You'd think that a song popular enough to get tens of thousands, hundreds of thousands, or even millions of plays would generate some substantial income for the performer. You sell in substantial mass and get compensated accordingly. That's not the case, according to Billboard's annual Money Makers report.
It seems that the income to the artists from all those streams are shockingly low. Of the top 100 musical money makers of 2009, only 10 made more than $2,000 from interactive streams, with Beyonce topping the list with a mere $5,000!
What's more, only 25 artists made more than $1,000 from on-demand streams, with Michael Jackson topping the list with $10,000 (these figures are US only and don't include publishing).
But there's still some real money in digital album download sales. 13 artists generated sales of over $200,000, again led by The King Of Pop with $800,000, and another 26 made more than $100k. And single track sales pulled in the kind of money you'd expect a pop star to generate. 3 acts generated more than $1 million in digital track sales, with Lady Gaga leading the pack, and 33 others made at least $100k from digital single track download sales.
Streams from subscription services like Rhapsody actually paid off a little though, with 26 earning more than $100,000, led by Nickelback, Michael Jackson, and Taylor Swift.
So what does this all mean? Even though we think we've figured out how to monetize music in Music 3.0, it's still a moving target. There are still many holes in the system, with the artists still taking the brunt of any shortfalls that occur. Because even if subscription music takes hold in a big way and the income stream of the industry takes a big leap forward, there's still no guarantee that the money will find it's way into the artist's pocketbook.
My buddy Richard Feldman, who's president of the American Independent Music Publishers (AIMP), a Grammy-winner producer and songwriter, and owner of Artist First publishing, wrote an interesting post on the AIMP blog the other day.
Richard takes a look at the current state of music copyright and music piracy and has some interesting numbers that can be downright scary or hopeful, depending upon your outlook for the business. Among the numbers:
Illegal P2P trading is estimated to be close to 90 million files per year, according to the IFPI's 2009 report.
Worldwide music sales for 2009 were $16 billion, again from the same IFPI report.
If just 10% of illegally traded songs per year were monetized (that adds up to 9 billion songs per year), $6.75 billion additional dollars could be injected into the industry if the income from song were 75 cents.
The technology doesn't exist to actually catch someone in the act of illegal file sharing (this was a surprise).
Digital piracy is not the only reason that the music business is in trouble these days, but if only a portion is converted to real sales, the music industry could change almost overnight. Check out Richard's post at the AIMP blog.
Sometimes we assume some things about the Internet that just aren't true. We think that it's a tool primarily for the young, but that's not necessarily so. This became a personal revelation when my 80 year old father found my parents new home by surfing the web. No realtor, no word of mouth, and none of the traditional tools, just a browser.
Briana Kerensky crunched some numbers from 19 different social media sites, including Facebook, LinkedIn, MySpace, Twitter, Delicious and StumbleUpon, to come up with some surprising numbers in a post on Pingdom.com, that verify that it's not teenagers and young adults dominating the social media sphere - it's their parents. The following is from Briana's post.
1. A quarter of social media users are between the ages of 35 and 44. According to Pingdom, people of middle age are the most "social" age group out there, because they were the generation of people in their 20s when online social networking took off in the mid-1990s.
2. 61 percent of Facebook's users are middle aged or older. While Facebook was originally created with college students in mind, older users have since taken over. According to Pingdom's study, 61 percent of Facebook's users are aged 35 and over, with the average age being 37. A full 64 percent of Twitter's users are over the age of 35 as well, with the average age of 39.
3. College-age people do not dominate any particular Web site. Pingdom's study revealed that no single Web site is the premiere choice for today's 18-24 year-olds.
4. The 17 and under crowd dominates Bebo. The only social networking site to have any kind of grip on the under 30 group is Bebo, which has an average age of 28. On Bebo 44 percent of the users are below 17 years of age. Owned by AOL, Bebo offers many of the same benefits as Facebook, but with more options to personalize profiles. It also offers space to promote music and original written works. Myspace also had a young group of users, with 33 percent being under 17.
