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Kristin Thomson, Future of Music Coalition @kristinthomson
How technology-driven changes have impacted musicians
3 obvious and 7 not-so-obvious things that have changed recently for working musicians.
1. Vast increase in number of platforms to share, distribute, license or sell music.
Physical retail Radio
Record shopsBig box retailers
Indie shops
Commercial radioNPR
College radio
Direct sales
MailorderRecord clubs
Sales at shows
Prior to 1998
Physical retail Radio
Record shopsBig box retailers
Indie shops
Commercial radioNPR
College radio
Direct sales
MailorderRecord clubs
Sales at shows
Digital retail Webcasters/satellite
++ +
Direct sales
Interactive streamingOnline audio
++ +
Online video
Positive
• More options for consumers/music listeners • More efficient delivery • Music is way more accessible
1. Vast increase in number of platforms
+
Negative
• For listeners, “the paradox of choice” • Dispersion of fans/consumers to many platforms • Bands have to be present on multiple platforms• The “unbundling” of music (more about that later)
1. Vast increase in number of platforms
_
2. Musicians’ greatly improved access to the music marketplace.
Retail Radio
• Limited by shelf space• Controlled by big distributors and retailers• Major labels a priority
Prior to 1998
• Tightly controlled playlists• Payola• Major label dominated
CD Baby: $49 per album TuneCore: $30 first year$50 each following year
91% of revenues back to artist 100% of revenues back to artist
2. Greatly improved access to marketplace.
2. Greatly improved access to marketplace.
Other “free” or low cost platforms and tools
• YouTube• Soundcloud
• Pandora• Sirius XM
• Websites/blogs• Bandcamp
• Facebook• Twitter• Instagram• Snapchat
Positive
• No barriers to entry! • Easy, affordable access to digital stores and platforms • Drastically reduced overhead costs • No need for distribution deal • Direct access to fans
2. Greatly improved access to marketplace.
+
Negative
• No barriers to entry! • Way more “noisy” • More competition for consumers’ attention/wallet share • Competing with the entire history of recorded music • For composers, significant drop in what they can charge
2. Greatly improved access to marketplace.
_
“It’s not a novel observation on my part, but technology has leveled the field of distribution to a great degree.”
– jazz manager interviewee
2. Greatly improved access to marketplace.
money.futureofmusic.org
3. Increased number of music- related revenue streams.
Composition income Sound recording incomeMechanical royalties
Public performance royaltiesSynch licenses
Jingle writing/composing for hire/commissions
Prior to 1998
Physical retail salesPhysical mailorder
Selling music at showsMaster use synchs
Composition income Sound recording incomeMechanical royalties
Public performance royaltiesSynch licenses
Jingle writing/composing for hire/commissions
Physical retail salesPhysical mailorder
Selling music at showsMaster use synchs
Digital retail salesDigital performance royaltiesInteractive stream payments
YouTube partner programCloud storage payments
AARC royalties
++
Streaming mechanical royaltiesMechanicals for cloud storage
Lyric display royaltiesYouTube partner program
Positive
• More opportunities to make money from your compositions, recordings, brand. • Shift from one-time purchases to license-based payments for each listen. • Development of entirely new revenue streams.
3. More revenue streams
+
Negative
• Atomization of former income streams. • Many new streams are fractions of pennies. • Lengthening of payback period. • Discovery and payment increasingly dependent on proper metadata and attribution.
3. More revenue streams
_
bit.ly/corzometadata
4. Disruption of conventional music business models, and 7 related results.
(Re)creation of the singles market. Great for consumers, and a key factor in success of iTunes store model but... • Significant drop in revenue from retail sales • Significant drop in mechanical royalties to composers • Reported drop in label support for artists
4. The unbundling of music
“The thing that’s decreased—this won’t surprise you—is the income from recording. By that I mean the royalties, the advances, all of the income streams that go along with the recordings. It’s all decreased significantly over the last 10 years.”
– Contemporary Chamber Ensemble interviewee
4. The unbundling of music: decreased retail sales
“Mechanical royalties have just been decimated; the statement that was 20 pages long and involved six figures has turned into this statement that’s 100 pages long and doesn’t even make five figures. It’s probably, I’d say, at least a 75% decline in mechanical royalties…”
– Nashville Songwriter interviewee
4. The unbundling of music: decreased retail sales
4. The unbundling of music
50%
22%
23%
4%Self-identified songwriters/composers:
Over the past five years, have the mechanical royalties for the reproduction of your songs/compositions increased, stayed the same or decreased?
Money from Music survey. N=1062
Half of songwriters/composers say mechanical royalties have decreased.
