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Why the Major Labels Love (and Artists Hate) Music Streaming
Hugh Pickens DOT Com writes "Jay Frank writes that the big four music distributors and their sister publishers (Sony, Warner, UNI and EMI) make 15% more per year, on average, from paying customers of streaming services like Spotify or Rdio than it does from the average customer who buys downloads, CDs or both. Each label makes 'blanket license' deals with Streaming services with advances in the undisclosed millions, which is virtually the same as selling music in bulk; they receive these healthy licensing fees to cover all activity in a given period rather than allowing Streaming services to 'pay as they go.' 'Artists are up in arms, many are opting out of streaming services,' writes Frank. 'Lost in that noise is a voice that is seldom heard: that of the record companies. There's good reason for that: they're making more money from streaming and the future looks extremely bright for them.' The average 'premium' subscription customer in the U.S. was worth about $16 a year to a major record company, while the average buyer of digital downloads or physical music was worth about $14. Thus, year over year, the premium subscriber was worth nearly 15% more than the person who bought music either digitally or physically."
They don't want us to own our music collections!
I've been VERY careful with services like Spotify. If I really like a song, I still acquire a real copy that's mine, rather than depend on Spotify to listen to it when I want to.
The simple fact is that Spotify might be gone someday, yet my MP3s will still be sitting on my (backed up) hard drive.
Artists are up in arms because record companies make more money off of their work, and yet they end up making less!
Thirty four characters live here.
If the record companies were honest, the artists would be making more money so would love streaming services. Unfortunately, the record industry is controlled by a bunch of thieving assholes who see paying artists as unnatural. So the record companies are making money hand over fist, and the the artists get screwed, as usual.
-- Will program for bandwidth
We call it Riding the Gravy Train.
tell me why I should give a shit? This is like a news item telling me how much Dropbox pays for hard disks or how much Google pays for electricity.
Streaming music services like Spotify provide a service, and I pay for it if I find it good value for money. I don't care what their overheads are or what deals they have in place with their suppliers.
Added bonus, they get to screw rockstars.
Captcha = orgies
Does this reflect the fact that many labels pay the artists upfront and fund the creation of the album and the lifestyle? It seems to me in many of these cases the labels are the ones taking the risk, while the artists are just enjoying the lifestyle. I don't know. It seems to me that if the internet is working the way many think it should, major labels would become a thing of the past. If you are breakout internet hit like Justin Bieber, I don't know why you would sell yourself to a label. Unless you just want the upfront cash. In which case you have sold yourself, so can't really complain that you don't get all of the profits.
"She's a scientist and a lesbian. She's not going to let it slide." Orphan Black
Sure, the major labels may love all the money they're getting, but they've squeezed all the profit out of the streaming companies. Free/cheap streaming music may not be long for this world once the venture capital runs out.
http://www.nytimes.com/2013/12/13/business/media/a-stream-of-music-not-revenue.html
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DRM is like antifreeze, to the MPAA/RIAA it's sweet, to the consumers it's poison.
The Hypebot article gives a few reasons artists don't like streaming. It includes things like having to wait longer for revenue, songs have to have "legs" and longevity, and finally the pie is cut into smaller pieces.
Do you see a pattern there? It isn't so conducive to pop / top 40 / disposable type music. An example given is that instead of consumer buying 3 CDs over the course of a year (and thus the money only going to 3 artists), with streaming that same amount of money may be split up over 18 artists instead. To me that sounds very good for indie artists, and, well, for music in general (if quality means anything). If a consumer is only going to buy 3 CDs a year on average, then there's a good chance those 3 artists will be the flavor of the month as shoved down everyone's throats by radio stations, TV shows, etc.
The artists that would be doing the most complaining are the highest grossing superstars, and to be honest, I'm not all that concerned for their financial well being.
The real question is do the record companies get an even larger percentage of the revenue with streaming, and I didn't see where these articles said that.
Better known as 318230.
and play the songs myself. I don't sing though, I'm terrible.
a few years ago they were awesome
are they evil now since they are screwing the artists out of having people buy music?
