Thursday, December 29, 2011

12 Music Business Predictions For 2012

Behold The Future image from Bobby Owsinski's Music 3.0 blog
It's that time of year again when it's time to speculate on what's in store for us in the new year. Here are 12 educated guesses that I have about 2012.

1. Google+ continues to grow. Depending upon who's research you read, Google+ is already at either 150 million users or 65 million users. Regardless of the number, it's huge considering that it only launched 6 months ago. How many of those users are actually active is debatable, although Google doesn't care much as long as you're signed up and it has your info (that's the underlying truth of the matter). Regardless, Google will continue to add features to Plus next year and continue to gain users at a record number.

2. Vinyl continues to grow as well. You can say that vinyl is a fad except for the fact that every music store owner who sells it says their sales are way up over last year. Add to that the fact that they can't keep record players and turntables in stock tells you that although the vinyl business may never be huge, sales will continue to increase in 2012.

3. Facebook feels Plus's heat. There's no way that Google+ can have so many new users without Facebook feeling it somehow. Even with a number of new features, there were already signs of attrition even before Plus took off. Look for Facebook to do everything they can to keep their user numbers looking good until their IPO, then watch things flatten out after that.

4. Twitter grows up. While dismissed by many, Twitter is still a force to be reckoned with and will be more so in 2012 as the next versions of Twitter and Tweetdeck come online and provide new features such as brand pages and embedding. Look for user numbers and social influence to increase in 2012.

5. The major labels wind down. It took a while but it seems like artists everywhere have finally gotten the message - in this Music 3.0 world you don't need a record label, at least not in the beginning. The Big 3 have less and less to offer while taking more and more of a revenue pie that isn't that big to begin with. The majors will always be there, but will only be useful in some capacity to the "1%."

6. Indie labels make some headway. As I mentioned in the 2nd edition of Music 3.0, the business won't take the next step in its evolution until a new crop of entrepreneurs takes root. There's evidence that's happening, as new more efficient and plugged-in indie labels take hold with their heart in the right place - music, not money.

7. Concert attendance takes a leap. It's true that The Stones are doing their 50th anniversary tour, and Van Halen will be trying to regain their glory days this year, but that's not what will make 2012 a banner year for concert attendance. In 2011, for the first time at least 50% of the biggest earners on the road were not legacy artists. Finally a new crop of current artists are beginning to pull their weight in venues all over the world. Add to this some pricing sensibility that seems to be coming back to the concert marketplace, and a stronger economy, and you have a record year.

8. Music publishers feel the pain. Publishing has always been the secret cash cow of the music industry, not well understood and somewhat hidden from prying eyes. That's no longer the case as artists and writers are more knowledgeable than ever and push for better deals. That said, the music economy has finally caught up with publishing, as mechanical royalties are way down due to low sales and an increase in streaming, and broadcast revenue continues to dwindle. Look for that trend to continue in 2012.

9. Artist royalties take a beating. Even though the industry can be joyful for a slight increase over 2010, that's due to superstars like Adele, Lady Gaga and Taylor Swift, et al. For the average successful artist, the only thing to look forward to is the ability to make a living, as CD sales aren't what they used to be, and downloads give way to streaming, which doesn't pay nearly as much. Time to hit the road to make some dough.

10. Subscription is the new download. Another prediction that I made in Music 3.0 2nd edition is that we'll soon see a major shift from downloads to subscription as a way of consuming music. That's already happening, thanks to Spotify's launch in the US, but we'll see it snow ball in 2012 to the point where many consumers will never purchase another download again.

11.  The cloud is in the air. In 2011 we saw the introduction of cloud services from Amazon, Google and Apple, and while they haven't been in the forefront of our daily news cycle, they are making an enormous impact upon our daily lives as people see how useful storing their data in the cloud can be. Expect to see a gradual increase in cloud computing use in 2012 until we all use it so seamlessly and often that it becomes a huge part of our lives.

12. Micropayments hit their stride. In 2012 micropayments will finally come to pass in the way that all the previous predictions hoped it would. Micropayments are small 1$ or less transactions that up until now have been impossible to make because of transaction costs imposed by banks. The floodgates are now open and numerous services have found ways to work around the bloodsuckers, as artists and indie labels soon find new ways to take full advantage of marketing to their fan base.

That's it. It'll be fun to have a look at the list at this time next year and see exactly which ones came to pass. Have a happy, artistic, and prosperous New Year.

Read my 2012 predictions for music production on my Big Picture production blog.

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.

