Thank You Songwriters Of North America (SONA)
Thank You Songwriters Of North America (SONA)
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.
Related see this post on failure of techies to understand that streaming services are subsidized by government mandates
Irving Azoff recently posted an open letter to YouTube on a tech industry news site where he laid out the arguments against YouTube–we think very effectively. He echoed many of our complaints against YouTube, particularly about how YouTube uses the “notice and shakedown” system of DMCA abuse in the form of “whack a mole” for Google’s own profit.
Of course, it’s not really correct to call it “whack a mole” because the mole never gets whacked. Google’s interpretation of the DMCA has effectively created yet another government mandated compulsory license, this time a compulsory license that is royalty free or more accurately redistributive because it moves value from the artist to Google. Add that to the vicious attacks on Prince by Google surrogate EFF in the ridiculous decision in the Lenz case and you’ve got a real recipe for disaster.
You would think that at least some of Irving’s fellow managers in the MMF would have rallied around him, but in the case of the Music Managers Forum in the UK, that’s not what’s happening at all. As we’ve long suspected, the MMF (at least in the UK) is busily shilling for Google.
Here’s an email that MMF president John Webster blasted out to MMF members:
Very instructive view of working at a major label:
A digital veteran questions the role of the music industry in the demise of music based tech start-ups:
A creator defends You Tube:
And the Featured Artists Coalition has launched a survey about YouTube. Please take three minutes to answer on behalf of your artists;
About: The MMF UK is the largest professional community of artist management in the world. We exist to provide support, training, representation and opportunity for Managers. We want a transparent music business that respects the needs and aspirations of the artist and their fans. If you wish to unsubscribe, please do so by return email.
This email is quite incredible because it cites to “A creator defends YouTube” but never mentions Irving’s open letter that engenders that defense. It only mentions the attack on Irving’s letter from a YouTuber who for whatever reason was defending Google against Irving. If they want to give both sides, then fine, but they didn’t. They only gave Google’s side.
Not surprising considering the email was from Jon Webster, but you would think that even he would be more careful about being balanced. This is the Music Manager‘s Forum, right? Not the Google Managers Forum? Wouldn’t it have made more sense to put a link to Irving’s open letter and then give the response rather than just giving the response?
Mystifying. We’re sure that both Webster and the YouTuber would deny that they are in Google’s pocket which could be true. They could be “useful idiots”.
If you read both Irving’s open letter and that response from the YouTuber, you’ll notice the response never brings up a really important point that Irving emphasized–YouTube’s utter failure at accounting transparency for the meager royalties it does pay after you cut through all the “DMCA license” and “fair use” claptrap.
You say you want transparency, and I agree that labels and publishers have not traditionally been the best at that. Two wrongs don’t make a right. You need to be transparent, too. Be transparent about your ability to keep illegal music off your platform. Be transparent about your ability to keep your own content behind a paid wall.
Be transparent about your revenue and, when paying artists, include all the revenue that is generated by music including advertising on YouTube’s home page. If you do this, I pledge to you that I will pressure the labels and publishers to pass on that transparency and increased revenue to the artists.
We would have thought that Jon Webster would be rallying the troops behind Irving on the transparency issue when the shoe is on the other foot. But Webster appears to have no interest whatsoever in criticizing Google about anything from his mealy mouthed defense of Google’s DMCA practices to this indirect slam of Irving Azoff standing up for his artists and our industry.
Not only is Webster out to lunch again when it comes to Google, he doesn’t even address Irving’s rather generous offer to actually help Google. That is a major offer from a major manager who could definitely make a difference. Google, of course, has ignored this generous offer. Why? Probably because it is conditioned on Google being transparent about their own revenues. If they want to pay artists a share of advertising revenue, then Google should be transparent about how that share is calculated and where the money comes from.
They should also stop playing games with ContentID and doing things like putting speed controls in their YouTube viewer to make it easier to pitch bend around ContentID in the first place.
It makes you wonder whose side the MMF is on–if you haven’t made your mind up already. The unity in the music industry against Google has gelled in a way that we haven’t ever seen before, and that’s what makes Google really nervous. That’s why they trot out the YouTube lottery winners (many of whom make the real money from distasteful brand integration fees or product placements, not YouTube royalties), that’s why they try to tell us that music isn’t an important part of YouTube’s revenues (so why bother auditing), and that may very well be why they use the MMF to push their agenda.