5. Senior citizens have not caught on to social media yet. Folks aged 55-64, and 65 and over, are not heavy social media users. Pingdom attributes this stat to various factors, including seniors' lack of technical prowess and interest in the Internet. There's also the fact that social networking sites tend to be pretty time consuming for users. The older generation, which wasn't raised with home computers or phones with Internet (and got along with life just fine) just isn't used to using the Web as frequently as others.
6. Classmates.com has the largest amount of older members. Classmates.com had the largest number of users over the age of 65, at 8 percent. Another 78 percent are over the age of 35. Classmates.com, which has been on the Internet since 1995, allows users to find, connect with, and keep in touch with people from throughout their lives. While it may just sound like a more nostalgic version of Facebook or MySpace, in 2008 Nielsen Online rated the Web site as number three in unique monthly visitors. In the United States and Canada alone, there are 40 million active Classmates.com members.
All this doesn't have a lot to do with music except for the fact that you can't assume anything when it comes to the Internet and social networking. Knowing your audience is still of prime importance.
Here's a great video from New York entertainment attorney Wallace Collins describing the two copyright arrangements (performance and mechanical publishing royalties) that keep the music business churning. What's even better, he describes the Controlled Composition clause that severely limits the mechanical royalties that an artist who writes his own songs gets.
This is a clause that not well-understood, but Wallace does a great job explaining how it works as well as the possible negotiating strategies with a label. Yes, it's legal, but it's easy on the ears as the explanation is very simple and straight-forward.
Heath Close posted a great video on his In The Box Production blog called "Monitoring Your Online Presence."
It has some great tips for finding out who's writing about you or your band on Facebook and Twitter. While you still can't beat the granularity of Google Analytics, Stat Counter, Youtube analytics or Tynt Tracer for your website and blog, Heath's techniques give you a pretty good idea of exactly what your penetration is in the most widely used of the social networks, albeit without the precision of the fore mentioned tools.
The Sellaband website described in yesterday's post has been off-line for the last 3 days. Now it appears that the company has been declared insolvent, which is the Dutch equivalent to bankruptcy (Sellaband is a Dutch company).
There's no word on what will happen to the funds raised by Public Enemy and other bands through the site, which could spell bad news for both bands and investors. Sellaband now seems to be one of those great Internet ideas that just can't be monetized. Too bad.
In other news, Rolling Stone Magazine'swebsite has also been down for a few days, but speculation is that they let they're name registration lapse because of the error message that's displayed. Whether that's the case or not, it's a good lesson to every artist and band that owns their own website - always keep up with the name registration. Once it lapses, it may be tough to get back.
Recently the Recording Industry Association of America (RIAA) released their tally of the decade's highest Gold and Platinum award achievements. About the most interesting thing about these totals is that most of the sales came in the beginning of the decade when CD's were still selling. Still, there are some impressive numbers on the list. I wonder what these totals will look like in 10 years?
The following comes via the always entertaining Hypebot blog.
TOP ARTIST TALLIES
Each level of multi-Platinum counts as its own unit and contributes to the tally. Only music released, as well as certifications granted, during 2000 - 2009 are included. Most total certifications (includes cumulative album, digital song, master ringtone, and music video certifications):
Group: The Eagles – 48 (Warner)
Male solo artist: Michael Jackson – 44 (Sony/Epic)
Female solo artist: Beyonce – 64 (Sony/Columbia)
Most album certifications:
Group: Nickelback – 25 (Roadrunner)
Male solo artist: George Strait – 29 (UMG/MCA Nashville)
Female solo artist: Britney Spears – 23 (Sony/Jive)