I remember back in the day you could get numerous channels of streaming music service 100% free. It worked reliably in your home, car, or even just walking around. You'd hear brand-new music just released, and you could even make requests to hear something specific, and it was all totally free. It was called broadcast radio. Of course we still have that but it's a shadow of it's former self (thanks Internet!).
When I first starting seeing Shoutcast and other Internet music streaming services, they were free, and I thought it was pretty cool because I could actually get more diversity with fewer (if any!) commercials than over-the-air radio. Then of course the music "industry" made their unfunny dick move and ruined it for everyone. Yeah, nah, fuck the RIAA and fuck subscription streaming music services. I'll still stick with broadcast radio when I'm out driving around, and music from my own collection the rest of the time.
Are YOU using the TOOL, or is the TOOL using YOU? Think about it!
Broadcast radio was quite dead before streaming. The death of radio even predates napster. It was pretty sick and almost dead before the internet ever was a thing even.
In the usa you can thank clearchannel for that. 12 stations all playing the same songs. all day long. and talk radio.
a bonus for broadcast, you get 20 mins of some idiot talking every hour, plus 20 mins of commercials. value added!
This must be a report from some other planet, because on the one I live on, the record companies are frequently the only voice that is heard.
and 10 of those minutes of idiot babble will take place WHILE music you want to listen to is playing! TWO FOR ONE!
It was called broadcast radio.
That's irrelevant. It was never a significant revenue source.
Broadcast radio was never a moneymaker for artists or labels, in fact labels often paid large amounts of money under the table to radio stations in order to get them to play their artists' music (and, of course, recouped those payments from artists' royalties). The government stepped into stop this activity, though they never really succeeded. Yes, radio stations paid a nominal royalty fee for the right to broadcast, but it was a token at best.
Why did labels/artists pay for airplay? Because airplay translated into exposure, and exposure translated into album sales. They effectively paid radio stations to advertise their music, and then made money on record/cassette/CD sales. This was particularly effective because the album only had to have one or two songs which achieved popularity, and listeners bought the whole album for those songs (hoping the rest was good).
Now, the new version of broadcast radio doesn't advertise music and generate purchases, so much as it eliminates the need for customers to buy albums (or even individual songs) at all. This is an entirely different market structure, and the fact that broadcast radio "worked" means absolutely nothing about whether or not streaming will work.
Personally, I think it will work out. If artists are making too little to live, they'll start agitating for more royalties, or maybe even just signing deals directly with the streaming services rather than going through labels -- which will motivate the labels to structure their deals with artists more attractively. As long as there is a good revenue stream to be divided, the industry will eventually restructure to divide that revenue stream more or less reasonably so that artists can produce music to motivate more revenue. The transition will be painful, and some artists will get screwed (a few labels may even get screwed -- but not nearly as hard as the artists), but it'll shake out.
Really, the bottom line is that people like music and are willing to spend their money for it. Artists like to make music and would like to take the listeners' money. Some system (likely just as imperfect as every other iteration of the system, but one that is Good Enough) will be collaboratively devised and implemented to connect those two bodies, with some number of middlemen siphoning off their take in exchange for various non-obvious but necessary services.
Note to ACs: I usually delete AC replies without reading them. If you want to talk to me, log in.
Let me preface this by saying I am totally on board the RIAA and record company hate train. I'm the guy pulling the whistle even. Choo Choo! They are greedy organizations who will ruthlessly do anything for profit.
That being said, I have become convinced over time that the artist-record company relationship is actually fair. Artists don't make the majority of the money that gets plunked down for their songs. But, you know, what? They aren't really doing much of the work either. Artists write and perform the song.This takes work, surely. Let's be generous and say each individual song takes a full person year to write and get good at. Record companies dump enormous resources into promoting it. This includes the work of hundreds (thousands?) of people resulting in the expenditure of many years of person effort. It seems to me like the record company is actually the one contributing more value. What happens to artists who try to succeed without record companies, or grants from universities? A tiny percentage of them earn enough to subsist. There is a reason for this.
