Guest Post: #FairTradeofMusic Initiative Goes After $330 million in the New Reciprocity Campaign for Artist Rights (#irespectmusic)–Artist Rights Watch

Guest Post by Chris Castle (cross posted from Artist Rights Watch)

I cannot tell you the number of times U.S. artists have said to me, “I don’t need to join SoundExchange, I’m already a member of BMI.”  (Or ASCAP.)  Then I have to explain to them why SoundExchange collects an entirely different royalty–for the performance of the sound recording not the song.  It’s SoundExchange for recordings, PROs for songs.  Say it like a mantra.  It is a testament to the decades of propaganda from the National Association of Broadcasters and especially SiriusXM that has kept U.S. artists in the dark.

Strangely–and I’m being sarcastic–I never get this question from artists who are not Americans.  They are very aware of the performance royalty for sound recordings.

What neither the US nor the UK artists know very often is that when an American artist is played in the UK, the US artist receives no royalty due to decades-old trade rules.  But when a UK artist is played in the US, the UK artist receives their full royalty from SoundExchange as a matter of law.  A new organization called the Fair Trade of Music campaign  wants to change that so that artists are treated the same in the UK regardless of where they call home.

Why do we care?

We care because Fair Trade of Music estimates that U.S. artists lose about $330,000,000 each year due to this lack of fairness and reciprocal treatment.

We care because due to COVID-19, live music income has collapsed to zero or near zero.  Public performance income from SoundExchange is one of the few income streams left that American artists can count on.  And this is not a Yank thing.  The idea that American artists are generating income that is denied to them because of ancient trade laws is just as maddening to their sisters and brothers among artists in the UK as it is to the Americans.

We care because fixing this inequity is not a zero sum game.  UK artists should not make a penny less if US artists get their rightful share.  The money is already being paid and the rates are already determined–it’s just that the payment of the money for US artists must be redirected.

We care because we have a chance to fix the ancient trade rules that perpetuate this inequity.  There are a lot of trade rules about many different products and services including the rules for these payments to American artists.  Those rules can be changed by vehicles like the upcoming UK/US trade agreement.

Right now the focus is on the UK because we have a vehicle to take a big step toward fixing this treatment (which is true in many other countries, too).  That vehicle takes the form of the upcoming UK/US trade agreement which may be signed in the next few months.  Even if it isn’t actually signed it will be negotiated, and the outlines of the UK/US deal will likely be much better defined before the end of the year. (This “bilateral” trade agreement with the UK must be put in place due to the UK leaving the European Union.)

We need to be at that table.  Now is the time to take action.

If you want to sound off to the powers that be about fixing this loophole, you can sign a petition to support fair treatment at the Fair Trade of Music site.  I don’t often ask you guys to do something like this, but I really think you should sign up.

As Ann Richards said, if you’re not at the table, you’re on the menu.

2019-2020 Streaming Price Bible : YouTube is STILL The #1 Problem To Solve

Here we go with the current year update.

This data set is isolated to the calendar year 2019 and represents a mid-sized indie label with an approximately 350+ album catalog now generating over 1.5b streams annually. Streaming is now a fully mature format, and it is also the number one source of revenue for recorded music. Streaming in all configurations now accounts for 64% of all recorded music revenues. Head on over to the RIAA US sales database [here] to check out the numbers. Pro Tip: Remember to adjust for inflation!

We are keeping a simplified chart again this year. We’ve extended to the top 30 streamers which represent 99.87% of all streaming dollars. The Top 10 streamers account for over 93% of all music streaming revenues (down from 97% last year). The Top 5 account for over 83% of all streaming dollars (down from 88% last year). The drop in overall revenues in the Top 5 and Top 10 are the result of YouTube’s Content ID pulling down the overall revenues / per stream.

The biggest takeaway by far is that YouTube’s Content ID, shows a whopping 51% of all streams generate only 6.4% of revenue. Read that again. This is your value gap. Over 50% of all music streams generate less than 7% of revenue.

 

This is the first time we have not seen the Spotify per stream rate drop since the service launched a decade ago. The Spotify per stream rate has stabilized moving up just slightly to .00348 from .00331.  In other words Spotify is paying out about $3,300 – $3,500 per million plays. We’re working with a very large sample that has aggregated all streams and revenue against both subscription and ad supported revenues for a single per stream average. This overall average is helpful for anyone who wants to calculate gross revenues by simply looking at the numbers on Spotify itself. For those who may not know, there is a simple “trick” to see the streams of any song on Spotify. On the desk top app, go to the album view and hover your mouse/cursor over the ||||||| at the far right side of any song, just to the right of the song length. Once there the plays for the song will materialize just below the song length.

 

Using our average, the song above has earned between $4,026 – $4,270.78 (gross before distribution fees) on Spotify at 1,220,224 plays.

