Are Music Piracy Numbers Overblown?

It's always so difficult to determine what to make out of any statistic regarding content piracy, since it's all such a big guess. Think about it for a second - if it's as difficult as it is to get precise numbers on real sales that aren't being reported (anything outside of SoundScan, like direct downloads or CD sales off an artist's website, usually isn't taken into consideration), what makes anyone think that the piracy numbers are anything more than a number pulled out of thin air?

I've heard from usually reliable sources that for every 1 legal digital download there are 20 that are pirated, yet others have told me it's only 1 in 10. Last week the IFPI reported that sales from digital albums dropped 12%, and in their minds it was mostly due of pirated music (you can read more about the report here). Don't you think it could be because the number of cash cow CD sales are down, or maybe because there hasn't been as many really big hits lately, or that music in general is soft because there hasn't been a new trend that pushes sales for a while?

Former EMI president Rupert Perry once told me in an interview for my Music 3.0 book that even back in the 60's they always thought that they were losing at least 20% of their sales to piracy, so this isn't something new to the industry at all. But it certainly makes for a convenient excuse when sales decline year after year the way they have.

Now a study conducted at Carlos III University of Madrid in Spain, in collaboration with scientists at the IMDEA Networks Institute, the University of Oregon (USA) and the Technical University of Darmstadt (Germany), seems to give us a better picture of exactly what's happening in piracy land.

According to an article on Smarplanet, the researchers found that illegal file sharers tended to be either  organizations (like record labels) that put up fake or malware-infected files to discourage piracy (called “fake publishers”), or "top publishers" who earn a profit from advertising and subscription using pirated content as bait.

In the end, the study concluded that "since BitTorrent’s popularity is tied to a small group of users who engage in illegal file-sharing for 'economic benefits,' if the same users lost interest or simply disappeared, BitTorrent’s traffic would be 'drastically reduced.'”

This suggests that piracy, while still a problem, isn't as bad a problem as we've been lead to believe, and certainly no worse than it's ever been. The problems of the music industry must lie somewhere else, which is something that we'll cover in another post.

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Music Consumer's Interesting Digital Behaviors

Neilsen Music and Midem recently conducted a survey of 26,644 online consumers in 53 markets across the globe during September 2010 about their digital music consumption habits. Here are some of the results of that survey:

• There is no single distribution channel being used by even 60% of the global online audience. In other words, there is a wide diversity of music distribution services worldwide.

• Nine channels of music consumption are each used by 20% or more of global online music consumers.

• People now consume more music by watching it than any other means. 57% have watched music videos on computers in the last three months from sites like YouTube.

• Music streaming is coming on strong, either on a computer (26%), streaming music on a mobile phone (21%), watching music video on mobile phones (23%) or using music apps (20%).

• More than 50% globally have downloaded a song from the internet for free in the last three months, some completely legally. But in addition, slightly more than 20% of respondents aged 34 and under have paid to download a music track to their computer in the last three months. From age 35 onwards, this percentage drops regularly and significantly.

• Music consumers between age 21 and 34 will do more of everything than the average: they watch more music videos (on the computer or TV), they download more songs (paid or not), they stream music more. Beyond 35, there is a slight but consistent erosion of music consumption from any of these channels.

• Accessing digital tracks on the computer is essential: 49% of the global online music consumers access their music this way several times a week (and 28% of global consumers access their digital tracks daily). 44% of online global consumers access internet video services several times a week. Streaming music via a computer (at 36%) and accessing music via social networking sites (35%) are the next most popular consumption methods in the last three months.

• 57% of the online global consumers polled had watched a music video on their computer in the last 3 months. Only a bit over 20%, of online global consumers had watched a music video on a mobile phone. 

• Globally 22% of online respondents own a smartphone (one in four consumers in Asia Pacific and one in five of consumers in Europe) and another 22 percent said they planned to definitely or probably purchase a smartphone in the next 12 months.

Other interesting items include:

• Men are more fond of watching videos on their mobile phone.

• Age makes a bigger difference in consumer’s music video watching preference than gender. The younger the consumer, the more likely they are to have consumed music videos via either of the media.

• Consumption via computer is more popular than watching on a mobile phone across all age groups. But as age rises, the disparity between watching on a computer and on a mobile phone also rises.

We're clearly changing our music consumption habits world-wide. Consumers are buying less, but consuming more music than ever, and music video is rapidly becoming the music consumption vehicle of choice.

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

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Are Listening Clubs The New Book Clubs?