Most digital song certifications:
Group: Linkin Park – 13 (Warner)
Male solo artist: Kanye West – 19 (UMG/Def Jam)
Female solo artist: Taylor Swift – 25 (Big Machine)
Most master ringtone certifications:
Male solo artist: T.I. – 15 (WMG/Atlantic/Grand Hustle)
Female solo artist: Beyonce – 19 (Sony/Columbia)
HIGHEST CERTIFIED RELEASES
*Format is: (record label/year released)
Highest certified album:
Group: *NSYNC’s No Strings Attached (Sony/Jive, 2000), – 11x Platinum & OutKast’s Speakerboxxx/The Love Below – 11x Platinum (LaFace/Jive, 2003)
Male solo artist: Usher’s Confessions – 10x Platinum (LaFace/Jive, 2004)
Group: Coldplay’s “Viva La Vida” – 3x multi-Platinum (EMI/Capitol, 2008) and The Fray’s “How to Save a Life” – 3x multi-Platinum (Sony/Epic, 2006)
Male solo artist: Flo Rida’s “Low” – 5x multi-Platinum (Warner/Atlantic, 2008)
Female solo artist: Lady Gaga’s “Just Dance” – 4x multi-Platinum (UMG/Interscope, 2008) and Taylor Swift’s “Love Story” – 4x multi-Platinum (Big Machine, 2008)
Highest certified master ringtone:
Group: D4L’s “Laffy Taffy” – 3x multi-Platinum (Atlantic, 2006), Hinder’s “Lips of an Angel” – 3x multi-Platinum (Universal Records, 2006), and Shop Boyz’ “Party Like a Rockstar” –3x multi-Platinum (Universal, 2007)
Male solo artist: Lil Wayne’s “Lollipop” – 5x multi-Platinum (Universal/Cash Money, 2008)
Female solo artist: Beyonce’s “Irreplaceable” – 3x multi-Platinum (Sony/Columbia, 2006)
NOTABLE DECADE DATES
September 23, 2004 - The decade’s highest certified album by a female solo artist – Shania Twain’s Up! – reaches 11x multi-Platinum
October 22, 2004 - Digital Single award introduced. 45 titles were included in the initial group of certifications, encompassing tracks from each major recording company and representing nearly every genre in music
October 7, 2005 - Interscope artist Gwen Stefani’s “Hollaback Girl” becomes first digital single to sell one million units
November 1, 2006 - Capitol Nashville country artist Garth Brooks takes Double Live (2008) 21x multi-Platinum. Garth Brooks is currently the best-selling solo artist in history having certified more than 128 million units to date
June 2006 - Master Ringtone award introduced. The Black Eyed Peas, Chamillionaire, D4L, T-Pain earn the RIAA’s first multi-Platinum ringtone certifications
January 10, 2007 = Daniel Powter’s “Bad Day” goes double-Platinum to become the RIAA’s first multi-Platinum digital download
July 27, 2007 - The best selling ringtone by a female solo artist, Beyonce’s “Irreplaceable,” certifies 3x multi-Platinum
2008 - The RIAA celebrates 50th Anniversary of Gold Record
November 7, 2008 - The decade’s highest certified album by a male solo artist – Usher’s Confessions – reaches 10x multi-Platinum
May 8, 2009 - Flo Rida’s “Low” goes 5x multi-Platinum; is the highest certified digital download in history
August 21, 2009 - Michael Jackson’s legendary album Thriller climbs to 29x multi-Platinum to tie the Eagles’ Their Greatest Hits (1971-1975) as the highest certified album in RIAA Gold and Platinum history
October 12, 2009 - The decade’s top recipient of digital download certifications – Taylor Swift – takes her best selling song “Love Story” 4x multi-Platinum
December 15, 2009 - Lil Wayne’s ringtone “Lollipop” becomes the highest certified ringtone ever at 5x multi-Platinum
Fan funding a recording was a hot topic the past couple of years. So much so that a website called Sellaband was launched as a way of facilitating the funding and a number of acts actually met with some success as a result. Indeed, 43 bands reached their funding targets through the site, with 35 of them set at the $50k mark and another at $60k, although most have been in the $10 to 20k range.
While raising funds from your fans might be a wise strategy for financing your next album, not everyone is successful, mostly because there's insufficient incentive for the fans to open up their wallets. The once mega Public Enemy is a prime example. The group was trying to raise $250,000 for recording and marketing a new album, and in December was 28% of the way there with $71,000 pledged. Since then, however, the fund has actually slipped to $67,400 instead of increasing.
Even though PE has been far more successful than any other band on the site in terms of total money invested, they're still unlikely to hit their target and here's why.
