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Music Industry Is Keeping Streaming Services Unprofitable
Lucas123 writes "Music streaming services, forced to give from 60% to 70% of their revenue to the record industry, will never be profitable in their current state, a new report shows. Unless the services can monetize their user base by entering new product and service categories, or they can sell themselves to a larger company that can sustain them, they're doomed to fail. One method that subscription services might be able to use to achieve profitability is to up sell mobile deals or bundles to subscribers. For example, a select package of mobile services would be sold through the music service provider, the report from Generator Research suggested. 'Services like iTunes Match and Google and Amazon are already heading in this direction,' the report states. Another possibility would be for a larger company to purchase the music service or for the service to begin offering sanitized user behavioral data to advertisers, who could then better target a customer base."
And exactly how profitable are torrents to the music industry?
The world's burning. Moped Jesus spotted on I50. Details at 11.
Music streaming services simply need to form an association so they can publish direct and basically cut out the publishers who do nothing but bring junk music to the scene. So direct from artist to music streaming services and skip those shit head, money sucking, politically corrupting, parasites. There is plenty of money there once the middle men parasites are pushed out of the system.
Chaos - everything, everywhere, everywhen
"Water Is Still Wet"
"Sky Is Still Blue"
"Politicians Are Still All Lying Crooks"
"Death, Taxes Still A 100% Certainty"
Are YOU using the TOOL, or is the TOOL using YOU? Think about it!
Artists make their money with merchandise and shows. I get free music. Middle men will eventually get nothing,
They are destroying their own business. Not that I really care though because most of their music is commercial crap anyway
I don't think the problem is that the Music Industry is claiming so much of the profit from music-streaming services. I think the problem is that there isn't much money going around when it's all based on ad-revenue. I mean, if you can make $10/month in music sales from people buying music (via CDs, iTunes, etc), or you can make $1/month from people who stream their music (via ads), and then we complain that music companies are taking 60% or 70% of that $1/month, is the real problem the fact that the music industry is taking 60% or 70% from music-streaming services, or is the real problem the fact that ad-supported music results in low revenue?
I know that "music companies are being stupid and greedy" is implied by the piece, but I'm not sure it's the fault of the music industry that ad-supported music is just a crappy source of revenue.
Two words: "Myspace bands".
How about a system that lets the artists themselves opt in (bypassing ASSCAP) for a reasonable set of royalties. The artists would get more money than the record companies give them for their streamed music, the streaming companies would pay less in royalties, and the tyRIAAnosaurus rex can take another step towards its destiny.
These are the 4 agencies you have to pay royaltees to.
I've seen the rates. Altogether it's about $6k per year to stream your standard shoutcast style station. When streamers like spotify, etc have revenues in the millions, that's a drop in the bucket.
The only time there is a sabot in the gears is when it's video. Then your standard mechanical/compositional licenses fees are required, and on top of that a Sync license is required which adds an entire clusterfuck of problems. With non-sync you just pay the 4 agencies, but none of them collect Sync rights. You have to track down every person involved in the production to get permission to stream any music with video in it.
Sanitized user behavioral data?
Because, you know, listening to music streaming is predispose to lewd, perverted and... in any case, highly imoral... behavior?
Questions raise, answers kill. Raise questions to stay alive.
Except this is a situation where some kind of a middle man is clearly required. Artists have neither the means nor the capacity to negotiate and manage licenses with dozens of different streaming services. And it simply wouldn't be worth it to them, because the per artist payout from a given service isn't significant enough to warrant the hassle of dealing with a licensing agreement. You could argue that a different middle man is needed, but simply eliminating the middle man isn't a valid solution to anything.
...or they just need to set themselves up in china and tell US record companies to fuck off
http://www.mosesavalon.com/why...
The music industry just doesn't get the 21st century. Their business model worked well enough (they get most of the cash, the artists got peanuts) in the day when the only way to get music was on physical media manufactured and distributed by them.
My empathy is 100% with the artists, not a thing for the non-musical side of the business.
Trolling is a art,
Or the publishers could start streaming their "junk" direct to the consumer.
