Category: Royalty Rates

About Royalty Rates

Amanda Palmer: Spotify and iTunes “Aren’t Putting Any Money Back Into Content Creation” | DMN

We’ll be running more of the artist feedback and commentary from last week’s Virgin Disrupters roundtable. Here’s Amanda Palmer,

“Can I speak up here? I’d like to just add to what Zoe [Keating] was saying. There’s also – the other kind of general problem that I think we’re seeing that doesn’t really get addressed very much because it’s so big and possibly un-fixable is that as bad and clunky as the major label system was, you still had a constant influx of capital back from those giant, sometimes soul-sucking systems, back into content creation.

And one weird thing is that iTunes, Apple, Spotify, Google, whatever, all of the people who are profiting – [and] YouTube – who are profiting off the artists from the small level to the huge levels aren’t really feeding very much back into the creation of new content.

READ THE FULL STORY AT DIGITAL MUSIC NEWS:
http://www.digitalmusicnews.com/permalink/2013/10/29/palmeritunesspotify

by Trichordist Editor

Swedish Artists Are Now Threatening Legal Action Over Streaming Royalties… | DMN

The origin of the outrage is telling: Sweden is widely regarded as a model country for streaming and access, thanks to massive adoption and recovering recording revenues. The threatened suits suggest that not everyone is celebrating or, more importantly, enjoying the early spoils.

Regardless of the locale, the issue comes ahead of very difficult juncture for Spotify. Mega-artists like Thom Yorke continue to raise uncomfortable questions about paltry payouts, but more perilous questions are dangling on the financial side. Recent financial figures show an unsustainable level of cash burn at Spotify, and potentially serious problems attracting more capital as a result. And after burning through hundreds of millions of dollars, Spotify is getting dangerously close to depleting its funding tranche.

READ THE FULL STORY AT DIGITAL MUSIC NEWS:
http://www.digitalmusicnews.com/permalink/2013/10/25/swedishartists

by Trichordist Editor

Why Spotify is not Netflix (But Maybe It Should Be)

If we are to explore the digital marketplace for both streaming and transactional downloads the music business might do well to look at what the film business is actually doing in the same space. We will quickly see that Spotify is not Netflix, but maybe it should be.

Readers will note the film business has not bought into the faulty logic that the only way to combat internet piracy is to make every film ever made, available instantly, on an all you can eat service for $9.99 a month. Some might argue that is what Netflix is, but people making that argument are obviously not current subscribers!

One thing that has struck us in the comparisons between Spotify and Netflix is that Netflix does not have every film, or even every current film, or even a large percentage of popular films. For the vast inventory that Netflix has, you also realize the service has a lot missing. But then again, what do you expect for nine bucks a month?

This is not to say that most in demand films are not available, somewhere (and legally). It’s just not available on Netflix. Other services such as Itunes, Vudu and Cinemanow (to name just a few) offer some films for rental while they are still in the theater, some for streaming rental prior to a home video “dvd” date, and there are constantly new variations and options.

Generally speaking films arrive at Netflix last in the distribution chain, if at all. This is a problem for Netflix in a lot of ways so they have responded to this by 1) offering competitive advances to film producers to get films earlier (generally in the cable window) and 2) they have begun investing in producing original content to differentiate themselves from the competition (this strategy worked particularly well for HBO).

Netflix in responding to their needs in the marketplace is actually investing capital directly into content creation in a meaningful way. Perhaps some artists should charge an advance for high profile new releases that will attract listeners to the service. Likewise, perhaps Spotify should provide funding for the financing and development of new artists.

So here is the question, is the record business really utilizing the new digital platforms correctly to address the current market place? Perhaps by looking at the options available to consumers from movie streaming, rental and download businesses we can find more robust and flexible opportunities for artists.

One thing we’ve noticed absent from the current offerings for example, is say, a $1 a day transactional streaming rental for an album. Why doesn’t this exist?

FILM RELEASE WINDOWING

The movie business releases films in what is known as “windows”. A typical feature length film is generally released in a pattern that looks something like this:

1 Film Released in Theaters
2 Film Released later on Video on Demand (Rental)
3 Film Released later on Cable and/or Broadcast
3 Film Released Later on Home Video (Rental and Purchase)
4 Film Released Later on Netflix (Subscription)

There are variations on the above, but the point being that you can not buy the DVD of a blockbuster film the day it opens in theaters, nor can you view it on TV that night from the usual cable movie channels. Today these windows are being rethought as the film industry explores different release models including how digital platforms are utilized as part of a theatrical release.