As Irving said:
The root of the problem here is YouTube: You have built a business that works really well for you and for Google, but it doesn’t work well for artists. If you think it is just the labels and publishers who are complaining, you are wrong. The music community is traditionally a very fractured one, but on this we are united.
And just in case they haven’t figured this part out yet, we’re complaining, too. We know where Irving is coming from, but Webster needs to decide which side he is on instead of standing shoulder to shoulder with Google and its surrogates.
So many of the issues we’ve been talking about for years are finally becoming part of the larger and more mainstream conversations about artists rights and an ethical internet.
Seems like there is a little bit more than a slight draft blowing on house of cards that Silicon Valley has built. Here’s a quick recap.
FREE, UNLIMTED, AD-SUPPORTED, ON DEMAND STREAMING IS UNSUSTAINABLE.
Pandora CEO Mike McAndrews first started teasing this talking point during an earnings call in October. You can read those comments at Re/Code. But it was the more direct article McAndrew’s authored for Business Insider that really cemented what we’ve been saying all along…
“This gray market is unsustainable. If consumers can legally listen to free on-demand music permanently without converting to paying models, the value of music will continue to spiral downward to the benefit of no one.”
There is no turning back from this admission.
It’s funny how in years past so many in the music and tech communities could not and would not admit to this simple fundamental truth often telling musicians the true value of their platform was “exposure” so artists could “tour and sell t-shirts”. Well it now looks like the wheels have been run off that nonsense for good.
What would be really great is to see Pandora join the fight with artists against Ad-Funded Piracy. Pandora, Spotify, YouTube and every other Ad-Supported music platform must be aware of the fact that the downward pressure from these infringing pirate sites not only diminishes the value of music, but also the value of advertising on legitimate and licensed paltforms.
WINDOWING WORKS. ASK ADELE, TAYLOR SWIFT AND THE MOVIE BUSINESS.
Taylor Swift, Adele, Beyonce, Prince, Coldplay, The Black Keys, Thom Yorke and other artists have proved that Hits Don’t Need Spotify, but rather Spotify Needs Hits. The Wall Street Journal reports that Spotify is caving in on windowing.
Now, the service is caving in, according to people familiar with the matter.
In private talks, Spotify has told music executives that it is considering allowing some artists to start releasing albums only to its 20 million-plus subscribers, who pay $10 a month, while withholding the music temporarily from its 80 million free users. The company is only interested in withholding albums that can be kept off of other free music sites, such as Alphabet Inc.’s YouTube, for the same amount of time, one of these people said.
There is no turning back from this admission.
This means that Spotify has admitted that it is NOT a discovery medium, it is a retail outlet. Spotify is the digital cut-out bin offering the lowest amount of value to artists. The big problem for Spotify now is who decides who is a lessor or greater artist? Who is going to have that conversation with artists and managers that they are a lessor artist and not worthy of Spotify’s stamp of approval to only be streamed to paying subscribers? Ironically, but predictably the new boss is worse than the old boss.
As with Pandora’s admission about unlimited free streaming being unsustainable, Spotify also recognizes that Ad-Funded Piracy, particularly of the YouTube variety (and mentioned by name) must be managed effectively for windowing to work.
YOUTUBER’S GET PIRATED ON FACEBOOK EXACTLY HOW MUSICIANS GET PIRATED ON YOUTUBE, AND THEY DON’T LIKE IT.
Here’s a shocker. YouTuber’s who create original content through their own investment of time, money and resources are outraged when Facebook users “Freeboot” (aka Pirate) those videos depriving the original creator of the revenue. Hank Green writes a post on Medium that breaks it down.
According to a recent report from Ogilvy and Tubular Labs, of the 1000 most popular Facebook videos of Q1 2015, 725 were stolen re-uploads. Just these 725 “freebooted” videos were responsible for around 17 BILLION views last quarter. This is not insignificant, it’s the vast majority of Facebook’s high volume traffic.
There is no turning back from this admission.