To be frank, at the end of the day professional musicians who make a good living aren't really any better than many of the ones who are struggling. I've seen so many really talented musician friends go through school to finely hone their skills, only to find no one in the real world cares (ie they can't make money). The reason no one cares isn't because people don't value music. They do. That is why so much money goes into buying music. The problem is that reaching the threshold at which most people consider you "good" is attainable by a VAST portion of the population. Probably roughly the same percentage of the population who can be considered good at physically lifting things and then setting them down elsewhere. Good musicians are a dime a dozen.
I know the musicians out there are going to crucify me for this. You'll all point out it is possible to discern the difference between the violinist who makes 10 mil and the one who can't get a job. I'm sure you can. The point is that most of society can't, and doesn't care to. This is why most of you make nothing and have to pursue other careers. I wish you would all wake up to it before dumping a decade or more into it. Unless of course you are wealthy enough to pursue it whether it brings you income or not.
Music and the arts are for everyone, as a hobby, because any human can be good at them to some degree. The skills it takes to do them are part of what it is to be human. They have been pursued professionally by the rich, or friends of the rich, historically. This is because the rich can afford to spend 20 years getting good to maybe get paid well at the end. If you are a middle or lower class person trying to pursue music you are being irresponsible. You are more than likely wasting your time, except for the rare people who value the honing of skills higher than standard of living.
Artists with music label contracts hate streaming because their record deals are so ridiculous they'd likely be illegal in any other industry. Artists that are too small to have a label or have simply chosen not to have one, love streaming. I've found more unique and interesting artists via streaming radio that I ever could have otherwise.
The last CD I ever paid money for, that I didn't buy from the artist himself, was in the pre-Napster days. Once Napster hit the scene I never looked back. Downloaded everything I wanted and a lot of what I hadn't heard of before and thought I'd try. It's lived with me on hard drive after hard drive since. Every once in a while when it rains or the sun shines a certain way and I'm feeling nostalgic I'll listen to a random selection, but mostly I don't. A recorded track is always the same, always what I've heard before, and it loses its appeal over time. Most of the time, I don't miss music at all. The only times I really enjoy music any more are live performances, by artists I've never heard of before, performing songs I've never heard before. Maybe it's a universal symptom of getting older, but it feels like something more akin to a post-musical existence wherein the human connection, music-as-communication in real time, is what makes it meaningful.
Do what you can, with what you have, where you are.
There's no guarantee your music will make you money just like any business venture. Music label contract scams have been know for ever yet you signed up because you dreamed your product is going to make you famous, well you knew what the end result would be. You're too afraid to publish your self because you keep dreaming of 15 min of fame and you think you and you product will get you rich.
by TheSpoom (715771) Uncaring Linux user here. I have nothing to add to this but please continue. *munches popcorn*
They don't need the majors label anymore. They can deal with the streaming services themselves, or even with the public directly.
SeqBox
Really... why buy it... i mean really why? I will buy music (directly from the artist) but other then that... NOPE
I remember back in the day you could get numerous channels of streaming music service 100% free. It worked reliably in your home, car, or even just walking around. You'd hear brand-new music just released, and you could even make requests to hear something specific, and it was all totally free. It was called broadcast radio. Of course we still have that but it's a shadow of it's former self (thanks Internet!).
Clear Channel and others were messing up broadcast radio before the internet had any significant impact.
The problem with broadcast radio, and the music industry in general, is the lack of diversity in what is generally promoted. If you don't listen to mainstream pop, country, R&B or hip-hop good luck finding anything of interest on the radio. (Much of that goes back to the radio conglomerates like Clear Channel wanting to play the same crap on hundreds of radio stations)
Most of the music I have purchased over the last couple of hears is a result of hearing the artist on a streaming service. In most cases I would not have even heard of them (or if I had heard of them, not become familiar with their music) if it hadn't been for the various music streaming services.
Any insufficiently advanced magic is indistinguishable from technology.
Broadcast radio was so fucking bad it gave me cancer. They play the same play list every day around the same time, usually each song getting several plays a day. a typical hour of radio goes like this:
3 x Idiots shouting stupidity into the mic
Ad x 6
Pointless ad for station you are listening to
1 song you've heard every day this week
And that just repeats all day long with the occasional break for a "news update" or similar crap.