If I have been able to see further than others, it is because I bought a pair of binoculars.
Record contracts are out.
Streaming contracts are in.
I am very small, utmostly microscopic.
There is almost no barrier for entry into the music business and no one knows this better than the music companies. They care more about control than profitability, but their grasp of music has slipped. They don't even realize the internet has given them the mortal blow yet.
Music can be obtained from torrents, purchasing online or it can be obtained from legal streaming services. These are all valid if not legal sources of music. If one or more becomes too expensive or unavailable, the others will fill in the gap. This was quite visible when the music industry refused to embrace mp3 music distribution. The illegal sources flourished during this time. Once Apple, Amazon and other started selling mp3's without DRM, these illegal sources became less attractive. Note that all channels still exist but the usage will change as the pricing (risk vs. $'s) shifts between them.
Causing the streaming services to go offline will only cause customers to go to the other channels and I do not believe there will be an appreciable increase to the mp3 sales channel.
Except this is a situation where some kind of a middle man is clearly required. Artists have neither the means nor the capacity to negotiate and manage licenses with dozens of different streaming services. And it simply wouldn't be worth it to them, because the per artist payout from a given service isn't significant enough to warrant the hassle of dealing with a licensing agreement. You could argue that a different middle man is needed, but simply eliminating the middle man isn't a valid solution to anything.
You missed the part where he said
Music streaming services simply need to form an association
You sign with an association once and done, and your music is syndicated to all the streamers or resellers.
No long term contract, no signing away your rights forever.
The only problem would then to get access to studio sessions so that it didn't sound like it was recorded in a garage.
There really isn't shortage of them either, (google will find studios in most mid size cities) but they can a bit expensive.
So getting your first single out there may be a problem of money. But you don't have to sell your soul to a label
to do that.
Sig Battery depleted. Reverting to safe mode.
They could start promoting artists on their own, without the music industry's help. They could be the new music industry, and put the old music industry out of business.
I produced http://www.youtube.com/watch?v... from conception to completion within a day (yesterday, Valentines Day if you care about pink fluffy luvviduvvy stuff). This says all I think I can say abou the Music Industry's 'think of our struggling artists when you ponder not giving us more money than we need' attitude.
John_Chalisque
Of course all that has to happen is for iTunes Match and Google and Amazon to go directly to the talent. Indi bands and even some headliners are alreay doing this. Why deal with the just this side of RICO record companies. What can they do for you now days that you can't either do yourself or directly hire soemone to do for you, instead of cutting record compaines into the deal?
That is the plan. Until the industry finds a way to charge yo for every time you *think* about a song they are not going to give up any thing to new technology or delivery methods.
---- Booth was a patriot ----
They damn will better pay 60-70% of their revenue to the people who have actually made the music. 30-40% margin really ain't that bad reselling someone else's work. Why should the streaming services get to keep 70% of their money when all they are doing is streaming an audio file over the internet. So simple to do these days. If the streaming services want higher profits they'd should commission their own music being made. If anyone is trying to be a free loaders it's the streaming services.
They damn will better pay 60-70% of their revenue to the people who have actually made the music. 30-40% margin really ain't that bad reselling someone else's work. Why should the streaming services get to keep 70% of their money when all they are doing is streaming an audio file over the internet. So simple to do these days. If the streaming services want higher profits they'd should commission their own music being made. If anyone is trying to be a free loaders it's the streaming services.
Haha, so cute! You think that money goes to the people who made the music!
Man, I needed a laugh today.
Most small artist are happy to play even on a tour.
The streaming services are just new middle-men - we don't need them. At least a good label attempts to develop their bands.
Music streaming services simply need to form an association so they can publish direct
This is very true. Recording and editing the music with the decent quality used to be very expensive. The analog consoles used to be hundreds of thousands of dollars producing similar quality what a thousand dollar computer with a decent audio card can do today. The studios nonetheless demand copyright ownership for offering studios (cheap now) and distribution service (also became cheap).
