Music Spending: The Same As It Ever Was?

SXSW is rapidly becoming THE place for all types of announcement and product releases, from hardware to software, album releases to media studies. Where once other conferences like MacWorld, New Music Seminar, MIDEM or MusicTech were the center of attention, they've all ceded their importance to the show held yearly in Austin.

And since the music world is now revolving around SXSW, it's only appropriate that Nielsen Entertainment should introduce their latest study of spending on music there. The study looked at the consumption habits of 4,000 "music fans," who's category accounts for 75% of music spending in the US, and takes into account everything from the purchase of music, concert tickets and artist merchandise.

As you can see from the infographic below, the most serious music fans, the "aficionados," can spend as much as $422 a year on music. The fact is that Nielsen also discovered that they illegally file share more than any other segment, with an average of 30 a year, which didn't seem to impair their actual spending on music music (perhaps it even enhanced it). This segment accounts for as much as 40% of music spending.

The next segment spends between $196 and $363 per year, with a subcategory called "Big Box" who shop at mass retailers partial to pop and country music.

Finally, the least engaged consumer spent between $44 and $121 per year on music. 60% of this category has never seen their favorite artist live and is more likely to use a free streaming service like Pandora. 25% of these use Spotify or Rhapsody.

I don't know that the general findings of this study are any different from any other era or decade of music. There's always been a multi-tiered system of music consumers that ranged from ambivalent to passionate to aficionado, so that hasn't changed. I don't even think that the spend levels have changed much, adjusted for inflation. In fact, this probably holds true for other segments of the entertainment industry as well.

What is interesting is the way music is being consumed, as shown by the study. Take notice the differences between the category between CD sales (purple) and digital tracks (orange). Then take notice how much live events (red) make up each category. Finally, check out where paid online subscription comes in (dark green).

This all goes to show that, if anything, there's a chance industry growth. In fact, Nielsen exec David Bakula estimates that it could grow as much as $2.6 billion, which is certainly good news for the for anyone with ties to the business.

The study does point out what everyone seems to forget is that when we speak of the "music industry;" there's a lot more to it than just recorded music. While recorded music is less than half of what it was at its peak, the rest of the business remains somewhat healthy.

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The Harlem Shake Gets Busted

Harlem Shake - Kansas Basketball Style

Use a sample, go to jail. Well, not exactly, but unless you get permission, you're going to be hearing from an attorney. The latest episode of uncleared samples comes with the recent viral hit "Harlem Shake" by Baauer. It seems that the DJ used pieces of Hector El Father's 2006 single "Maldades" and Plastic Little's "Miller Time" without getting permission first, and now they want some money.

The fact of the matter is that most major labels have business affairs departments that would've made sure that all samples were cleared before the song was released, but "Harlem Shake" was on the tiny Mad Decent Records, who had no such resources. It was only after the video for the video went viral with it's crazy dance (if you can call it that) that the song became a hit.

"Harlem Shake" has spent the last 3 weeks at the top of the Billboard Hot 100 chart and had over 800,000 downloads, and the video has over 27 million views. All of that has been very recent though, as the song was actually released last May and until the video broke, was destined to be one of the many songs that with little traction in the marketplace.

To a small record label who considers a couple of thousand sales a hit, clearing samples is hardly a priority. Chances are that the sample owner will never hear it, and if they do, there's hardly enough money involved to make a legal case of it. That all changes when the song is a hit however.

It will be interesting to see just how much El Father and Plastic Little settle for. I've known people in the past who know that they're being infringed upon and purposely wait until the song is a big hit before they announce the situation to the world. You get a bigger payday that way.

Regardless, it's just another lesson that if you don't get the proper clearances, it will cost you in the end.

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The Reasoning Behind Apple's Low Streaming Rate

News seeped out last week about Apple pushing for a low-ball royalty deal with the record labels for their upcoming iRadio (or whatever they're going to call it) streaming service, probably from the labels themselves. The leak was made to make Apple look like the bad guy in the negotiations, and maybe it is, but you won't see the whole story in any of the news reports.