No label support, lower revenues overall means artists are asking their fans to: • pre-purchase albums • support tours • buy premium offerings Great for many musicians, but does add to workload.
5. Direct support from fans possible...and necessary
6. Increased corporate presence
42%
35%
9%
14%Self-identified recording artists with a relationship to an indie or major label:Thinking back over the past five years, has your financial support from your label(s) increased, stayed the same or decreased?
Money from Music survey. N=381
42% of signed artists say that label support has decreased.
Reported drop in label support for artists means musicians looking to other sources for support. • tour sponsorships • product endorsements • sync license deals
6. Increased corporate presence
“[...] it definitely seems that people in general are bummed that record sales are so shitty and while I would love to get paid more for records I, long ago, gave up chasing that particular ghost and have looked for money elsewhere.”
– rock band guitarist and singer
6. Increased corporate presence
Drop in “traditional” revenue streams and tour support means that bands are more dependent that ever on income from live performance. • more shows • more attention paid to (and money spent on) stagecraft
7. More shows, and higher expectations
“Do I think that touring has become significantly more expensive? Yes. I think the bar has been raised for production…I think it’s required now and because of that it costs more to do that.”
– hip hop business manager
7. More shows, and higher expectations
• Digital sales are very well documented. • No more dealing with distributors, hassling phone calls, getting stiffed on payments.
8. It’s way easier to get paid
+
• There’s just a lot more platforms you need to track and monetize• Accumulation of many tiny payments.
_
Platforms like Bandcamp make it possible to: • use variable pricing • bundle physical and digital goods together • sell directly to fans
9. Market segmentation for the win
+
“We have our own download card system in place. I, for one, definitely use that when I’m playing out, particularly with the vinyl. There’s a download card taped to the back of each record, and I try to do the same with t-shirts as well.”
– indie label owner and performer
9. Market segmentation for the win
Prior to 1998: if you aspired to be on commercial radio, in big retail chains, playing big shows, you needed to sign with a major label and relinquish your copyrights.
Now: artists can more easily retain control of copyrights and doing licensing deals, hire consultants for expertise.
10. Musicians can control more of their career
+
36.8
53.5
55.7
63.9
66.3
24.1
21.8
23.7
18.9
11.6
18.4
2.7
8.0
4.6
1.2
20.7
22.1
12.6
12.7
20.9
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
My day-to-day work is more about promotion than creation
I can collaborate with other creators
I can manage my career myself
It's more competitive than ever
I can communicate with my fans directly
Strongly agree/Agree Neutral Disagree/Strongly disagree Not applicable
I can communicate with my fans directly
It’s more competitivethan ever
I can manage my career myself
I can collaboratewith other creators
My day-to-day workis more about promotion
than creation
Thinking back over the past five years, how have emerging technologies and the internet affected your musical career?
{N = 4617 Data from Artist Revenue Streams
money.futureofmusic.org
5 w
ithgr
eate
st a
gree
men
t
“There’s enormous structural differences from the day-to-day blue-collar existence of the musician in terms of how you organize a tour.” – indie rock composer, performer, sideman
10. Musicians can control more of their career
• Empowered music creators. • Created efficiencies. • Greater access to the music marketplace. • Direct connection to fans. • Possible to retain control of rights, and self-manage career.
Recent changes are a double-edged sword
++
• Atomized income streams. • Support structures are changing. • More competitive than ever. • Created new work and additional responsibilities for musicians, whether it’s managing an online presence or self-releasing your music digitally.
Recent changes are a double-edged sword
_
The answer
The answer
There is no single solution to the challenges facing musicians and songwriters.
Be everywhere.
Leverage the internet tooffer different prices and bundles.
Play favorites.
Re-assert exclusivity.
Super-serve your fans.
Maintain control.
Measuring the impact of these changes.
FMC resources
Artist Revenue Streams Research
money.futureofmusic.org
42 Revenue StreamsRevenue Streams:
Existing, Expanded New
money.futureofmusic.org/40-revenue-streams/ money.futureofmusic.org/revenue-streams-existing-expanded-new/
FMC resources
HOW THE MONEY FLOWS BACK TO
songwriters, artists,publishers & labels
songwriter
broadcast radio terrestrial broadcast of any AM or FM station
PROs ASCAP, BMI, SESACCsongwriter
publisherperformance of composition
performance of sound recording
How are musicians and songwriters compensated when their music is played on the radio, sold on digital platforms,
webcast, or streamed on interactive services?
For digital stores and on-demand streams, how the money flows depends on what entity negotiated the license.
