Censored Spotify Article Update: HuffPo CEO is Former Spotify GC, Possible Shareholder


Huffington post CEO seems stoked about Spotify subscriber metrics. Why is that?  

Digital Music News is reporting:

“Huffington Post CEO Jared Grusd was General Counsel and Global Head of Corporate Development at Spotify for 4 years.  Which means there’s probably a strong connection, and even financial strings like stock options.”

Please read full article here

The bad odor emanating from HuffPo keeps getting stronger.  For background, artists rights advocate Blake Morgan posted this mildly critical piece about Spotify on his HuffPo contributor account.  Just as it was beginning to go viral HuffPo took the article down.  The justification was… shall we say less than convincing? And in the words of Digital Music News “the internet called bullshit.”

Digital Music News hints at another issue by noting that HuffPo CEO Jared Grusd may have  “financial strings like stock options.”  This is interesting for several reasons.

First Spotify appears to be in its “quiet period” for it’s IPO.  Second Spotify is going public through an unusual direct listing.  This means that current stock and options holders are essentially making the public offering.  Rather than underwriters and banks. I am not a securities law expert, but wouldn’t this make current shareholders selling stock in the direct listing, the parties making “the offering” of stock as defined in SEC regulations?  Wouldn’t these parties then be subject to the SEC rules governing what can be said by the parties making the public offering?  Further the SEC guidance on public statements during quiet periods (here) has pages of rules on what “related media” can or can’t do when providing information to the public (start on page 133).  The question I can’t answer is whether a shareholder “offering stock” actively suppressing information that would otherwise be public violates the letter or spirit of these rules.   That’s above my pay grade.  But someone out there knows the answer.

 

2017 Streaming Price Bible! Spotify per Stream Rates Drop 9%, Apple Music Gains Marketshare of Both Plays and Overall Revenue

We first did this back in 2014, and then again last year, so here we are again.

As we predicted as streaming consumption grows, the per stream rate will continue to drop, every year, year to year.

This data set is isolated to the calendar year 2017 and represents a mid-sized indie label with an approximately 200+ album catalog now generating over 200m+ streams annually. That’s a pretty good sample size. All rates are gross before distribution fees.

Spotify was paying .00521 back in 2014, two years later the aggregate net average per play rate dropped to .00437 in 2016, a reduction of 16%.

The current effective per stream rate at Spotify has now dropped to 0.00397, a reduction of 9% since last year. This a cumulative reduction of 24% since 2014, which is an average decrease of 8% a year of the per stream rate.

If the music business could set a per stream rate that allowed revenue growth, proportionate to consumption growth that would be a much better model. Looking at the stats below we can actually see that working for Apple Music!

An interesting change from last year is that Pandora replaces YouTube with the greatest value gap of streams at 21.56% volume with only 7.86% of revenue. YouTube drops to 8.38% of volume with only 1.70% of revenue. Again, this is just music delivered to YouTube via the distributor for the automated song generation and it does not include Content ID or Artist Channel revenues.

For the second year in a row Apple Music Streaming sits in the sweet spot generating the second largest amount of streaming revenue.  The current per stream rate seems to have actually modestly increased from .00735 last year to .0783 this year. A nominal increase but worth noting. Apple’s current effective rate of .00783 is pretty close to double the Spotify effective rate of .00397.

There’s more good news for Apple as their market share has risen from 7.18% last year to almost 11% this year. But the bigger story is that Apple Music is now accounting for over 22%+ of music streaming revenues up nearly 11% from last year. This is good news and shows the power of both Apple’s commitment to streaming, and the value of a paid only platform. Apple Music is actively taking marketshare away from Spotify.

To put this list in the context of our previous reports and numbers we’re adding the chart below with the data sorted by the quantity of streaming plays required to match the revenue of a single song or album download. This is important as we work towards defining and setting a fair per stream rate and also setting an accurate economic equivalent of streams to songs and albums for the purposes of charting.

Billboard currently calculates 1,500 streams to one album for the purposes of charting, which at current streaming rates (at Spotify) actually sorta matches an economic equivalent. But that’s just backing out of an arbitrary rate set by Spotify, it doesn’t actually define what the cost of a stream should be.