Apple Music is again the best value per stream accounting for nearly 25% of all streaming revenue on only 6% of consumption. Spotify generates the most overall revenue of any streamer (no surprise) at 44% of all streaming revenue on 22% of consumption. As stated before, and which can not be overstated enough, You Tube’s Content ID is the major issue limiting growth contributing only 6% of revenues on over half of all streams, at 51% of total consumption. That’s a staggering statistic.

Apple’s per stream rate also stabilizes this year hitting a per stream rate of .0675 which is much closer to where it was two years ago at .00783. Our numbers from 2018 showed a dramatic drop in Apple’s rate at .00495 which we attribute to an expansion into new territories and a large number of 90 day free accounts that had not matured to fully paid subscribers.

In looking at the per stream rates for song and album equivalents, you might want to read this article by Billboard (as of 2018) on the current calculation of how many streams equal an album for the purposes of charting. The report states that, “The Billboard 200 will now include two tiers of on-demand audio streams. TIER 1: paid subscription audio streams (equating 1,250 streams to 1 album unit) and TIER 2: ad-supported audio streams (equating 3,750 streams to 1 album unit).” Our numbers suggest however it would be more fair to average all revenues, against all streams (including content ID), and that actually lands at about 3,516 streams per album across the board.

 


These numbers are from one set of confidentially supplied data for global sales. 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]

2018 Streaming Price Bible! Per Stream Rates Drop as Streaming Volume Grows. YouTube’s Value Gap is Very Real.

Here we go again. To see previous years, click [here].

This data set is isolated to the calendar year 2018 and represents a mid-sized indie label with an approximately 250+ album catalog now generating almost 1b streams annually. 2018 is the year we saw streaming truly mature as the dominant source of recorded music revenues.

In parsing the data provided we find that digital revenues are 86% of all recorded music revenues globally (RIAA Reports Digital Revenues as 90% of Total). Streaming is 80% (or more) of Digital Music Revenues. Downloads are about 20% of digital music revenues for the year, however if we isolate Q4, it would appear download revenues could be less than 15% of digital revenues. The transition from downloads to streaming is well beyond the tipping point and we wonder how long the major services (Apple, Amazon, Google) will continue to support the format.

As we dig down into the physical revenues much of the gross is eroded by manufacturing, shipping and inventory costs of both CDs and Vinyl. In short, the recorded music business is now the streaming music business. Whatever charm there is to vinyl, it is at best still a truly niche business in terms of meaningful net revenues.

Every year there are surprises in the data and this year is no exception. As always we present this data as a single sample, but one we feel is fairly representative of the state of the business. As such, we welcome comments from others with access to similar data to report on their findings. Some of the percentages may vary dependent upon the genre of music and the size of the label or artist. However, we generally don’t find trends that are completely contradictory to our sample where it matters most, in reporting on stream rates and relative marketshare.

We’ve also simplified the chart this year. Just one chart, and only the Top 20 streamers which represent  99.35% of all streaming dollars. The Top 10 streamers account for over 97% of all music streaming revenues. The Top 5 account for over 88% of all streaming dollars. What we see below is a maturing marketplace with a small number of dominant players. Anyone who thought the digital revolution would remove so called “gate keepers” are painfully wrong.

If you want to compare these numbers against the RIAA’s official report for the first half of 2018, click [here]. That data is for the USA and only through June of 2018. It’s hard to get “apples to apples” reporting, so everything should be taken as different perspectives on the overall business. If you are an artist or label, see how your own data compares.

The biggest takeaway by far is that YouTube’s Content ID, (in our first truly comprehensive data set) shows a whopping 48% of all streams generate only 7% of revenue. Read that again. This is your value gap. Nearly 50% of all recorded music streams only generate 7% of revenue.

 

The Spotify per stream rate drops again from .00397 to .00331 a decrease of 16%. Apple Music gains almost 3% for an total global marketshare of about just under 25% of all revenue.

Apple’s per stream rate drops from .00783 to .00495 a decrease of 36%. We need to state again, that 2018 saw a massive shift of revenues from downloads to streaming and no doubt this expansion of scale, combined with more aggressive bundling (free trials) as well as launching into more territories was bound to bring down the overall net per stream.

Apple Music still lead in the sweet spot with about 10% of overall streams generating 25% of all revenue (despite the per stream rate drop). Spotify by comparison has nearly triple the marketshare in streams than Apple Music but generates less than double the revenues on that volume.

The biggest takeaway by far is that YouTube’s Content ID, (in our first truly comprehensive data set) shows a whopping 48% of all streams and only 7% of revenue. Read that again. This is your value gap. Nearly 50% of all recorded music streams only generate 7% of revenue. Apple Music and Spotify combined account for just short of 40% of all streams and 74% of all revenue.

