Samsung has revealed it will draw the final curtain on its Music Hub streaming service by the end of the year, just days after Telstra announced its plans to axe BigPond Music downloads.
According to an announcement on the Music Hub website, customers will no longer be able to access their accounts after 31 December 2014.
Existing subscriptions will not be renewed after 30 November, and Music Hub will not accept new paid memberships. Access via gift vouchers will still be accepted until 31 December, and customers with prepaid subscriptions extending beyond the deadline are being directed to the Music Hub support line.
It's been a rough few days for digital music services in Australia. Earlier in the week Telstra said it will close its digital music download platform BigPond Music (BPM) on 12 December. From this date, customers will no longer be able to purchase music or access their accounts, according to a notification on the BPM website.
Many works composed by popular musicians including The Eagles, Pharrell Williams, Boston, Foreigner, John Lennon, Smokey Robinson, Chris Cornell and George and Ira Gershwin could be headed off YouTube.
On Wednesday (Nov. 12), just as Google announced the coming launch of YouTube Music Key, its much-anticipated subscription service to compete against Spotify and Pandora, a compensation dispute was triggered. Music industry heavyweight Irving Azoff tells The Hollywood Reporterthat he is prepared to take 42 of his clients, representing some 20,000 copyrighted works, away from the YouTube ecosystem, including the new subscription service. The move is a huge shot across Google's bow, perhaps even more significant than Taylor Swift's much-discussed decision a week ago to remove her songs from Spotify over doubts about royalties.
Azoff is the former chairman of Live Nation who is now spearheading a new venture, Global Music Rights (GMR), aimed at extracting higher performance rights royalties for songwriters. Traditionally, those rights have been handled by ASCAP and BMI, which have been hamstrung by consent decrees with the Justice Department that requires a license be given whenever an outlet requests it.
Just how important music is to consumers was one of the many questions included in a consumer survey conducted by Music & Copyrightpublisher Ovum in July. Over a three-week period, 15,000+ consumers across 15 countries were asked a number of questions about their media use. In terms of importance, music was considered essential by 42% of respondents, and important by a further 43%.
Although listening to music was less important than browsing the Internet and reading the news, it was considered more essential that interacting on social media and watching TV. Only 16% of respondents said listening to music was unimportant.
Comparing the survey findings with the current state of the recorded-music industry suggests a large proportion of consumers’ interest in listening is not being satisfied by paid-for services. Annual sales of recorded music have been falling for more than 10 years and 2014 is expected to add one more to the total number of consecutive years of annual contraction.
Every month for almost 12 years, somewhere between 10% – 30% of the money owed to songwriters/publishers is not paid by many streaming services. Just ask Microsoft/ Zune, LaLa (now Apple), Spotify, Rhapsody, Beats/MOG, Rdio, etc., how money was not paid out and they are still sitting on.
Of the money that is paid, in many cases it is being paid to the wrong entity due to wrong data.
Each month, the digital services provide a list of every stream of a sound recording that occurred in the digital music service in that month to these third party companies. This list is called a “Usage Log.”
The third party company must:
Match the sound recording to the composition.Match the composition to the publishing administrator.Have a name, address and other contact information for the publisherRun the royalty formula.Provide the statements and the interactive mechanical royalty payments to the music publisher administrator on time.
Some of the third parties are not paying on time. Some are paying up to 115 days late. In addition, most are not paying accurately.
In almost all cases they are only able to match/map and pay Interactive Streaming Mechanical royalties on 70% to 85% of the sound recordings in the interactive music service’s usage log. This means each month, since the launch of the first interactive streaming service 12 years ago, 10% to 30% of the money owed to publishers for Interactive Streaming Mechanical royalties has never been paid out.
There is no transparency and no audit trail that we have been able to find for this un-administered money. The only thing we can be certain of is it has not been paid out.
In addition, for the money being paid out, we don’t know if they are paying the right publisher.
Audiam estimates the amount of misallocated or unpaid revenue over the past 12 years from streaming services around the globe is over $100 million.
"The Streaming Effect: Assessing The Impact Of Streaming Music Behaviour" is a new report from MIDiA Research focused on the music market's reaction to streaming music options and the effects of listeners' choices on music sales. Listeners have an array of easy free choices, described in the report as a "hierarchy of free," from which to choose.
The sales of digital music have exceeded those of physical formats, such as CDs and records, for the first time in Finland as digital services accounted for 58 per cent of all music sales between January and June.
Last year, over 60 per cent of music revenues was derived from the sales CDs, DVDs and records.
The music industry, however, expects the share of physical formats to increase this year due to an anticipated rise in sales in the final quarter of the year – and especially during the holiday season.
In spite of the growing popularity of streaming services such as Spotify, the value of music sales decreased by 11 per cent year-on-year in the first half of the year largely due to slumping CD and DVD sales. The sales of records, in turn, continued to pick up – surging by as much as 52 per cent between January and June – but remain relatively insignificant for the entire industry.
The figures are based on information gathered by IFPI Finland from its member organisations.
To an extent, the increase in digital music sales is attributable to the fact that for the first time the figures also include music streamed on Youtube. A survey carried out by IFPI Finland has found that Youtube is the most popular online streaming service, with 59 per cent of respondents saying that they use the popular video-sharing website to listen to music.
Regardless, the radio has retained its position as the most popular medium for listening to music, with as many as 86 per cent of Finns saying that they listen to it on a weekly basis. The most popular device to listen to music, in turn is a car audio system, according to the survey.
With the survey finding that some 68 per cent of Finns have yet to try a single streaming service, IFPI Finland expects streaming subscriptions to increase further. Similarly, over half of Finns have yet to buy music downloads.
For some artists, the situation is all too much. “There are tons of musicians who are leaving the business,” said Rebecca Gates. “In droves.” In the long term, the exodus will hurt us all, from musicians to consumers to the streaming services, according to some.
“We’ll get the culture we pay for,” Ribot said. “I don’t think people will care if it’s just artists getting hurt. But this is going to be destructive to our culture.”
African-Americans, Asian-Americans and Hispanics—the “Multicultural” consumers—are taking the music industry by storm. According to current U.S. Census Bureau projections, the American consumer is increasingly the multicultural consumer; forecasted to become the majority of the U.S. population by 2043. Given that Multicultural consumers account for 31 percent of the total spend on music and, on average, spend $7 more on music than the total market, this growing group is increasingly influencing the music market.
Not only are these consumers shaping the musical taste of the U.S. population as a whole, but they're also creating new and innovative ways to discover, buy and share music. Companies that wish to understand the future of music need to pay close attention to this growing demographic's consumer habits.
Fifty-three percent of the Multicultural population is under age 35, compared with 45 percent of the country's total population. And within the critical Millennial generation, 40 percent are Multicultural. Multicultural Millennials are young enough to consider music an essential component of their lives and old enough to have money to spend on it. And with these young consumers leading trends in smartphone use, online streaming and social media, they've become an essential asset to the music industry.
Op Ed by John Dilley from HighSpeedInternet.com. When iTunes launched 10 years ago, it became the model for buying and legally downloading music. Soon services like Spotify came along and changed the game from a purchasing model to a licensing model. How has this changed the industry? For consumers it’s great, but for the music industry it’s meant tons of competition at the bottom, a vanishing middle, and more corporate domination at the top.
Playlists and individual tracks have become the dominant consumption paradigm. Even music piracy has moved away from the album to smaller numbers of tracks, with free music downloader mobile apps and YouTube rippers now more widespread than P2P. This is the piracy behavior of the digital natives who have no need to hoard vast music collections because they know they can always find the music they want on YouTube or Soundcloud if they want it.
The behavior shift is clearly evidenced in revenue numbers. Since 2008 alone US album sales (CD and digital) have declined by 22% (IFPI), while digital track sales outpace digital album sales by a factor of 10 to 1. The top 10 selling albums in the US shifted 56.4 million units in 2000. In 2013 the number was 14.7 million (Nielsen SoundScan). Even more stark is the contrast between playlists and albums on streaming service. Spotify has 1.5 billion playlists but just 1.4 million albums (see figure). While the comparison is not exactly apples-to-apples (album count is a catalogue count and playlist count is a hybrid catalogue / consumption count) it is nonetheless a useful illustration of the disparity of scale. (In fact the 1.4 million album assumption is probably high due to a) duplicates b) singles and EPs c) compilations.)
Apple's (NASDAQ: AAPL ) decision to acquire Beats looks great in the face of declining digital music sales. A recent report from Nielsen reveals that music downloads continue to wane -- compared to the first six months of last year, digital track sales are down 13%.
Nielsen called out on-demand streaming services specifically as helping to spur the decline of the digital music download business, noting that on-demand streaming song plays were up 42% through the first six months of the year (compared to 2013).
Can Beats replace iTunes? Beats Music has only a fraction of Spotify's subscribers, but under Apple's management, it could quickly grow its share of the market. Likely because of its deep integration with Apple's devices, iTunes Radio now accounts for about 8% of the streaming music market, up from nothing last year.
As on-demand streaming rises in popularity, Beats subscription service could offset, or perhaps even replace, Apple's iTunes business.
After years of investing in algorithms that can figure out that someone who likes the Beatles would probably also be interested in Creedence Clearwater Revival, which has helped the online radio behemoth Pandora claim 250 million users, the tide has turned. “Curation” is now the buzzword du jour.
Are ASCAP and BMI obsolete? Sony/ATV, arguably the world's #1 publishing company, seems to think so, and is preparing to pull out of both before the end of the year, according to reports surfacing yesterday. Sony/ATV head Martin Bandier had told members in July that he was considering such a move as a way to open direct negotiations with digital and broadcast outlets. But now it appears all but certain. The loss of one or more top publishers could cripple both ASCAP and BMI financially ...
(1) Artists make little-to-nothing off of streaming services.
(2) Streaming services claim that artists are making money off of streaming, which has generated massive distrust and anger among artists.
(3) As a result of (1) and (2), artists often get pissed off at streaming services, and sometimes publish their abysmal royalties on sites like Digital Music News.
(4) As a result of (3), streaming services counter that the leaked royalties are miscalculated and inaccurate, which makes artists even more pissed off.
(5) Streaming services like Spotify claim that someday in the near future, artists will make money off of streaming services. In fact, Spotify CEO Daniel Ek says that artists will be making a decent, living wage off of streaming in just a few years.
(6) There is very little evidence to suggest that (5) will ever happen for artists.
Since the last time we spoke, it seems like there’s been a dozen new streaming services launched. And streaming is now discussed as the savior of the record industry. We have a new Amazon service, Google has announced one, and Beats service was bought by Apple. There’s surely going to be others by the end of the month. Do these new services seem to be, from an artist’s point of view, an improvement? Or do we just not know?
Well, it’s going to depend on what kind of artist you are. First of all, let’s just take that face-value statement, that streaming will save the music industry. Well, it will if the music business is the kind of music business that’s basically just built around Top 40 songs.
If you don’t want to ever have Captain Beefheart and Miles Davis and — one of my favorite bands — the gloom-stoner, doom-metal band Sleep. If you don’t ever expect to have those kind of bands anymore. And the reason is because streaming flattens and commoditizes the spin. So you just have one price for every spin of a song across the entire spectrum, whether it’s some kind of avant-garde classical work or whether it’s a Miley Cyrus song. So that will work if you have lots and lots of spins. But it won’t work if you have just a few spins. So what that will do is push out — and you already see that happening — it will push out any sort of niche or, you know …
Any specialty genres.
Specialty genres. Because people might have gone into the stores and gone, “Well, all the albums are between $9.99 and $17.99, they sort of all hover around $12.99, or whatever. It’s always been that way.” Well, yes and no, because something like a Miley Cyrus song might get spun a whole bunch — you might play that record a whole bunch until you’re sick of it whereas an Art Blakey record you might play four times a year. Those, in effect, were more expensive, and when you look at the normal, real, non-magical unicorn part of the economy, niche products cost a lot more than mass-market products.
The American Association of Independent Music (A2IM) has announced its support of music industry control of the domain name .music. In doing so, the coalition will go up against Google and Amazon, which are also pursuing .music for their own purposes. With the support of .music LLC's parent company, Far Further, and Dotmusic, A2IM has written a call-to-action to the Internet Corporation for Assigned Names and Numbers (ICANN) to advocate for their cause.
A2IM president Rich Bengloff puts it a little more bluntly, citing Google and Amazon's investor-driven interests as a concern if either one were to acquire .music. "We’re afraid their total goal will be maximizing revenues, so they may not have the safeguards in place to ensure the necessary support for the industry, individual labels, and artists who should have it," he tells Billboard. "We want to make sure only legitimate owners get first shot of these domains."
For example, he continues, a music industry-controlled .music would give Concord Music Group first shot at the domain name Concord.music and its artist, Paul McCartney, first dibs on paulmccartney.music. Bengloff hopes that during the application review process, ICANN selects a music community-supported organization to manage the domain name. As of last year, however, ICANN published "Last Resort" auction rules, essentially a winner-take-all model that gives domains to the highest bidder.
A new report from Juniper Research found that the digital music industry will experience slow growth in revenue over the next 5 years, from $12.3bn this year to $13.9bn in 2019. The research found that a strong performance in the robust streamed music sector, will largely be offset by decline in revenues from legacy services such as ringtones and ringback tones.
Pureplay providers face challenge from OTTs
According to the new report - Digital Music: Streaming, Download & Legacy Services 2014–2019– the market will be characterised by consumer migration to cloud based services. It observed that offerings from pureplay music providers, such as Spotify and Pandora, will increasingly find themselves competing with personalised services from the leading OTT (over-the-top) players, including Apple and Google.
However, the report cautioned that piracy was still responsible for major revenue leakage, particularly in emerging markets, such as China, where only a small percentage of content is legally acquired. Nevertheless, it pointed to instances where the industry had successfully reined in such activity, such as a Singaporean bill that allows the blocking of sites that contain infringed content.
Music discovery remains a challenge
The report argues that music consumption is set to become a highly sociable activity, with features such as music discovery and social media integration that connects music fans. However, finding ways to expand the pool of their subscribers and increase the ease of discovery remains a key challenge for streaming companies.
Juniper believes that smartphones and tablets will be the main platforms of growth, although digital music revenues on the PC/laptop will remain robust over the forecast period. Additionally, emerging markets are expected to strengthen in terms of digital music consumption, as disposable income levels continue to rise and streaming services expand into these regions.
Spotify has added a new way for musicians to make money from its streaming music service, through a partnership with US company BandPage.
The pair have teamed up to enable artists to sell “VIP experiences” to fans from their Spotify profile pages, including access to exclusive concerts, meet’n’greets, Skype conversationsand limited-edition merchandise.
Country artist Miranda Lambert, pop singer Ariana Grande and dance star Porter Robinson are among the first musicians to take advantage of the new feature, which will sit alongside existing ticket and merchandise sales on their profile pages.
The experiences are similar to those offered by musicians as part of crowdfunding campaigns on sites like Kickstarter, although in this case, they’re being sold rather than offered as rewards for pledges.
Spotify is not the first streaming music service to work with BandPage in this way. In September 2013, it announced a similar partnership with US service Rhapsody. More than 500,000 musicians have profiles on BandPage already.
For the Spotify launch, fans can pre-order Grande’s new album for $9.98 and get access to an online stream of her concert debuting its songs; pay $39.99 to meet Robinson during his upcoming tour and get a mask prop from a recent video; or buy Lambert’s $25 t-shirt and beer-cooler bundle.
Other examples include US band Tea Leaf Green charging fans $200 to collaborate on one of their own songs with its drummer and producer, and The Stone Foxes charging $30 for fans to watch soundchecks and meet them on their next tour.
“Offering direct-to-fan experiences represents a massive opportunity for musicians,” BandPage chief executive J Sider told The Guardian, citing a report from research firm Nielsen suggesting that this area could be worth up to $2.6bn a year to artists.
“At BandPage, we’ve seen bands increase their net revenue by as much as 25% by adding experiences like VIP backstage passes, online concerts, custom recordings and more. And fans absolutely love the opportunity to connect with their favourite artists in this way.”
Spotify’s director of artist services Mark Williamson told The Guardian that the new experiences feature will be live in nine countries today – the US, UK, Ireland, Australia, New Zealand, Denmark, Sweden, Norway and Iceland – with more to follow.
This week the Viacom Music Group released research finding regarding the "Music Experience" of today's 13 to 40 year olds. It's an interesting study with plenty that will be taken out of context leading to confusion (which isn't a bad thing if the confused people are your competitors) and some really interesting points that may not be pursued. Even so, the report paints an intriquing picture of what today's young yet soon to be old people have to say about their experience of music. Viacom shared their research findings in a blog post this week.
In a 2013 survey conducted by Harris Interactive, 78% of American adults confirmed that they watched TV on “their own schedule.” In other words, the majority of Americans are choosing to by-pass scheduled television programming for the convenience of on-demand TV on their computers. For the tech industry, this practice has launched a competitive market for streaming on-demand media providers that have given viewers quality content such as Orange is the New Black and House of Cards. However, for the music biz, watching television on the internet has taken its toll on songwriters’ income.
According to IFPI, revenues for synchronization licenses (see Part I for more information on these guys) decreased by almost 4% in 2013. Les Scott, who specializes in placing music in television and film for over 350 artists, remarks that revenue from sync will keep “going down and down and it will only continue to do so.”
Why is this the case and what does America’s habitual love for internet TV have to do with it? Scott explains that performance rights organizations (PROS), such as ASCAP, BMI, and SESAC, negotiate a flat fee (known as a “blanket license”) with television networks for the right to use a copyrighted work that is controlled by that particular PRO. Since the negotiations were established, the value of a blanket license has historically increased as more and more people started watching television. More viewers meant more advertising sales for the networks and, in turn, meant that the networks were willing to fork over more cash to the PROS to play their tracks in their TV shows. It wasn’t until recently that the revenues from sync began to decrease.
Scott argues that the problem arose when “viewers elected to go away from their television set and go watch things online.” As shown by a fall in TV subscriptions by more than a quarter million dollars in 2013, many Americans are finding it easier to pull up their favorite shows on their own schedules than accommodate television’s non-adjustable air times. The decreased amount of viewers on traditional cable, fiber, and satellite services has created a domino effect wherein companies negotiate lower prices for advertisement sales, allotting less in advertising revenue to television networks, and, thereby, driving down the bargaining price of blanket license fees. “[Networks] have less money when [PROS] come to the table,” explains Scott. “As a result, [PROS] are getting less money. Therefore [copyright holders] are getting less money because [PROS] are getting less money.”
An ongoing battle with YouTube over alleged heavy handed negotiating tactics and unfair terms for their unlaunched subscription music service, has united the global independent music community on the broader issue of fairness in all digital deals. In a not so veiled jab at YouTube and other digital services, global indie trade group WIN has released an open letter signed by more than 700 independent labels that calls for fair digital music deals.
"The big print giveth and the small print taketh away.”
That line from Tom Waits headlines the Fair Digital Deals Declaration, an open letter which calls not just for more transparency both between digital music services and labels, but also between the labels and their artists. Indie labels signing on include Domino Recordings, Beggars Group and Secretly Canadian.
The five key points of the manifesto are:
We will ensure that artists’ share of download and streaming revenues is clearly explained in recording agreements and royalty statements in reasonable summary form.We will account to artists a good-faith pro-rata share of any revenues and other compensation from digital services that stem from the monetization of recordings but are not attributed to specific recordings or performances.We will encourage better standards of information from digital services on the usage and monetization of music.We will support artists who choose to oppose, including publicly, unauthorized uses of their music.We will support the collective position of the global independent record company sector as outlined in the Global Independent Manifesto.
The long drawn out demise of recorded music revenue is well documented, as is the story of artists, labels and managers all trying to make sense of a world in which music sales can no longer be counted upon. But the contraction of recorded revenue has occurred at the exact same time that the live music sector has undergone a renaissance. The net effect, when coupled with publishing revenue holding its own and the growth of albeit modest, merchandise revenue, is that the global music industry has largely held its own, contracting by just 3% between 2000 and 2013 (see figure).