Does The Music Business Really Need YouTube?

We’ve known for months that YouTube will soon introduce its own streaming music service, and in doing so it's revisiting its licensing agreements with all the major and indie labels. For a monthly fee the new service will reportedly allow users to download their streams to enable listening offline, and also eliminate those annoying adverts that we all hate so much but are so necessary to the revenue stream of the content owners.

The negotiations aren’t going so well on the independent label side though, as indie label associations worldwide are refusing to sign what has been labeled as an unfair agreement. As a result, YouTube is threatening to block all current YouTube content from indie labels that don’t sign the agreement and prevent them from uploading anything new as well.

The indie label’s point of contention is that they’re not being offered the same royalty rate as the major record labels, and what is being offered is reportedly lower than that of Spotify. As a result, the American Association of Independent Music (which represents US indie labels) has petitioned the US Federal Trade Commission to intervene, and the Worldwide Independent Network in London has filed a complaint with the European Commission.  

That said, YouTube is well within its rights to refuse service to a company that doesn’t agree to its terms as much as a grocer isn’t obligated to lower the price of a single loaf of bread to the same price that a restaurant might pay for a hundred. The difference is that it’s also the same as not allowing you to purchase anything else in the store unless you buy a hundred loafs of bread like the restaurant. Read more on Forbes.

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Jack White's Lazeretto Goes To #1 Because Of Vinyl

It used to be that you needed sales of 1 million+ and massive radio airplay to get to #1 on the Billboard 200 album chart, but those days are long over. Today the sales requirement is a lot more modest, sometimes as low as 50,000, which includes all sales of CDs, vinyl and downloads. That's why it's so interesting that Jack White's new Lazaretto album went to #1 this week, but chiefly based on his vinyl sales.

Lazeretto had total sales of around 138,000 in the week ending June 15, but 40,000 of those where vinyl copies, which also garnered him a #1 on the vinyl chart as well. To put that into perspective, the CD sales were only 41,000 and the rest were attributed downloads.

But the 40,000 vinyl sales were significant in another way. They were the highest weekly sales since Soundscan began sales measurement in 1992.

One of the things that really helped the vinyl sales of Lazeretto is the extra features that White included to make the record unique, like:

• 2 hidden vinyl-only tracks beneath the label. One plays at 78 rpm and the other at 45 rpm.
• Side A plays from the outside in.
• Dual groove technology plays an electric or acoustic intro depending upon how the needle is dropped.
• The dead wax area on side A contains a hologram designed by Tristan Duke.
• Zero compression used.
• Different mixes from the CD version.

Jack White has always pressed the limits of technology and music, and this time it appears to have paid off.

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The 1000 True Fans Theory Explained

In the latest version of my Music 4.0: A Survival Guide For Making Music In The Internet Age book I explain that making a living in music is considered the new success, as we shift our priorities to DIY. That said, the way that's accomplished is by have a group of core fans. In the following excerpt from Music 4.0, this "1,000 True Fans Theory" is explained.

"The “1,000 True Fans Theory” by Wired magazine’s “senior maverick” Kevin Kelly states that all an artist needs is 1,000 true fans to maintain a fruitful, if unspectacular, career, thereby relieving the artist of the need for some of the nastier things in life as a regular job. True fans are sometimes called superfans or uberfans, depending on whose theory we’re talking about.

Kelly wrote the following:

A creator, such as an artist, musician, photographer, craftsperson, performer, animator, designer, videomaker, or author---in other words, anyone producing works of art---needs to acquire only 1,000 True Fans to make a living. 

A True Fan is defined as someone who will purchase anything and everything you produce. They will drive 200 miles to see you sing. They will buy the superdeluxe reissued hi-res box set of your stuff even though they have the low-res version. They have a Google Alert set for your name. They bookmark the eBay page where your out-of-print editions show up. They come to your openings. They have you sign their copies. They buy the T-shirt, and the mug, and the hat. They can't wait till you issue your next work. They are true fans. 

The idea is that if each of the 1,000 fans bought $100 worth of product every year (the figure equals an arbitrary full-day’s pay), you’d have an income of $100,000, which, even minus expenses, can still represent a reasonable living for most artists. The trick, of course, is how you expand your fanbase to that magic 1,000-fans number (providing that you buy the theory, of course). 

Like most theories on such things, the detractors of the 1,000 True Fans theory point out several relevant issues. They are:

• The $100,000 amount is the gross income and doesn’t take expenses into account. Expenses for any creative endeavor can be quite substantial and must be accounted for in any income assumption.