We don’t know how the powers that be at the major labels can continue to allow for this gross inequity. It will be interesting to see how YouTube Red numbers evolve over this year. YouTube Red, the newly rebranded version of the disastrous “Music Key” is off to a slow start in a competitive subscription music marketplace. One has to ask, what incentive is there really for Google/YouTube with the Red subscription service when they already benefit from service 48% of all streams while paying only 7% of the overall revenue?

In looking at the per stream rates for song and album, you might want to read this article by Billboard on the current calculation of how many streams equal and album for the purposes of charting. We don’t know if YouTube Content ID streams count towards charting, but they absolutely should not. The report states that, “The Billboard 200 will now include two tiers of on-demand audio streams. TIER 1: paid subscription audio streams (equating 1,250 streams to 1 album unit) and TIER 2: ad-supported audio streams (equating 3,750 streams to 1 album unit).”

In the coming year Amazon’s Unlimited Music service shows promise. We also wonder about Google Play. The payouts on Google Play are fair, but when bundled into the YouTube ecosystem is largely inconsequential in terms of both streams served and revenue. As smart home assistants grow there could be a larger market segment for paying subscribers to have streaming music catalogs available and on demand.


These numbers are from one set of confidentially supplied data for global sales. 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]

Spotify’s Big Lie, Streaming Habits Mirror Purchasing Habits

One of the biggest lies told by Spotify is that streaming will provide more revenue over the life of a record because every play will be monetized. This as opposed to the one time payment earned from a transactional purchase where all the revenue from the purchase of the record is paid at once. There is however, a very big problem with this theory, which is that the consumption curves of streaming match the consumption curves of transactional sales.

So, what about that so called long tail? Well, it doesn’t exist. Not for music consumption. Or we should say, it doesn’t exist any different for streaming than it did has for transactional sales. What do you think is more profitable in generating revenue? Is it the album sales of artists catalogs, or is streams?

Keep in mind, streaming is a fixed cap market. So it does not matter how much the market grows in actual consumption, the revenue is capped by the amount of revenue earned by the hosting provider. If consumption doubles, but revenues stay flat, every stream is worth half of what it was previously.

We’re already seeing this trend as we noted earlier this year that Spotify per stream rates appear to be dropping steadily by about 8% per year. This is likely a combination of both the growth of consumption and the slowing of revenue across both subscriptions and advertising.

If anyone truly believes streaming is going to generate more revenues than transactional sales, we have a bridge in Brooklyn to sell you cheap. The fix is simple. The industry must move towards adopting an industry standard streaming penny rates. Only by setting fixed per stream rates will compensation scale with consumption.

[NOTE:] Chart from a mid size indie label showing revenues from Downloads and Streaming. The Spikes indicate new release activity / hits which reveals that revenue tails off for streaming the same way it does for transactional downloads.

If Only Artists and Managers Had Listened To Us : Spotify Per Stream Rates Keep Dropping

We hate to say we told ya so, but… Below is our post from September 2015. Two years ago we predicted the inevitable truth of the all you can eat Spotify subcription model. Like many of our predictions and proposals (example; windowing titles) we’ve had to wait for the industry to catch up to us. Today, two years later, Digital Music News confirms our prediction.

Read the report from Digital Music News by clicking the headline link here.

Exclusive Report: Spotify Artist Payments Are Declining In 2017, Data Shows | Digital Music News

Our original post from 2015 is below…


Spotify Per Play Rates Continue to Drop (.00408) … More Free Users = Less Money Per Stream #gettherateright

Down, down, down it goes, where it stops nobody knows… The monthly average rate per play on Spotify is currently .00408 for master rights holders.

PerStreamAvg_Jun11_July15

48 Months of Spotify Streaming Rates from Jun 2011 thru May 2015 on an indie label catalog of over 1,500 songs with over 10m plays.

Spotify rates per spin appear to have peaked and are now on a steady decline over time.

Per stream rates are dropping because the amount of revenue is not keeping pace with the  number of streams. There are several possible causes:

1) Advertising rates are falling as more “supply” (the number of streams) come on line and the market saturates.

2) The proportion of  lower paying “free streams”  is growing faster than the proportion of higher paying “paid streams.”

3) All of the above.

This confirms our long held suspicion that as a flat price “freemium” subscription service  scales the price per stream will drop.  As the service reaches “scale” the pool of streaming revenue becomes a fixed amount.  The pie can’t get any larger and adding more streams only cuts the pie into smaller pieces!

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: $4,080 / 1,000,000 = .00408 per stream). Multiple tiers and pricing structures are all summed together and divided to create an averaged, single rate per play.

