8Sided Blog

the scene celebrates itself

Total Music Streams Doubled In 2015

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Digital Music News:

Song downloads plunged another 12.5 percent last year, and a depressing 23.4 percent since 2013, according to preliminary US-based stats from Nielsen Music. Indeed, downloading is plunging downward, but streaming is absolutely soaring: according to the same dataset, the total number of streams doubled in just one year. As in, gained 100 percent, in 365 days.



Also from Digital Music News:

Accordingly, the music world will witness a more dramatic download plunge in 2016, with 12.5 percent shifting towards 18 percent, according to conservative DMN estimates. The decline will subsequently accelerate to 25 percent in 2017, with a 40 percent drop anticipated in 2019.



The reasons for this aren’t mysterious: last year, the number of music streams doubled to 317.2 billion streams in the US alone, thanks to explosive growth across Spotify, YouTube, and Apple Music, among others. That is directly assassinating paid downloads, with Apple accelerating the plunge by aggressively pushing consumers towards Apple Music streaming accounts.



The rest, as they say, will be history, with downloads occupying a niche space in music listening experience, alongside CDs and other marginalized formats.



The tone of these articles is a little gloomy, which is interesting from a site called Digital Music News. I see the download decline as inevitable by nature of the technology (just wait until the wireless / streaming CDJ is invented for the club DJs), and the rapid acceptance of streaming as a good outcome. Those numbers will get higher and higher as download numbers plummet. It changes the game, but I’m confident fleet-footed independent labels will adapt and succeed.

Remastered, You Say?

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If labels are seriously seeking to make streaming a more organic, listener-friendly experience then an easy first step would be to eliminate this practice:

(click image to expand)

All that is accomplished by appending technical ‘remaster’ information to the song title is it makes things more clinical and distracting. Not only does this show up in the album list but also on the single song title as it plays. I can assure you that no one cares about this information … I’m a big fan of both Talk Talk and Wire and I just want to hear the songs, no matter the version. I may seem nit-picky here, but this is the kind of stuff that subtly clouds the whole. Having technical notes added to the title of a favorite song reminds us that we’re participating in a digital process when we just want to get lost in the music.

If the services (and labels) really want this information out there then they could add it to the liner notes on the album’s page in the streaming app. Oh, what’s that? Liner notes aren’t available on album pages? There’s a good second step.

Note: The screenshots are from Apple Music as that’s what I use, but it is the same on Spotify (I checked) and, I assume, all the other services (I didn’t check). Thus this technical data added to song titles comes from the labels submitting album metadata across the board. It would still be nice for the streaming gods to demand this ‘remaster’ stuff be filtered out or provide the liner note option.

Spotify Hit With $150 Million Class Action Over Unpaid Royalties

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Camper Van Beethoven and Cracker frontman David Lowery, retaining the law firm of Michelman & Robinson, LLP, has filed a class action lawsuit seeking at least $150 million in damages against Spotify, alleging it knowingly, willingly, and unlawfully reproduces and distributes copyrighted compositions without obtaining mechanical licenses.

The lawsuit comes amidst ongoing settlement negotiations between Spotify and the National Music Publishers Assn. over the alleged use of allowing users to play music that hasn’t been properly licensed, and also without making mechanical royalty payments to music publishers and songwriters. According to sources, Spotify has created a $17 million to $25 million reserve fund to pay royalties for pending and unmatched song use.

The complaint states that Spotify has “publicly” admitted its failure to obtain licenses and created a reserve fund of millions of dollars for royalty payments which have been “wrongfully withheld from artists.” The complaint further notes that statutory penalties allow for judgments between $750-30,000 for each infringed work, and up to $150,000 per song for willful infringement.


I admit I’m not the biggest David Lowrey fan in this sphere, but any eyeglass pointed at artist royalty in these early days of streaming is important as it may help interpret and set future policy. If Spotify is knowingly withholding royalty that can be remitted then most certainly they should pay up. However, I’ve heard of reserve funds being held by other services until rightsholders can be identified, most notably by SoundExchange (though they aren’t actually transmiting the compositions themselves), so the practice may not be as outlandish as the suit implies. One can also assume that if Spotify is doing this with regards to mechanical licensing then Apple Music, Tidal, etc. are probably doing the same … ?