It appears that there's a growing trend in the UK these days called "Listening Clubs" where a group of people get together to listen to a classic album from beginning to end, according to an article by the BBC News. What's more, the playback source is high quality vinyl played through high quality audio gear, in order to make the experience as enjoyable as possible.

As we did in the past, the listeners get comfortable, the lights are dimmed, phones are turned off, and late arrivals are encourage to wait until the end of the album before entering.

Anyone who grew up in the age of vinyl knows that listening like this was a common practice back then. You would often go to someone's house just so you could hear a new album, and most often you'd listen all the way through the record. It was just part of every day life back then. You never thought twice about it. Music meant a lot to people (as it does now), but the overall listening experience was way different.

One of the reasons that vinyl records lend themselves so much to this practice is the fact that they real do sound better from a number of standpoints. The audio was much less compressed, which gave the songs some dynamics and created very little ear fatigue (a real problem with today's CDs and especially MP3s these days). And the audio quality in the way the record was made, the playback source (the record itself), and usually the playback system were quite a bit better than we're used to today. In fact, it was difficult to find anyone that didn't have a quality sound system back then. Even the lowliest dorm room's playback was far superior to what's normally found everywhere but the studio and audiophile household today.

We can only hope that this trend extends to the United States, since today's listeners should really be exposed to the joys of excellent music played back through an excellent sound system. Once the bar is raised in what you're listening to, it's difficult to listen to MP3's ever again.

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

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The State Of The Music Industry For 2010

The International Federation of the Phonographic Industry (IFPI), the association that represents the recording industry worldwide, recently released its Digital Music Report for 2010. In it was a lot of information that certainly put the state of the entire music industry in perspective, such as:

1) It's estimated that 95% of all music downloads are unlicensed, or 19 out of every 20. Spain has the highest piracy rate, and it's estimated that 45% of all Spanish Internet users get their music illegally.

2) Worldwide, digital music accounted for 29% of record label revenues last year, as opposed to 25% the year before. In the US, the percentage was much higher, with a full 50% of the record label revenues coming from digital sales. In Europe, digital sales grew by 20%

3) More than 400 legal music services now exist globally, 200 of them in Europe alone.

4) Global music sales were down 9% in 2010, while digital music sales were up only 6%. The total global revenue was $4.6 billion, which is about 10 times less than what Apple has in its bank account.

5) Box office sales of the top 50 tours dropped by 12% last year and the number of tickets sold declined. The revenue looks higher than it really is because the price of tickets have gone up.

6) Fewer new artists are breaking through globally. Total sales by debut artists in the global top 50 album chart in 2010 were just one quarter of the level they achieved in 2003

Now you can look at this report and see doom and gloom written all over it, but I'm going to give you a different perspective. The industry is changing and the big shakeout is in progress. You'll soon see many of the old guard drop away, and with them, their way of doing business. You'll see much of the big money that controls the business abandon it because it's no longer profitable. Good riddance to them.

In their place will be a new business and a new way of working. The new music business may never return to its former heights, but it will be better than ever and well worth the wait. New blood, new energy, new music, new excitement. Right around the bend.

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

Don't forget to check out my Music 3.0 blog for tips and tricks on navigating the music business.

Help support this blog. Any purchases made through our Amazon links help support this website with no cost to you.

2010 Global Top 10 Digital Singles

Here are the top 10 global best selling singles for 2010, according the annual IFPI Digital Music report.

Ke$ha topped the global top 10 singles chart in 2010 with sales of 12.8 million copies of Tik Tok. This compares to 9.8 million copies of Lady Gaga's Poker Face which topped the chart in 2009.

	ARTIST	TITLE	SALES (m)
1	Ke$ha	TiK ToK	12.8
2	Lady Gaga feat. Beyoncé	Bad Romance	9.7
3	Eminem feat. Rihanna	Love The Way You Lie	9.3
4	Lady Gaga	Telephone	7.4
5	Usher feat. Will.i.am	OMG	6.9
6	Katy Perry	California Gurls	6.7
7	Train	Hey, Soul Sister	6.6
8	Justin Bieber	Baby	6.4
9	Black Eyed Peas	I Gotta Feeling	6.1
10	Paramore	crushcrushcrush	6.1

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Notice anything about these? They're all from major labels. The lesson is that major labels are still a necessity if you really want to break out big worldwide, at least as the industry is currently configured.

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You should follow me on Twitter 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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Bad Music Sales Get Worse

The news just keeps getting worse in regards to music industry sales. Last week the #1 album on the Billboard 200 chart by the band Cake, "Showroom of Compassion", sold just 44,000 copies, which is the lowest for a #1 since Soundscan began tracking sales in 1991.