RECORD RELEASE WINDOWING

We’ve heard people say that the record business historically has not windowed releases. This is only sorta true. It is true that a record is released to all outlets in all configurations more/less simultaneously on a single release date. There may be some exceptions with the availability of say vinyl, but mostly it is true that labels do not withhold music releases from different markets or distribution channels. But maybe that’s not exactly either right if we look at it closer.

Generally speaking, a historical record release “window” looks like this:

1 Radio Airplay prior to a commercial release of the single
2 Commercial Single Release
3 Album Release at Full List Price, but “Discounted” at Retailers

There’s not much more that is done until the album gets to be a catalog title, which the record industry would refer to as a mid-line title. Some records, drop one more step from midline to budget. Records that generally make the last drop may have been albums by artists who had one hit on the album.

Today, these traditional old physical model windows built around pricing incentives don’t really make sense on digital platforms. New Releases on Itunes are not discounted on release date and then return to their suggested list price a week or two later when the discounting ends. So if record release windowing is not based in pricing incentives, perhaps it should be based in accessibility incentives.

DIGITAL PLATFORM MUSIC RELEASE WINDOWING

What comes next is the starting point for a discussion to break free from much of the current controversy over whether or not Spotify is fair and sustainable. It is an attempt to rethink the digital music distribution landscape in the same way the film business has with varied consumer offerings and options.

We’d love to see some new players in the marketplace for music that function much in the same way that Vudu or Cinemanow do for films. These would be transactional streaming rentals.

1 Single Release Digital Transactional Download 99 cents
2 Single/Song Release Digital Transactional Streaming Rental 10 cents for 24 hours
3 Album Release Digital Transactional Download 9.99
4 Album Release Digital Transactional Streaming Rental $1 for 24 hours
5 Select Songs Released to Subscription Streaming Services, not whole albums.
6 Album Release Subscription Streaming Services

The key to a future where streaming may be the preferred delivery method is dependent upon more variations and flexibility in the the business model than currently offered by Spotify. There are a range of opportunities in exploring business models that allow for streaming rentals, and limited access to different material at different times.

If every decision we make is based upon the extortion of illegally operating and infringing businesses, surely we will pay the price in a race to the bottom where eventually everyone loses except the companies getting our labor for next to nothing.

by Trichordist Editor

The music industry may be streaming towards a cliff | Business Spectator

In August the cellist Zoe Keating published a spreadsheet of her earnings from various streaming sites. In the first half of 2013 she scored 232,000 streams, for which she was paid $906.41.

I used the word “legitimate” above because by far the biggest “publisher” of music is BitTorrent, which is simply the internet protocol for enabling peer to peer sharing of files, and the foundation of Napster’s many successors. Some people I know have zettabytes of music and movies they have downloaded; BitTorrent has been estimated to account for as much as 70 per cent of all global internet traffic.

READ THE FULL POST AT THE BUSINESS SPECTATOR:
http://www.businessspectator.com.au/article/2013/10/9/information-technology/music-industry-may-be-streaming-towards-cliff

by Trichordist Editor

SoundExchange and BandPage Collaborate to Put $2M in Unclaimed Royalties in Musicians Pockets | Music Industry News Wire

Music Industry Newswire reports on some good news!

WASHINGTON, D.C. /Music Industry Newswire/ — SoundExchange, a music industry non-profit focused on distributing digital performance royalties to recording artists and record labels, and BandPage, a leading solution for musicians to manage their presence online, recently teamed up to notify recording artists of unclaimed royalties with SoundExchange.

Together the two groups identified more than $2 million in unclaimed digital performance royalties for thousands of BandPage musicians who have not yet registered with SoundExchange. Bandpage musicians with unclaimed performance royalties will be notified by BandPage directly via email.

READ THE FULL POST AT MUSIC INDUSTRY NEWS WIRE:
http://musicindustrynewswire.com/2012/08/07/min5749_140533.php/soundexchange-and-bandpage-collaborate-to-put-2m-in-unclaimed-royalties-in-musicians-pockets/

by Trichordist Editor

Xbox Music : Microsoft to Pay The Most of Any Music Streaming Service?

