us in a meeting, ‘What’s going on with these records?’ I know that I’m going to be using more of the Ultimate Chart information to really give the most accurate gauge I can give on how these songs and how our artists are performing,” Westover says. He says the data can help land an artist a sponsorship or a booking on Letterman.
Rishi Mirchandani, vice president of marketing and operations at RCA/Jive records, uses Next Big Sound’s data to help shape his company’s marketing approach. “What we’re using Next Big Sound to do is to evaluate the growth and the engagement of an artist’s online community and fan base,” he says. “The goal is to really translate those metrics into actually marketing insights that can inform our decision making.”  The future of these emerging charts may hinge on whether they can draw a meaningful line between buzz and commerce. “It’s really difficult today because there’s a significant gap between Internet fame and Internet commercial success,” says Leeds of Buzzmedia Music. “We’re still in pursuit of the perfect chart.” 
Billboard might not be perfect, but it isn’t ready to cede its dominance. “Billboard is a 116-year-old brand, and we’ve been innovating for most of that time,” says Bill Werde, editorial director at Billboard Magazine. “If you look at what we’ve charted and how we’ve charted over the past 50 years, it’s a study in the changes that have gone on in the music business.”  Billboard hasn’t faced many challengers over the years. Competing trade magazines published charts, but in the ’80s they either lost clout (Cash Box magazine) or went out of business (Record World magazine). Now, as weak album sales bring the Billboard 200 closer to obsolescence, Werde touts the Hot 100 singles chart as Billboard’s signature and most enduring chart.  “Singles culture has come and gone and come and gone. And it’s come again now,” he says of the Hot 100, which ranks the popularity of songs based on sales, radio airplay, and online streams on certain platforms.
Billboard began ranking songs in 1940 and began tracking album sales in 1945. Its albums chart was branded the Billboard 200 in 1992 and has since served as the last word on what’s popular. A chart-topping album still makes more headlines than a chart-topping single.  But when Amos Lee — a singer who straddles folk and jazz — topped the Billboard 200 in February, the headlines weren’t favorable. His “Mission Bell” album moved just 40,000 units, making it the lowest-selling No. 1 album since Nielsen SoundScan began tracking sales and supplying data to Billboard in 1991.
That same week, Lee was only at No. 6 on Big Champagne’s Ultimate Chart, trailing bigger names: Pink, Bruno Mars and Katy Perry. During Cake’s stay at the top of the Billboard 200 in January, the group stood at No. 25 on the Ultimate Chart, lagging behind Britney Spears, Eminem, Lil Wayne and the Black Eyed Peas.  The Ultimate Chart tracks how music is shared, streamed and purchased across more than 100 different platforms, with each outlet weighted by its perceived importance. Sales matter the most. Buying a full album on iTunes or in physical form affects the Ultimate Chart much more dramatically than streaming a song on Pandora.  That means the Billboard 200 chart and the the Ultimate Chart’s artist rankings can sometimes look similar. Beyonce has topped the Billboard 200 for two weeks this month with the lowest-selling album of her career. But it was still enough for her to land on the top of this week’s Ultimate Chart, too.
Split between offices in Los Angeles and Atlanta, Big Champagne’s staff of 25 generates revenue through subscriptions and syndication, providing data to industry professionals, trade organizations, radio networks, retailers, online music companies and others.  Garland says one of the chart’s goals is to feel authoritative in an popscape overcrowded with charts: College Music Journal, better known as CMJ, has tracked the most popular acts on college and public radio since 1978; the Hype Machine, a popular MP3 blog aggregator, ranks songs and artists based on blog activity; iTunes offers various sales charts that constantly churn in real time; and Billboard maintains more than 50 individual charts, measuring artists, albums and songs by genre and format.  “No one has a way of absolutely tracking every time a song hits an eardrum,” says Werde at Billboard. “But are we constantly looking at the different ways that music is hitting eardrums and deciding if it’s worth putting a Billboard chart behind?  Absolutely.”
We Are Hunted’s 10-person staff measures the excitement of music fans by tracking “blog posts, news articles, comments, likes, tweets, shouts” and other online fan activity, general manager Richard Slatter said via e-mail. He said the company generates revenue by licensing technology and providing media marketing and development services to various companies in Australia and the United States.
Next Big Sound’s Social50 chart measures activity across major social networking sites — Facebook, YouTube, Twitter, MySpace, about 10 in all — and tallies a weekly weighted total of plays, views and fan activity. The company’s 10-person staff also produces another chart, the NBS25, which monitors which artists are creating the most online activity the fastest.
Billboard liked Next Big Sound’s two charts so much, it decided to license them late last year. Big Champagne, meantime, says that We Are Hunted’s rankings factor into the algorithm of the Ultimate Chart.  There’s a lot of data out there. Is it possible to surface meaning from it?  “That’s what’s cleverly referred to as ‘analysis paralysis,’ ” says Garland. “There’s too much data, unless you have good curators who are helping you make sense of the data and make it manageable.”  The popularity contest — and the race to accurately measure, analyze and monetize that popularity — continues.