The #1 record the week before, Taylor Swift's "Speak Now", was the previous all-time low at 52,000 (it was down to 35,000 this week), but this week managed to be a lot worse than that.

That being said, Britney Spears "Hold It Against Me" had a great debut atop the Digital Songs chart with 411,000 downloads sold, which was the largest debut ever for a female artist, topping Taylor Swift from about a year ago by almost 100,000.

Overall physical sales are down 11% from last week and 15% from this time last year. Then again, where are you going to go to buy a CD these days? With one of the last remaining CD retailers, FYE, about to shut its doors, it's not easy to buy one of those round pieces of plastic even if you wanted to.

That being said, digital sales are not terribly robust well, with Bruno Mars' "Grenade," at No. 2 (219,000; down 21%). Wiz Khalifa's "Black and Yellow" at 3 (190,000; up 3%), Katy Perry's"Firework" at 4 (184,000; down 20%), and Enrique Iglesias' "Tonight (I'm Lovin' You)" at #5 (182,000; down 5%). Overall, digital sales are down 8% from last week, but they are up 8% over last year at this time.

What's the upshot? CD album sales were the cash cow of the industry, but that cow is dead and slaughtered. It's now a singles world, but there's a huge difference in cash flow from 400,000 singles as compared to 400,000 albums like in the golden days. That doesn't necessarily mean that we'll never go back to album sales. It just means that's not where the music industry is at currently or in the foreseeable future. If you're an artist, you just gotta roll with it.

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You should follow me on Twitter 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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Ultimate Guitar Tone Handbook Contest

Enter to win a copy of The Ultimate Guitar Tone Handbook.

My latest book (co-authored with Rich Tozzoli) provides an intensive overview of why electric and acoustic guitars, amplifiers, speaker cabinets, and effects, sound the way they do, and shows you how to get the sound you've been searching for. Also loaded with recording and production tips, interviews, and a DVD.

Click here to learn how to enter.

Music 3.0 - The Video

If explained Music 3.0 a few times in the two years I've been writing this blog, but if you're a new reader that hasn't seen those posts, here's a video that shows you just how the music industry got to this place. The information is taken from the Music 3.0 Internet Music Guidebook.

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

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Why The Decline In Entertainment Spending Is A Good Thing

I've been accused of being negative lately in my posts and I guess if you look at them a certain way, that's true (sorry, don't mean to be). The fact is that there aren't a whole lot of positive stories around about the music business these days.

Actually, I don't see these stories as negative from the point of view that the sky is falling, and everything sucks and is dying, as much from the viewpoint that the business is in the middle of deep change and evolution. As with life, as one part dies, another is renewed.

That being said, the LA Times ran a story the other day showing how spending has declined in most sectors (not all) of the entertainment business.

Want to know the positive of the above graphic? Perhaps homogenized corporate entertainment has finally hit the wall.

It doesn't matter what form of entertainment, it has always been at it's most creative and vital when run by passionate fans. Television, the film industry, and the music business have all had their heydays when run by entrepreneurs that truly cared about the product and their customers. It's when those entrepreneurs are bought out by multinational companies and the suits take over that the product becomes watered down in the search for greater and greater profits. Sooner or later the product suffers to a degree that the consumer is no longer an automatic buy and becomes desensitized to the entire genre. Sound familiar?

The numbers on the chart above are actually a good thing. It signals the beginning of the end of an era for many facets of the entertainment industry. Soon big business will want to divest because the profits just aren't what they used to be (if they're still there at all), and we'll be back to an era of fan/entrepreneur/owner. We may not see it happen tomorrow, but we will see it happen eventually. And our entertainment will be much better for it.

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You should follow me on Twitter 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.

Help support this blog. Any purchases made through our Amazon links help support this website with no cost to you.

The Death Of A&R

The job of A&R isn't what it used to be, and looks to be dying even faster than the major record labels, according to Rich Esra, one of the publishers of The Music Business Registry, a quarterly publication that tracks A&R people and provides their contact information. Rich knows what he's talking about since he used to be an A&R exec himself, working for 6 years at Arista Records.

Rich recently posted some reasons that he thought A&R was dying in the excellent Digital Music News newsletter. According to Rich:

"1) The major labels are hiring fewer and fewer A&R executives because the volume of acts (and more importantly the types of acts) being signed have dramatically decreased.

2) The A&R process used to be about the discovery, signing and nurturing of the act. Today, A&R executives are not looking for talent per se. They are looking for an ongoing business.

