Tag Archives: Trichordist

PANDORA ROYALTIES: THE REAL ANSWER

Pandora royalties came under fire once again last week, with a firestorm of blog posts pointing a ton of virtual fingers. Facts become “facts” as each side is skewing the story to their benefit. All sides should take equal blame for misrepresentation. The truth is that online plays equal audience impressions, and this disparity causes confusion on both sides. When you do the actual math, Pandora is likely paying songwriters less than other broadcasters, but also has a royalty at an enormously higher multiple compared to others for their “all in” rates. Yet even if royalty disparities get fixed, it won’t solve the issue of low payments to artists and songwriters because Pandora’s enormous catalog means tiny slices to a greater range of creators.

For those who haven’t been following, here’s what happened:

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IS STEALING MUSIC REALLY THE PROBLEM?

Once again, the issue of stealing music and its moral/financial/ethical arguments are dredged up. And once again, most people miss the overall point, causing the collective issue to dig a deeper ditch while those who’ve moved past it (i.e.: major labels) are busy raking in the dough in the new music business.

Yeah, you heard me. It’s 2012, and now the neophytes are actually many indie artists (not all) while the smarter ones tend to be concentrated at major labels, thereby strengthening their power.

What started this was a post on NPR’s website by an intern named Emily White who admitted to buying very little music in her life but owning a lot via various levels of legality. This led to an impassioned response by Camper Van Beethoven/Cracker frontman David Lowery, who eloquently argued for the ethical and moral obligations Emily should have towards these artists and how stealing music has dramatically impacted their financial lives. This post has sprung up impassioned responses by, among others, Bob Lefsetz and a manager who is also, coincidentally, named Emily White. People have dug in their heels and have spilled many hours defending and vilifying both sides.

Yet lost in this discussion is one important element. Facts. Because if you’re going to argue that stealing has impacted your business, you should actually prove that…y’know…a lot of people have actually stolen your music.

Google, as the worldwide leader in search results, is a strong indicator of actual file trade demand. In fact, industry watchdog Moses Avalon argued such this week at New Music Seminar. Yet, when I went to look on Google Insights to see the level of demand for free music by David Lowery’s group Camper Van Beethoven, the message I get is, “Not enough search volume to show graphs.” This basically means, from what I can gather, that less than 50 people per month in the entire world are even showing intent to steal his music. Statisticians basically refer to this as essentially zero. Technically, the same search terms for his band Cracker show some potential thievery intent at work. However, if you actually searched these terms, you’d find most people were actually looking for a program to crack site passwords, and if they were looking for music they were more likely intending to steal the music of Uncle Kracker, who might actually have a legit beef on music stealers.

None of this is to say that I’m naive to think nobody is stealing music. Far from it. I just don’t think they’re stealing the music of the majority of artists bitching about thievery’s impact on their business. The statistics don’t bear it out. At my panel at New Music Seminar, Musicmetric CEO Greg Mead pointed out that file trading is actually decreasing in recent months. This echoes what fellow panelist Russ Crupnick reported in NPD Group’s “Annual Music Study” back in March when they reported that P2P site activity decreased from 19% of the internet population in 2006 to 13% last year.

Respected blogger Cory Doctorow also noted last month that a summary of over 20 different papers on file trading shows very little impact on sales from file trading. Drew Wilson, the author of the summary, got his results from such “fringe” groups as The Wharton School, The Journal of Law And Economics, and The Journal of Business Ethics. The most interesting line in the summary to me is this one:

Judging by the evidence we’ve collected, the evidence does not point in the direction that file-sharing, in and of itself, displace sales, but rather, other factors would also play a role in displacement of sales.

The primary “other factor” is the fact that there are too many artists competing for shrinking dollars, largely due to the shift from albums to singles. Despite the economic number that David Lowery quoted of the number of professional musicians falling by 25%, if you took “album releases” as an indicator, it seems like the number of pros has increased. In a decade, we’ve gone from about 30,000 albums being released to over 77,000 last year. And that’s just albums going thru legit channels. The problem, as noted by Chris Muratore of Nielsen on the previously noted New Music Seminar panel, is that 94% of those releases sold less than 1,000 units. Indicators that I have examined showed those low sales aren’t because of people stealing them. They come from too many releases causing most people to not even realize they are out. For example, 80s rocker Lita Ford has a new album that came out yesterday. As of this writing, it’s the 91st most popular new release on Rdio. How many of you have the patience or time to sift thru the other 90 releases to get to #91? Let alone decide to even put in the effort to steal it? Whether you were going to listen to it or not, I’d be willing to bet that almost everyone reading this found out that Lita Ford had new music from this paragraph. Stealing it is even further down their priority list.

