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ROYALTIES SUCK, MUSIC SALES ARE DOWN, PIRACY IS RAMPANT AND OTHER LINK-BAIT TERMS FOR MUSIC PUNDITS

The royalties artists get on streaming services are pitiful! Mere slivers of pennies and a million plays barely buys you a pizza. These need to go up because music sales are in the toilet. Did you see that iTunes sales are down 1% this year? Panic in the streets! The real scourge is piracy which, a decade on, is still left unchecked and easily found with a Google search! So, your music is being stolen, not being purchased, and then devalued heavily on streaming services.

Sound like a familiar refrain? Sure, many artists and music business pundits have been spouting off about this stuff for awhile now. As well they should to keep the debate healthy…and grow their own business. Wait, say what?

A new MIDEM white label report called Content Marketing In The Music Industry, put together by UK agency Venture Harbour, found that those are the Top 3 topics to generate social sharing and backlinks to the author’s site.
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This is not a surprising finding to me. I’ve tried to write on some issues that I felt were intelligent and important and even downright helpful to the artists and the industry. Yet these posts seldom get close to the traffic I receive when I talk about Spotify royalties.

In a lot of ways, this is a variation of the “Culture Of Fear” that permeates news broadcasting. If you watch the evening news, you’d think we’re living in some of the most violent and dangerous times. Instead, Chicago has the fewest murders since 1965, New York’s murder rate is the lowest since the 50s, and that we are likely living in the least violent time in mankind’s history.

This is not to say we should be complacent about artist rights and royalty rates. This is the music business, after all. It’s just that in the aggregate whole, things are much better than what pundits are saying. It just seems that it’s in their best business interest to continually tell you otherwise.

2013 MIDYEAR US SALES TRENDS: WHAT DOES IT ALL MEAN

The release of music sales stats halfway thru 2013 are always time for analysis. This year offers some figures that could probably bolster many people’s arguments, depending on how you’d like to skew the data.

The main highlight is that in the US, digital singles have declined 2.3% year-over-year. Even more interesting is that the Q1 decline was 1.34%, while it was 3.3% in Q2. Many people will suggest that streaming usage is finally eroding single sales. This may indeed be the case, but where is the erosion taking place? It’s actually in the middle and the bottom. For while sales are down, the number of titles selling over 1 million copies actually increased 8.5%. The biggest selling title, “Thrift Shop”, sold over 5 million copies, which is similar to last year’s top seller by this point (Gotye).

Certainly, streaming is likely to erode sales in the future. Where this is eroding sales in the present is in the niche and fringe songs, not in the hits. If anything, what also seems to be happening is that the gap between revenue of hits and non-hits appears to be widening. This can be occurring due to a multitude of factors. Streaming availability is one, but so is the abundance of song titles available to the public. As we head to a point where digital single sales are likely plateauing, it becomes increasingly clear that the hits are taking up an ever-increasing percentage of this pie.

Where the niches may be finding success is in the digital album sale. The one sales increase stat so far this year is digital albums which are up 6.3%. Overall album sales are down, but that could be due to an increasingly shrinking shelf space at retail amidst tighter ordering of physical product. This suggests that while niche single sales might be down, niche album sales of quality acts might be on the rise. This can certainly explain recent career-strong debut weeks for acts as varied as Queens Of The Stone Age, The National and Wale. On top of that, the albums that have sold “gold” (500,000 or more) in the first 6 months of this year also increased 36%.

Certainly streaming will continue to affect sales numbers as they become more pervasive. For the moment, though, the hits increasingly take up a bigger piece of the pie and it becomes more incumbent to hit those benchmarks in order to make a profitable music venture.

Another bright note…for the second year in a row, the top selling single is a song developed independently by the artist and then upstreamed to a major.

BILLBOARD HOT 100 COUNTS YOUTUBE VIEWS, AND BOT VIEWS WILL SUFFER

On Wednesday February 20th, Billboard added YouTube views to their Hot 100 methodology which radically changed the makeup of the esteemed chart. The most immediate change came at the top, where “Harlem Shake” by Baauer, the viral sensation, debuts at #1. It marks the first time that a relatively unknown artist debuts at #1 with very little radio airplay to aid it. Given the ubiquity of the song last week, with everyone from the Today Show to college swim teams to the Norwegian Army joining in, it feels culturally right to see the song at the top spot. As many writers have noted, this is probably the biggest change to the Hot 100 chart in a very long time.

But why did it take this long to add YouTube (and VEVO) views to the chart? With numerous videos being seen north of 100 million times, YouTube’s influence on pop culture has been clear for a few years. At a minimum, it’s been two years since the game changing Rebecca Black video. Shouldn’t Billboard have been counting YouTube all along?

The likely reason why they haven’t is because YouTube numbers have to be trustworthy if they are going to influence the bellweather singles chart. Simply scraping numbers from YouTube is not valid as it doesn’t account for country discrepancies within a US based chart. But it also doesn’t account for activity from bots, a practice many labels and artists have used to varied success over the last few years.

In advance of the Hot 100 announcement, YouTube stepped up its enforcement of its Terms Of Service forbidding bot views. The most noticeable result was a 2 BILLION view decrease in major label videos 2 months ago, but similar audits of videos at all levels have been ramping up for months now. With a chart influence now on the line, both parties are more incentivized to stay honest. The timing of these events feel like more than coincidence, and certainly suggests a concerted effort to increase YouTube’s credibility for chart eligibility. As such, I would anticipate enforcement to get more strict, with account deletions a likely punishment for bot activity.

Last week’s #1 was “Thrift Shop”, another song that broke out of YouTube. Getting the credit as the “breaking spot” for back to back chart-toppers is crucial to reinforcing and growing YouTube’s brand. Having more credible numbers is certainly good for everyone in the long run. For those who think they can do an end-run around the system, it feels very likely that this one is closing rapidly.