Concert, Recorded Music Sales Crashed In 2010
(By Christopher Morris)
The U.S. music business closes 2010 in an atmosphere of continuing uncertainty and decline, as the events of the last 12 months evince more questions than answers about the industry's future.  All four major music firms find themselves in transition as the year closes, but the longest shadow hangs over EMI Music.  Purchased in 2007 by U.K.-based Terra Firma Equity Partners, the company has been staggering under its crushing bank debt ever since. In what many saw as a desperate maneuver, Terra Firma sued its principal creditor, Citigroup, late last year, alleging the lender fraudulently inflated the sale price of EMI.
A federal jury rejected Terra Firma's claim last month, and EMI -- helmed by a succession of three CEOs over the past year, with publishing chief Roger Faxon taking the reins in June -- must now brace for the possible sale of its label and publishing assets if Terra Firma defaults and Citigroup takes control.  All three of EMI's competitors, meanwhile, have witnessed or will soon see major changes in their executive suites.  In January, former Universal Music Group chairman-CEO Lucian Grainge, who has served as co-CEO of UMG with Doug Morris since his February elevation, will take solo control amid predictions of layoffs at the long-running industry leader.
It is rumored that the 72-year-old Morris may move to Sony Music Entertainment, where CEO Rolf Schmidt-Holtz is expected to exit when his contract expires next year. A top Sony creative exec, RCA/Jive Label Group chairman-CEO Barry Weiss, ankled the division for a job at UMG.  At Warner Music Group, Tom Whalley was swept out as chairman-CEO of flagship Warner Bros. Records after almost a decade, succeeded by an exec team led by new chairman Rob Cavallo, WMG's former chief creative officer and a top producer.