An artist that has developed some kind of traction and awareness on their own is what I'm talking about. Today, acts need to be "developed" or at least developing in a business sense for any label to have even the slightest amount of interest. The idea that today's A&R executives will discover an unknown act / artist and develop that artist is an illusion. They have neither the desire, time or money for that matter in 2011.

And by the way, this last point is about to become profoundly illustrated in the next 60-90 days - as dramatic and sweeping changes happen at Universal and Sony (massive layoffs are expected soon).

(3) This is why from an A&R perspective, only the most generic, ubiquitous type of acts get any attention from labels today. There is only a certain type of act these days that major labels are willing to sign."

According to Rich, there were only 25 A&R execs hired in 2010 while 40 were let go without a single one of them being rehired. In 2009 there were 58 hired and 51 let go, and in 2008 there were 80 hired and 64 let go.

We've all heard the stories about the meddling A&R guy who knows nothing yet demands that an artist change their music or direction, but there were far more good people employed than bad ones. Someone has to find the next generation of talent just to keep theses companies alive, and without A&R, it's more likely than ever that the major labels will die along with the position.

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You should follow me on Twitter 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.

Help support this blog. Any purchases made through our Amazon links help support this website with no cost to you.

4 Things To Know About BitTorrent

Kyle Bylin had a nice article on Hypebot recently about the 5 things to know about BitTorrent stats. I'm going to repurpose that article a bit for this post in order to make a few points. If you don't know what BitTorrent is, then you're probably not illegally file sharing or moving large amounts of data, but it's a peer-to-peer file sharing protocol for distributing large amounts of data.

That being said, if you're a content creator or owner of any kind, BitTorrent can be one of your worst nightmares as your work can be freely distributed to anyone anywhere if they so choose. Here are a few things you should now about the service.

1) BitTorrent has over 100 million monthly users. That includes over 20 million active users that download over 400,000 files daily. That does not include what may be up to a couple million unofficial clients.

2) BitTorrent has twice as many users as Hulu and Netflix combined, but it's only has about half as many users as iTunes or YouTube. This puts things into perspective a bit when you realize that twice as many people are willing to obtain their entertainment legitimately.

3) BitTorrent still makes most of its money from its toolbars. This means that unless they figure out a different business model, they're leaving a lot of potential money on the table since there's really no other way to take advantage of this massive amount of traffic.

4) Surprisingly enough, the highest searched for music item was only #47 of the most searched items (that was Eminem). All of the top 10 searches where Hollywood movies. People may be still downloading your music, but I would worry a lot more if I were a film studio, although that doesn't say too much for the popularity of music these days, does it?

What does this all mean?
A) People still are willing to pay to a quick and easy user experience.

B) Music is in trouble because people are beginning to feel that it's not worth stealing.

C) BitTorrent makes a lot of money but it's not the huge cash cow that it should be, given the amount of traffic that it has. Services like this have a tendency to be bought for their technology, or disconnect from their audience to find a new business model, so don't be surprised if one day BitTorrent isn't there anymore or becomes something else.

Read Kyle's article on Hypebot here.

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You should follow me on Twitter 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.

Help support this blog. Any purchases made through our Amazon links help support this website with no cost to you.

Some Social Media Ideas From NAMM

While most musical instrument manufacturers that exhibited at the recent NAMM show in Anaheim where hip to social media and had their mailing lists, Facebook pages and Twitter feeds, most didn't utilize their exposure to 10's of thousands of people at the show.

That being said, there's was one distributor that did an excellent job of utilizing social media and that was Loud Technologies, distributor for Ampeg, Crate, EAW and Mackie, among others. Here's what they did.

First of all, every tag identifying a product carried a QR code (like seen on the left), which linked to to more detailed online info if you had a QR scanner app in your phone. A QR code is essentially a real world web link that's designed somewhat like a barcode. Scan it with your phone and it will call up digital information from an analog source.

The other thing that Loud did was to take advantage of the power of Facebook by setting up 4 iPads. If you logged onto Mackie's (or Ampeg's) Facebook page and registered a "Like," you became eligible to win some Ampeg or Mackie products.

How can you use this if you're an artist?  You can make a sign with all of your Facebook, email and Twitter details to hang at your gigs and merch booth. You can make your own QR code by going to qrcode.Kaywa.com that takes them to your website.

Just having the social presence isn't enough sometimes. You have to let people know about it and make it easy for them to find too.

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You should follow me on Twitter 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.

Help support this blog. Any purchases made through our Amazon links help support this website with no cost to you.