• Even if you reach the magic 1,000-fan number, that doesn’t mean that each will spend $100 per year. That’s true, but remember that $100 is an average number. Some fans might spend $500, while others might spend only $20. Of course, you have to present them with the products and the opportunity to spend money. If you put out a single release and don’t tour, it’s unlikely that you’ll hit your target. If you’re touring, and a true fan attends three shows and brings five friends, that could easily account for $100 right there. And if you release two albums, a deluxe box set, and newly designed T-shirts, hats, mouse pads, and coffee cups, there’s an even greater chance that the true fan will just have to have whatever you’re selling.

• Music 4.0 presents a worldwide marketplace, so 1,000 fans don’t necessarily have to reside just in the United States. Again, this is true and can lead you to believe that developing your fan base is a lot easier than it really is. Don’t forget that true fans in some countries such as Russia, China, and Mexico might not be paying anything at all and still be enjoying your work thanks to the prolific piracy that those areas are accustomed to.

• You can expect some attrition of your new fans. Hopefully, the attrition of your fanbase will at least be offset by new members, and perhaps even grow some in the process.

• Other artists are competing for the same fans. There’s always competition in the marketplace for every dollar, sale, and item. You must differentiate yourself and your product from your competition to make the choice easier for the fan. For sure, you’ll lose some fans during this process, but if done well, you’ll make that number up, and more.

While the total number of true fans actually required to make the theory work (is it 300 or 1,000 or 4,000?) may be in question, the idea is that you need this hard-core group in order to sustain your career. Whatever the number that you’re lucky enough to develop, be sure to take care of and nurture them, because they truly want you to."

You can read additional excerpts from Music 4.0: A Survival Guide For Making Music In The Internet Age and my other books on the book excerpts section of bobbyowsinski.com.

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YouTube To Begin Blocking Indie Labels

It's an open secret that YouTube is preparing to introduce its own streaming music service soon, and in doing so it's revisiting its licensing agreements with all the major and indie labels.

Apparently that isn't going so well on the indie side, especially in Europe where the Worldwide Independent Network (WIN), a global consortium of small labels, is refusing to sign what it deems to be an oppressive agreement.

As a result, YouTube is threatening to pull WIN's content from the site and block them from uploading any new content.

This seems pretty harsh, and indeed it stops the WIN-associated labels and their artists from directly making money from their videos, but it doesn't mean that artists like Adele and Arctic Monkey's won't be represented on the service. The ban apparently applies to only master recordings, and since the majority of videos are uploaded by fans themselves, it seems that only the "official" videos are in jeopardy of being blocked.

In essence, Google wants to refashion YouTube more as a music service, complete with the ability to download a song for offline playback. They want to pay the indies less for this feature than they'll pay majors, which is why WIN is balking.

You have to hand it to WIN for standing up to one of the biggest corporations on the planet. That said, record labels everywhere are relying more and more on the income from YouTube, and cutting that off can have a serious impact on their bottom line, which translates directly to the artists.

Let's hope that this disagreement is resolved soon for everyone's sake.

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Amazon Prime Adds Music: The Good And The Bad

As predicted, Amazon Prime has joined the ranks of music streaming services today as its new Prime Music service has now gone live. This is a natural extension of the offerings available on Prime, which began as a $50 program to ensure free two-day shipping of purchased items from the online store. Since that initial conception, the program has expanded to include movies and television titles as well as books. Let’s look at the pros and cons of Prime Music as it now appears.

The Good

It’s a potential way to increase music sales. At least that’s how it’s being sold to record labels, and the company has an argument in that Amazon DVD sales have increased since Prime was introduced. The service has included Buy buttons that make it easy to fill out an existing music catalog that you might already have, but the big question still exists - why buy it if you can get it any time you want? Movies and TV shows rotate out of Amazon’s catalog all the time, so that might be a compelling argument to buy a DVD of something if it’s your favorite, but the rights issues involved in music prevent that from happening, although the average Prime customer may not be aware of that fact.

There’s no advertising on the service. This is a plus for the user but it also should be expected for a premium tier service. 

Many songs are synched with lyrics. Many, but not all, of the songs offered in the Prime Music catalog offer simultaneous lyric availability thanks to a deal with LyricFind. That’s not such a big deal for some people, a bigger one for others, but it is a unique feature of the service.

Lots of playlists. Curated music is the word of the day in the streaming music world and every service is now making darn sure that they have a horse in the race. Prime Music is no exception, as the company is said to have recruited a team of music experts to create to create hundreds of playlists that range from “best of’s” to ones tailored to a specific mood. Read more on Forbes.

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Why Casey Kasem Became A Radio Legend

After a lengthy illness, legendary radio countdown show host Casey Kasem has passed away, and another piece of the classic American experience has passed with him. Casey was the longtime host of a number of the most widely syndicated radio shows ever, including the American Top 40 franchise as well as Casey’s Top 40 and Casey’s Countdown, where the weekly top 40 (and later top 20 or top 10) songs were played in reverse order down to number one at the show’s end. Casey was noted for his folksy anecdotes and dedications between the songs, which endeared him to audiences all over the country.