Keep in mind every streaming service has a key piece of data that would allow artists and labels to set a fair per stream rate. Every on demand streaming service, Apple, Spotify, Tidal, Google Play all know how many times a song is played (per person) on average over time. This is the data that is key to setting fair streaming rates. Who will share this information? Apple, Jimmy Iovine, we’re looking at you.

 

These numbers are from one set of confidentially supplied data. If you have access to other data sources that you can share, we’d love to see it.

  • HOW WE CALCULATED THE STREAMS PER SONG / ALBUM RATE:
  • As streaming services only pay master royalties (to labels) and not publishing, the publishing has to be deducted from the master share to arrive at the comparable cost per song/album.
  • $.99 Song is $.70 wholesale after 30% fee. Deduct 1 full stat mechanical at $.091 = $.609 per song.
  • Multiply the above by 10x’s and you get the album equivalent of $6.09 per album
[EDITORS NOTE: All of the data above is aggregated. In all cases the total amount of revenue is divided by the total number of the streams per service  (ex: $5,210 / 1,000,000 = .00521 per stream). In cases where there are multiple tiers and pricing structures (like Spotify), these are all summed together and divided to create an averaged, single rate per play.]

[royalties][streaming royalties][music royalties][royalty rates]

 

@lizpelly: The Problem with Musak — Artist Rights Watch

The music world continues to be exceedingly vulnerable, and there are looming questions that desperately need to be addressed. Most important: How can artists distribute and sell their work in a digital economy beholden to ruthlessly commercial and centralized interests? Enter Spotify, a platform that is definitely not the answer.

via @lizpelly: The Problem with Musak — Artist Rights Watch

The Slippery Slope of Censorship: @HuffPost Pulls Story Critical of @Spotify Ahead of IPO

Artists Rights advocate Blake Morgan (#IRespectMusic) published a story in the Huffington Post this morning critical of Spotify. The story was rapidly gaining traction when it was suddenly deleted and Morgan received this email from the Huffington Post:

From: Bryan Maygers <>
Subject: Spotify’s Fatal Flaw Exposed
Date: January 8, 2018 at 11:43:41 AM EST
To: Blake Morgan <>
Hi Blake,

I’m writing to let you know that we’ve unpublished your recent post. We’re not making any judgment about the accuracy of the claims made in the piece, but the contributors platform is intended as a place for commentary based on the established factual record, not original reporting. If anyone were to dispute your account of the meeting in question, we wouldn’t be able to verify or stand behind the quotes.
If you want to reframe the piece with the same basic argument — that Spotify sees their service and not the music as the product — without relying on retelling the conversation after the meeting, we’d be happy to reconsider.
Thanks,
Bryan

I’m not a journalism expert but the author is the source.  What’s the problem?  You have to wonder if HuffPo got a phone call from Spotify on this one.

Here’s Blake’s piece in its entirety.

Spotify’s Fatal Flaw Exposed: How My Closed-Door Meeting with Execs Ended in a Shouting Match

I love streaming.

I love making playlists, I love being able to download streamed music so I can listen when I’m offline, and I love being able to bring that music with me. In short, I think it’s a great distribution method.

What I don’t love is how little musicians get paid for all that streaming. It’s not fair––not even close. What’s more, middle-class music makers are the ones who are hit hardest, whose businesses are threatened, and whose families are put at risk. So how can I be against the way streaming companies treat musicians but not be against streaming itself?

The same way I’m against the electric chair, but not against electricity.

Spotify, the current Goliath of streaming services, had a rocky year and it’s come at a bad time for them. The public’s perception of the once can-do-no-wrong streaming giant is evolving, and for the first time it’s not improving. This was the year people watched as multiple, massive class-action lawsuits were filed against the company for widespread copyright infringement. This was the year people learned that even while Spotify added millions of new subscribers, their per-stream rate to musicians actually fell. This was the year people started to understand how it all works: that while it takes a music maker 380,000 streams on Spotify just to make minimum wage, the average Spotify employee earns $14,000 a month.