Similar state existed in photography where the equipment had astronomical cost and companies could offer equipment, hire photographers "for hire" and keep the copyright. Nowadays, is is nearly impossible to see contracts where the photographer does not retain the copyright on his/her images. Still, plenty of services are available that remove all the "negotiation" part when selling and advertising the images. The photographer is free to offer images for sale with multiple brokers and some have agreements where if an images available for sale on one service will be offered for sale on the other too. There's no reason the music industry cannot follow the same model. The musician will be in charge of the recordings.
What really is killing the development of this market is the fact that one can sell "the ownership" under the current copyright laws. Once the labels buy the "ownership" of the recording they haven't produced, they can also buy the laws that benefit them and no so much help the musicians or the music industry in general. Kill the labels and let the artists to be the deciders of where the music to be played and it will increase the competition among services too -- bringing the new and innovative distribution channels.
There's no such thing as "illegal download"
You mean the fact that a business is on the internet doesn't mean they're entitled to print money?
I do not fail; I succeed at finding out what does not work.
Companies like CDBaby are already acting as middlemen between artists and digital download stores. They focus on delivering the music to the stores without all the promotion, signing bonuses, etc. of an actual record label. In exchange, they take a much smaller cut.
I was the CEO of a company that sold ringtones and MP3s a la carte for mobile devices. When you added up (1) the licenses paid to record labels, (2) the fees paid to mobile operators for payment processing, and (3) publishing royalties, it was something like 120% of the retail price for the content. So, umm, not a really scalable business model[1].
We eventually built out an ad-supported streaming model, under the compulsory licensing model for "internet radio" (a la Pandora), and I actually believed there was a viable business there, even without premium (ad-free) subscriptions. But I'm not so sure now. The music industry, which for so long made money by controlling marketing and distribution, is now too accustomed to making money through venture capital. Not directly, of course -- they extract it via a never-ending stream of venture-backed music startups, who either pay licenses in advance that they'll never be able to recoup with sales, or pay with legal settlements when they try to do something innovative that doesn't fit into the existing (untenable) licensing models.
I do believe that ultimately we will get to more of a free market that escapes the cartel of the legacy music industry, but it's certainly taking longer than I had expected. There are a lot of powerful entrenched interests.
That has been obvious to anyone associated with this business since about 2002.
I think this is a feature, not a bug, from the point of view of the record labels.
Or, I will stick with my current strategy -- buy physical CDs, rip them to MP3, and listen to them wherever the hell I want ... and you don't get to sell my sanitized behavior to advertisers.
It's been working quite well for me so far.
Lost at C:>. Found at C.
Record companies can extort huge license fees because they control most of the artists, which is because they control the biggest market, which is because they extort huge license fees to make other industries unprofitable.
Trying to supplant the record industry by licensing its content can't work. If the streaming industry wants to go anywhere, they need to deal with the artists directly. Which popular artists hesitate to do to avoid hurting relations with record companies.
I discovered a fantastic violin/fiddle player and her band through YouTube. They release their music on an Indie label so without some recording their live Ren Fest performances I would never have stumbled across this musical style. In case anyone is interested search for Circa Paleo and "The Hot Violinist".
Seriously, I have seen several good groups who were waiting for the BIG deal with one of the major recording studios. They refused to do their music on-line because they heard that the majors would block them. Yet, if the streaming media groups will start going after these start-up bands and get them deals, and streaming, the media can gut the recording studios. Once they can strip the monopoly from the recording studios, then they will be able to make money. Until then, just those couple of studios control everything.
I prefer the "u" in honour as it seems to be missing these days.
What really is killing the development of this market is the fact that one can sell "the ownership" under the current copyright laws.
The market will adjust. The laws have no effect on extemporaneous music performed by unknown, unrepresented musicians. If the streaming services that only offer music that is unprofitable due to copyright fees and restrictions cannot turn a profit, then the streaming services that have instead cleverly hired young, driven, trained and competant talent to improvise popular music and "broadcast" the performances live (or make available many channels of many styles of improvised music performed live), without any copyright restrictions or fees, will be profitable, and will dominate the market.
There are a lot of people making music in their garages. And yes... most of it is terrible. But some of it isn't.