This could get interesting. Digital Music News reports “The Xbox Music streaming service is venturing into iOS and Android platforms, as well as free internet streaming, with newly adorned with apps and features. The Web service will provide on-demand access to 30 million songs, with an ad-free subscription or ad-supported free use.”

What makes this even more interesting is that Microsoft appears to be paying more than any other streaming service that we know of  (we don’t know what Itunes Radio is paying yet).

Faza at The Cynical Musician wrote this:

A Quickie: XBox Music Royalties

Since this is streaming money, there’s not a lot of it, but the rate is absolutely astounding: the latest statement pegs a stream at 3.6 cents. Yep, you read that right: several cents a pop. Traditionally, I’ll do a quick stream-to-download calculation which works out at 18 XBox Music streams to one iTunes download (both numbers for songs to which we own the entirety of rights, making CD Baby the only middle-man – they take a commission of 9% I believe).

It’s a sign of the times when we get excited by a per stream rate of 3.6 cents…

by Trichordist Editor

#StandWithSongwriters Petition Against Pandora’s Exploitation

Please sign the Petition Here:
https://www.thunderclap.it/projects/4273-standwithsongwriters-petition

The rights of songwriters are under attack. Pandora Media Inc., which controls 70% of the US streaming market, has launched an aggressive campaign to pay songwriters and composers less than a fair market share for their work – even as the company’s revenue and listener base has soared.

As songwriters and composers, we value the opportunities Pandora and other music streaming companies create for our music to reach new audiences. In return, we want Pandora to value our contribution to your business.

Right now, a song that is streamed on Pandora 1,000 times, earns the songwriter only 8 cents on average. And yet, Pandora is going to great lengths – even taking songwriters to court – to pay us even less.

Music drives Pandora’s business. If the company’s revenues keep getting larger, why should the rate it pays songwriters keep getting smaller?

Songwriters are not the enemy. Instead of fighting to pay music creators less than a fair market rate, join us in an effort to construct fair music licenses that allow songwriters and composers to thrive alongside the businesses that revolve around our music.

Songwriters deserve fair pay. If you agree, commit a tweet and help send this message to incoming Pandora CEO Brian McAndrews.

by trichordist

How Will Musicians Survive In the Spotify Era? | The New Yorker

Sasha Frere-Jones, Dave Allen, Jace Clayton, and Damon Krukowski discuss how (mildly) popular musicians are going to survive.

Last month, Damon Krukowski and I discussed Spotify, the public exit of Nigel Godrich and Thom Yorke from that platform, and the various challenges facing musicians who do or don’t want to participate in similar streaming services. Toward the end of the discussion, Damon and I both hinted at the freedom of going free, the moments when giving your music away is more profitable—in the long run—than letting another company sell it inefficiently and unprofitably. Damon expanded on his position in a subsequent article for Pitchfork, but neither of us was advocating that musicians play and record for free, in all scenarios, all the time: nothing of the sort. So before I hand this discussion over to a new panel, one clarification.

My band, Ui, released a clutch of records through Southern Records. These albums are no longer available on Spotify because, according to Southern, the costs of administrating the relationship were not covered by the microscopic amount of revenue generated. I believed them then, and believe them even more now.

READ THE FULL STORY:
http://www.newyorker.com/online/blogs/sashafrerejones/2013/08/how-will-musicians-survive-in-the-spotify-era.html

by trichordist

Why Spotify’s Piracy Study Isn’t Cause for Celebration | SPIN | Newswire

Report shows promising signs, but only in the Netherlands…

…According to a Spotify spokesperson, the company doesn’t break down user numbers by individual country, but has 6 million paying subscribers and 24 million users worldwide…

…The report follows news that music sales increased greatly in Sweden, Spotify’s home country, corresponding with the service’s growing popularity there. Which is great news across the pond, but which doesn’t necessarily scale to America’s humungous market. The Netherlands is a country of under 17 million people with 6.8 million residential broadband connections versus the United State’s 313 million population and 82.4 million broadband users…

READ THE FULL STORY AT SPIN.COM:
http://www.spin.com/articles/spotify-piracy-study-festivals-thom-yorke/

by Trichordist Editor

Musician’s POV: Five Things Spotify (and others) Could Do Today to Level the Playing Field for Independent Artists

Guest post by Chris Castle

We’ve talked about piracy, but now let’s change that conversation to talk about the “New Boss” licensed services.  One of the problems for artists selling their music, films or books in the legitimate digital space is getting a fair deal from the New Boss distributors.  And that is exactly what they are–digital distribution requires artists and labels to outsource what are essentially manufacturing and distribution functions.

