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]

Spotify Retaliating Against Apple Music Exclusive Artists, Execs Say… | DMN

Nope… nothing to see here…

The Times dropped the bombshell after digging into the Frank Ocean situation, one that is actively causing the music industry to reinvestigate their practices around exclusives.  “Executives at two major record labels said that in recent weeks Spotify, which has resisted exclusives, had told them that it had instituted a policy that music that had benefited from such deals on other services would not receive the same level of promotion once it arrived on Spotify,” Sisario wrote.  “Such music may not be as prominently featured or included in as many playlists, said these executives…”

READ THE FULL STORY AT DIGITAL MUSIC NEWS:
http://www.digitalmusicnews.com/2016/08/26/apple-music-exclusive-spotify-sabotage/

Spotify might not suppress search, but that doesn’t mean artists with exclusives get treated equally | Tech Crunch

Hmmmm…

However, while Spotify has been clear about rejecting one part of the argument against the company, there is another piece of the story that remains unaddressed. Hidden in the details, the accusations are really twofold, including both the notion that

* Spotify directly suppresses tracks from artists that have previously signed exclusives with Apple Music or Tidal in search results.
* And, Spotify indirectly targets artists who have signed exclusives with Apple Music and Tidal but promoting music differently in playlists and banner ads.

READ THE FULL STORY AT TECHCRUNCH:
https://techcrunch.com/2016/08/26/spotify-might-not-suppress-search-but-that-doesnt-mean-artists-with-exclusives-get-treated-equally/

Spotify Is Burying Musicians for Their Apple Deals | Bloomberg

New boss, worse than the old boss…

Spotify has been retaliating against musicians who introduce new material exclusively on rival Apple Music by making their songs harder to find, according to people familiar with the strategy. Artists who have given Apple exclusive access to new music have been told they won’t be able to get their tracks on featured playlists once the songs become available on Spotify, said the people, who declined to be identified discussing the steps. Those artists have also found their songs buried in the search rankings of Spotify, the world’s largest music-streaming service, the people said. Spotify said it doesn’t alter search rankings.

READ THE FULL STORY AT BLOOMBERG:
http://www.bloomberg.com/news/articles/2016-08-26/spotify-said-to-retaliate-against-artists-with-apple-exclusives

Gently Down The Stream (Songwriters Streaming Royalties Explained) | SONA [VIDEO]

Thank You Songwriters Of North America (SONA)

Songwriter Would Need 288 Million Spins To Equal Average Spotify Employee Salary

Screen Shot 2016-05-26 at 8.12.33 PM

 

Spotify just posted their financials and Paul Resnikoff at Digital Music News was quick to point out that the average Spotify employee salary is $168, 747.

Contrast that to the plight of songwriters.  There would be no music business without the fundamental efforts of songwriters. Yet, there is not a free market in songs.  The federal government sets compensation for songwriters/publishers based on a percentage of revenue.  An abysmal below market rate.  In effect a subsidy for streaming services.   Last I checked this rate was working out to about $0.00058 per spin.    This includes both the public performance (BMI/ASCAP) and the streaming mechanical  (IF they happen to pay it).

Best case scenario, if a songwriter retains all publishing rights to their song then a songwriter would need 288,104,634.15 spins to earn the reported average salary of a Spotify employee.

Any questions?

++++++++++++++++++++++++++++++++++++++++++++++++++++

Related see this post on failure of techies to understand that streaming services are subsidized by government mandates

https://thetrichordist.com/2016/05/27/clueless-spotify-defender-illustrates-tech-ignorance-about-federal-cap-on-songwriter-pay/

 

Windowing Works! 9 of the Top 13 UK Albums NOT on Spotify…

Windowing isn’t just for Adele and Taylor Swift anymore, Music Business Worldwide reports the following:

Four of the Top 5 current UK midweek albums aren’t on Spotify – and are, streaming wise, particularly fragmented.

A quick scan down the rankings, sent to labels today, shows that the same fact applies to five of the Top 6, six of the Top 10 and nine of the Top 13.

We started suggesting that windowing was one of several viable solutions to combat the negatives effects of streaming music ubiquity as early as 2013 when we stated “Why Spotify Is Not Netflix, But Maybe It Should Be“.

We were told we were “out of touch”, “luddites” and we “didn’t understand the new digital economy.” But we persisted on this point with additional writing in 2014, “How To Fix Music Streaming In One Word, Windows“.

Again, many resisted what is just common sense. The record industry always had utilized windows (or windowing as some prefer), but it just looked a little different than the way the film business did it. But it was there, and it always had been there.

In a December 2015 post we got more specific, suggesting that record labels experiment with more disruption and innovation following Taylor Swift and Adele successfully windowing off of Spotify during the initial release window of their latest releases. We wrote, “Three Simple Steps To Fix The Record Business in 2016… Windows, Windows, Windows…“.

In that post we included this:

This is not a philosophical discussion. This is financial reality. Respected stock analyst Robert Tullo who is the Director Of Research at Albert Fried & Company says this:

Longer term IP Radio and Spotify are good annuity revenue streams and great promotional tools. However, we believe the system works better for everyone when artists have the right to distribute their Intellectual property how they see fit.

Ultimately we think windows for content will form around titles that look much like the Movie Windows and that will be great for investors and the industry as soon as all these so called experts get out of the way and spot trading fashionable digital dimes for real growth and earnings.

So here we are in the spring of 2016. As simple math and economic reality effects more artists, managers and labels first hand the truth becomes self evident.

YouTube is the next windowing battle to a restoring a healthy economic ecosystem for artists. You can’t window if you can’t keep your work off of YouTube. That’s not YouTube, that’s YouLose…