Wednesday, December 28, 2011

Spotify's Royalties Actually Greater Than Radio

Spotify logo image from Bobby Owsinski's Music 3.0 blog
OK, here's a surprise. An article by Billboard magazine cited some interesting research by David Touve, an Assistant Professor of Business at Washington & Lee University who has long studied the music industry. The study found that Internet streaming, specifically Spotify, actually pays a higher royalty rate than radio airplay.

Touve found that a spin on terrestrial radio results in royalties that range  from $0.000186 to $0.000372 in the U.S. and from $0.0004 to $0.0007 in the UK (at current currency rates). That's not much, is it?

Now consider that Spotify pays about 0.3 cents per stream (an estimate based on Billboard sources and media reports), which is 16.1 times greater than $0.000186 and 8.1 times greater than $0.000372.

There are a couple of differences though. Radio royalties feel bigger because so many people listen to radio. On-demand royalties feel small because relatively few people use services like Spotify. Also, the way radio royalties are shared makes a big difference in how much you earn.

The way that works is that ASCAP or BMI is paid a huge lump sum by the broadcaster for the right to use that organization's member's music, and it's then divided up between writers by taking a survey of national airplay. The more plays you get during the survey, the more money you get....maybe. The trick is that it all depends on the time of day, the market, and how many plays you get during the survey period that determines how much is in your royalty check. If you happen to get a big amount of plays either before or after the survey period, you probably won't get credited for them. And to make it even worse, ASCAP and BMI have different ways of weighting the different types of plays, so you make more from radio airplay from one, or television broadcast from the other. One of the benefits of streaming is that you know the exact number of plays and where they come from (or at least you should).

That said, with restricted playlists and decreasing airplay due to stations converting to news or talk, it's harder and harder to make any dough from radio airplay, even if the royalty rates were even.

Okay, so the cash cow of the music business is turning out to be thin and sickly, so what else is new? If you were in music to make a ton of money, you're in it for the wrong reason anyway. To real musicians, producers, execs, and all manor of other people working in the biz, it's all about the music; any money that comes in is a bonus. If you don't have the passion for it, go be a banker and make some real money.

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.

Tuesday, December 27, 2011

Music Sales Up 1% In 2011

Digital Music image from Bobby Owsinski's Music 3.0 blog
It's hard to believe but as of December 15th, music sales were actually up 1% over last year, which represents the first time in about 10 years that has happened. That's more impressive when you consider that sales for 2010 were down about 13% from 2009, and prior to that they were down an average of about 8% in the 2000's.

Why the turnaround, you may be asking? For one thing, there were some actual blockbusters this year. First of all, Adele's 21 had sold 5,281,000 with two weeks of sales yet to be recorded. That means that her sales will be a lot closer to 6 million by the end of the year, considering the holiday buying season. million. But hold on; that doesn't include an additional 750,000 copies she sold this year of her last album, 19. Then consider that her single "Rolling in the Deep” has sold 5,665,000 downloads, followed by “Someone Like You” with 3,352,000, “Set Fire to the Rain” with 963,000, and “Rumour Has It” with 551,000. All in all, a banner year for any artist at any time.

There were other big sellers as well, but keep in mind that these numbers are a few weeks old.
  1. Adele, 21 - 4,817,000 copies sold
  2. Lady Gaga, Born This Way - 1,973,000
  3. Michale Buble, Christmas -  1,964,000
  4. Lil Wayne, Tha Carter IV - 1,776,000
  5. Jason Aldean, My Kinda Party - 1,389,000
  6. Mumford & Sons, Sigh No More - 1,328,000
  7. Jay-Z/Kanye West, Watch The Throne - 1,124,000
  8. Beyonce, 4 - 956,000
  9. Lady Antebellum, Own The Night - 908,000
  10. Katy Perry - Teenage Dream - 907,000
What does this mean? Music is still alive and well and people will gladly pay for it in one form or another if they love it (not just like it). Sales like this prove that there's a lot of great music being made today, and fans will buy it when they find it.

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.

Monday, December 26, 2011

An Interview With Topspin's Ian Rogers

Ian Rogers image from Bobby Owsinski's Music 3.0 blog
Formerly the General Manager of Yahoo Music, Ian Rogers is currently the CEO of Topspin Media, one of the premier direct-to-fan services currently available. A frequent panelist at industry conferences world-wide, he is one of the most respected and widely quoted voices in the music business today.  I was lucky to  have him agree to an interview for the 2nd edition of my Music 3.0 Internet Music guidebook. Here's a brief excerpt from that interview.
"Where do you see things heading a couple of years down the line?
I really see things crystalizing. The industry has been in the way of what consumers wanted for the last fifteen years, but it’s finally getting pushed out of the way. The way fans are consuming music will change again in the next five years time, which should really scare the industry. They just got used to the idea of digital downloads and now they’re going to see their distribution format change yet again.