I was lucky enough to spend some time with Casey in his luxurious home in Beverly Hills during the early 90s, and found him to be disarmingly normal, despite being surrounded by the accouterments of wealth. I was actually there to see his wife Jean, whom I was doing a media project for at the time, but Casey took it upon himself to entertain me while she was finishing up another meeting.

One of the things that struck me was that the man was just like his radio show. On the show he would dedicate a song to the little girl in DeMoines who’s puppy ran away, or the guy in San Antonio who just proposed to his girlfriend, and he made you feel that he really did care about these people and was talking directly to them. I saw this first hand when I met him, as Casey went out of his way to find out everything about me; where I was from, where I lived now, what I liked about Los Angeles, and even how I was dealing with the overbearing heat of that particular summer.

When I asked about a beautiful painting on the wall of his living room, he answered the question, but quickly turned the conversation back to me. The questioning didn’t feel anything like he was probing to make sure that I was qualified to work with his wife, since nothing he asked about was professional in nature. It was only what seemed to be his genuine interest in another human being in an effort to keep me from getting bored while waiting for the meeting to start. More on Forbes.

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How To Submit Your Songs Directly To Pandora

If you're an indie artist, you want your songs on as many music streaming platforms as possible. An easy way to do that is to use a distribution service like CD Baby, Tunecore or Distrokid, but it will cost you some money as a result.

Here's a video of how you can submit your songs directly to Pandora without a distributor in the middle. It's from my Selling Music: MP3s, Streams And CDs course on Lynda.com.


Get 7 days of free unlimited access to lynda.com.

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Can Pandora Grow Any Larger?

When a new technology or product is launched, it usually goes through 4 phases if it's successful. The first is the Early Adopter stage where people who like to use new technology or products will take a chance simply because it's the latest thing. At this point the technology or product is clearly in the niche phase.

Then comes the Early Follower stage were the technology or product is proven and stable and attracts enough users to be an ongoing business, and with just a little help, hits critical mass to go to the next level.

The Mainstream stage is where the technology or product has matured and achieved widespread popularity. The final Late Adopter stage is where the technology or product is finally adopted by those always late to technology.

As you can see from the chart below by Media Consulting's Mark Mulligan, Pandora has reached the final stage of market saturation, and had even dropped a bit when iTunes Radio was launched.

That proved to be just a blip, but the fact of the matter is that Pandora has reached a level where it may not have that much growth left, especially not at its previous rate. As more people discover the joys of interactive streaming (Spotify, Beats Music) as opposed to a radio-like service, Pandora may find itself stalled at around the 70 million users that it now has.

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8 Scenarios When You Might Need A Record Label

This blog is mostly about getting along in the new music world without a record label, but there does come a time when having a label is worth considering if you want to jump to the next level as an artist. Record labels are not intrinsically bad; it’s just that you have to weigh the advantages versus the disadvantages to determine whether or not the time is right for you to be associated with one.

This excerpt from my Music 4.0: A Survival Guide For Making Music In The Internet Age book covers the 8 scenarios where a partnership with a label could be a great career move.

"You might want to consider a label if:

1. It's offering you a staggering amount of money. If this happens, either you must be hot enough for a bidding war to have broken out or they really, really believe in your future. Just remember that this might be the last money you’ll ever see from the label, and it may have a significantly negative impact on any credibility that you have with your fan base. Best to test the notion of signing with a label with your tribe just to see their reaction first, since they won’t buy anything from you if they feel you sold them out.

2. You need money for recording, touring, or any other needs. One of the things that labels do really well is to act like a bank by using your music as collateral. Major labels still do this as skillfully as ever before, but is it worth the price you’re going to pay in terms of the freedom that Music 4.0 offers?

3. You’re spending too much time on certain aspects of a career. A label can take some of the burden of marketing and distribution off your shoulders. You still have to be involved on some level, though, or you run the risk of things getting way off course before it’s brought to your attention. If you don’t have a manager already, that might be a better association to make at this point than to start working with a label.

4. You need expanded distribution. If distribution into the remaining brick-and-mortar stores is beyond what a small indie label can provide, a major label can be your friend. Major labels have the relationships, the sales force, and the means to collect the money. If you’re distributing by yourself, you’ll get paid if and when the stores feel like it because you have no clout. In some cases, you won’t even be able to get into the remaining chains and retail stores because you don’t sell enough to get on their radar. A major label or large indie sells the stores a lot of product, and they’re trusted, so it’s a lot easier for them to get the retailer to take a chance. Further, the label has some leverage in that they can always threaten to withhold in-demand product if they don’t get paid.