Labels / Spotify Admit Windowing is Streaming Solution (while cutting royalty rates)

It’s amazing how long it takes the industry to catch up to us. We strongly suggested windows and pay-gates at ad supported streaming services (Spotify) to drive conversion rates to subscription revenues back in 2014 and again in 2015, twice!

Well guess what is being reported in Digital Music News this week…

“According to details tipped, the Swedish streamer would restrict the biggest album releases to only paid subscribers for a period of time.”

Wow, windowing works! Who knew?!

But here’s the real kicker, the labels are LOWERING royalty rates in exchange for the ability to window hit records! It’s unbelievable that the industry must always take two steps back for every one step forward. Does it really need to be this hard?

Read the full story at Digital Music News below:

Spotify Finally Finds a Way to Lower Licensing Deals and Go Public

 

YouTube’s Value Gap is the Record Industry’s Biggest Problem To Fix, and Here’s Why…

If the record industry is serious about growing streaming revenues (and the digital economy in general) it must address the problems with the exploitative practices of Google’s YouTube. We’ve been lucky to be supplied with Content ID data from the same source as our previous data – so we added that into the mix to see where it would rank.

These numbers are just staggering.

If you combine Content ID to the YouTube Subscription numbers you arrive at a whopping 63% of total streaming market share that only contributes  11% of revenue. Ya’ll taking notes here?

yt_istheproblem

 

Look at the combined YouTube revenues of Subscriptions and Content ID together at 11% of revenue. That puts the combined earnings at #3 in market share behind Apple Music. However, Apple Music creates more earnings than the two combined YouTube Revenue streams with less than 4% of the consumption. You’ll also notice that YouTube is the only streaming service with three zeros following the decimal point. That means YouTube is paying hundreds of dollars per million streams while the other leading streamers are paying thousands.

Apple Music generates 12% of revenue with less than 4% of streams. YouTube generates 11% of revenue with 63% of streams. Does that sound like a problem to anyone else?

As of this writing we’re not factoring in the direct channel uploads for artists to YouTube or Vevo, however we just can’t imagine that those numbers are much different in terms of plays versus revenues. We hear from a lot of label folks that they are afraid to give up their annual revenue from YouTube sources, but all we can say is that you’d be gaining more much more than you would be giving up.

We’ve heard of at least one executive who met with resistance when faced with the prospect of potentially walking away from millions of dollars a year in YouTube revenues. But, it’s not walking away from millions, it’s giving up 10’s of millions in true revenue.

Let us not forget, that this devalued revenue will prevent the overall growth of streaming as a format. With streaming revenues (largely from Spotify and Apple Music) now accounting for approximately 40% of overall digital music revenues why should YouTube be able to pay 1/10th of the other major players? Oh, that’s right because of user pirated content uploads…

It’s time for the record business to get serious about cleaning up YouTube.

 

After 16% drop in Per Stream rates, Spotify asks for another 14% Reduction…

We can’t make this up. We’ve stated many times before, as the consumption of streams increase (and those services grow) the per stream rate will drop as revenues level off. This is simply because revenues can not keep up with consumption, and there is no fixed per stream rate.

In our latest look at streaming rates we found that Spotify streaming rates had dropped 16% from 2014 to 2016. Now, Hypebot is reporting that Spotify is asking for another 14% reduction in royalty payments.

Please someone break out a calculator… that would be a 30% reduction in per stream rates in two years! It’s just math. Wow.

Read the full story at Hypebot:

Spotify’s Latest Offer To Labels: A 14% Lower Royalty Rate | Hypebot

Updated! Streaming Price Bible w/ 2016 Rates : Spotify, Apple Music, YouTube, Tidal, Amazon, Pandora, Etc.

The last time we did this was back in 2014, so we thought it was time for an update. Not a lot of surprises but as we predicted when streaming numbers grow, the per stream rate will drop. This data set is isolated to the calendar year 2016 and represents an indie label with an approximately 150 album catalog generating over 115m streams. 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 has dropped to .00437 a reduction of 16%.

YouTube now has their licensed, subscription service (formerly YouTube Red?) represented in these numbers as opposed to the Artist Channel and Content ID numbers we used last time. Just looking at the new YouTube subscription service numbers isolated here, they generate over 21% of all licensed audio streams, but less than 4% of revenue! By comparison Apple Music generates 7% of all streams and 13% of revenue.

Speaking of Apple, they sit in the sweet spot generating the second largest amount of streaming revenue with a per stream rate .00735, nearly double what Spotify is paying. But, Spotify has a near monopoly on streaming market share dominating 63% of all streams and 69% of all streaming revenue. The top 10 streamers account for 99% of all streaming revenue.

streamrevenuemkrtshr2016

To put this list in the context of our 2014 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 actually matches an economic equivalent. However, that is most likely a highly excessive numbers of plays to achieve that economic equivalent. But, more on that later…

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.

streamspersong2016

  • 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]

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