Author: Trichordist Editor

Trichordist Editor

Streaming “Transparency” and the 70% Black Box Lie… The Solution Is #gettherateright

The argument goes something like this…

Streaming companies are paying 70% of their revenue but artists are not getting paid enough. This must be the result of record labels and rights holders not passing on the right amount to artists.

The first question is, how do we know that streaming services are actually, really paying 70% of their top line gross revenue to rights holders? We know what the revenue of a transaction is on iTunes, because it is factually transparent – it is the list price being charged. We all know this, and we can all verify this. A $9.99 album on iTunes pays out $7.00, or 70%. Same thing for a $.99 song that pays out $.70, that’s also 70% of revenue.

But when if comes to streaming services however we do not know what the revenue is that should be credited to artists and rights holders. This is what is actually of concern. There is a big black box at the top of the waterfall from which all other money flows downstream.

So if streaming services are paying 70% of revenue, what exactly is that revenue? Let us see it. So here we are with the issue of transparency. If we can’t actually see or know what that number is then yes, the low payouts are very much of concern and have very little to do with intermediaries.

We can disagree about how the 70% of revenue is passed onto artists from iTunes and other transactional sales. But one thing is clear, we all understand the transparent economics of how much money is generated on each transaction. This is not so with streaming. So without transparency at the top of the waterfall, everything that follows is suspect.

More importantly, and more to the point, if there are established retail and wholesale rates for each stream, the calculations become immediately transparent in the same way they are with Itunes. See, the issue here is not what is going on downstream, but rather what is happening at the top of the waterfall.

“WE HAVE A MONETIZATION PROBLEM”

The truth is by now (and everyone should be able to agree on this), we know that streaming creates too little revenue relative to the value of the product. In other words the product is being sold to the consumer for less than the cost that it takes to create and produce it, and still remain sustainable.

In simple terms this is expressed as selling a Porsche for one dollar. It doesn’t matter how many Porsche’s you sell for one dollar while paying out 70% of the revenue, there will never be enough money to actually pay for the cost producing the car. Porsche’s, like professional music are expensive to produce. Despite the advances in recording technology, it is he cost of human labor that is the most important in the value chain.

This is the economics of music streaming in a nutshell, but with one added twist. The Porsche may be sold for one dollar one month, and be sold for only eighty cents the next month, and maybe the month after that sold for a dollar and ten cents. This is because of the fixed (and unsustainable) revenue pool that is divided by the total number of plays.

The common sense solution would be to establish a fixed per stream rate at each platform. This is the most simple way to encourage transparency and fairness as the revenue generated per stream can be transparently and easily calculated from top line data – no more black box at the top of the waterfall. The funny thing is, the people shouting the loudest for transparency also seem to be the most opposed to the easiest solution. Why is that?

So, if we are to have conversations about transparency let’s at least be clear about what it is that we actually need to see.

 

by Trichordist Editor

Music Streaming Now Generates Trillions Of Plays — But Are Royalties Keeping Up? | Billboard

A lot of advertising gets slathered on A Trillion Streams, and served to the most highly prized consumer demographic… no wonder Google/YouTube, Spotify and Pandora are so opposed to non-free, subscription based models that could actually compensate musicians and songwriters fairly.

The headline number in the report is 1,032,225,905,640, or 1.03 trillion, the number of song plays on Pandora, Rdio, Spotify, SoundCloud, Vevo, Vimeo and YouTube that the company tracked in the first six months of this year. It’s a startling number, much larger than anything we’ve seen before it.

…

It’s safe to say not all 1.03 trillion plays were royalty-bearing streams. Some had a royalty in the 0.05 to 0.1 cents per stream range typical of subscription services. Many of the Pandora streams had a U.S. statutory rate for pure-play webcasters of 0.14 cents plus a smaller amount for publishers (some Pandora streams had a higher royalty applied to streams by subscribers). And SoundCloud, a new entrant to licensed, monetized streaming, most certainly had many non-monetized streams.

Yes, it’s safe to say not all 1.03 trillon plays were royalty-bearing streams. No kidding. For most musicians and songwriters a trillion streams still means the same thing, a couple hundred bucks, if they’re lucky…

READ THE FULL STORY AT BILLBOARD.COM
http://www.billboard.com/biz/articles/6663811/music-streaming-now-generates-trillions-of-plays-but-are-royalties-keeping-up

by Trichordist Editor

Pay the Band | Memphis Flyer

Brice S Newman of Memphis details why support for the Fair Play, Fair Pay bill is essential for all musicians and creators to support.