To recap, Apple is looking to pay half of what Pandora now pays, which is 12 cents per 100 songs streamed. That's still lower than what a typical radio station pays for their online service, which is 22 cents per 100. And then you have Spotify, paying what seems to be a whopping 35 cents per 100.

So why should Apple get away with paying so little in comparison to the potential competition?

The fact of the matter is that streaming experts all agree that Pandora's and Spotify's business models are broken, and neither company will survive if they have to continue paying the current rates. In fact, Pandora itself has said as much as it pushes hard for a better royalty deal than it has now. Apple does not only want to stay away from that trap, but it also wants to set a precedent for payment. It's pretty difficult to push for a lower rate once a higher one is agreed on, as Pandora and Spotify are now seeing.

Of course, none of this helps the artist and songwriter, who are not making much even with the current rates. They'd make more if they had better streaming deals with the labels and could participate in more of the upfront fees that the services pay, but that's not going to happen any time soon.

While I can see the labels point in keeping the rate as high as possible, the fact of the matter is that a strong Apple entry is good for the entire business, even at a lower rate. While free streaming with ads doesn't help the artist much, widespread subscription would. Any push in that direction only gets the industry to a better place faster.

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Interested in the Music 3.0 archives? Buy The Music 3.0 Guide To Social Media. The best of over 800 posts.

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.

Tumblr Discovers Music Discovery

For record labels and investors alike, music discovery is the holy grail when it comes to music online. Many of us tend to listen to songs that we have in our collection over and over, and that prevents us from finding anything new. Usually that's because we don't have a trusted source for new music and don't want to spend the time sampling new music without finding anything that suits our tastes. A reliable discovery method that knows our tastes is always welcome.

Just about every music service has tried to fill this void, some more successfully than others, but the ultimate discovery service is still elusive.

Blogging site Tumblr thinks it might have the answer. From their over 95 million users, the company will select a group of editors that share music, and their choices will appear on Tumblr's "Explore" page. They also have a new music.tumblr.com blog that will post announcements and music recommendations as well.

Both of these will be available to mobile users and non-Tumblr members, and will be officially rolled out this week at SXSW.

Music discovery really hasn't changed since the 50s. It used to be a radio personality who exposed us to something new. We liked and trusted his taste and knew that his selections generally jibed with ours. That still holds true today.

Although programmers have tried valiantly to design a recommendation engine that works, it still comes down to a human to point us in the right direction. That's why Tumblr's decision to employ editors as the basis of their recommendations is such a great idea. Of course, you still have to pick the right editors. We'll soon know how well they've done that.

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

Interested in the Music 3.0 archives? Buy The Music 3.0 Guide To Social Media. The best of over 800 posts.

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.

Pinterest Ideas For Musicians

One of the fastest growing social networks online, Pinterest is now the third-largest behind only Facebook and Twitter, with users pinning images just as much as they're tweeting. Unlike other networks though, Pinterest is equally popular with different age demographics. Although at one time it had a larger difference in gender mix than any other of it’s social counterparts with five times more women pinning than men, this is changing rapidly as both men, businesses, and brands discover its features and reach. Here's an excerpt from my upcoming book Social Media For Musicians about how artists, bands and musicians can use Pinterest as a promotional tool.

"Pinterest allows you to save and categorize images of things that you like (called “pins”) even when you’re browsing . The process of selecting or uploading a pin is called “pinning.” You pin things to folders that have a common theme called pinboards or “Boards,” which can be either public or “secret.” Every time you pin something, it shows the link of where the pin came from, which can be a good way to get traffic if you pin your own site’s graphics. You can follow people and use keywords and trending item hashtags just like Twitter. You can also link your account to both your Facebook and Twitter accounts so that when you pin something, it simultaneously publishes to those networks as well if you desire.

There’s a lot more about Pinterest than meets the eye. Here are some additional hints and ideas for using Pinterest.

• Pin pictures of your fans and then paste their testimonials in the pin’s description. People love seeing faces with testimonials because it seems more credible and friendly. 