For record labels that are represented by a digital aggregator/distributor:
For artists who own their sound recording copyrights and use services like CD Baby or TuneCore:
In the US, terrestrial broadcasters do not pay performers or sound recording copyright owners
For record labels that have a direct deal with services:
digital saleiTunes • Amazon
Google Play • eMusic
SR record label artist/band*
mechanical reproduction of composition
sale of sound recording
publisher songwriter
10-50%
9.1¢/track
* Rate of payment from label to artist/band depends on terms of contract, and whether digital sale is classified as a sale or a license.
0.5% Sound Recording Special Payments Fund #
# Labels contribute a small percent of sound recording sales income. If recording was made under the AFM’s recording agreement, payments are disbursed to musicians who were paid scale wages during the recording session.
musicians
SR aggregator
artist/band*
mechanical reproduction of composition
sale of sound recording
publisher songwriter
IODA/The Orchardrecord label
9.1¢/track
@50%
85%
SR only relevant if performer recorded + released songs written by others
sale of sound recording
publisher songwriteraggregator artist/bandCD Baby or TuneCore
91-100%
AFM & SAG-AFTRA Fund
webcast or digital performance
Pandora • Sirius XM • NPR streamingany webcast stations
PROs ASCAP, BMI, SESAC*C
SR SoundExchange
songwriter
publisher
record label
performer(s)
50%
45%
5%
performance of composition
digital performance of sound recording background singers and musicians
* At the end of 2012, Universal Music Publishing Group and Sony/ATV-EMI pulled their digital rights from ASCAP and BMI, seeking to get a higher rate by negotiating directly with webcasters.
UMPG and Sony ATV-EMI* UMPG and Sony ATV-EMIsongwritersC
songwriter
songwriteron-demand
streamSpotify • Rdio • Rhapsody
SR record label artist/band*
streaming mechanical royalty
licensed use of sound recording 10-50%
10.5%
minus payment to PROs
PROs ASCAP, BMI, SESACCpublisher
performance of composition
publishers
UMPG and Sony ATV-EMI*C * At the end of 2012, Universal Music Publishing Group and Sony/ATV-EMI pulled their digital rights from ASCAP and BMI, seeking to get a higher rate by negotiating directly with services.
UMPG and Sony ATV-EMIsongwriters
licensed use of sound recording
PROs ASCAP, BMI, SESACsongwriter
publisherperformance of composition
SR aggregator
artist/bandIODA/The Orchard
record label 50%+
85%
on-demandstream
Spotify • Rdio • Rhapsody streaming mechanical royalty
songwriterpublisher*
C
streaming mechanical royalty
licensed use of sound recording
PROs ASCAP, BMI, SESACC
songwriter
publisherperformance of composition
SR aggregator artist/bandCD Baby or TuneCore
on-demandstream
Spotify • Rdio • Rhapsody
* Services pay streaming mechanical royalties to big publishers directly, or to a mechanical licensing agent like Harry Fox, Songtrust or Music Reports, which then pay their publisher members/clients. Because it is very burdensome for self-published songwriters to collect these royalties, both CD Baby and TuneCore have set up services to help self-published songwriter clients to collect them.
* Rate of payment from label to artist/band depends on terms of contract, and whether digital sale is classified as a sale or a license.
* Services pay streaming mechanical royalties to big publishers directly, or to a mechanical licensing agent like Harry Fox, Songtrust or Music Reports, which then pay their publisher members/clients. Songwriters need to be proactive in seeking out this revenue.
mechanical licensing agent or publisher*
publisher*
Information compiled by the nonprofit Future of Music Coalition, with gracious assistance from many experts and friends.
Poster edition: September 2013www.futureofmusic.org | money.futureofmusic.org
© Future of Music Coalition 2013
Artist Revenue Streamsmoney.futureofmusic.org
* Rate of payment from label to artist/band depends on terms of contract, and whether digital sale is classified as a sale or a license.
mechanical licensing agent or publisher*
performance of composition
performance of composition
big labels
indie labels
self-released
10.5%
minus payment to PROs
9.1¢/track
10.5%
minus payment to PROs
91-100%
For radio and radio-like services, blanket licenses determine who gets paid, and how much.
digital saleiTunes • Amazon
Google Play • eMusic
digital saleiTunes • Amazon
Google Play • eMusic
Music and How the Money Flows infographic
futureofmusic.org/moneyflow
New Business ModelsDigital Distribution and
how to participate
futureofmusic.org/nbm futureofmusic.org/dd
Kristin Thomson | Future of Music Coalition @future_of_music@kristinthomson
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