I stopped listening about 30 years ago, but I still get a dose of it every so often from shops, passing cars, etc. The only people who listen to radio are the same ones who thought it was cool in the 70s / 80s and didn't notice they are still playing the same songs from that period.
All those moments will be lost in time, like tears in rain.
> "make 15% more per year, on average, from paying customers of streaming services like Spotify or Rdio than it does from the average customer who buys downloads, CDs or both."
I should point out that people should parse that sentence very carefully to understand the situation. The summary says the labels make 15% more per year, on average, from paying customers of streaming services. Most people aren't paying for streaming services. Here's one source that says that only about 25% of Spotify's regular users are actually paying customers: http://paidcontent.org/2013/03/12/spotify-hits-6-million-paid-users-as-market-for-music-streaming-heats-up/
There's also the fact that people who are free-users of Spotify might be buying less music because of it (i.e. the existence of Spotify might be lowering music sales among the "not paying for spotify" group).
So, should the labels love streaming music? I don't know. But, I'm very skeptical of the notion that the labels should love streaming music over regular music sales (at least as it existed 15 years ago).
Broadcast radio was quite dead before streaming. The death of radio even predates napster. It was pretty sick and almost dead before the internet ever was a thing even
Yes, I believe it was video that killed it
A service that has a better deal?
http://mbsy.co/MGhN Tunecore
When you sign with a 'big' record company or even a subsidiary you no longer hold the 'rights' or copyright to your work.
This "streaming revenue" is no different then Albums/cd's, the record companies make out of it you don't, any time you sign a deal the money you signed for is a 'loan' plain and simple, and you pretty much give up any copyrights on any work you created.
This is how they own artists... This is why the do not want people creating there own music, this is why there is blatant [and I would argue illegal] abuse of the DMCA, because the record companies are no longer needed, and they want to keep there monopolies on artists, when there were indie labels popping up everywhere they quietly tried to buy as many off as possible or steal the bands from under them, causing them to fold up.
My point, is if artists want to make money off of there songs they shouldn't be selling themselves out. You made your own bed, lay down, shut the fu** up and take it up the ass. Go tour or do shows instead of wasting energy bitching and moaning at your own stupidity for selling yourself out.
You and another commenter in this thread are missing the point, and you're also probably not old enough to be lecturing me on how broadcast radio used to work, considering I was a teenager in the early 80's when all you had for recorded music in your car was cassette tapes. We didn't have to pay to listen to the radio. I don't really care what you say, you're not representative of 100% of everyone alive today who listens to music, and I'm not the only one out there who is unwilling to pay to listen to "streaming services" on the internet. I find the idea moronic, in fact, and it's not like I haven't listened to them in the past, so you can't say I don't know what I'm talking about, either. I'd much rather listen to my own music, that I own copies of, that I can listen to as many times as I want and not pay another red cent, and again I am not the only person out there who feels this way. I'd venture a guess that there are more people like me than the industry wants everyone else to believe, too. They'd love it if the iPod Generation would toss their PMPs in the trash and pay, pay, pay every day to listen to the same stuff. No, thank you.
To this guy, http://slashdot.org/comments.pl?sid=4677163&cid=45982029 : There are radio stations, then there are Radio Stations. They're not all the same. Sounds to me like you were/are in a market dominated by Top-10 stations, who have shitty program managers who insist their DJs play the same box of records over and over again every hour, as you described. There are radio stations out there still that aren't programmed that way and are fairly decent to listen to. Also, presets, do you have them!? I've always gone back and forth between a selection of stations in my market, dodging commericals and untalented on-air talent that set my teeth on edge, that's always been that way. Lately if you haven't noticed there are stations popping up that don't even have DJs, and some of them are halfway decent. Of course not everyone likes all the same things and you sound like you've never liked broadcast radio, so to each his own, I'm not going to pass judgement on you for that (so long as you do me the same courtesy), all I'm saying is maybe the market(s) you've been living in just sucks for radio.
Are YOU using the TOOL, or is the TOOL using YOU? Think about it!
