How Many More Records Could You Be Selling This Holiday Season If Your Album Wasn’t FREE Streaming?

happyholidays

Adele, Taylor Swift, Beyonce’, Coldplay and more artists are fully understanding the value of not giving away their work for free right out of the gate. This is especially important during the biggest consumer spending season of the year. Why would anyone with a solid fan base and known demand for their work give it away for free during most profitable window of the year? This then begs the question how many more records would you be selling this holiday season if your record was not available on free streaming platforms?

Spotify and other free streaming services should be structured more like Netflix. The film industry understands the value of strategic pricing in the context of time based value propositions. Friday night block buster movies are not available on Netflix at the same time for a good reason.

There has been a lot of good work and innovation by the film industry to create “day and date” titles that are available both in theaters and as video on demand at the time of release. However none of these are made available free to consumer on an advertising supported platform. In fact, all the major film and tv streaming services require payment of some kind, be it subscription (HuluPlus, Netflix, Amazon Prime) or transactional fees for rental or permanent download (Itunes, Amazon, Vudu).

“Or Else They’ll Steal It!”

The only argument that is ever made against the use of windows is that tired old song that they like to sing in Silicon Valley called, “Or Else They’ll Steal It.” The problem is of course, they’re already stealing it, and will continue to steal it until there are real consequences to not do so. But the film and tv industries are not listening to the song of Stockholm Syndrome. Instead the film and tv industries continue to innovate and experiment with new windows, digital distribution models and competitive pricing based on the new value propositions.

Converting consumers from “pirate 2 paid” is dependent upon giving consumers more value and pricing options, not less. If the record industry doubts this for even a split second the proof is expressed in a single word, “vinyl.”

By contrast the record industry has given away valuable profits to tech companies like Spotify who give little in return for the high value products that are being licensed. The ubiquity of distribution on streaming platforms drives the price of all products to zero.

Windowing allows for price elasticity and rewards consumers who are willing to spend more for the premier product or experience. Of course, for windowing to work there has to be a fair and regulated marketplace where artists and rights holders actually can withhold their work from various platforms should they chose to do so.

If we’ve learned anything at all in 2015 it is that YouTube is probably the single greatest threat to the ability of artists and rights holders to have a long term sustainable business. There can be no windows if everything appears on YouTube via User Pirated Content anyway. 

The grand irony here is that in a well controlled and regulated distribution system, it is far more likely that all stakeholders would have the ability to generate greater profits within their sectors. We now have a decade and a half of data behind us while heading towards the second half, of the second decade, of the new millennium. It’s time to for the adults to put an end to play time.  It’s just math and common sense.

Windows work. Period.

Business decisions need to developed through common sense, innovation and time tested principles of basic economics. We’ll repeat our previous suggestion for an industry wide, consistent windowing platform strategy below.

Windowing works better when there is a reasonable amount of consistency. Our friends in the film business have been highly effective at windowing for decades and there’s no reason why it can’t work similarly well for the record business.

Every new release should have the option to determine the release windows when the record is being set up. For example the default could be 0,30,60,90 day option for transactional sales, followed by 0,30,60,90 day option for Subscription Streaming prior to being available for Free Streaming.

Windowing is not new for the record business. The industry has never had pricing ubiquity across all releases, genres and catalogs. There has always been strategic and flexible pricing strategies to differentiate developing artists, hits, mid-line catalog, and deep catalog. An industry wide initiative to re-allign time proven price elasticity is the key to growing the business and developing a broad based sustainable ecosystem for more artists.

  • Windowing allows for Free Streaming to exist as a strategic price point.
  • Windowing allows for Subscription Streaming to exist as a strategic price point.
  • Windowing allows for Transactional Downloads to exist as a strategic price point.
  • Windowing allows for artists and rights holders to determine the best and most mutually beneficial way to engage with their fans.

Windowing is the key (as it always has been) in rebuilding a sustainable and robust professional middle class that will inevitably lead to more artists ascending to the ranks of stars. Some will become superstars and legends capable of creating the types of sales and revenues currently achieved by Adele, Taylor Swift and Beyonce’. To get there however we need to abandon Stockholm Syndrome and embrace windowing that works for everyone.