Every argument that has been used against musicians, filmmakers and other creators for using the DMCA to protect their work suddenly takes on new dimensions when the tables are turned.
Larry Lessig had convinced a generation that they we’re being criminalized because musicians were “out of touch” with the “sharing economy”. When musicians issued DMCA notices to YouTube they were vilified, taunted and publicly shamed “Sorry that video is no long available due to a copyright claim by the artist.”
THE DMCA IS NOT A “LICENSE” FOR INFRINGEMENT, COX LOSES SAFE HARBOR IN JURY VERDICT.
Perhaps the single greatest ruling of the year involves Cox Communications losing it’s safe harbor under the DMCA. Digital Music News reports on the jury verdict.
Ultimately, the court found the situation to be more complicated than that, with Cox now ruled guilty of both contributory and willful contributory copyright infringement by a federal jury. The jury award is $25 million, though that probably represents a small prelude to damages that could ultimately push into the hundreds of millions.
There is no turning back from this verdict.
For those of you keeping score at home it is the DMCA abuse that has been used as a shield against copyright infringement liability by the internet and web/tech communities. Many businesses including many ISP’s and content hosting platforms such as YouTube have used the DMCA to build massively profitable businesses that are largely comprised of infringing works, otherwise known as User Pirated Content. That may be about to change thanks to this ruling.
THE PIRATE / FREE CULTURE MOVEMENT HAS FAILED.
In a recent interview Peter Sunde, the founder of The Pirate Bay, the flagship of the free culture movement admitted he had failed and was giving up. The most interesting admission by Sunde is at the end of the interview where he echoes what we and other’s have been saying for years.
So, is there like a concrete thing we should focus on? Or do we need to aim for a new way of thinking? A new ideology?
Well, I think the focus needs to be that the internet is exactly the same as society.
There is no turning back from this admission.
There is an excellent open letter in response to Sunde by David Newhoff at The Illusion of More that is well worth reading with a detailed look at why Sunde has failed. But it is Sunde himself who makes the most profound admission.
We have centuries of rule of law for civilized societies that respect and protect individual creators rights in the authorship of their work. The United Nations Universal Declaration of Human Rights, Article 27, part 2 states “Everyone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author.”
The greatest irony here is that Sunde set up The Pirate Bay as an attack on capitalism, but he started by attacking artist’s and creator’s moral rights firsts. The paradox of “pirate logic” expands when one recognizes that The Pirate Bay was said to be making over four million dollars year. Yeah, that’s the way to fight capitalism, attack the ability for artists to survive and pocket four million a year. We couldn’t make this up if we tried.
SO LETS CHECK THE MATH HERE AT THE END OF 2015
There is a lot of work to be done, however these admissions set the framework for the future of these conversations going forward.
Watch and learn… We can’t make this up. Seriously you have to watch this video.
If we had a nickle for every YouTuber or Tech Journalist that advised musicians that “YouTube” was the SOLUTION TO PIRACY we’d be rich. Really rich. I mean, really, really, really rich. We we’re told YouTube was “promotion” and “exposure” to make money other ways.
We were told how if you just “made stuff people wanted” and “connected with fans” then they would reward you with loyalty and support. Musicians were told they were “whining” about piracy and that they should “adapt and evolve” to the “new way” and just embrace all of this “awesome internet empowered promotion”.
Funny how it is when the shoe is on the other foot. See here’s the thing. All of these YouTuber’s make money from the advertising that runs on their YouTube videos. But when those videos are ripped from YouTube by fans and uploaded to Facebook guess who doesn’t get paid? Yup, you guessed it… the YouTuber’s are getting stiffed and they don’t like it.
Where is Larry Lessig to help these folks out? Remember kids, don’t break the internet! It’s “sharing economy” afterall. You do the work and silicon valley shares the profits.
Soooo… when a musician’s work is pirated on Napster, Grockster, Kazaa, Limewire, The Pirate Bay, oh and YouTube… Musicians should “get over it”. But when a YouTuber’s work, labor and creative output is devalued, or worse monetized by a third party (Facebook) who doesn’t pay them anything, well then, you know, that’s “bad”.