There are four parts to the initiative, which includes a comprehensive bill that gives music creators pay parity. First, legislation would establish a process for setting fair-market royalty rates, not some pathetic low royalty rate that is decades old.

Second, the legislation would create a performance right for artists on terrestrial radio in the U.S., so that artists can get paid when their performances are on the radio. This is how it’s done in much of the rest of the world.

Third, this legislation would close a 1972 loophole and would guarantee that veteran performers receive royalties.

Fourth, the legislation would codify royalty payments to producers — the people behind the songs. If we can make all this happen, I am sure we will be paid back many times over in good music that’s been created by musicians who deserve to make a living.

READ THE FULL STORY AT THE MEMPHIS FLYER:
http://www.memphisflyer.com/memphis/pay-the-band/Content?oid=4073778

by Trichordist Editor

Did Google & YouTube just Scam The Entire Record Business into Free Streaming Licenses? MusicKey is MIA…

Remember all the controversy over YouTube’s ad-free streaming subscriber service, MusicKey? If the words “Google” and “Ad-Free” sound like a complete contradiction, you are not alone.

MusicKey_AdFree

Ok, so where is it? We tried to sign up, but we’ll be notified later when the service is available.

whenMusicKey

Remember how one of the requirements was ALL OF YOUR MUSIC also had to be licensed for FREE STREAMING on YouTube or your promotional videos would be blocked or banned from the site?

Did you forget? No worries, here is the recap from Zoe Keating’s blog that brought the issue to light.

1) All of my catalog must be included in both the free and premium music service. Even if I don’t deliver all my music, because I’m a music partner, anything that a 3rd party uploads with my info in the description will be automatically included in the music service too.

2) All songs will be set to “montetize”, meaning there will be ads on them.

3) I will be required to release new music on Youtube at the same time I release it anywhere else. So no more releasing to my core fans first on Bandcamp and then on iTunes.

4) All my catalog must be uploaded at high resolution, according to Google’s standard which is currently 320 kbps.

5) The contract lasts for 5 years.

So, “All songs will be set to “montetize”, meaning there will be ads on them.” That’s one hell of a trade-off to get some subscription money, but maybe it won’t be so bad once that MusicKey money starts rolling in right? YouTube and Google have a HUGE amount of users to convert to PAYING SUBSCRIBERS, right?

Hahahahahahahahahaa. You fell for that gag? Seriously? Here’s what YouTube says about that little side business of PAID SUBSCRIBERS…in an interview between YouTube Senior Exec Robert Kyncl and Music Ally: YouTube Music Key delay ‘nothing too serious’ says senior exec.”

“We’ll always have ad-supported: that’s our core, and we’ll never stop focusing on it.  It’s in Google’s DNA to be in the ad-supported business.

Subscription is just an add-on. It’s an adjacent business that we’re building.”

Suckas… You seriously thought Google who has slathered the internet with advertising on “User Pirated Content” across multiple platforms was going to pivot to a paid subscription model to move away from advertising on it’s flagship video streaming site? Really? Seriously?

You saw that five year term, right? So MusicKey is a no show for subscriber revenue but thanks to that five year term the largest streaming service in the world, that pays the least amount per stream now has licenses for the next half decade. As the kids say, LOL.

Don’t worry about MusicKey not showing up anytime soon with that Paid Subscriber Money, in the meantime enjoy your life’s work as a YouTube auto-generated music video and playlist, for free.

Oh MusicKey we would have loved to have known you – now all we have is our catalogs of master recordings being monetized on old-school YouTube for pennies on the dollar of every other streaming service including Spotify. Wow, just wow.

And Speaking of Spotify, guess who has a seat on the board to make sure that their “ad-supported DNA” remains the primary focus of that music streaming service? Three guesses… Yup, it’s Google.