5. You want to expand into foreign territories. Let’s say that you have a huge following in Germany via your online efforts, but you can’t service them properly because you live in Kansas City. A major label can use their overseas resources to promote you and get product in the stores there. It saves you the hassle of reinventing the distribution and marketing wheels.

6. You need economies of scale. Sometimes the power of a big label can be used to your advantage since they can cut a better deal with a service (YouTube and MTV come to mind) than you ever could as an indie. 

7. You need major marketing. Another thing that a major label does well is to market you traditionally. If you want airplay on radio and appearances on television, a label may be your only hope. If you want reviews and articles in mainstream media, they still have the clout to get it done. 

8. If you feel that you’ve gone as far as you can go as an indie artist. If you need help to push your career over the edge to stardom, then a major label or major label imprint may be the way to go. This is what they do—sometimes well, sometimes not. 

Unless you have a specific need for any of the above that you’re sure you can’t fill any other way, it’s best to stay independent for as long as you can as long as you can in order to retain as much of the control over your music and your musical destiny as you can."

To read additional excerpts from Music 4.0: A Survival Guide For Making Music In The Internet Age and my other books, go to the excerpts section of bobbyowsinski.com.

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Who Will Be The Last Streaming Service Standing?

Reports last week that Google is in talks to acquire Songza, a six year old music curation and streaming service, show that an industry-wide rollup in streaming services is now in real possibility. This is on the heels of Apple snapping up Beats Music recently, and may be a sign of things to come in the sector.

Although Songza is a relatively minor player in the space with only 5.5 million active users, it does show that the major players are interested in acquiring infrastructure or feature parts they don’t currently have in order to quickly compete with the other major players. Songza is known for its music curation, which could be immediately integrated into Google Play Music All Access (perhaps the world’s worst brand name) in order to compete with an anticipated new Apple streaming service. Beats Music’s main feature is also curation, and having Apple jump out in front with that feature would require Google Play to catch up even more than it has to already.

It’s still unclear whether curation is the killer feature that music consumers want though. A trusted source has always been the key to popularizing new music, from radio DJs to MTV to music critics, but as of yet no single curation source has risen above the rest online as the de facto standard. In fact, it can be speculated that curation doesn’t actually matter much at all, given the fact that Beats Music subscriber numbers are so low at between 110,000 to 250,000, depending on what you read. It was the feature that the service hung its hat on, yet it wasn’t something that consumers flocked to when it became available.

That said, there are indications that we’re beginning to see what has been predicted as a slow rollup of smaller streaming players that will eventually leave only the major players of Amazon, Google and Apple, and maybe one or two of the smaller ones, standing. Read more on Forbes.

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Yahoo To Introduce Its Own Version Of YouTube

AdAge has reported that Yahoo is about to launch a new video service geared to compete with YouTube. The company has apparently been approaching many popular YouTube creators with promises of larger revenue splits in an effort launch with some significant names and content.

The company has wanted to enter into the video business for some time. Last year it launched an unsuccessful campaign to acquire DailyMotion, and CEO Marrissa Mayer has stated several times that she felt the company needed to increase its video presence in order to succeed.

Like on YouTube, content creators can reportedly start their own channel, and will have access to a dashboard that enables them to publish across all Yahoo assets like the home page and Tumblr. The company isn't requiring an exclusive deal though, as anyone with a Yahoo channel can also post on YouTube or any other video platform as well.

There is a big stumbling block, however, in that Yahoo's current agreement with content creators states that the company be given a perpetual license to any videos that are shared on Tumblr, which effectively transfers the video's ownership rights to Yahoo. One would assume that this language will be stricken from the final agreement before the service is launched, since most veteran content creators would simply ignore the service if it remained as is.

While it's nice to have another service in the online video mix, don't expect too much from Yahoo Video. The company has a long history of screwing up good ideas, so the odds are good it will happen again.

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We're Spending Less On iTunes

One of the things that might have hastened the purchase of Beats by Apple is the fact that spending on iTunes is dropping rapidly. According to data supplied by Morgan Stanley, the average user spent $1.90 on iTunes in the first quarter of 2014. That's down from $2.90 from a year ago, and $4.30 from two years ago.

Apple doesn't care about this revenue source declining as much as the fact that it shows that music fans are getting their music from somewhere else, and that may be taking a toll on iPhone sales.

At its core, Apple is a hardware company that makes software to facilitate hardware sales. If the software isn't popular, then the hardware sales suffer. Beats Music may or may not prove to be a wise decision over time, but it does show that Apple is acutely aware of the the ultimate affect of music sales on its bottom line.

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