If 100 streams = 1 Song Download, why doesn’t the money match?
Originally posted on MUSIC • TECHNOLOGY • POLICY:
As we noted in a prior post, Billboard reported on what might be called the “chart value” of streams compared to downloads. To the extent that streams are counted in both the Billboard charts and the UK’s Official Charts, streams are valued at 100 streams to one permanent download. This ratio was touted by Spotify at the recent artist meetings hosted by the Featured Artist Coalition in New York.
When you consider the royalty value of that ratio, however, those 100 streams are rewarded at a much, much lower penny rate than a download, even if you compare 100 streams to the $0.70 price of the lowest iTunes wholesale price of downloads. As we noted previously, the 100:1 ratio implies a per-stream royalty of $0.007.
What About the Royalty Value?
Experience suggests that this seems high. Quite high. So just to confirm what Spotify representatives actually said at the…
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Trichordist readers will recall our many posts about how Google uses search to drive traffic to unlicensed sites where Google Adsense or Doubleclick serves the advertising that keeps the illegal site operating. And turns a nice profit for Google. This is the principal way Google profits from piracy as far as we can tell.
Today there’s a story in the BBC about Google’s latest charm offensive to try to demonstrate to the world–or at least to the European Commission antitrust regulators–that far from profiting from piracy, Google actually fights piracy.
This is, of course, utter bullshit. We’re not going to go through the whole song and dance again, but take a look at this screen shot showing Google’s Doubleclick serving an ad to Grooveshark. That would be the adjudicated infringer Grooveshark:
Here’s what Google told the BBC:
Google has announced changes to its search engine in an attempt to curb online piracy.
The company has long been criticised for enabling people to find sites to download entertainment illegally.
The entertainment industry has argued that illegal sites should be “demoted” in search results.
The new measures, mostly welcomed by music trade group the BPI, will instead point users towards legal alternatives such as Spotify [Google is on the Spotify board so presumably owns shares in Spotify] and Google Play [aka the Genco Pura Olive Oil Company 2.0].
Google will now list these legal services in a box at the top of the search results, as well as in a box on the right-hand side of the page.
Crucially, however, these will be adverts – meaning if legal sites want to appear there, they will need to pay Google for the placement.
The BPI said that while it was “broadly” pleased with Google’s changes, it did not think sites should have to pay.
“There should be no cost when it comes to serving consumers with results for legal services,” a spokesman told the BBC.
Well, allow us to retort:
This is a motherfucking shakedown.
We suspect that’s a more accurate assessment of what the BPI was probably thinking but felt constrained to say.
Combine this with thursdays Digital Music News story and we can only conclude:
Google drives traffic to illegal sites while forcing legitimate sites to pay! How is this good news?
But a new reality has tripped him up and it’s the same one shafting artists all across the world: Namely, that everyone wants to listen, and no one wants to pay. This week, Iggy gave a lecture for the British Broadcasting Corp. called Free Music in a Capitalist Society. Artists have always been ripped off by corporations, he said; now the public is in on the free ride, too: “The cat is out of the bag and the new electronic devices, which estrange people from their morals, also make it easier to steal music than to pay for it.”
To keep skinny body and maverick soul together, Iggy’s become a DJ, a car-insurance pitchman and a fashion model. If he had to live off royalties, he said, he’d have to “tend bars between sets.” As I listened to his enthusiastic stoner Midwestern drawl, I thought: If Iggy Pop can’t make it, what message does that send to all the baby Iggys out there? In a society where worth is judged by price, for better or worse, what are you saying to someone when you won’t pay for the thing he’s crafted?
Announcement From c3 (The Content Creators Coalition)
“Google is in the process of systematically destroying our artistic future… if the creative community doesn’t intervene now, and by now, I mean, fucking now — we will be bound to a multigenerational clusterfuck that will take 40 to 50 years to unravel.” - Kurt Sutter Attacks Google: Stop Profiting from Piracy (Guest Column) | Variety
DEMONSTRATE TO SUPPORT ARTISTS RIGHTS
when: THIS SUNDAY, Oct 19th, at 4:30-5:00pm
where: Google 8th ave btwn 15th and 16th sts in Manhattan)
MARCH WITH US at 4pm sharp from Le Poisson Rouge
(158 Bleecker St., btwn Sullivan and Thompson in Manhattan )
MEET US at Kelly Park at 4:15 pm
(W 16th St., btwn 8th and 9th avenue in Manhattan)
This action is sponsored by the c3, the Content Creators Coalition, a non-profit organization dedicated to the achievement of economic justice in the digital domain.
* Google: Stop the Attack on Artists’ Rights.
* Google/YouTube: Pay Creators For All Use Of Copyrighted Materials: When Profit Is Being Made, The Artist Must Be Paid: Support An Artists Right To Choose: Take-Down-Means-Stay-Down!
* Google: Stop brokering ads to corporate black market sites.
SUPPORT ARTISTS RIGHTS! #supportartistsrights
Join Us: ccc-nyc.org http://ccc-nyc.org/
Chris Castle at Music Tech Policy beats us to the punch on more Spotify shenanigans… if 100 streams = 1 song download, why don’t the economics match?
Originally posted on MUSIC • TECHNOLOGY • POLICY:
The erudite Harley Brown reported in Billboard about Spotify’s artist relations charm offensive in New York that:
[Blake Morgan's] main complaints were manifold, but two were based on the meeting’s central tenets: that the per-stream rate is never going to go up (70 percent of revenue goes to royalties) and 100 song streams equals a sale on the Billboard charts and the U.K.’s Official Charts Company. With regard to the former, both [Mark] Williamson [of Spotify] and [Paul] Pacifico [of the Featured Artist Coalition] stress that Morgan (and a few other malcontents) didn’t pipe down long enough to let Spotify help the uninitiated artists in the room understand their position.