Then there was the biggest revelation. This was the year people started to connect the dots about how Spotify’s founder, Daniel Ek, made his initial fortune. At 23, he was the CEO of uTorrent, a pirate platform that became BitTorrent (arguably the largest rights-infringing platform in the world). He and their developers then used identical rights-infringing software in order to build his new golden goose: Spotify. His personal worth is now estimated at around $800 million.

If all this wasn’t enough to corrode the company’s shiny image, people also noticed that Spotify doesn’t make anything. They’ve noticed that the television and film industries aren’t up in arms over Netflix the way music makers are up in arms about Spotify, for good reason. It’s because Netflix makes stuff. Great stuff in fact, like Stranger Things, The Crown, Orange is the New Black––great shows that employ great artists and craftspeople at every level, not just superstars. Gaffers, grips, carpenters, writers, make-up artists, and so on. Meanwhile, Spotify pockets 30% of all the revenue they collect––and they don’t make anything.

Instead, they’ve become single-minded in their pursuit of Wall Street, aiming for a public offering that now looks likely in the weeks or months ahead. Spotify’s ambition to become a stock market titan––a strategy music insiders continue to scratch their heads at––will put the company in the untenable position of pleading poverty to Congress and pushing for even lower rates to music makers (“We can’t make any money, you have to save us!”), while simultaneously having to brag about how successful they are to their shareholders and the rest of Wall Street (“We’re making so much money! You have to buy our stock!”). All you have to do is ask Pandora, internet-radio’s once but now fallen Goliath, how that untenable position worked out for them. (Spoiler alert: it didn’t.)

Spotify has a public relations problem because they have an actual problem, and for all the problems listed above, the greatest one they face is this: Spotify’s in trouble because Spotify doesn’t know what their product is.

It’s astonishing. But it’s absolutely true. I know, because they told me so.

I was invited to a closed-door “artists-only” meeting with executives from Spotify. I’d been invited because of I Respect Music, a campaign I started and launched from my laptop which, improbably and surprisingly, has since become the largest grassroots campaign in American music history. The meeting was a loud and pointed one––something Spotify executives hadn’t anticipated––and the 40 or so of us music makers present were openly incensed.

 I was a vocal participant in the meeting, and when it was over I found myself surrounded by several Spotify executives. One said, “Blake, I just don’t think you understand, our users love our product because it’s such an amazing one.” Another added, “You have to look past just numbers, our product is so great it’s actually turning the industry around.” This went on for a while, until I finally said to one of the executives, “You keep using that word, ‘product.’ I’m not trying to be difficult, I’m really asking you: what do you think your product is?”

The executive was surprised. He stared at me blankly and said, “What do you mean? Our product is Spotify.”

There it was. It was a shocking admission to me, in earshot of everyone, and one he obviously didn’t think was an admission at all.

“No no…sorry,” I said, shaking my head in disbelief. “Your product isn’t ‘Spotify.’” He continued to stare at me. I said, “Sir, your product is music.” The emboldened musicians standing around us started laughing. The exec smiled and backed away, “Well okay, if you’re going to be like that.”

“Wait,” I said, “Listen, it’s music. Your product is music. The reason I know that is because if we went out into the street right now and asked a thousand people what Starbucks’ ‘product’ is, they’d all say coffee. Not a single person would say ‘Starbucks’ product is Starbucks.’ Right?”

His smile faded.

“And by the way,” I added, “Stop calling your subscribers ‘users.’ They’re not ‘users,’ they’re listeners––our listeners in fact. You’re the ‘user.’ You’re using our music to monetize our listeners for your profit.”

He looked at me as if I’d just shot Santa Claus in the face.

“No, man! You’re wrong!” He was sweating now, and the dozen or so musicians who’d gathered around us began heckling him. He shouted, “Spotify is our product! You don’t get it at all!” He stormed off.

I called after him, “You shouldn’t be fighting the people who make your only product. That’s an expensive and stupid fight you’re gonna lose.” I left the meeting. I was still in disbelief.

I feel like this is a good time to remind you that I actually love streaming.