Update:

Spotify is currently in the middle of a settlement with the National Music Publishers Association, after being sued for failing to accurately keep track of royalty payments. In a blog post last week Spotify admitted that it had a problem managing royalties, and that it would work with the NMPA to build a “comprehensive publishing administration system” to ensure artists and publishers are properly compensated.

If the NMPA opts into the settlement, which allows publishers to request royalty payments in exchange for dropping legal claims over licensing fees, it will likely weaken Lowery’s case.

SoundCloud Strikes Deal with PRS

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Variety:

Music streaming service SoundCloud has struck a licensing deal with UK-based music rights group PRS for Music, settling a lawsuit and in turn clearing an important hurdle on its way to launch a full-fledged music subscription service. Now, the company just has to get other rights holders back to the table.



SoundCloud has been working for some time on launching a paid subscription service similar to Spotify or Apple Music. However, the company also wants to keep user-generated uploads, remixes and DJ sets on its platform. To this end, it has been looking to offer rights holders the ability to monetize user-generated uploads, similar to the way YouTube has been doing it in the video space.



Music Business Worldwide:

MBW: Do you get a genuine sense from SoundCloud’s side that they have a business ambition to succeed with a subscription platform – and that they’ll remain solvent long enough to do so?



Robert Ashcroft (PRS CEO): It’s clear from our discussions with them that is their intent. I know they have good financial backing. We’re very hopeful that this will be a major service. It has its own particular personality and there’s room in the market for lots of different takes on music services. We do believe that they’re sincere in the evolution of their business.



MBW: Vevo’s looking at a subscription service, Apple Music is already one; Spotify’s conceding ground on the ‘everything free’ rule; YouTube’s even launched Red – a paid-for tier. Now SoundCloud is starting to behave itself. Is there something in the air?



Robert Ashcroft: We very much hope so. We’ve been very public about our feeling that the playing field has not been level between the different kinds of services. We’ve called on the European Commission to examine the boundaries of who can benefit from the hosting defence under safe harbour legislation and who cannot. We’ve called for a clear distinction between those services that are purely passive, like DropBox, and those that are active in that they provide search, curation and various other means of accessing music. We’re in similar discussions with YouTube. My aim is to create a climate were copyright is valued on the internet, and where all of these services can compete with each other on a level playing field.

Pandora To Owe More

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Quartz:

For months now, the US Copyright Royalty Board—a three-person government panel that decides how much online radio services have to pay to play artists’ music—has been mulling a tough decision: Increase music licensing rates for the next five years, or lower them? While artists and record labels pushed for higher fees, webcaster services like market leader Pandora insisted on the opposite.



The CRB {has now} announced those new rates, and they are not exactly in Pandora’s favor. While the royalties cost for streaming songs on a subscription platform has dipped a bit, the cost for streaming songs on the more popular ad-supported free-user platform is now higher.



These fraction-of-a-cent changes may seem negligible, but they amount to millions of dollars a year. Last year, Pandora paid $446 million in music licensing costs alone—roughly half of its $921 million revenue. The increased cost for streaming songs on an ad-supported platform means Pandora will have to dip even further into its revenue stream to pay record labels and artists, in the next few years.



All in all, the rate increase is not as dramatic as it could have been: SoundExchange, the royalty distribution platform that represents artists and record labels, had asked the CRB for a rate of $0.0025. Pandora had asked for $0.0011. The new rate is almost exactly in the middle.



Negotiation 101. Aim high, meet in the middle.

The Freemium Quandry

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Music Business Worldwide:

According to a new report from the Wall Street Journal, Spotify is ‘caving in’ to demands for certain artists to be able to keep their records off Spotify’s free tier.



The newspaper says: “In private talks, Spotify has told music executives that it is planning to allow some artists to start releasing albums only to its 20 million-plus subscribers, who pay $10 a month, while withholding the music temporarily from Spotify’s 80 million free users.”