• Your Pinterest page has its own RSS feed! Your (or anyone else’s) RSS fee can be found by going to the user’s Pinterest URL and adding /feed.rss to the end of the link. Here’s an example using my username “bobbyowsinski:” http://pinterest.com/bobbyowsinski/feed.rss.  You can also view a specific Board feed by going to the board URL and replace “feed” with the board name like in this example where my board name is ‘noms’) http://pinterest.com/bobbyowsinski/pictures-from-everywhere.rss. Use the RSS feed anywhere that a feed is appropriate (Facebook, LinkedIn, for syndication on other sites, etc.). Alert your fans and readers to your feed and ask them to add it to their RSS feed readers.

• Add prices to your pins to create your own Pinterest shop. To add a price to a pin, type the $ or £ symbol followed by the item’s price in the pin’s description. The price then shows up on a diagonal bar across the pin. Also, when you add prices to your pins, the pin may also be featured in Pinterest’s “Gifts” section.

• Create a special board to highlight your band or album project team members. Use the description area under each photo to write a bio of each person.

• Show behind-the-scenes photos of your gigs, rehearsals or studio recording. People love knowing the back story of what you do.

• Become an information curator. Gather the last news and resources regarding your type of music on a board or boards. If you become a trusted source for information on Pinterest, your following will grow by leaps and bounds.

• Highlight old content on your blog so that people can repin your archived posts. 

• Schedule your pins using Pingraphy.com. It provides some analytics as well.

• Create seasonal or holiday boards that relate to your brand. For example: New Year’s Resolutions, Fourth of July, etc. These are always a hit on Pinterest.

• Create a board that tells the story of band and communicates your core values. A “History of the Band” board is the perfect way to show your evolution.

• Create “thank you” boards for fans that send special messages. Pin their pictures to the board and thank them in the description.

• Have a blog? Create a board for it. 

• Going to a conference like SXSW? Create a board for it."

Social Media For Musicians, which is all about using social media for promotion, should be available by the end of the month. For excerpts from my other books, go to bobbyowsinski.com.

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

Interested in the Music 3.0 archives? Buy The Music 3.0 Guide To Social Media. The best of over 800 posts.

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.

The Next Era Of The Music Business

Regardless if you're a musician or music consumer, your music life is about to change. Slowly but surely digital music distribution has been evolving from downloads to streaming, but that transition has been really picking up speed over the last 12 months. With Spotify leading the way thanks to reams of publicity, more and more consumers are finding that the joy of renting music beats owning it by a long shot.

While it's been long rumored that Apple has their own streaming service up their sleeve, several developments reveal the change that is about to come.

First is the fact that Jimmy Iovine's Daisy project (named after the first computer generated song) just received a $60 million injection from the likes of Warner Music Group's owner Len Blavatnik, Fort Worth billionaire Lee Bass and Australian financier James Packer. This is a serious investment by some deep pockets that know what they're doing and don't like to lose. Then comes word that Apple's Tim Cook recently took a meeting with Iovine to be briefed on the project. Does that mean a collaboration? We don't know, but at the very least, Apple has a good working relationship with Iovine, since he was one of the first to sign Universal Music onto iTunes back in 2001. Together they'd be a powerhouse, a true 1200 pound gorilla. Chances are that Apple will chose to go it alone and just stay at 800 pounds though. It doesn't need a partner, but if there's something there worth buying, they have lots of money.

Then comes word that Google has been quietly making deals with all the major labels for their own YouTube-based subscription streaming service to be launched later in the year.

If all this were happening a couple of years ago we would've looked to only one of these prospective services to be left standing at some point, with the others falling by the wayside. But this is a different time, with the streaming business far more mature thanks to the likes of Spotify, Pandora, Rdio, Slacker, et al. It's now probably possible that all of these new services survive if they're at least half-way decent in their user operation and offerings.

This is definitely going to be a big win for consumers, with nearly an unlimited selection of songs available for a relatively small monthly fee (not sure what the price point will end up being, but $9.95 keeps being mentioned). Consumers are quickly seeing the advantages of renting their music.

It will be a different story for artists and songwriters however. By now everyone knows how little the royalty can be from a stream, with stories abounding about income lost by the writer and artist. Although a full transition to streaming will be a godsend for the labels, with steady monthly income actually bolstering their bottom line, you can bet that not much of that will trickle down to the artists - at least at first.