The issue gained national attention this year earning editorials and reports from the likes of Slate, “Facebook’s Piracy Problem” in July. Time followed with a story in August, “This Is Facebook’s Biggest Problem With Video Right Now.” And recently as November AdWeek chimed in, “Facebook’s ‘Freebooting’ Piracy Problem Just Cost Casey Neistat 20 Million Views“.
This quote from the AdWeek story above kind of says it all…
But then they ran into a problem known as “freebooting,” which entails republishing videos on social sites without the consent of the folks who made the clips. In essence, it’s a practice of intellectual-property theft that’s plagued Facebook more than other digital platforms—PR-wise, at least—in recent months thanks to a few whistle-blowers.
They go on…
“I spent roughly a week issuing take downs on Facebook—a convoluted process,” Neistat told Adweek. “I crowdsourced the process of finding the freebooters because there is no way to search Facebook. In all, I took down well over 50 different posts—[which was] not nearly all of them. I simply gave up after a while. I anecdotally kept track of the view counts—over 20 million views on the videos I took down.”
Here’s more to chew on from a post by Hank Green on Medium, “Theft, Lies and Facebook Video“.
According to a recent report from Ogilvy and Tubular Labs, of the 1000 most popular Facebook videos of Q1 2015, 725 were stolen re-uploads. Just these 725 “freebooted” videos were responsible for around 17 BILLION views last quarter. This is not insignificant, it’s the vast majority of Facebook’s high volume traffic. And no wonder, when embedding a YouTube video on your company’s Facebook page is a sure way to see it die a sudden death, we shouldn’t be surprised when they rip it off YouTube and upload it natively.
Facebook’s algorithms encourage this theft.
Hmmmmm… where have we heard this story before? Maybe it was Daily Finance back in 2010, “Viacom vs. YouTube/Google: A Piracy Case in Their Own Words“.
• On July 19, Chen wrote to Hurley and Karim: “Jawed, please stop putting stolen videos on the site. We’re going to have a tough time defending the fact that we’re not liable for the copyrighted material on the site because we didn’t put it up when one of the co-founders is blatantly stealing content from from other sites and trying to get everyone to see it.” Four days later, Karim sent a link to the other founders, and Hurley told him that if they rejected it, they needed to reject all copyrighted material. Karim’s reply: “I say we reject this one but not the others. This one is totally blatant.”
• 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.”
Yup, Karma meets irony… How very interwebs… Ok, Ok, Ok… Sorry, just one more…
Everyone’s creativity deserves to be protected. All creators should be united against the illegal, infringing and exploitative uses of their work (especially for profit) without consent or compensation.
Today’s younger consumers who missed the glory days of the record store as a cultural hub will probably have little awareness of the cut-out bin. The cut-out bin was dreaded by artists and labels alike, but it served an important function in the ecosystem and economy of record sales. This was the rack in the record store where over manufactured titles made their last stop before the trash bin.
The cut-out bin was the last stop for an album, not the first stop. This is a very important consideration in today’s digital music economy. Artists, you deserve better service from your labels, management and partners.
Having your record appear in “the cut-outs” didn’t mean the album wasn’t successful, to the contrary, many of the records in cut-out bins were by well known name artists. Many of these records contained hit songs and singles. However, for whatever reason the quantities manufactured exceeded the markets ability to absorb those units into sales. At some point the decision was made to either monetize the overstock, or destroy the overstock.
The net result of the cut-out bin was that full length albums were often priced below the cost of a current 45 rpm single. However, this pricing distinction occurred at least a year or more after the initial release of the album. An album was “cut-out”after all of the front line sales, traditional discounts and higher margin retail channels had long been exhausted. Cut-out supplies were also limited and inconsistent. In other words, it was only the most patient and adventurous consumer who benefited from this deep discount.
Honestly, who would buy an album at full price if the same exact product (sans for the cut off top right corner) could be had for less than the price of current single?
So here we are a decade and a half into the new millennium and the best “new business model” for artists and rights holders in the 21st Century Digital Economy is to start at the last stop on the value chain? You’re kidding us, right? We wish.
So how did we get here? Well, in three words “Ad Funded Piracy.” The lowest price for a product or service sets the price floor for all other comparable products. In the case of music that price has been set at about zero for over a decade and a half. But that’s not say there’s no money being made in the distribution of music online. No, there’s actually a lot of money being made by the Internet Advertising Networks supplying the advertising that fuels the corporate profits to over half a million infringing pirate sites.