“What I was trying to explain,” Williamson says, exasperation emanating from his voice over the phone, “Is that we’re a revenue share model. How do we increase the amount of revenue — the pot of royalties — which increases the amount we…
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Saturday, October 18, 2014 @ 8:00 pm
Featuring John Zorn, Eric Slick (Dr Dog), Steve Coleman, Marc Ribot, Henry Grimes, Marina Rosenfeld, Trevor Dunn, Brandon Seabrook, Satomi Matsuzaki (Deerhoof), Amir ElSaffar, and more!
The event will also feature a short screening of highlights from Michael Count Eldridge’s upcoming documentary film “Unsound”.
General Admission: $20 pre-sale (ends at noon on 10/18) $25 at Doors
Special Artist Rights Supporter tickets include reserved balcony seating and access to a one hour meet and greet prior to the show // Doors at 7pm
Originally posted on The Trichordist:
By Chris Castle
There has been considerable discussion about how the DMCA notice and takedown procedures are “broken.” We don’t think that this is quite true—the procedures are manipulated, misunderstood and abused on a grand scale. That doesn’t mean that the notice and takedown procedure is “broken” any more than the laws against burglary, theft and tax evasion are “broken.” No statute can control unethical behavior by those who use the law as a flimsy excuse to get away with bad behavior.
Many Internet companies have interpreted the DMCA to permit bad behavior until the victim of the bad behavior notified the bad actor that they were behaving badly—each time they behaved badly. This “catch me if you can” interpretation of the DMCA was not at all what the Congress had in mind. We would go further and suggest that not only was it not what the Congress had in mind, it…
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It’s not that streaming can’t work. It can. It’s that Spotify is a bad business model that has unsustainable economics and exploits artists because it is a wall street financial instrument and not a music company.
We’ve previously published a couple posts on streaming music where we explore how access models and windowing are working for the film industry and could serve as a guide to the record business. We’ve also shown how transactional music purchases have made legal music consumption the best value in the history of recorded music.
The key to building streaming business models that make sense and are sustainable is to increase the subscription fees, utilize well thought-out windowing models and experiment with new pricing tiers for access based services.
Historically the music business has employed the use of special markets such record clubs (remember 11 CD’s for one penny). It’s not that record clubs were bad, in fact numerous studies found them to be great source of additional revenue if managed in a way that did not cannibalize front line sales. (Remember 12 month record club holdbacks?) Now we need to strike the same balance with streaming services.
So let’s get real, the Spotify business model and streaming math just does not work and can not work in it’s current form.
Here are five suggestions to get music streaming back on track as a viable business model.
1) Minimum Payment Per Play
You want to give your service away? Fine, but artists and rights holders are not going to subsidize your business by devaluing our work. No plays without a minimum royalty–including the “free service”–and all plays pay at paid subscription rates. If you can’t sustain your business doing this, then you need to rethink how your business works. Your bad business model is not our problem. Maybe an unlimited, non-graduated free tier is a really, really, really bad idea. 30 Day trial offer, ok. Virtually unlimited free access, no.
The music business must embrace windowing to maximize revenues across all distribution channels and platforms. It’s so basic we can’t believe artists and labels are not utilizing this to greater effect. The first 30 days of a new release could be limited to transactional streaming access by the day, week, or the month at different price points. Likewise, perhaps only two songs from an album are made available on streaming platforms for the first year of release. There are many unexplored variations and options.
3) Transactional Streaming
The music business needs to embrace new models such as “transactional streaming” much like VOD exists for film versus transactional downloads or physical product. There is no reason why streaming distributors should have every title, ever released, for one fixed, flat price. Again, new releases in particular should be priced as transactional streams where the consumer can chose between low cost limited access to a new release, or pay more for a transactional download.
4) Tiered Pricing based on Access and Consumer Value Proposition
Just like cable tv and SiriusXM, one possible solution is to create price tiers based on access. For example, catalogs can be curated into genre and lifestyle packages. Creating bundled packages adds value to both the end user and the streaming service. Individual packages can be as little as $4.99 a month, and complete access could priced at $49.99 a month. Again, there are many unexplored variations and options.
5) Move Beyond Stockholm Syndrome
The answer to every attempt to introduce real world economics to the marketplace can not be met with “or else they’ll steal it.” We already know that. They have been stealing it for over a decade (thank you Mr. Ek for your contributions to uTorrent). The film industry is not approaching streaming with a gun to it’s head offering every title ever made on every platform for one low monthly fee. Itunes is the single most successful dedicated online music business ever, and it doesn’t have a “free-tier”.
Isn’t it odd that companies like Pandora and Spotify that are not profitable and don’t support artists are thought to behold some kind of gnostic wisdom of economics that defies all logic and reason? Last year Twitter lost $645 million dollars. Record labels have been profitable for over half a century with a sustainable ecosystem that invests in artists and new talent, while also creating hits and stars. It’s time to leave the rainbow unicorn school of economics and faith healing behind and develop real business models based on real economics.
Anyone remember the dot com bubble? Where is mp3.com now? Things can and do change fast in web/tech. Any talk of the “record industry” without MySpace in 2004 and you would have been laughed out to the room. Where is MySpace now? Spotify can (and very well may) quickly become MySpace. So let us all focus on how to make streaming actually work for all stakeholders and not only those with equity… it’s just math.