Here’s a trip down MusicKey memory lane…

April 2014 : Exclusive: ‘YouTube Music’ Is Launching This Summer… | Digital Music News

June 2014 : Artists who don’t sign with YouTube’s new subscription service to be blocked [Updated] | Ars Technica

June 2014 : F*&K It: Here’s the Entire YouTube Contract for Indies…| Digital Music News

November 2014: YouTube’s MusicKey Will Cause $2.3 Billion In Music Industry Losses… | Digital Music News

January 2015 : YouTube Is Removing Any Artist That Refuses to License Its Subscription Service…| Ars Technica

April 2015 : If You Don’t Agree to YouTube’s New Ad-Free Terms, Your Videos Will Disappear…|Digital Music News

June 2015 : YouTube Music Key delay ‘nothing too serious’ says senior exec | Music Ally

Exhausting… Why would anyone trust these people? All hail “User Pirated Content“… and if that doesn’t work just come up with a non-existent paid subscriber streaming service that auto-generates music videos and playlists on the free, ad-supported platform. At least that part is working, right?

Let’s talk about transparency for a second. Why is it that YouTube would be excluded from Google’s own DMCA tracking report? It couldn’t be because DMCA notices and takedowns of infringing material YouTube dwarf even the most notorious of pirates sites say like The Pirate Bay? No, that wouldn’t be the reason would it?

553k_InfringingBusinessesMaybe #adbusters and #blackspot really do have it right…

by Trichordist Editor

The Digital Ad Business Is Broken, Says Former Forbes.com CEO | Venture Beat

No surprises here, right?

“The onion is slowly and surely getting peeled back.”

…

Last year, Google reported that 56.1 percent of all ads served were not measured viewable by humans.

Last December, the Association of National Advertisers and security firm WhiteOps estimated that up to a quarter of video ad views were fraudulent and resulting from software bots. It also said that as much as half of publisher traffic is from bots. This represents a projected $6 billion-plus in wasted ad spend this year.

Spanfeller sees the current system as a big part of the problem.

No kidding.

READ MORE AT VENTURE BEAT:
http://venturebeat.com/2015/08/08/the-digital-ad-business-is-broken-says-former-forbes-com-ceo/

Over 50 Major Brands Funding Music Piracy, It’s Big Business!

“User Pirated Content” Is Core Internet Advertising Model

 

by Trichordist Editor

Music Artists Take On the Business, Calling for Change | New York Times

The New York Times quotes representatives of the artists rights movement including Blake Morgan of the #irespectmusic campaign, Melvin Gibbs of C3Action.Org (Content Creators Coalition), David Lowery of the Trichordist as well as musicians Zoe Keating, David Byrne and others.

“None of these companies that are supposedly in the music business are actually in the music business,” Mr. Gibbs said. “They are in the data-aggregation business. They’re in the ad-selling business. The value of music means nothing to them.”

READ MORE AT THE NEW YORK TIMES:
http://www.nytimes.com/2015/08/01/business/media/music-artists-take-on-the-business-calling-for-change.html

by Trichordist Editor

“User Pirated Content” Is Core Internet Advertising Model (Which is Why Streaming Rates Can’t Increase Until Piracy is Decreased)

Google’s YouTube is a business built on infringement as a model. So called “User Generated Content” is really just code for what the majority of the high value media on YouTube really is, “User PIRATED Content“.

In other words there’s nothing internet advertising loves more than illegally monetizing the work of professional creators, and thus driving down the true fair market rates for those works (keep this in mind when thinking about Spotify and streaming services!).

Below are excerpts from emails discovered during the Viacom Vs. YouTube lawsuit and published  by DailyFinance:

• A July 29 email conversation about competing video sites laid out the importance to YouTube of continuing to use the copyrighted material. “Steal it!” Chen said , and got a reply from Hurley, “hmmm, steal the movies?” Chen’s answer: “we have to keep in mind that we need to attract traffic. how much traffic will we get from personal videos? remember, the only reason our traffic surged was due to a video of this type.”

And this is not the only smoking gun, here’s a quote from DailyTech regarding Google’s Ad Sales and the site EasyDownloadCenter: 

In fact, Google’s ad teams even made suggestions designed to optimize conversion rates by using keywords targeted to pirated content – such as suggesting downloading films still in theatrical release, that obviously were not available yet in any authorized format for home viewing.

According to PCWorld this added up to some decent money…

EasyDownloadCenter.com and TheDownloadPlace.com generated US$1.1 million in revenue between 2003 and 2005, and Google received $809,000 for advertising, the Journal reported.

Both YouTube and Google Search function similarly by monetizing infringing “User Pirated Content” with advertising. On YouTube users upload infringing music and videos of all varieties which attract the consumers to the globally dominant and monopolistic video streaming site.