That’s fine if it creates efficiencies, but what it also has done is create a huge dodge for the “New Boss” who tries to say that any problems that artists have with them is a problem with the “Old Boss” who made the deal the artists don’t like.

That gloss doesn’t work for independent artists, though, because there is no “Old Boss” to point the finger at.  Even if there were, the Old Boss is usually a union signatory under a collective bargaining agreement that allows a negotiation team to air grievances directly with the labels.  That doesn’t happen with the New Boss.  There’s a reason why Senator Rockefeller said that the big tech companies (pretty clearly meaning you know who) were worse than the monopolist Standard Oil (which was run by John D. Rockefeller, Senator Rockefeller’s great grandfather).

As far as we know, there is no New Boss who is a union signatory.  In fact, the old joke goes that tech companies know so little about unions that they think collective bargaining is venture capitalists setting a target’s valuation.   For example–YouTube refuses to be audited by independent publishers.  That would never happen at a record company–they might take an edge in other ways, but if they ever denied an audit right there would be a revolt.  In fact, the New York Attorney General sued major labels over “unclaimed” royalties and California has laws about transparency in record company statements thanks to Don Henley.  The sheer indifference and arrogance from the New Boss companies is startling and leads to one answer–they do it because they can get away with it.  And nothing says Internet Freedom like getting away with it, right?

Nowhere is this indifference to artists more apparent than in subscription services.  (We have some thoughts on a la carte download services, too, but that’s a subject for another day.)

We tried to think of five things that Spotify (and their competitors in the subscription business) could do today to level the playing field for independent artists.  These are things that wouldn’t cost them much, but that would be very helpful to artists making less than say $2500 a year from the service.  Leave a comment if you have other ideas or if you disagree.  (And you’re welcome, Spotify, Rhapsody, Napster, Google this is free market research for you.)

1.  Remember, nobody ever negotiated royalty terms with independent artists, it was just presented as take it or leave it.  Make the royalty rate more fair and transparent in two ways:  First, stop deducting out of pocket costs for advertising sales commissions (and all other advertising-related costs) off the top from independent artists.  Spotify and the others shoud eat those costs out of their revenue share rather than making independent artists bear 50% of these costs.  Second, pay artists a per-stream minimum across all your products.

2.  Spotify can start linking from Spotify’s internal artist profile page to places that actually might help the artist, like artist websites or tour information.  As Zoë Keating said “I wish Spotify would do more to facilitate the connection between listeners and artists — i.e show that the artist is playing nearby, or add links to buy music.”  We think she’s got a great point and we’re sure that most artists would be happy to reciprocate with a link to Spotify.

3.  Promise to pay each independent artist on the service a fixed amount of money as a bonus if Spotify goes public or is sold.  $5,000 each sounds good to us, and if Spotify has a $1 billion valuation now…. They will certainly be able to afford it if their valuation is high enough for a firm commitment underwriting (aka IPO).  This promise will not cost Spotify anything right now and won’t slow down its growth–which seems to be the most important thing to Daniel Ek.   Spotify would only pay it at the liquidity event, i.e., when they have the money.  Remember–sharing is caring.

4.  Let independent artists sign up for Spotify for free.  Either give the artists access to upload their music, or cover the costs of forcing artists to use an aggregator by grossing up their royalty split.  Please don’t charge us to make you rich.

5.  Contribute something to music education foundations, like Instruments A Comin’ (Tipitina’s Foundation) or to a musicians health care organization like the Health Alliance for Austin Musicians.  Would this really be so hard?  Start with 1% of revenue, even 1/2% of revenues.  And please don’t set up your own charity so you can have parties and give yourselves awards every year.  We already have those.  Save the money on the back patting and give it to people who are already doing the good works.  It would make a big difference in the lives of the next generation of artists and to families.  Good PR for Spotify, too, you could use some.

It feels good to do some good.  If that’s not enough reason, think of it as preserving your supply chain.

by thetrichordist