It's not going to happen overnight, but within a matter of time, you'll see the entirety of the management and law categories of the music business devise a better way to get paid, and eventually force the labels to fall in line. And when that happens, it will trickle down to the DIYers who insist on doing it their way. To what degree this all takes place, we'll have to wait and see.

While this blog is aptly named Music 3.0, we're about to see the next stage of the music business. Welcome to Music 3.5!

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

The "Content 4.0" Concept

There's a new concept about our current state of online content that's been making the rounds called "Content 4.0" which breaks down nearly anything online into 4 major elements:

• Relevance
• Attractiveness
• Emotional Appeal
• Convenience

The idea is that we have to have all 4 in order for someone to respond to our content, which could mean anything from a Like to a purchase. Here's an interesting infographic that provides a number of examples of each element.

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

Interested in the Music 3.0 archives? Buy The Music 3.0 Guide To Social Media. The best of over 800 posts.

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.

The Art Of Asking

Love her or hate her, Amanda Palmer is the poster child for Music 3.0, where social media is at the heart of an artist's interaction with her fans. Regardless how you feel about her, you can't argue with her success.

Here's a video of AP's presentation at the recent TED 2013 conference entitled "The Art Of Asking," and it outlines her basic strategy. Fair warning - it's a lot more human than you might expect, and received a standing ovation from the normally jaded and tough TED audience.

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

Interested in the Music 3.0 archives? Buy The Music 3.0 Guide To Social Media. The best of over 800 posts.

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.

The Major Labels Go From 3 to 4

One of the former major players in the music business is back in the game. In a deal announced late last week, German multinational media group Bertelsmann has purchased the remaining 51% of BMG (Bertelsmann Music Group) from investment group KKR, bringing the company full circle and back into the recorded music business.

This is a big deal in that the Big 3 major record labels are now actually expanding to 4. Who could've even conceived that such a thing could ever happen, especially in these days of corporate consolidation?

BMG had been a major player in the record business for 30 years when it decided to sell of it's recorded music business to Sony Music and Universal Music Group starting in the mid-2000s. The company then transitioned into a "rights management" company by buying numerous publishing catalogs with partner KKR. Over the last couple of years, the company has made overtures to return to the business by making offers to purchase a number of record label assets, including those of Warner Music and EMI, but lost out on both accounts. In fact, it was only a couple of weeks ago that BMG purchased Sanctuary Records, home of Black Sabbath, Iron Maiden and Megadeath, from Universal.

That said, BMG has a new-found commitment to be in the recorded music business, and that's a good thing. More competition in this world is just what's needed when it comes to developing new talent and new industry blood.

The other thing that's attractive is that Bertelsmann is privately owned, with 80.9% owned by a private foundation and think tank founded by the Mohn family, with the family directly owning the remaining 19.1%. There's a wonderful freedom when you're not beholden to stockholders, Wall Street and quarterly reports.

The company said it's going to be aggressive moving forward, and this can only be positive for the music industry as a whole. Let's hope they bring in some fresh new forward thinking execs that know the ways of the Music 3.0 world instead of living in the past.

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

Interested in the Music 3.0 archives? Buy The Music 3.0 Guide To Social Media. The best of over 800 posts.

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.

Global Best Sellers Of 2012

Think you know what the best sellers are from 2012? You might be surprised. Here are the worldwide single and album Top 10 thanks to the IFPI. Of course, expect these numbers to change in 2013 as streaming becomes more widespread. Music subscribers were up 44% last year to 20 million and download sales were down 12%, and if that continues, these charts will change forever.