MBW understands that the latest internal Spotify figures show that the platform now has close to 100m active users, and 25m+ paying customers around the world.



Atom Factory’s Troy Carter via Digital Music News:

There have been times where I had to get on the phone with really big managers, and — who have really big clients, and tell them what the downside was for them leaving their product off of Spotify. All of the music is still available on YouTube for free. It’s still available on the piracy services for free, so you’re missing out on a big audience and you’re missing out on a revenue stream.



I don’t know if Spotify needs to get over the Taylor Swift problem, as much as it is… people have to see the future. Because free already exists, it’s a flawed argument when you say ‘I don’t want my music on any service that offers free,’ when free already exists.



Update: Music Business Worldwide:

Those weeping for the death of Spotify’s ad-supported bonanza are forgetting something: it’s only for a quirk of recent history that freemium was ever allowed to bloom in the first place.



As sites such as The Pirate Bay (not to mention YouTube) were left unfettered by international lawmakers, {Spotify founder Daniel} Ek’s argument in the lead up to Spotify’s 2008 launch – basically, hi guys, nice to meet you, we’re your best worst option – was cast-iron. This year, despite all of Spotify’s success, that contention has started to look a little more fragile.



If Ek’s offer of all music, all free, all the time was forever destined to be quashed, you have to say he’s made the most of it. By ‘rescuing’ an industry plunged into paranoia and desperation by piracy, Spotify has raced to a near-100m user base (and an $8bn+ pre-IPO valuation) with what hindsight may prove was a once-in-a-generation freedom to dice with price.

YouTube’s Music App Could Rule All Streaming Services

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Wired:

YouTube’s audience is unique. They love to engage. They watch, like, and share. They make remixes, covers, lyrics clips, and response videos. And they do this for everything that’s already part of the YouTube collection, including official music videos, fan videos, and concert footage.



Now, YouTube is taking this massive corpus, mixing in some neat new features, and opening it up to everyone as a standalone app with a clear focus on just the music. Today, the company is launching its first official standalone music app called, well, YouTube Music.



My favorite feature of all is something called the offline mixtape. You determine how much of your phone’s data you’re willing to spare for songs, pick the audio quality, and let the app make you a playlist. It’s a lot like Spotify’s excellent Discover feature, except it’s refreshed daily, not weekly. The offline mixtape is another exclusive for YouTube Red subscribers.


The manner that Google has been able to develop and expand YouTube is remarkable. The YouTube that they acquired in 2006 is still recognizable today, but its present culture and varied uses of the service (such as this music focus) would be alien then. I’m certainly interested in the ‘offline mixtape’ and what YouTube does with it, as well as the integration of user generated content. Some things need to be solved … the way that YouTube presents its auto-generated music ‘videos’ is a bit clunky (here’s an example) and I’m curious how that will translate to the YouTube Music app. And there’s also the familiar issue of YouTube’s fuzzy transparency with how music creators are getting paid.

Revenue Neutral

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Slate:

In a new working paper, University of Minnesota economist Joel Waldfogel and Luis Aguiar of the Institute for Prospective Technological Studies in Seville, Spain, estimate how Spotify has affected both music sales and piracy during its fast expansion across the globe. Their method: comparing countries where the service grew rapidly between 2013 and 2015, and those where it didn’t. The upshot? According to the authors’ calculations, Spotify does seem to have put a damper on piracy, but it’s also displaced some digital sales (neither is exactly a shocker). Add it all up, then factor in the payments Spotify itself is sending to labels, and the effect appears to be roughly “revenue neutral” for rights holders. They don’t make any more money. They don’t make any less.



If these findings hold up (again, it’s just one working paper), it should put the ongoing debate about Spotify’s treatment of artists into some new perspective. If the platform’s business model hasn’t shrunk the total pie of cash being divvied up by rights holders, but some artists really are seeing their paychecks shrink, it suggests the problem (insofar as one exists) has to do with the way record labels are distributing the cash.