Remember the email above where the YouTube founders admit “how much traffic will we get from personal videos? remember, the only reason our traffic surged was due to a video of this type”. And by “this type” they mean professionally produced and created media by artists, musicians, filmmakers and other creative professionals that are of high value in attracting an audience – an audience that can then be monetized with advertising.

Google Search operates in very similar way (no coincidence) by monetizing (mostly with advertising) millions infringing URLs on sites primarily dedicated to distribution of copyrighted works via p2p networks and bittorrent.

Over 50 Major Brands Funding Music Piracy, It’s Big Business!

LouReedCHEVY

But don’t take our word for it, here’s a report from DigiDay (owned by The Economist):

According to AppNexus CEO Brian O’Kelley, it’s an easy problem to fix, but ad companies are attracted by the revenue torrent sites can generate for them. Kelley said his company refuses to serve ads to torrent sites and other sites facilitating the distribution of pirated content. It’s easy to do technically, he said, but others refuse to do it.

“We want everyone to technically stop their customers from advertising on these sites, but there’s a financial incentive to keep doing so,” he said. “Companies that aren’t taking a stand against this are making a lot of money.”

What about the removing infringing material with a DMCA notice you ask? Well, we’re glad you did… here’s how it “works”…

https://vimeo.com/94514834

DMCA “Takedown” Notices: Why “Takedown” Should Become “Take Down and Stay Down” and Why It’s Good for Everyone | Nova Edu

 

Safe Harbor Not Loophole: Five Things We Could Do Right Now to Make the DMCA Notice and Takedown Work Better

 

by Trichordist Editor

A Declaration of Principles for an Ethical and Sustainable Internet

Originally written and posted in 2012, here again for your July 4th weekend…

 

Technology may change but principles do not. A society that encourages the creative spirit is rare in history and worth defending. The internet and digital technology have opened up many new opportunities for artists, but it has also opened up new opportunities for those who wish to exploit those artists.

We offer for discussion a set of principles as a guide for companies and policy makers to keep in mind. It is our hope that these principles will help build a sustainable online creative ecosystem, one that benefits creators, innovators, and the general public alike.

1. FAIR AND ETHICAL LABOR PRACTICES: RESPECT WORKERS’ RIGHTS
A fair and ethical internet is built on the respect and protection of the rights of individuals to determine who benefits from their labor and creations.

Since the rise of digital utopians in the 1990s, we’ve unfortunately seen many very old arguments surface as to why the economic benefits of a few big companies should be valued over the labor rights of many. This problem is what drives workers to organize to protect their labor and demand fair compensation. Not only are artist rights protected by the US Constitution, artist rights are also internationally recognized as human rights protected by many international treaties, including the Universal Declaration of Human Rights. Unfortunately, however, there are those who seek to capture the value of artist rights profit only for themselves by systematically violating these rights for commercial gain.

A free and open internet works best without overbearing regulation, but it will not work at all without protection for fundamental rights of working people.

2. CONSENT IS THE FOUNDATION OF CIVILIZATION: RESPECT ARTISTS’ INTEGRITY
Your right to swing your fist stops at the end of my nose. Your rights end where mine begin.

Rights secured by the Constitution are intended to protect the individual from hostile majority forces and the tyranny of the mob, particularly the corporate mob. This is especially true regarding copyright, which is itself a vehicle of the right of free expression for individuals, and protected by the Constitution.

Everyone understands the value of individual privacy in the digital age. The essence of the artist’s control over the integrity of their work is not that different. Individual consent should be required for a corporation to profit from taking any creative work (just like individual consent is required for taking personal information) because the creative work goes to the artist’s personhood. Protecting an individual’s right to their personhood and the protection of their free expression are building blocks in the foundation of civilization.

3. PROTECT INDIVIDUAL FREEDOM OF EXPRESSION: DON’T TRIVIALIZE CENSORSHIP
Freedom of speech requires freedom of expression. Copyright protects free expression. Together, they ensure a robust marketplace of ideas that advances truth, knowledge, and culture.

Let’s get this straight. Censorship is intolerable. You don’t have to look very far to see artists being censored by governments — there are many historical examples . No one understands this more than the scores of individual artists, musicians, painters, writers, poets, filmmakers and creators of all disciplines who have actually (and literally) have been persecuted, disappeared or assassinated for their views all over the world. Sadly, many confuse the actual freedom of expression with the mistaken idea that preventing the illegal exploitation of that very expression is the same thing. It’s not.