Social network it... and sign people that are decent. Then as part of the deal your site would promote those singers.
Add on to that, music coaches, sound studio time, and finding concert venues for top singers.
I've decided to stop wasting my time responding to AC trolls/sockpuppets... so if you want a response from me... login.
Gives 60% of profits to X.
Isn't profitable.
Where does that 40 % go?
Both Deezer and Spottify have 5 million paying subscribers.
If Spotify isn't happy paying royalties, they're welcome to make their own music.
Seriously though, if your business model can't support paying $0.004 (or less) per play, when you're serving an audio advertisement (and theoretically a well-targeted one) every 3 songs, and have endless display advertising, then you're doing something really, really wrong.
The problem with an association is once you get a group of established players forming an association they'll have little incentive to let new streaming companies join since it can only hurt the existing players, at which point we're back to square one with having multiple entities to deal with in order to get the music out. The other potential problem is that having a single association to deal with creates a monopsony which hurts the artists ability to get fair value for their work. Any new bands are probably going to get really bad deals as they can either put up with breadcrumbs or not have any of their music available on any of the member streaming services. Even established acts might have problems if there's no competitive pressure.
Personally I don't think it's an issue. There aren't that many different streaming sites out there right now and you'd think that most would want to make it as easy as possible to get new groups signed up. If an artist's manager can't handle dealing with this, what value are they actually providing to earn their pay? Smaller acts are probably used to dealing with dozens of different people when setting up gigs at various venues so I would imagine that anyone with half a brain could come to terms with a streaming site if they wanted to put a bit of effort in to do so.
I might agree with you for the services where I type in the song I want to play and it plays. But for the service I use, I type in a few songs I like and the service finds hundreds of other songs I might like, plays them, and learns my habits to find more of them. And then I go buy downloads of those songs so I can listen to them all the time, and I go see those artists at clubs when they come to town.
That service deserves more of the money, because they aren't just serving a file, they're deciding which file to serve, which is a marketing service they deserve to get paid for. (In truth, the streaming service should get all of the marketing money that's instead going to some deadbeat label somewhere that conned the artists into signing a contract when they were too young and stupid to know better.)
-- Pandora user who has been refining my work music station, and buying tracks off it, since 2006.
It doesn't hurt to be nice.
Damn it and here I was going to get in the music middle man biz so I could kick back and take 80%.
I've been very happy with the service so far. I can access my music from a variety of devices, whenever I want, and I only pay a little more than $2 a month. I even had a hard drive failure last summer, and I was able to redownload every single track without any loss. Obviously, the service will never be any good to people who hate Apple, but for non-fanboys who like the right tool for the job, it's fine. If this is the model the industry is moving towards, is that so bad?
Stasis is death. Embrace change.
The music industry is what keeps streaming services alive - those services don't produce music, so they would have no existence without the music industry.
If the artists formed an association (something like what used to be called a trade union), they would be in a much better situation to: a. get a reasonable offer from the new distributors (streaming services, etc.) b. bypass the greedy, old-fashioned record companies and c. share both resources and revenue.
Umm, the middlemen looks to be the music stream services. All they have to do is distribute a product that someone else has produced to the consumer, and for that they are getting to keep a whole 30-40% of the total sale.
Sorry, but if they can't make a profit on that, then they are doing something seriously wrong, or there are too many companies competing for too small of a market.
The problem with any music (or TV/Movie for that matter) subscription or streaming service as a for profit business, is the simple fact that you have no alternative. If your customers want to listen to some artist, say Led Zeppelin, then you have no option but to pay the royalties asked for by the copyright holder. There is no alternative product for you to give your customers. You can't give your customers Lady Gaga, because they want Led Zeppelin. So when the Led Zeppelin copyright holder decides they want to make more money they will charge you in order to get it. And you don't have the option of going to another supplier, because there is no other supplier of that product.
This isn't limited to, or unique to, music streaming services. This happened in the days of radio. And it happens to television, cable, satellite and even OTA broadcasters.