Your Favorite Label In The Age Of Streaming

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Hollywood Reporter:

Amid some big changes in the music industry, new RCA Records CEO Peter Edge and longtime colleague Tom Corson, who was promoted to president and COO in August, have officially shuttered historic labels Arista and Jive. J Records, launched by Clive Davis in 2000 as an “instant major,” will also see its artists bequeathed to RCA.



In the digital age, one might think these closures mean there is little value, awareness or loyalty to a label by name, but the execs insist it’s quite the opposite. “The concept is that there is value in branding RCA and not having it confused or diluted by other labels,” says Corson.


That’s an odd quote in answer to a statement about label identities not having value, as, of course, there is no real identity to the RCA ‘brand.’ The writer’s statement is perceptive, and brings up a good point. Labels seem to matter less and less as we rely on proprietary software for streaming music. Apple Music and Spotify only mention the label of origin on a release’s ‘page’ as a required copyright line in fine print at the bottom. One certainly can’t search for a favorite label and listen to a streaming ‘playlist’ of its new offerings, unless it is a pre-packaged playlist that someone put together to focus on that label. Spotify at least lets labels have profiles, which come up if you search for the label name. But these don’t offer much information beyond label curated playlists … not even a list of the latest releases.

I’ve written a bit about the problems with curation on streaming services, and removing label identity could be seen as a part of that issue. The labels that inspired me when I was young (Factory Records, SST, 4AD, and so on) had attraction as a type of curator, in that I knew what I was getting into – for the most part – if, for example, I listened to a 4AD release in the ’80s. There are certainly some great indie imprints active now that benefit from a closely moderated identity, sonic and otherwise. Or, at least, they could benefit, if the streaming services would give labels some credit.

But the quoted article above may reveal the problem. The major labels, being the ones that shout the loudest at the streamers, don’t need or care to foster this sonic identity. One could say Jive had a sound … there are a group of classic dance records that come to mind when I think of the label, and it could be argued they were identified by a certain pop style in recent decades. But that’s hardly important in the age of streaming, so it’s fine to make things less complicated and throw it all under the RCA blanket. And that makes sense for them … label identity, and having streaming services highlight labels and their intrinsic sounds, can only benefit the independents.

Full Stack Music: 1 Trillion Streams, 200 Million Tickets

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TechCrunch:

Going back to 1999, the record company would use radio as a way to get fans to discover a new act, then monetize that investment, primarily via selling “on-demand” access in the form of CDs and, finally, drive additional discovery by subsidizing touring (known as “tour support;” a label would underwrite some of the cost of touring to help build an audience to whom to sell CDs). Touring represented a small percentage of artist income.



[Fast forward to 2015:] Over the next few years we will see [the] connection between streaming [i.e. “on-demand” access] and ticket sales become completely explicit. Streaming services will increasingly make it seamless for fans using their services to see when the artist has a local show; Songkick’s existing API partnerships with Deezer, SoundCloud, Spotify and YouTube are hints at what this could look like. It’s not impossible to imagine a time when you could possibly buy tickets directly from your favorite artist right inside your streaming service.



When that happens, artists will finally be able to see a connected picture of how their music is distributed and monetized. An act who gets 100 million streams will see that 10 million of those were monetized via paying subscribers, 90 million by ads and another 5 million fans via ticket purchases. The outcome will be a more seamless experience that results in casual music fans attending more concerts.



The key point across all of this is that the central, most valuable asset of streaming music services will be the listener data they generate. As we shift from offline radio to online streaming, artists will know how those 1 trillion tracks of music were streamed — which fan listened to them, where they were based, which concert tickets they purchased in the past — and be able to tailor personalized and richer experiences to their fans.


The TechCrunch article quoted above was published three days ago. Seems a bit prescient, as the same site revealed this breaking story earlier today:

[Pandora] just announced it will purchase Ticketfly, a Ticketmaster-type site, for $450m in cash and stock. Pandora says in a press release that Ticketfly’s service will allow Pandora listeners to better find live music events.



“This is a game-changer for Pandora – and much more importantly – a game-changer for music,” said Brian McAndrews, chief executive officer at Pandora, in a released statement today.



It’s likely that Pandora will use this extensive data set to attempt to sell tickets through Ticketfly to events it knows listeners will enjoy.