 

What’s Good for Adele, Sucks For Everyone Else… And Here’s Why…

We celebrate in all the success that Adele deserves. Like Taylor Swift and Beyonce’ before her the ladies are leading the industry with common sense. We applaud all three for windowing their new albums off of Spotify and other FREE streaming services. We also have some concerns about the implications for other artists who currently can’t do the same.

It would appear the new way to sell music and make money is the same as the old way to sell records and make money. Make a great record, don’t give it away for free, and partner with a major label.

Of course there are those who might say that the success of these female artists is due to the fact that they also have a female audiences. One could argue that there are far fewer women pirates and that alone is a key factor in driving these types of phenomenal sales figures. Perhaps women are more mature consumers than their but scratching, booger eating male counter parts however these types of pop music sales generally transcend demographic limitations.

But what works for Adele, Taylor Swift and Beyonce may not work for other artists and here’s why – it’s called income redistribution. The top 1% of artists are capturing 77% of recorded music revenues. That means everyone else, the remaining 99% of artists are dividing up the remaining 23% of recording revenues among them. In short that leaves an ecosystem with superstars on one end of the spectrum and hobbyists on the other and not much of a middle class in-between.

The Top 1% of Artists Earn 77% of Recorded Music Income, Study Finds… | Digital Music News

In other words, the exact opposite of the Long Tail, a theory that seemed exciting at the time but has now been thoroughly disproven (MIDiA’s report is titled The Death of the Long Tail: The Superstar Music Economy).

Perhaps the larger irony here is that those who sought to destroy the major labels through piracy have only empowered them. The major labels now not only capture the larger share of revenue from recorded music but also as a result they also capture the most favorable deal terms (including equity shares) from the digital service providers (DSP). The net result being that indie and DIY artists who once accounted for a robust middle class of musicians have been pushed down into the realm of hobbyists. Of those few, rare indie/DIY outliners that manage to flourish none of them will get equity stakes or the same terms that the major labels do from the DSP’s.

There is no internet empowerment for professional musicians. There is no democratization of music in creating a new and robust ecosystem of middle class professional musicians. Internet piracy and the new “digital music economy” have only created equality when everyone is equally poor. That’s a pretty lame revolution.

Revenge Of The Record Labels: How The Majors Renewed Their Grip On Music | Forbes

FORBES estimates that the three labels have amassed positions in digital music startups valued at almost $3 billion–or around 20% of the $15 billion or so the labels are collectively worth. The percentage will shoot even higher if and when Spotify goes public. And some bets have already paid off: Universal Music Group took an early position in Beats by Dr. Dre and owned 13% when Apple bought the company for $3 billion last year, resulting in a $404 million score.

WINDOWING THAT WORKS FOR EVERYONE

So what does this mean for the non-superstar artists? Very simply, windowing works. Windowing works better when there is a reasonable amount of consistency. Our friends in the film business have been highly effective at windowing for decades and there’s no reason why it can’t work similarly well for the record business.

Every new release should have the option to determine the release windows when the record is being set up. For example the default could be 0,30,60,90 day option for transactional sales, followed by 0,30,60,90 day option for Subscription Streaming prior to being available for Free Streaming.

Windowing is not new for the record business. The industry has never had pricing ubiquity across all releases, genres and catalogs. There has always been strategic and flexible pricing strategies to differentiate developing artists, hits, mid-line catalog, and deep catalog. An industry wide initiative to re-allign time proven price elasticity is the key to growing the business and developing a broad based sustainable ecosystem for more artists.

  • Windowing allows for Free Streaming to exist as a strategic price point.
  • Windowing allows for Subscription Streaming to exist as a strategic price point.
  • Windowing allows for Transactional Downloads to exist as a strategic price point.
  • Windowing allows for artists and rights holders to determine the best and most mutually beneficial way to engage with their fans.