Pointless ad for station you are listening to
To be fair, the pointless ad is a pretty clean way of doing the legally required Stantion Identifications (which exist for good reason)
-a HAM
If everyone would just Pirate all music, the music label/distro titans would finally fall. Then and only then will Artists finally have a chance in this world.
make 15% more per year, on average, from paying customers of streaming services
They pay the customers and make more money? It's win-win!
systemd is Roko's Basilisk.
Clearchannel? The advertising company? They ran US radio?
No kidding!!! What do you say at this point?
Majors should be careful. Pretty soon they won't be able to argue that what they care about is art and the artists. In any case, pretty soon there won't be a need for majors. Most people will self-produce, and if they make enough money by selling direct to the customers/fans (which should be easier than going through a major which takes WAY more than a fair share), then they can go to producers and record in a studio. Then all you need is a proper agent to setup tours and stuff. I genuinely believe that in a modern world major companies are really not that needed. Only the really motivated and good musicians will get ahead of the pack, and that's for the better. Too much shit music these days.
For $9.95/mo, I can listen to pretty much whatever I want, as much as I want.
Or for $9.95/mo, I could maybe get a bargain basement clearance CD every month. Which has one song that I want, and 15 that I don't.
Hmm ....
Cut a deal with the devil? You get the big red one sucker!
Not at all. This is a myth.
Millions of people are riding around in their cars listening to terrestrial radio. One play on terrestrial radio is worth (monetarily and in terms of publicity) tens of thousands of streams.
They own most radio stations in the USA. You can actually drive all over the country and find that similar music is played on very similar frequencies most of the time. This has been true for at least a decade or two. I remember noticing it as a kid and thinking it was funny that the same company owned the oldies, country, indie and new rock stations. All 4 of them where owned by the same company and ran mostly the same commercials. And they all played the top 40 songs from their genres sporadically between commercials.
When I was an older teenager a new rock station started up that was awesome. They played a couple commercials per hour and used automation to allow a couple DJ's to keep the music playing 24 hours. They were serious about rock music and you were as likely to hear something from 20 years ago as a new hit. The last time I was back in town though it sounded like they had sold out and been bought up by clearchannel as well.
Since napster at dialup/shaky dsl speeds you have been able to download all of the music you could ever possibly want.
Piratebay search "x+ discography" usually meticulously cataloged with all of the extras.
If you want to support the artist go to their website and buy their merch. Paying for someone to give you access to infinitely and nearly freely reproducible data is archaic.
On the other hand, if they pay the artist a tenth of a cent per minute played, using your formulas I calculate a subscription cost of $14.61 per month. The service then has a million in revenue for every 68,000 subscribers. Whether that's enough to pay the overhead is left as an exercise for the MBAs.
At that pay rate, if the artist can get 50,000 people to listen to 60 minutes of their music each month (i.e. a long album's worth) they can pull in over $30,000 just from the one streaming site.
Seems to me that there is money to be made for both the artist and the middleman.
Myths are things that never were, but always are.
Not only similar, but identical... switch from one station to another and pick up the same damned commercial at the same point in the ad. Over and over and over.
ClearChannel has reduced radio to the broadcast equivalent of DoubleClick. It's why I haven't bothered getting the radio fixed in either of my trucks.
~REZ~ #43301. Who'd fake being me anyway?
It's not that they "want" to play the same crap on hundreds of stations, but rather that it's VERY cost effective to just have one DJ and one automated system which goes out on a feed to ALL your stations -- only needs one studio setup per genre, no local talent required, and only one music library rather than one for every station.
~REZ~ #43301. Who'd fake being me anyway?
I've switched to streaming (renting music) because it's so much more convenient than owning music. I have 1,500 CDs, hundreds of LPs, and 24,000 mp3 files, but I seldom play any of them because streaming is so damn convenient. When streaming becomes the obvious standard that will last, I'll probably get rid of my other forms of music.
I stream through the computer, through my mobile devices, and to my TV and big stereo system via the Roku. I want the streaming services to succeed, pay the artists more, and to improve their software. This is the music payment model I want for now and in the future.
There are many albums I bought as LPs, then as CDs, then as SACDs, or as re-mastered CDs. Ownership isn't that permanent. I'm tired of buying, shelving, backing up files, being a librarian, etc.
EMI ceased to exist when Universal bought it recently.