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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.
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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.
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.
http://www.mosesavalon.com/why...
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.
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"
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.
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.
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.
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.
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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.