Webster’s English Dictionary defines the term “golden goose” as a continuing source of wealth or profit that may be exhausted if it’s misused. Sadly, Spotify’s ongoing crisis of misuse begins and ends with the fact that they don’t know their only product is music. They think it’s themselves, which explains each and all of their stunning mistakes and missteps. They’d be well-served to ask any first-semester business student what the difference is between a “brand” and a “product.” But I don’t think they will, and I don’t think it’d help them at this point. I think their goose is cooked.

Mark Twain wrote, “It’s not what you don’t know that gets you into trouble. It’s what you think you know for sure that just ain’t so.” Spotify’s in serious trouble because they’re powerfully sure of something that just ain’t so. They think this is all about them. It’s not.

It’s about music. It’s about the people who love to listen to it, and the people who love to make it. That connection between music lover and music maker is primal and unbreakable. Take all the music off Spotify and no one will show brand-loyalty by sitting and staring at their silent logo.

There’s a bleak future waiting for Spotify if they continue to behave their way into situations like the one they’re in now. Wall Street won’t be able to save them. And music makers won’t be interested in even trying. Ask MySpace.

I really do love streaming. It’s not the future as many say, it’s the present. It’s here now, and it’s here to stay. It can provide enormous energy to our musical landscape––lighting the way for music lovers and music makers alike––and it can and should drive great, productive, and healthy growth for all. I hope it does.

Remember…musicians love electricity. It’s the electric chair we hate.

 

 

 

Universal Leads Royalty Deadbeat Facebook Out of the Cold With Precedent Setting Licensing Deal

Praise where praise due. Earlier this year we said UMG’s effort to bring Facebook into line on music licenses should end up benefitting all songwriters. Facebook is a massive platform and the revenues to songwriters could be substantial. Watch this developing story. More likely to come.

Music Technology Policy

This is what happens when you stick to your property rights–Bloomberg reports that Facebook, aka royalty deadbeat, has signed a multiyear licensing deal with Universal Music Group:

Facebook Inc. signed a multiyear licensing deal that lets the social network carry songs and artists from the world’s biggest record label, Universal Music Group, across its platforms.

The deal announced Thursday solves a long-running dispute, with Facebook agreeing to compensate the company and artists including Taylor Swift when users post videos that include copyrighted material. The accord includes Facebook, Instagram and Oculus virtual-reality technology, with Universal saying the company would become a “significant contributor” to the industry.

The deal sets Facebook up as a more direct competitor to Google’s YouTube, the most popular destination online for listening to music. Both technology giants are battling for a bigger share of people’s time, and music rights could help Facebook give users new…

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@SGAwrites Statement Opposing Music Modernization Act of 2017

The Songwriters Guild of America makes a great point on equal governance by songwriters.

Artist Rights Watch

[Editor Charlie sez:  Here’s a copy of the Music Modernization Act of 2017]

December 21, 2017

Dear Representative Collins:

I write as president of The Songwriters Guild of America, Inc., the nation’s longest established music creator organization run solely by and for music creators, representing thousands of professional music creators and their heirs.

Thank you for forwarding a copy of the draft Music Modernization Act of 2017 yesterday for our review prior to its introduction, which was much appreciated. We continue to believe that reform of the music licensing process is and must continue to be an exceptionally high legislative priority – second only to the need to raise music royalty rates to equitable levels that will sustain our community. We applaud your sincere efforts and the efforts of the many members of Congress who have been hard at work trying to fashion solutions to these challenges over the…

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Joint statement on Music Modernization Act of 2017 from NMPA President & CEO David Israelite, ASCAP CEO Elizabeth Matthews, BMI President & CEO Mike O’Neill, NSAI President Steve Bogard and SONA Executive Directors Michelle Lewis and Kay Hanley

We should thank Rep Collins and his staff for working tirelessly the last three years to make digital music ecosystem fairer for songwriters and performers. We have not yet had a chance to review the 100+ pages of this bill but we look forward to reading it.

Artist Rights Watch

We strongly support the introduction of the Music Modernization Act which represents months of collaboration and compromise between the songwriting and tech industries. This legislation enables digital music companies to find the owners of the music they use and reforms the rate setting process for performing rights, ensuring that songwriters and music publishers are paid faster and more fairly than ever before.