The copying and distribution of those expressions without the creators permission is simply exploitation without consent or compensation. Would you think that a car thief is being censored when they are prosecuted for stealing your car or a bank robber is being censored when they are prosecuted for stealing your money? Don’t trivialize “censorship”.

4. FAIR COMPENSATION: IF YOU DON’T LIKE IT, DON’T BUY IT
In any value chain where the individual creator’s work is exploited, the creator must be compensated.

Most fair and reasonable people embrace “Fair Trade” products to support and encourage fair compensation of labor. Unions have fought long hard-won battles for the protection of labor rights. As a society we recognize the individual’s right to fair compensation of labor as a fundamental cornerstone to an ethical and healthy society. The internet is inhabited by as many different varied participants as the physical world, and the respect for human labor should not be devalued simply because technology makes it possible to be unethical.

It’s very simple–the answer if you don’t like an artist’s work is not to steal it–just don’t buy it. They’ll get the message.

5. MUTUAL RESPECT: IT’S ABOUT GETTING IT RIGHT, NOT GETTING AWAY WITH IT
Mutual respect for the diversity of all online citizens is the cornerstone of a healthy and robust community.

The mutual respect granted by intellectual property rights allows individual creators the freedom to determine what permissions they wish to grant and at what price. No one has to pay that price, but the creator is entitled to set it. Denying these freedoms to creators because the mob or a public company wants to overrun a musician, author, illustrator or photographer violates the very protections against mob rule that the Constitution is intended to secure. Sadly, this is largely how individual rights are viewed today by some online corporate interests.

6. PARASITIC EXPLOITATION IS NOT INNOVATION: FREE AND OPEN SHOULD BE FAIR AND HONEST
The illegal exploitation of individuals for commercial gain is not innovation, it is techno-thuggery and cyberbullying.

We see many companies on the internet illegally exploiting the work, labor, innovation and creations of others simply because they can get away with it. We’re often told that innovation requires the unauthorized exploitation of creators in some kind of technological determinism that rejects the innovation of creators because it“scales”. That is just another way of using “convenience” as an excuse for theft. Any business that requires the illegal exploitation of individuals to be profitable is not a business but rather is a parasitic engine of oppression.

7. SUSTAINABLE INNOVATION SOLVES PROBLEMS: FAIR NOT FAKE
Sustainable innovation is best represented by solving problems, not creating them by adding intentional opaque layers of obfuscation.

The organized and deliberate complexity of some online ad networks, pirate site operations, and other businesses creates an impenetrable black box to protect illicit money flows and give the participants plausible deniability. Then we are told to “follow the money” through advertising networks, down a rabbit hole to a maze followed by another rabbit hole. That’s not innovation. It is old school wire fraud. This should not be a badge of honor for the online community but rather a point of embarrassment that the Internet—one of the greatest technological achievements of all time–is trivialized by making it nothing more than a safe house for many illegitimate businesses profiting at the expense of honest citizens.

8. COMMON GOALS, BEST PRACTICES AND SOLUTIONS:
There are centuries of mutual ground between creators, commerce and rights holders. Let’s not throw this away.

Let’s not set a goal of building a large database for clearances of all copyrights and do nothing until it is operational. That solution almost guarantees that there won’t be many new works to put in that database. Such a database has never existed and is incredibly complex. A transparent rights clearinghouse is a possible solution, but the lack of one it is definitely not an excuse for bad behavior.

 

by Trichordist Editor

What’s Next for Daniel Ek? Wherever he is, he’s not in Kansas anymore.

Spotify is in the Advertising Business First… and the Music Business Maybe…

Music Technology Policy

After pulling out all the stops in the smear campaign against Apple, the Spotify/Google juggernaut got a pause this week courtesy of @taylorswift13.  Mr. Ek–and potentially the entire ad-supported business model touted by The Man 2.0–may need some help.  You know, buy a vowel, phone a friend–just not one named Sean or Larry. Courtesy of Complete Music Update, a summary of indie label reaction:

Helen Smith of pan-European labels group IMPALA: “This is a great precedent in any sector on the benefits of working together and taking a stance to achieve a fair result. With 80% of all new releases produced by independent labels, this is also a great result for Apple. Their launch will now incorporate the very music that makes an online service attractive to music fans. The involvement of Merlin is vital considering its fundamental role in strengthening the independent sector. IMPALA has repeatedly called on…

View original post 813 more words

by Trichordist Editor