Windowing is the key (as it always has been) in rebuilding a sustainable and robust professional middle class that will inevitably lead to more artists ascending to the ranks of stars. Some will become superstars and legends capable of creating the types of sales and revenues currently achieved by Adele, Taylor Swift and Beyonce’. To get there however we need to abandon Stockholm Syndrome and embrace windowing that works for everyone.

This one chart says it all…

FreePaidChart

 

 

So Prince released his new album today Exclusively on TIDAL… how long will that last before it’s on YouTube?

Today Prince released his new album “HITNRUN Phase One” exclusively on TIDAL. The real question is, how long will it be before the album in part or in whole is on YouTube and every other pirate site in the world?

image001

You can listen to :30 of each song at the link below without signing up for the service.
http://listen.tidal.com/album/50767183

Music Tech Policy detailed why we can’t have nice things in the post “The Great Disappointment: Tidal Highlights YouTube’s Moral Hazard for All the World to See”.

Part of Tidal’s business model relies on artists being able to grant exclusives.  The concept of an exclusive requires property rights that are respected by other platforms in the channel.

Imagine if Showtime began showing rips of Game of Thrones day and date with its HBO release.  Forget that HBO would sue them and win.  The actors, screenwriters, producers and the vast below the line personnel would think twice about working for Showtime in the future.

And that’s exactly what should happen to YouTube.

Beyonce released “Die With You” on Tidal as an exclusive.  Everyone at YouTube knows that it was intended to be an exclusive just like everyone at YouTube knows that YouTube could keep the track from being uploaded to YouTube if YouTube wanted to do that.

YouTube has worked hard at getting the world to accept the concept of “user generated content” as some kind of great cultural event–even, when like “Die With You”, there isn’t anything particularly “user generated” about it, unless you call a one-to-one rip of Beyonce’s track that was distributed in clear violation of Beyonce’s rights “user generated”.

READ THE FULL POST AT MUSIC TECH POLICY:
https://musictechpolicy.wordpress.com/2015/04/07/tidal-highlights-youtubes-moral-hazard-for-all-the-world-to-see/

What You Can Do Today to Stop Brand Sponsored Piracy Through Touring Contracts or Sponsor Deals: Artists Helping Artists

by Chris Castle

If you are like most artists, you feel overwhelmed by the alliance of Big Tech and Fortune 500 companies allied against us in the intricate network of brand sponsored piracy.  (If you need more background on what “brand sponsored piracy” means, just look around on the Trichordist or on MusicTechPolicy and you’ll get the idea.)  From Google search to Chilling Effects, some artists would like to know what they can do to fight back.  Of course, if artists wanted to fight piracy full-time, they would be cops not artists.  So we need to find ways to leverage your time more effectively and try to find everyday ways that artists can help themselves and each other to fight back.

You may not be aware of it, but clubs, tours and especially festivals or event programming take ads online.  Sometimes these ads appear on pirate sites.  Here’s an extreme example from the illegal lyric site, Lyrics007.com that rips off songwriters, in this case Adele:

Beyonce, Adele and the Super Bowl Exploited by Pepsi

Do I think that Beyonce knew that her name and likeness would be plastered all over illegal music sites?  Of course not.  Did the NFL know?  Unlikely.  Did Pepsi know?

Now that is a more difficult question.  The problem that these big brands have is that someone always knows.  Someone at their ad agency also definitely knows.  They’ll give you a big song and dance about it’s a big system, millions of transactions, but it is simply not possible that no one knows, yet a brand the size of Pepsi–a company that has been a very good friend to the music business, by the way–spends millions on an advertising campaign without knowing where its ads are going?

Put Them On Notice

Thanks to David Lowery, Camper Van Beethoven and Cracker, artists have come up with an easy way to create some incentives for their touring partners to take responsibility for where the promoters advertise their shows.  And this concept could fit in every artist agreement from an one-nighter agreement, to a recording agreement, to Beyonce’s Super Bowl promotion with Pepsi or any other event-driven advertising campaign.

The artist can tell them no.