Global Album Best Sellers in 2012

	Artist	Title	Total (m units)
1	Adele	21	8.3
2	Taylor Swift	Red	5.2
3	One Direction	Up All Night	4.5
4	One Direction	Take Me Home	4.4
5	Lana Del Rey	Born To Die	3.4
6	P!nk	The Truth About Love	2.6
7	Rod Stewart	Rod Stewart	2.6
8	Rihanna	Unapologetic	2.3
9	Mumford & Sons	Babel	2.3
10	Maroon 5	Overexposed	2.2

Source: IFPI

Global Singles Best Sellers in 2012

	Artist	Title	Total (m units)
1	Carly Rae Jepsen	Call Me Maybe	12.5
2	Gotye	Somebody That I Used To Know	11.8
3	PSY	Gangnam Style	9.7
4	fun.	We Are Young	9.6
5	Maroon 5	Payphone	9.1
6	Michel Teló	Ai Se Eu Te Pego	7.2
7	Nicki Minaj	Starships	7.2
8	Maroon 5	One More Night	6.9
9	Flo Rida	Whistle	6.6
10	Flo Rida	Wild ones	6.5

Source: IFPI

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

Interested in the Music 3.0 archives? Buy The Music 3.0 Guide To Social Media. The best of over 800 posts.

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.

2012 Music Sales: No Reason To Celebrate Yet

In the last few days just about every print and online publication has had an article about the triumph of the music industry last year. It seems that sales were up for the first time since 1999, which no doubt is a good thing. But look a little closer at the stats and you have to come away with a "hmmmmm."

According to reports from both the international trade group IFPI and research company NPD Group, last year's sales jumped 0.3% to around $16.5 billion, and digital music, which increased 9%, represented 34% of that total. All well and good there.

Then you read that a lot of that was due to the fact that music piracy was down a lot last year:

• Consumers using P2P services to download music declined 17%
• The volume of illegally downloaded music files from P2P declined 26%
• Music files burned and ripped from CDs owned by friends and family fell 44%
• The number of files swapped from hard drives dropped 25%
• The volume of music downloads from digital lockers decreased by 28%
• 40% of consumers who illegally downloaded in 2011 stopped doing so in 2012

On the surface, all good news. By every account, music piracy is on the decline. But think about it - all this and total music sales only rose 0.3%?

Something's not working with these numbers, but I suspect it's the same as when the RIAA and IFPI were claiming that for every one sale, somewhere between 9 and 19 were pirated, depending upon the day and what side of the bed the researcher got up on. Let's face it, numbers like these were never dependable in the first place.

Here's something else that's scary. The biggest selling album of 2012 was the same as 2011; Adele's 21, this time with 8.3 million compared with over 18 million the year before. Once again, on the surface it's great that any album in the Music 3.0 age (soon to be Music 3.5 by the way) can sell this many, but bad in that there was no new album released in 2012 with enough juice to overtake it.

I don't want to come off like a naysayer, since I'm the biggest proponent that things aren't as bad as they're sometimes made out to be, and what we're living through is only the natural evolution of things. I'm just saying to always take industry numbers with a grain of salt.

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Interested in the Music 3.0 archives? Buy The Music 3.0 Guide To Social Media. The best of over 800 posts.

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.

The 6 Strike System Anti-Piracy System Goes Into Effect

A new strategy aimed at combating Interent piracy went into effect on Monday that could have violators having their broadband speed slowed to a crawl or lost altogether. The new Copyright Altert System, which is sometimes known as the "6 Strikes System," is a partnership between the entertainment industry and Internet service providers aimed at decreasing online theft of copywrited material.

The way it works is if one of an ISP's subscribers is accused of violating a copyright, he or she will be sent a series of warnings. On the sixth violation, the ISP is free to extend punishment.

This sounds pretty good on the surface until you find that each ISP has a different idea of exactly what that punishment should be. For instance, Verizon intends to slow the Internet connection for a few days while an arbitrator determines if a violation actually occurred, while TimeWarner will temporarily suspend the connection until the violator contacts a company rep and promises not to do it again (I'm sure that will work - not).

The fact of the matter is that this is too little too late. The music industry already is acknowledging that piracy is slowing thanks to streaming, and we've not even reached it's tipping point yet. In fact, music sales were even up slightly last year. And with the slap-on-the-hand punishment that the ISP's are suggesting, the only people who are going to get caught are a few kids who aren't smart enough to find their way around it, or haven't bought into streaming yet.

It is a great PR move however, as it makes both industries look like they're actually doing something to reign in the problem while slapping a mere bandaid on it.

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

Interested in the Music 3.0 archives? Buy The Music 3.0 Guide To Social Media. The best of over 800 posts.

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.