1) Like similar offerings, PE has multiple investment levels. Here's what they call "exciting incentives":
"Believer" Level = 1 Part ($25) Incentive: Exclusive, numbered CD in Digipak 1
"Hype" Level - 4 Parts ($100) Incentive: Exclusive, numbered CD Digipak, opportunity to buy 2nd CD at 50% off, & Name in booklet 4
"Rebel" Level - 10 Parts ($250) Incentive: All of Above plus Exclusive Limited Edition Public Enemy T Shirt 10
"Posse" Level - 20 Parts ($500) Incentive: All of Above plus Autographed Copy of CD signed by Chuck D 20
"Terrordome" Level [Limited to 50 investors] - 40 Parts ($1,000) Incentive: All of Above plus Unlimited use backstage pass for 3 years 40
"Bring The Noise" Level [Limited to 15 Investors] - 200 Parts ($5,000) Incentive: All of Above plus Executive Producer Credit on Album 200
"PE Number One" Level [Limited to 5 Investors] - 400 Parts ($10,000) Incentive: All of Above plus Studio Visit during recording session 400
The problem here is that the "exciting incentives" aren't really that exciting. You pay a relatively high price for not a lot in return. Perhaps they think that they don't have to offer more because they're a well-known entity, but it appears their fans have spoken with their lack of participation (or an example of a campaign done well, check out Josh Freese).
2) The average investment per donor is pretty low at an average of about $75 per each of their 901 investors. Most other acts average well beyond 100 bucks, with some approaching 200. Again, there's not much of a benefit for the investor at almost any level so there's no enticement to throw a lot of money at it.
3) Sellaband doesn't have much in the way of tools to market much beyond their particular network, and PE hasn't had a good enough social networking campaign to continue to reach out to potential investors.
In fact, PE could've used their fame for a dynamite marketing campaign, but if the following video is an example of what they'e doing, it was doomed to fail.
How could you make a video trying to raise money without adding any details? There's no steak and no sizzle.
4) It's hard to be sympathetic to a band asking for money who has a member that's all over television in commercials and reality shows. If Flavor Flav is so famous, why doesn't he finance it?
The lesson here is that for fan financing to work, they must feel like their getting something special at any investment level. Bang for the buck is just as important in this arena as in any other.
As long as musician have been signed to record labels there's been misunderstandings about what's in the contract, almost always by the artist. What's unusual is when you actually have an audio recording of the disagreement. What's even more unusual is when this recording is from way back in 1956 and it involves the legendary Buddy Holly.
Here's the setup. Buddy and his band were spotted by a talent scout opening for Elvis and signed to the Decca label out of Nashville. Decca had them record 5 tracks with famed producer Owen Bradley, but no one liked the result, so Decca declined the option on Buddy's contract when it came up for renewal. Buddy was OK about being released, but wanted to be able to use the songs that he recorded, so he called the president of Decca to get permission. He also secretly recorded the call, which is what you're about to hear.
Decca refused to let him use the songs (which included what became his huge hit, "That'll Be The Day"), which is understandable since they wanted to recoup the money they spent. Holly eventually got around the deal by recording the songs for a subsidiary of Decca under the name of the band "The Crickets," which is probably why Decca never took him to court, which they probably had the right to do.
I spotted this video on the great Musicianscooler blog. Dave Jackson of Musicians Cooler recently did a couple of interviews with me regarding my Music 3.0 and How To Make Your Band Sound Great books. Thanks, Dave! I'll post the links when the interviews go live.
Predictions are usually left until the end of the year, but there are some trends that seem to be giving us an idea of what we'll find commonplace in an Internet world not that far away (5 years or less). All of these are good news for musicians, by the way. So if I may, let me give you my 4 predictions about the Web of the future.
1) Speed will no longer be an issue. Depending upon which study you read, the United States ranks between 13th and 28th in the world regarding Internet speed. That looks to be addressed soon with initiatives from the FCC to raise the bar to 100mbs, and from Google to significantly top that. With much of the rest of the industrialized world already over the hump in terms of a big speedy pipe for media delivery, it will be interesting when that limitation is finally breached in the US. While we already watch short videos with no problem at all, and even the last bastion of media limitation, the long form movie, is already being delivered with regularity, full 1080p (and not the severely compressed kind) and 3D movies with full interactivity beckon as we hit the blazing speeds of the future.
2) The computer will not be our prime interface. You might think that this prediction is based upon the upcoming release of the iPad, but our Smartphones have already pointed the way. In the not too distant future, our computers will be used for what they do really well, which is input data, while everything else will be used for access and viewing of Web content, including phones, tablets, the new generation of televisions coming on the market, and some other "output" devices that hasn't come into every day view yet.