Five years from now you won’t connect your computer by a wire and transfer tunes to it. CD sales will continue to decline, but they won’t decline to zero because some people will still want collectables. Things like box sets or 12 inch vinyl will still exist.

Then you’re going to have two types of services. One is the subscription services, which are the Spotifys of the world, like Spotify, Rdio, MOG, and Rhapsody. I don’t think you’ll see many new entrants there, and in fact, the weak ones will probably get bought by a company with an existing subscriber base, such as a cable or wireless company.
 And then you’re going to have Apple, Google and Amazon with these more sovereignty-based [cloud] services. You buy the track in some form so you own it, and then it’s lockered and you can access that track from any device. That’s what it’s going to look like.

Companies like Topspin are going to be dealing with the direct-to-consumer channel which will be for the higher end goods. Digital is 50% of our volume and 25% of our revenue right now, but it’s possible that ratio will decrease over time.

What’s the best way to break an act these days?
I’m not sure that it’s changed all that much. More than ever you have to have something that people are passionate about, and you have to build awareness through great recordings and touring. Step two is different in that you now have to build real fan connections and a real relationship with those fans. If you’re lucky enough to do both of those things, then you can talk about selling something.

I think another difference between the proverbial yesterday and today is that we’re moving from a mass market to mass niches, so you have to know what the first niche is that you’re targeting and then go after it. You don’t put the music out there and see who adopts you, you have to know when and how and where you fit. Square peg, square hole, you just go straight into it.

If you look at the way that Yeasayer did it, it wasn’t about an all-out blitzkrieg. Their manager said, “I know exactly the audience that is going to like this. I’m going to tailor our approach to fit that.” It wasn’t that he changed the way they looked or anything, but he didn’t let any photos of the band get out for the first twelve months. He had a specific way that he wanted people to experience the music and the art that went with it. He knew it would resonate with a certain audience, and that’s the way he let it unfold, naturally but still really deliberate. Once he saturated that niche, then he moved on to another audience that would likely dig it, and treated it like it was a brand new band and pulled all those levers again.

The typical scenario is more of a shotgun approach, that “If only I can get it out there, someone is going to find it” kind of thing. That may have worked in the past, but not now.
Yeah, you’re right, but if you look at Odd Future as an example, those guys didn’t really do anything. They literally did just put it out there and the right people did find it and then some magic happened, but that’s the exception because it’s proven that the way your awareness unfolds really matters.

There’s a great study that someone sent to me that found that the influence of people on other people matters a great deal. Having someone say, “You’re going to like this,” is really important. That speaks to the fact that trusted filters really mean something when it comes to marketing music. I think we’ll have more of that happening in the future, and getting music to those new trusted filters in the right way will become increasingly important.

What’s the best way to do that?
I’m not sure but I think this is where the relationship game goes in the future. Having a relationship with the right bloggers and things like that is really going to matter. I think that there will be a “relationship with trusted taste-makers” business somewhere down the road, which is something different. Getting introduced to those sites in the right way will soon be an important part of marketing."

You can read additional excerpts from Music 3.0 and my other books at

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.

Sunday, December 25, 2011

Top 10 Google Searches In 2011

Google Music image from Bobby Owsinski's Music 3.0 blog
Here we go on a number of end-of-the-year posts. This time it's the Top 10 Google searches in 2011 according to Experian Hitwise:. Take a look at the list first, then I'll explain why it's so interesting.
1. Facebook
2. YouTube
3. Facebook Login
4. Craigslist
6. Yahoo
7. eBay
9. Mapquest
The first thing that jumps out is that Facebook is on here 4 times. Why would anyone google "" or "" when they can just type it in? Make you wonder.

Then take notice that Yahoo is on there twice (once more with a ".com"). What's ironic here is that people are searching for a search engine! Makes you wonder, take 2.

I'm pretty baffled at the fact that people don't know enough to just try to type in "" directly into their browser instead of doing a search for it. Makes you wonder, take 3.

This helps prove my point that most of the people using the online world are not as sophisticated as we're led to believe by the media. I guess this list is a lot better than if it included Justin Beiber and Britney Spears though.

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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