And now that you know Lita Ford has a new record, what are you going to do about it? If you have a remote interest in her music at all, you’re most likely going to listen to it on a perfectly legal source such as YouTube, Spotify, Rdio, Mog, Rhapsody or Slacker. Why? Because I bet you caught yourself subconsciously saying that it would be quicker and easier to stream it and see what it’s about there than finding a site to steal it from, let alone having the downloads clutter your hard drive. Guess what? This is what most people do now. Having a download on a hard drive…single or album, purchased or stolen…this is the 2012 equivalent of “buying a CD with one good song on it”. People are smart and will legally stream something before any sort of ownership decision solely because they don’t want their hard drive cluttered with music they don’t like. And guessing by the demographic of my readership, I would also guess most people just want to check out what Lita is up to and have no intention of any sort of ownership. The music would have to be mind-blowing to shift the decision from “let’s see what she’s up to” to “I need to own this”.

So while all these independent artists argue thievery, do you know who’s winning? Major labels. This week, of the top 100 tracks on Spotify, only 6% are on independent labels. Major labels have figured out that the game is about exposure and awareness, two things that they are actually quite good at. It’s not about royalty rates, thievery, or even quality of music. It’s all about how I get people to know I exist. Major labels aren’t ignoring file traders, but they have moved past how much of their day they concern themselves with it. Instead, they focus on putting energy behind making music that the public wants and marketing the shit out of it so it rises above everyone else. While you’ve spent the last few years claiming the major labels are “dinosaurs” who are going to be “out of business”, they’ve actually become stronger behemoths who are more progressive than you realize.

As for the quality of their music, that’s a subjective opinion. And it’s no more subjective than the independent artists who have figured out how to make a big business out of the new music business. Artists like Tyler Ward, Kina Grannis and Alex Day, amongst others, are making six figures a year in the new paradigm. They struggle to get respect from traditional media because they’re not considered cool, credible musicians. Yet they run rings around the businesses these so-called cool bands deliver. Why? Maybe it’s simply because they deliver the kind of music more people want nowadays. As far as I can tell, they spend not a minute worrying about the money they don’t make and instead spend time making more money from the sources that do pay.

I agree ethically with David Lowery’s assessment. A person who spends extra to protect migrant workers in a third world country but takes money out of musicians’ mouths is a hypocrite. Emily White should stop complaining about wishing for a Spotify-like service and actually…y’know…subscribe to Spotify. But for actually succeeding in 2012, it’s the wrong argument. The biggest problem that David Lowery has to face is exemplified by Zach, the 24 year old New Media indie label guy at the end of Bob Lefsetz’ response post to Lowery’s “screed”. When told by a co-worker that David is the founder of Camper Van Beethoven and Cracker, he replies, “Not sure what either of those are…”

7 OVERLOOKED CATEGORIES OF THE NEW MUSIC BUSINESS

Can you define a musician? Then, presuming you can, can you define a successful one? Many technologists bemoan the “old” music business because they didn’t “get” new technologies. Yet those same people largely don’t “get” that those we define as a successful musician has also changed.

What fired me up about this was last week’s blog post on The Trichordist entitled, “If the Internet is working for Musicians, Why aren’t more Musicians Working Professionally?” They trotted out well-used established facts such as:

* Only 228 out of 105,000 albums sold over 10,000 units in 2008 (or 2%)
* The number of albums released went down 22% from 2009 to 2010
* 99.9% of Tunecore artists make under minimum wage

I agree with these facts. However, they presume a successful musician is predicated on albums and selling said albums. If I follow on that logic, then I’d also like to declare the internet is dying because dial up access has decreased significantly in recent years. Naturally, the internet is not dying. The reality just scares many because not only is music thriving, but it’s largely thriving in the world of the uncool, unhip, and whose talent is not found in a traditional “critical” sense.