With a simple contract clause that could go in the artist’s agreement (including in the tour rider), an artist can prohibit the artist’s work from being advertised on pirate sites.  Violating this clause could put the promoter in breach–but the point isn’t to sue people.  The point is to have a dialog, raise awareness and get people to be more careful.  Offer promoters a competitive advantage to get the deals in the first place.  If you want repeat business with an artist, don’t let the artist see ads show up on pirate sites.

So what’s a pirate site?  Big Tech would like you to believe that it is only sites that have been adjudicated an infringer in a final, nonappealable judgement before the highest court in every country of the world.

That’s obviously bunk and designed to make  you feel helpless because only Big Tech can afford that kind of litigation, so naturally that’s the bright and shiny object they want you to focus on.

Remember–you are talking about a private contract.  Your private contract.  How and where your show is marketed is a function of how much you trust your promoter to market your name…your brand…so it is absolutely reasonable for you to want to control how you are presented to your fans and to the general public when you permit someone else to make decisions about that marketing, just like you would decide that the headliner’s name came first in billing.

Meaning that if you are making a private contract, you are in control of your marketing (at least generally) and you can negotiate those terms.  The list of sites you want to exclude–if any–is up to you, a subjective decision.

You could also decide that you want the promoter to be able to refer to an objective list, that is, a list determined by a third party who you both agree will reasonably set the standard.  The USC-Annenberg Innovation Lab’s Transparency Report uses the Google Transparency List.  This is a good list, but Google has some pretty large exclusions from that report.  So the language that Camper and Cracker like also includes the US Trade Representatives Notorious Markets List, which is much shorter than the Google list, but uses US Government resources in its determination.

Suggested Contract Language

If you decide you want to go this route, the Camper/Cracker antipiracy clause covers three bases, which I think are probably good enough:  The USTR List, the Google List, and whatever list the artist may come up with that isn’t on either of those lists.  (The artist doesn’t have to give a list, but reserves the right to do so–the artist may also add back sites that USTR or Google would exclude.)

Here’s the language (“BUYER” usually refers to the talent buyer or promoter):

“THE BUYER WILL NOT, AND WILL NOT AUTHORIZE THIRD PARTIES TO, ADVERTISE THE SHOW ON ANY WEBSITE THAT IS LISTED ON THE CURRENT US TRADE REPRESENTATIVE’S NOTORIOUS MARKETS LIST (currently http://www.ustr.gov/sites/default/files/121312%20Notorious%20Markets%20List.pdf), OR THAT IS LISTED IN THE CURRENT GOOGLE TRANSPARENCY REPORT (currently http://www.google.com/transparencyreport/removals/copyright/domains/?r=last-month), OR THAT THE ARTIST HAS INFORMED THE BUYER IS A SITE ON WHICH THE ARTIST DOES NOT WISH THE BUYER TO ADVERTISE THE SHOW.”

Obviously, this is not meant as legal advice and you should confirm with your own lawyers how this language might affect your rights under the particular agreement, but it should be a good starting place for any show agreement that is based on the American Federation of Musicians “One Nighter” agreement or the equivalent.This language could be included in a watermark on any pdf version of a show agreement, or placed in the artist’s rider.

Flow Down Language

In more complex situations, you may wish to consider adding it as a flow down provision in a promoter agreement that requires the promoter to include the language in any show agreements.  A flow down provision is a clause that anticipates the other side will be empowered to make many contracts with third parties that give effect to the principal two-party agreement, and one side wants to control certain aspects of those third party contracts without negotiating or signing them.

For example, a US promoter might buy a 50 city tour and have an overall deal with the band.  The US promoter then goes out and contracts with local promoters for each of the 50 shows.  The artist may want to get the US promoter to promise the each of these 50 contracts will have certain clauses to protect the artist often relating to staging, insurance, venue sales and advertising.  That’s a good place to put the antipiracy clause, but the artist is not necessarily a party to those agreements.

Artists Helping Artists

It is easy to see how this language could be adopted in sponsorship or event agreements, and i  t would go a long way to raising awareness of the situation and incentivizing all concerned in the right way.

It’s nothing personal, it’s just business.