The latest round of musical chairs comes as recorded music sales continued a plunge that began in 2004. Moving into the fourth quarter of 2010, album sales were down 13%, according to Nielsen SoundScan; if holiday purchases don't generate an uptick, this year's drop could beat the 12.7% downturn of 2009.  The bottom fell out of the CD market years ago, but digital downloads, a growth market in recent years, began to stall in 2010. Total track sales are virtually flat to date this year vs. a gain of 12% last year, according to figures recently published by Billboard.  Piracy continues to plague the industry despite action like the court-ordered shutdown of LimeWire's peer-to-peer service in November. As torrent sites proliferate, an illegal download of virtually any hit track is still just a mouse click away.  In terms of music's valuation, it was a case of "how low can you go" this year, as's Daily Deal pricing of hot new albums at $3.99 lofted some titles like Arcade Fire's "The Suburbs" to the top of the charts.  In one case, online availability of one prominent catalog thrust CD prices into the basement: After the Beatles' music was finally offered digitally via an Apple iTunes exclusive, Amazon offered remastered CDs of the group's titles -- launched in September 2009 at a full price of $18.98 -- for just $7.99.
The concert business, which boomed in 2009 despite the country's ongoing economic instability, was looked upon as the one area of the music sector that would be recession-proof in 2010.  It was amid a confident afterglow that the long-pending merger of concert promotion, venue and management giant Live Nation and ticketing behemoth Ticketmaster was completed in January.  Within months of the formation of the new Live Nation Entertainment entity, the touring market collapsed, as major treks by acts including U2, Christina Aguilera and the Eagles were either postponed or scaled back.  Year-end figures cited by Billboard's live music editor Ray Waddell tracked a 26% decline in North American concert grosses and a 12% decrease in attendance.  At one point in July, Live Nation's stock, which reached a 52-week high of almost $17, had fallen below $9.
Could anything be counted on as a sure thing in a business filled with disarray? Yes, if it had the word "Glee" attached to it.  Fox's top-rated musical comedy series proved the most reliable sales in 2010. On last week's domestic album chart, "Glee" titles took two slots in the top 10 and seven in the top 200; two of those sets had been on the chart for more than a year.  Otherwise, the landscape was dominated by a mixture of rap, country and pop. Eminem had the biggest album of the year with a strong comeback, "Recovery" (3.1 million sold to date, according to Nielsen SoundScan). Country trio Lady Antebellum logged the second-biggest seller with its sophomore release "Need You Now" (2.9 million), while teen dream Justin Bieber's second collection "My World 2.0" shifted 2.1 million.
The end of 2010 is playing out like a rerun of 2009, as Susan Boyle's Christmas album "The Gift" dueled with Taylor Swift's "Speak Now" at the apex of the chart.  The matronly, TV-bred Scottish singer's "I Dreamed a Dream" and the young country-pop vocalist's "Fearless" faced off during the last holiday shopping season.  Possibly the most troubling symptom at year's end was the quick burnout of releases by acts with platinum track records.  By their fourth week in stores, fresh titles by Keith Urban, Rascal Flatts and Kid Rock -- all megamovers in years past -- were delivering weekly totals hovering just above the mid-five-figure range. Coming off one of the biggest albums of last year, the Black Eyed Peas found themselves in similar straits.
Pop (and its hyphenate relation country-pop) ruled the charts. There were no new rock acts to speak of with any significant sales. Television was the dominant medium for the exposure of new music (with a big assist from its Internet-based relatives Vevo and YouTube).  And, as it was before Elvis Presley and the Beatles took the stage, the professional songwriter -- in a new-millennium incarnation as songwriter-producer -- dominated as a commercial force.  Listeners snapped up songs by Katy Perry, Ke$ha, B.o.B., Lady Gaga, Cee Lo Green and Mike Posner, but Dr. Luke, Red-One and Bruno Mars were the true powers behind these musical thrones. 

U.S. Album Sales Dropped In 2009
(Reuters, January 10, 2010)
U.S. album sales tumbled for the eighth time in nine years as the rate of growth in legal digital downloads slid in a turnaround from recent years, according to industry figures issued last week.  Total album sales fell 12.7 percent to 373.9 million units during the 52-week period ended Jan. 3, according to retail data collected by tracking firm Nielsen SoundScan. Late pop star Michael Jackson was the top-selling artist, and Taylor Swift had the No. 1 album, followed by Susan Boyle. The decline in total sales follows a 14 percent drop in 2008, and it sets a new low since Nielsen SoundScan began publishing point-of-sales data in 1991. Sales have plummeted 52 percent from the industry's high-water mark of 785.1 million units in 2000, largely because of Internet piracy and competition from other forms of entertainment such as video games.
While recession-weary consumers spent more money on movies and live concerts in 2009 than they did the year before, they drew the line at music purchases. Liquidations of the Virgin Megastore and Circuit City retail chains did not help, nor did the reduction in display space at retail outlets such as Borders.  On the other hand, the death of Jackson in June provided a boost. The pop singer was the best-selling artist of the year, accounting for 8.3 million units. Neither he nor the next two artists, country star Swift and the Beatles, released new albums last year.  Swift was a distant second with 4.6 million units, mostly for her second album, "Fearless," the biggest seller of 2009 and the No. 3 seller of 2008; 3.3 million units of the Beatles' newly remastered catalogue sold.