First, let’s set a benchmark for success of recorded music. If we’re to say that 10,000 albums is the bar of success, then one can say that someone needs to gross around $100,000 in sales (10,000 units x $10 album price). So, are there more than 228 artists grossing over $100,000 in recorded music revenue? Plenty. Who are they?

1) SINGLES ARTISTS
Several artists are foregoing releasing albums when their singles are selling so well. Even bands like Red Hot Chili Peppers have announced releasing only singles. When they release 18 songs as singles instead of on one album, that’s just one more sign of the album’s decline. But that’s not the decline of the music business. And the Chili Peppers are not alone.

2) SINGLES LABELS
Whole labels are set up around the new music business. Kontor in Europe has over 1 BILLION YouTube streams from dance singles. That’s a lot of revenue before digital or physical sales. They do release some full length albums and compilations. But the bulk of the business is in singles that aren’t counted in that top level album roundup. It’s not just the dance community, and it’s not just Europe.

3) MUSICAL ENTERTAINERS
I’ve previously written about unsigned artist Alex Day getting UK chart hits. Some people in comments criticized that he built a following thru non-music entertaining videos. So then we should discount Disney stars who were actors before they sang a note? Should Jana Kramer’s foray into Country Music not count because she had previously been on a TV show? Let’s not double standard someone just because they’re on YouTube. They made music. It made money. Get over it.

4) COVER ARTISTS
Have you gotten annoyed with all these singers racking up millions of views doing covers on YouTube? Well, you’ve just written off a whole class of musicians. Many of them are making six figures a year. Some solely off of YouTube revenues. Should we not count these folks as artists? Then we should erase the many Pat Boone covers from the charts of the fifties. Or all the covers on the Beatles’ first few albums. Performing covers should not disqualify you from being counted in the music business.

5) PARODY ARTISTS
What, just because you make funny music, you shouldn’t count? There was a time when a comedian named Vaughan Meader had the best selling album of the year. The Chipmunks Sing The Beatles won a Grammy (which is comedy AND covers). “Weird Al” Yankovic has routinely had best selling albums. Just because you’re not serious doesn’t mean you shouldn’t be TAKEN seriously. And many of these parody artists are selling lots of singles AND earning lots of YouTube revenue.

6) CUTE KIDS
Awww…those precocious young kids who can rap Nicki Minaj and end up on Ellen. How cute. How novelty. Also, how rich. Not “buy a mansion” rich. But certainly “gross $100k” rich. Just because they’re not of legal age yet doesn’t mean we shouldn’t count them. They sing. They make money. They count.

7) CHILDREN’S MUSIC
Dirty secret of the business. They used to sell a shit-ton of kids music. And they counted in overall yearly roundups. But with that business drying up, they no longer count. Where has it gone? YouTube. I should know because I played endless videos for my daughter when she was a toddler. Have you watched Gummibar? That’s making a lot of money. Someone has even turned public domain kids songs into a business with Super Simple Songs. If we used to count them years ago, we should still count them now.

By the way, this is before we even talk about musicians who are making great strides outside the system WITH great music like Amanda Palmer and Zoe Keating. In my opinion, saying there’s a decline in musicians is cultural elitism. It’s still alive and well, just not in the form a true “passionate music fan” would like to see it in. The music business is alive and well in many splinter forms that don’t involve radio or labels. But they also don’t involve what a traditional music career might be. I’m OK with this. Are you?

FYI…here’s a list of 40 artists who are clearly doing very well in music just from YouTube revenue who don’t have a record company behind them. They’re not traditional, but that shouldn’t take away their success. I know there are many more, but these are ones that are at the top of the pyramid.

Alex Day
Alex Goot
Austin Mahone
Bart Baker
Christina Grimmie
Connie Talbot
Dave Days
David Choi
David MeShow
DeStorm
DJ Earworm
Emmanuel & Phillip Hudson
The Gregory Brothers
Gummibar
Julia Nunes
Julian Smith
Keenan Cahill
The Key Of Awesome
Kina Grannis
Kurt Hugo Schneider
Lindsey Stirling
Maddi Jane
Matty B
Megan Nicole
Mia Rose
Mike Tompkins
Mystery Guitar Man
Nice Peter
Nichole337
Nick Pitera
The Piano Guys
Pomplamoose
Rebecca Black
Singing Trio
Sophia Grace
Sungha Jung
Super Simple Songs
Tay Zonday
Tyler Ward
Vasquez Sounds