“For too long, digital music services have taken advantage of the ‘bulk NOI’ process and often failed to find the correct creators to pay, and now – by working together – this bill ends this practice by creating a private-sector system where money will no longer be lost to inefficiencies and lack of information. The bill also improves how mechanical royalty rates are calculated by introducing a willing-seller/willing-buyer standard.

“On the performance rights side, the bill also replaces the current rate court system with the random assignment of judges used in most federal court cases, and allows…

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Major Defeat For Google-Era Justice Department, Huge Victory for Sanity and Songwriters — Music Technology Policy

Great news today that the appeals court upheld BMI’s ruling by the BMI rate court judge that there is no such thing as 100% licensing under the consent decrees. Although it’s like winning an appeal that the Sun really does rise in the East (attention Cal students), it’s good to put that issue to one side and to poke a stick in Google’s eye.

via Major Defeat For Google-Era Justice Department, Huge Victory for Sanity and Songwriters — Music Technology Policy

SoundExchange Scores 41% increase in SiriusXM artist royalties

Billboard reports today the government’s decision on the performance royalties SiriusXM pays to artists (effective January 1, 2018):

The Copyright Royalty Board [“CRB”] has determined that Satellite Audio Radio Services, i.e. SiriusXM will pay 15.5 percent of revenue for the next five years beginning in 2018 to 2022, although the full determination has yet to be posted on the CRB’s website while the participants scrutinize the document to make sure proprietary data is not publicly revealed.

That represents a nearly 41 percent jump from the 11 percent the service was paying in the current year, although it’s short of the 23 percent that SoundExchange was advocating to the CRB judges, who are appointed by the U.S. Librarian of Congress. But its better than the static rate that Sirius was hoping from the judges.

SoundExchange press release says:

The CRB increased the rates for Sirius XM by more than 40%, from 11% of revenue to 15.5% of revenue, effective January 1, 2018. Sirius XM is the only satellite radio service in the United States and reported revenues of $5 billion in 2016. By contrast, the CRB reduced the rates for Music Choice’s and Muzak’s services from 8.5% to 7.5% of revenue. SoundExchange advocated on behalf of its artists and rights owners in this rate litigation, which spanned 24 months.

“We thank the CRB for its work and appreciate their consideration of the case we laid out,” SoundExchange President and CEO Michael Huppe said. “SoundExchange is dedicated to our mission of ensuring that creators are properly recognized and compensated for the use of their work. And while the Copyright Royalty Board did not adopt the rates we proposed for Sirius XM, its ruling demonstrates an important step in the right direction toward valuing the contributions of the music creators represented by SoundExchange.”

Yesterday’s decision confirms the need to change the so-called Section 801(b) rate standards under which satellite radio and the “grandfathered” cable radio services operate, and which permit the CRB to adopt rates different than what the market would provide. As a result of that rate standard, Sirius XM has paid below-market rates for years, and the recording artists and rights owners SoundExchange represents have subsidized the company’s growth.

Major score for artists, musicians, vocalists, as well as major and indie labels.  More to come when the Copyright Royalty Board releases its written opinion.

The Information’s Expose on Google’s Hostile Work Environment is a Cry for Corporate Reform

This is the week’s most underreported story. Add this report to previous reports of “open marriages;” deleted Instagram accounts; sound proof love nests; sexy yacht “decorators;” and various rumored sidepieces and you have an increasing probability of freakiness to be revealed at Google.

 

Music Technology Policy

“All animals are equal, but some animals are more equal than others”

Animal Farm: A Fairy Story by George Orwell

The Information has conducted an extensive review of Google’s apparently hostile work environment and one thing is clear–all the stories we heard about Google’s headman, Eric “Uncle Sugar” Schmidt really have had the predictably corrosive effect.

The romantic relationships within the walls of Google made ideal fodder for gossip columns and magazine profiles.

Co-founder Larry Page dated Google lieutenant Marissa Mayer in the company’s early days, and co-founder Sergey Brin later drew attention for dating Amanda Rosenberg, a younger colleague. CEO Eric Schmidt dated publicist Marcy Simon when she did work for Google. The stories had sex, money and power against a backdrop of one of the world’s largest tech empires. It was like something out of a rebooted soap opera—Dynasty 2.0.

But an examination by The Information found that…

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