Downloads through online retailers such as iTunes have taken on greater importance to the industry, but the impressive growth of recent years is waning. Digital track sales rose 8.3 percent to a record 1.16 billion in 2009, but that was proportionally far less than a 27 percent increase in 2008 and a 45 percent leap in 2007.  Digital album sales rose 16.1 percent to 76.4 million units, also a record, after jumps of 32 percent in 2008 and 53 percent in 2007.  After Swift, the No. 2 album of 2009 was Scottish singer Boyle's debut release, "I Dreamed a Dream," which sold 3.1 million copies after six chart-topping weeks in stores. Jackson's 2003 hits package, "Number Ones," was No. 3 with 2.4 million copies sold.

If Spotify and Pandora Are the Future, Do Artists Have One?
(By Spin magazine, January 29 2013)

The music industry, which 10 years ago finally shifted to online sales via iTunes, is now in the midst of another massive change. But the transition to digital streaming services such as Spotify, Pandora, and YouTube brings with it a dramatically different way of paying artists' royalties. The companies that offer streaming services are now multi-billion-dollar concerns. The artists whose music they stream, not so much.  As the Times reports, the comparatively teensy amount artists earn from streaming services has caused concern throughout the industry.

While the average musician might earn 7 to 10 cents on an iTunes download, artists receive a fraction of a fraction of a cent each time their songs are played on streaming services. That's not terrible if you're Psy, who a Google executive recently said had earned $8 million on the 1.2 billion views for "Gangnam Style," a rate of roughly 0.6 cents per view. It's less good if you're Zoe Keating, a self-described "avant cello" musician who late last year revealed that despite getting more than 1.5 million plays on Pandora in a six-month span, she received less than $1,700. Spotify was a bit kinder: Her 131,000 plays last year yielded almost $550.
Pandora, for one, lobbied last year for permission to lower its royalty rates, which unlike Spotify's are set by law. A wide range of artists, from Brian Wilson to Rihanna, opposed the leigslation, the so-called Internet Radio Fairness Act. So did the American Association of Independent Music, which represents many prominent indie labels. Billboard reports that the legislation isn't completely dead and is "just hibernating."

Artists might dream of penny royalties, but streaming service providers are swimming in big bucks. Pandora is publicly traded, with a share price that values it at nearly $2 billion. Spotify isn't public, but its investors have reportedly pegged its value at $3 billion. To put that into perspective, the entire music industry saw revenues of roughly $7 billion in 2011, according to the Recording Industry Association of America.  Streaming service companies might be worth a lot on paper, but they're not contributing much to the record business just yet. Pandora had $202 million in "content acquisition costs" in its last four reported quarters, and Spotify recently said it had made $500 million in royalty payments, the Times notes. That pales in comparison to music downloads' $2.6 billion in 2011 sales.
The article doesn't come out and say so, but for music fans a major worry is whether the streaming services are, to put it in agricultural terms, eating their seed corn. A top executive at a music rights management company told the Times that only artists with serious live income will be able to carry on as full-time professional musicians. Still, a top music lawyer is quoted as saying royalties for streaming will probably rise sooner or later. (That's despite signs, such as the Internet Radio Fairness Act, that streaming service providers would actually prefer to pay artists less, not more.)

Then there's Sean Parker, the former Facebook president who helped Shawn Fanning launch Napster and is now a Spotify board member. "I believe that Spotify is the company that will make it succeed,” he's quoted as saying. “It’s the right model if you want to build the pot of money back up to where it was in the late '90s, when the industry was at its peak. This is the only model that’s going to get you there.”  Or Justin Timberlake, who famously played Parker in The Social Network, could finally put out an alb — oh wait. Industry's saved, everybody, we can go home.


Rihanna, Brian Wilson, Everyone Suddenly Mad at Pandora
Internet Radio Fairness Act would "gut" royalties, according to letter signed by more than 100 artists
(By Spin magazine, November 15 2012)
A bill introduced in Congress in September that would cut the royalty rates that Internet radio providers must pay to artists has led to some unusual bedfellows. Rihanna, Katy Perry, Brian Wilson, Stevie Nicks, Nas, T.I., Blondie, Billy Joel, and more than 100 other artists have signed an open letter opposing the so-called Internet Radio Fairness Act. They say the legislation would unnecessarily slash payments depended on by musicians.

“Pandora’s principal asset is the music,” says the letter, whose signers also include Robert Plant, Common, Sheryl Crow, Cee Lo Green, George Clinton, Duff McKagan, Missy Elliott, John Fogerty, and Janelle Monáe. “Why is the company asking Congress once again to step in and gut the royalties that thousands of musicians rely upon? That’s not fair and that’s now how partners work together.” The letter, which will appear in Billboard, was first published by groups SoundExchange and the musicFIRST Coalition, which argue the bill could reduce royalties to musicians by 85 percent.
As the New York Times explains, Internet radio provider Pandora Media is a champion of the bill, joined by Clear Channel Communications and a range of technology groups. Supporters of the legislation say it would end an unfair discrepancy between Internet radio royalty requirements and the lower royalties paid by satellite radio services and other digital providers. Pandora pays 4 percent of its revenues in royalties, compared with 1.7 percent for broadcast radio stations, which also enjoy special deductions.  Pandora founder Tim Westergren was not deterred by musicians' opposition. In a statement quoted by the Times, he indicated the Internet radio industry would collapse without a "permanent fix" to keep royalty rates from rising. Pandora successfully obtained a temporary reduction on rates set by a panel of judges in 2007, but the discount ends in 2015. Westergren argues lower rates for Internet radio companies like his will create jobs and lead to more money for musicians.

You know how those "job creators" can be, though. Damon Krukowski of the bands Galaxie 500 and Damon and Naomi, who has made his groups' music available for free on Bandcamp sites, recently wrote on Pitchfork that his royalties from Pandora and Spotify basically amount to pocket change. "Pressing 1,000 singles in 1988 gave us the earning potential of more than 13 million streams in 2012," he noted, after providing the numbers to support such a stark statement. He also noted that while these companies continue to lose money, their executives are profiting through stock sales.
To a certain extent, as with the debate early this year over the so-called Stop Online Piracy Act, sorting out the argument over this law means recognizing a corporate generational shift. We're accustomed to complaining about the big, bad record labels, but technology companies have a fiduciariy duty to look out for their own bottom lines, too.  This disconnect between old media companies and new is hilariously illustrated by comments that one of the bill's sponsors, Senator Ron Wyden, a Democrat from Oregon, made recently at the Future of Music Coalition Summit. After some harsh words for the major labels, Wyden said the following, as quoted by Digital Music News: "Now, if it weren't for the disruptive independent record labels — I'm talking about people like I.R.S. and Sub Pop and Tim/Kerr — we might never have known much about bands like R.E.M., and Nirvana and the Replacements ... I sure want us to remember their enduring influence on not just rock music, but on their contributions to our culture and an entire generation."

There's only one problem with Wyden's professed support for indie labels. The American Association of Independent Music, which represents many well-known indie labels, including Sub Pop (Tim/Kerr is defunct, and I.R.S. is now part of a major label), has come out against his legislation. In a letter to Congress dated October 1, the organization writes, "We urge you to reject misleading titles of 'fairness' and claims of 'parity' and oppose this bill." Kurt Cobain could not be reached for comment.


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