It should also be noted that the CEO of the leading ad-funded, free to consumer streaming service was also the creator of the most successful ad-funded, bit-torrent client, u-torrent. Yup, that’s none other than Spotify’s Daniel Ek. Shocker, right?
Obviously, pirates and thieves are going to pirate and steal. These people should not be the first concern of business executives seeking to expand their profits on digital platforms. Enterprise level piracy requires the political will to enforce the law against egregious digital robber barons. Anti-Piracy is an “in addition to” action, not an “instead of” action. The future of the music business must be rooted in both innovation and advocacy.
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.
According to a story in today’s NY Times, the folks at YouTube are ready to pony up cash to support some of its users “fair use” claims in court.
“YouTube said on Thursday that it would pick up the legal costs of a handful of video creators that the company thinks are the targets of unfair takedown demands. It said the creators it chose legally use third-party content under “fair use” provisions carved out for commentary, criticism, news and parody.”
You’ve probably read a lot about “fair use” lately. It’s the Electronic Frontier Foundation’s mantra and if the folks there had their way, pretty much everything and anything would be considered “fair use.” Fair use an important legal doctrine and when applied properly (criticism, comment, news reporting, teaching, scholarship, or research) is not an infringement of copyright. However, these days, too often is used as a disingenuous defense for copyright theft.
READ THE FULL STORY AT VOX INDIE:
We reported on this a little bit ago that YouTube Music Key seemed to be a pretty good way for Google to leverage labels into legitimate licenses with the promise of paid subscription fees. We questioned that in our post, “Did Google & YouTube just Scam The Entire Record Business into Free Streaming Licenses? MusicKey is MIA…“.
But here’s the thing… it’s not just us. Music Business Worldwide is asking the same question:
YouTube Music Key starts charging subscriptions… oh wait, no it doesn’t | Music Business Worldwide
You can see why suspicions are growing out there amongst the more cynical minds in the music biz that YouTube won’t ever charge for Music Key.
YouTube struck a number of megabucks, multi-year licensing deals with rights-holders last year, largely on the basis of launching a subscription platform.
Deals done, labels are now scratching their heads as to why Music Key isn’t earning them any money, almost a year after it was announced.
READ THE FULL POST AT MUSIC BUSINESS WORLDWIDE:
Our friends at AdLand recently posted this story “Nice ad you got. Be a shame if no one saw it.” They detail how social media sites like YouTube and Facebook are becoming more and more aggressive in leveraging their platforms to require payment for engagement.
Bands take note, these platforms are charging you to reach the audience you built for them…
The article is a must read, a small except below.
In 2012, GM stopped advertising on Facebook. It took its 40 million dollars elsewhere. When Facebook started reducing organic reach it became even clearer that social media is not the bargain, or effective juggernaut it was purported to be.
Consider that analog media print for a moment. You spend money to place an ad in GQ, and it goes in GQ’s across the country. There is no guarantee someone will buy the magazine, of course, but if they do, there is a good chance they’d see your ad. If Facebook owned GQ, you’d place an ad in it, and then Facebook would hide 90% of the magazines unless you paid them to put the magazine featuring your ad on the magazine stands.
So we live in the digital age where media channels like Youtube and Facebook seem only effective if you pay for views to inflate your numbers (and likes if you’re even more smarmy). And remember, a vast majority of Youtube videos (ads or otherwise) do not go viral. Then in Facebook’s case you’re dealing with a a quasi-Mafia-style practice of paying them to “boost” your post to an audience you worked hard to cultivate.
PLEASE READ THE FULL STORY AT ADLAND:
More artists, performers, songwriters and composers are getting it.
“YouTube are effectively paying incredibly low rates and are not a willing partner to negotiate licences and that pulls down the rates from someone like Spotify, which has to compete in their free service with YouTube,” he told The Independent on Sunday.
“The value from the music we create is being sucked out into the companies that aggregate it, [but] YouTube … are not happy to set adequate streaming rates. There is a huge shift of value from artists to tech companies.”
READ THE WHOLE STORY AT THE INDEPENDENT UK: