Thursday, October 17, 2013

Why The SFX IPO Is Bad For EDM

SFX Buys Beatport image
SFX Entertainment’s recent IPO (Initial Public Offering) seems to have met both some backlash and bad timing, as it’s stock continues to struggle to come back to its original IPO price of $13 per share. Part of this is due to the stock market having a case of the yips over our boys in Washington being unable to come together to fund the government, so there’s your bad timing. The other part is due to the IPO stock offering being on the high side to begin with, much like the Facebook IPO last year.

But the fact that we’re even talking about the stock price rather than the company’s impact on music is the problem here, and it’s a symptom of a larger malady that pertains uniquely to the entertainment business. Once a company goes public, it becomes beholden to the stockholder and not the customer, and that’s bad for a company based around a totally creative product. In this case its music, more specifically electronic dance music (EDM), where SFX has made its big play.


Just a refresher on SFX - it’s the brainchild of chief executive and chairman Robert Sillerman, who saw how EDM was becoming the next big trend in music and wanted to cash in on its popularity. The company went on a buying spree, rolling up several event producers as well as online music store Beatport, and was planning on using the IPO money for additional acquisitions of other major EDM events.

It’s great when someone has so much confidence in a part of the music industry that he invests heavily in it, and then convinces Wall Street to invest as well, but that also brings about a self-fulfilling prophecy, meaning that when big money comes into something artistic, the art inevitably gets squeezed out in favor of something safer and more likely to result in a profit. Read more on Forbes.
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Follow me on Forbes for some insights on the new music business.

You should follow me on Twitter and Facebook for daily news and updates on production and the music business.

Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.

Wednesday, October 16, 2013

Spotify And Pandora Pros And Cons

Streaming music is taking off and predictions are that its 29 million worldwide paying subscribers will grow to at least 191 million in 5 years (I think it will be more). In the meantime, Spotify and Pandora are the big dogs on the block for the moment (expect iTunes Radio to take that mantle soon). Here's a pretty good set of pros and cons between them, courtesy of The Music Bed.


Keep in mind that the above is from the consumer's point of view. There's a whole different set of pros and cons when it comes to the artist and songwriter, but it mostly stems around the fact that the royalty rate is so low. Keep in mind that if the number of paying subscribers raises by the factor of 6 as predicted, so will the revenue streams to artists.

It's probably not possible to get a higher royalty rate from streaming services in that few of them make money as is due to the already high cost of the content. That said, the tiny royalties won't be so small with a lot more subscribers on board.
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Follow me on Forbes for some insights on the new music business.

You should follow me on Twitter and Facebook for daily news and updates on production and the music business.

Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.

Tuesday, October 15, 2013

The 20 Highest Paid Hip Hop Artists

This year's Forbes Top 20 Best Paid Hip Hop Stars list is here. Although there are few surprises on the list, the one thing that did stick out was how far the earnings at the bottom of the list were. As you probably surmised, Diddy, Jay Z, Dr. Dre and Nicki Manaj dominated again. Take a look.

1. Diddy ($50 million)
2. Jay Z ($43 million)
3. Dr. Dre ($40 million)
4. Nicki Manaj ($29 million)
5. Birdman ($21 million)
6. Kanye West ($20 million)
7. Lil Wayne ($16 million)
8. Wiz Khalifa ($14 million)
9. Ludacris ($12 million)
10. Pitbull ($11 million)
11. Drake ($10.5 million)
12. Snoop Lion ($10 million, tie)
12. Eminem ($10 million, tie)
14. Kendrick Lamar ($9 million, tie)
14. Pharrell Williams ($9 million, tie)
14. Macklemore & Ryan Lewis ($9 million, tie)
17. Swizz Beatz ($8.5 million)
18. Tech N9ne ($7.5 million)
19. 50 Cent ($7 million)
20. Lil Jon ($6 million, tie)

Read the article on Forbes for more details.
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You should follow me on Twitter and Facebook for daily news and updates on production and the music business.

Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.

Monday, October 14, 2013

Another Piece Of The Music Business Evolves

NARM-MBA image
It’s rare when a trade association reinvents itself. After all, they mostly fall into the same trap as most corporations, trying to maintain the status quo rather than experiencing the change needed to keep growing. Associations, like many companies, generally don’t want to experience the pain that evolution can bring, even if it’s in it’s own best self-interest.

That’s why the re-branding of NARM (the National Association of Recording Merchandisers) to become the Music Business Association is so impressive. The board recognized that we live in a totally different world than when the association began in 1958, and it needed more than just a coat of paint to be relevant to its members in our current Music 4.0 world.

The new Music Business Association will divide its attention around six sectors that now make up the new music business: digital products, information technology, physical products, knowledge, management, touring and legal/business affairs. This division recognizes that the music business has evolved to become far more than just selling music products in brick and mortar stores as when it began. Addressing these different sectors also acknowledges that the in order to grow, the organization has to represent more areas of the music business than just retail, which really was at the core of NARM in its previous iteration. Read more on Forbes.
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You should follow me on Twitter and Facebook for daily news and updates on production and the music business.

Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.

Sunday, October 13, 2013

Twitter's Interesting New Usage Numbers

Twitter image
Twitter recently filed to go public and within their S-1 (the document that the SEC requires all public companies to make about their basic business and finances) where a number of very interesting usage statistics.

  • Twitter has 100 million daily active users.
  • It has about 215 million monthly active users, but 169 million (77%) are outside of the United States.
  • 75% of Twitter users access it via a mobile device.
  • Since it's inception in 2006, there have been over 300 billion tweets.
  • More than 6 million websites have integrated Twitter.
  • Most of the users outside the US are from Argentina, France, Japan, Russia, Saudi Arabia, and South Africa. 

Of course there was some interesting financial stats as well, like:

  • Twitter looks to be doubling in growth this year, with revenue projected at $656 million this year.
  • 87% of its revenue comes from advertising, with the rest coming from licensing agreements with companies that want better access to the platform.
  • 65% of it's ad revenue comes from mobile devices.
  • The company still isn't profitable, losing around $80 million last year.
  • It could be worth as much as $20 billion when it finally goes public!

It will be interesting to see what happens when Twitter finally goes public, since so many times a company changes because it becomes more worried about it's stockholders than its customers. That said, it should be an interesting ride, at least in the beginning.
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Follow me on Forbes for some insights on the new music business.

You should follow me on Twitter and Facebook for daily news and updates on production and the music business.

Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.

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