The moral of the story, isn't that the RIAA/Music Industry is evil, it is that you should *never*, ever, ever start a business where you are selling something that only *one* supplier can provide you with. It's a business death sentence, since that supplier can (and will) raise their rates regardless of what it does to your business. And they'll do this, because well they're the *only* supplier of that product.
There are hundreds/thousands of internet music streams from all over the world available with simple listening tools such as Streamtuner. If these were not profitable, then they would not be there.
Excuse me, but please get off my Pennisetum Clandestinum, eh!
The music companies don't seem to understand that society's musical tastes aren't just fracturing.
They're disappearing.
There's no need to listen to popular music. Or any music for that matter. It's often distracting, and the "industry" offers up ridiculous, embarrassing pablum for our consumption, and through action and indifference, prevents anything more interesting from arising. So it isn't.
Better off without it.
On the other side I've seen artists complaining that when they do get a lot of play on streaming services they still don't get much in royalties. I would venture (meaning I have better things to do this afternoon than research the real numbers) that in terms of revenue to the independent artist that sells their own music, one customer who purchases a download or buys physical product is equivalent to a much larger number (10? 100?) who play them repeatedly on streaming services. From a label or self marketed artist standpoint the streaming services are successors to the record clubs, what makes them more complex is that they also function as radio stations. From the standpoint of an independent artist getting on the streaming services is important promotion, but then every time someone saves them to their streaming service library instead of going to Itunes or Amazon they are getting a tiny fraction of the income. No surprise that established artists who have control over these things aren't available on these services. Further given that the labels probably also believe they should charge a lot more, I'm surprised that there aren't complaints that the agreements call for forced exposure of their developing artists.
An example that most people miss about the record companies not adjusting to technology is that the record companies aren't shifting to DVD Audio. I still buy most of my music in physical format, in large part because of MP3 quality (unreliable). For customers like me who pay a premium for quality there is no excuse with today's technology to deliver less than 48kbps 20bit. DVD Audio can deliver lossless 96x24 when CD is still limited to 44x16. (As for the alternative SACD format, only about 1% of all CD capable devices can decode SACD as compared to about 50% that are DVD players or ROMs).
Getting back to the main point, the Legacy Recording Conglomerates don't know to deal with anything in the new landscape, historically they've had difficulty with change. In the 1940s a startup called Capital Records changed the rules by sending free copies of records by their big signing (Frank Sinatra) to radio stations, eventually the 2 conglomerates of the time (RCA and Columbia) had to do the same to remain competitive. It is the up and coming independents who will figure out how to navigate the new landscape, all the big labels want is a return to the way it used to be.
minds, get scrambled like eggs, abused and erased. Hard Hearted Alice is who you want to see.
Actually just had a bit of a b*tch session about this.
Android mobile devices are overall the most well selling, with 40% adoption (IOS follows at 35%).
That comes to roughly 9m users on wireless devices. I'm not sure what adding other media devices (tablets, tv-boxes, etc) would contribute, but there are those as well.
So I heard a song on the radio I liked, and tried to buy it online.
Google Play Music: Not available in Canada
Amazon Mp3: Not available in Canada
iTunes: Not available on platforms other than IOS/Windows/Mac
So for everyone who *wants* to pay for music.... what are the options? Sounds like a case of "shut up and take my money" to me.
""Putting to one side the quality of the actual service, which most users would rate very highly, the facts show that Pandora -- when viewed objectively as a business -- is in dire straits," the report stated. "We are at a loss to know why the company's stock has performed so well, especially over the last 12 months."
Over the past year, Pandora's stock price has jumped from $11.48 to $37.95."
So, Apple has a record quarter, a sustainable business model, yet their stock goes down on news of their sales. Pandora doesn't and their stock triples.
Go figure.
With a bit of tweaking, YouTube could also easily help you discover "new" music.
Only if either A. you want to sit at home at your computer to discover music instead of discovering music during your commute, or B. you want to pay hundreds of dollars per year to a wireless carrier for a data plan on top of what you may already pay for Internet at home. FM radio stations stream music to a vehicle with no recurring fee.
The problem is there is absolutely no need for a record company anymore.
Who else will vet your music to make sure you didn't accidentally copy a song that someone else had already written?