3) Social Networking will continue to dominate. Just about all social networking is still rising all over the world and that won't stop any time soon. Humans are social by nature so connecting via the Web is just an extension of what we already like to do. Even those that are normally anti-social in the physical sense are able to interact via social networking. As Internet speeds gets faster and we get more and more devices that we can use as an interface, expect that interaction to increase, but also expect new ways to interact via a host of new apps.
4) Piracy will finally be held in check. Not completely eliminated (when has that ever happened?) but somewhat thwarted via IPv6, a technology that's been around for some time but never fully utilized. Internet Protocol Version 6 (IPv6) will finally replace Internet Protocol Version 4 (IPv4 - what we use today to assign a specific address to a website) simply because we running out of Internet Web addresses. But along with more addresses than we can ever use (79 octillion more!!) via IPv6, we get the ability to put a unique code on every frame of film or video every made, every second of every song and every paragraph of text. There are a lot of very smart people (some of which I know personally) that have this worked out already, and pretty soon the timing will be right as the world realizes that new websites are no longer possible with IPv4. This one technology has huge implications on so many facets of our connected world, so it will be a lot of fun to see how it plays out.
The future for the Web is indeed speedy and bright. Can't wait for it to get here.
As noted in a number of previous posts, EMI Records has been in pretty tough straights since it was purchased by investment fund Terra Firma a couple of years ago. The reason was the TF played fast and loose with Citibank's money, who put up most of the funds for the sale.
Now Citi wants its money and TF doesn't have it, so EMI has been in a slow death spiral. It can't pay it's bills and it can't get new artists or keep old ones since they have no money for support. What can they do? Sell off parts of the company, of course.
EMI recently tried to sell it lucrative publishing arm, but the sale was stopped by Citi. In the end, it will eventually happen anyway (it's publishing an catalog are the only things worth anything these days) as this once giant of industry dies a slow and unbecoming death.
But one thing it can sell is the revered Abbey Road Studios, according to an article in the Financial Times. The studio was purchased in 1929 for about $160,000 but reportedly will bring in tens of millions of dollars, since the brand name is worth far more than either the studio or real estate. That will hardly put a dent in the more than 5.5 billion dollars still owed to Citi, but the studio is bound to prosper more away from EMI than within it. If you're not much into music history, Abbey Road is where some of the biggest selling records of all time were made, including most of The Beatles recorded output, Pink Floyd, Radiohead, and many many more.
So if really want to buy a studio, take a tour of Abbey Road.
If you read my Big Picture blog, sorry for the cross-post, but I thought the topic fit for both.
David Frey, manager for Cheap Trick, hit upon an interesting point in his post on the Tunecore blog the other day. He stated that Neilsen/Soundscan (the company that measures CD and digital sales), Amazon, Ticketmaster and a host of other entities own all the information of the band's sales, and that they then sell it to whomever wants it. Of course, the band doesn't get a piece of the sale but that's besides the point here.
Frey was taking issue especially with Soundscan, who would sell that info and the end result was to the detriment of the band. Whenever Cheap Trick would self-release an album, a new re-issue would suddenly appear from the band's former record labels which would in turn cannibalize the sales of the band's new release. How would the labels find out? They'd buy the info from Soundscan.
So Frey and the band decided to try to get around Soundscan, this time by releasing the album through Tunecore and specifically requesting that it not be reported to Soundscan. But Soundscan still managed to get the data. Since they could no longer collect it, they'd buy it from the likes of Starbucks, the major retailers like Best Buy and Wal-Mart, iTunes, Amazon, and any number of other sources. Soundscan then was able to sell the info once again to anyone that wanted it, and so the cycle continues.
Cheap Trick has been a more-or-less music business constant for over 35 years so this incident doesn't apply to most artists and bands just entering the business or trying to get over the visibility hump. Still, it does illustrate that your information (both the sales data and meta-data) is an important product in Music 3.0, and that's it's difficult at this time to control and near impossible to make money from.
I predict that data and meta-data ownership will become a huge battleground in the future as more artists become aware that they own own a lot less of their information than they think.
