2014 Year End Review On The Latest Inner Circle Podcast

On the latest Inner Circle Podcast, I look back at the biggest stories in both the music industry and the world of recording and audio in the last year.

So much happened in 2014 that it almost seems like two different years, with many of the biggest stories happening in the first half. It just goes to show how much things can change during the course of 12 months.

I'll take a look at the 10 biggest stories that happened in the music business, as well as the big stories in the world of audio, then I'll tell you my Top 5 audio products for the year. It's all there in this year-end special.

Remember that you can find the podcast either on iTunes or at BobbyOInnerCircle.com, and now also on Stitcher.

Google Now Provides Automatic Song Lyrics

For years dedicated lyric sites have been both the bane and glory of music publishers. If the lyrics were unlicensed, then that was obviously taking money form the the artists that the publisher represented as well as the publisher itself. Of course, if the lyrics were licensed then that was another source of income. As a result, quite a few fully licensed lyric sites like LyricFind and Musixmatch began to dominate the space.

They may be in for a rough time though, now that Google is incorporating lyrics into the results of any search for a song, as you can see from the graphic on the left. The lyrics are now part of Google Play (as you can see here for the Foo Fighters song) and are in a large database that's totally licensed from the publishers. No, you don't need to be a Google Play subscriber to access them.

Many of the current lyric sites are crowd sourced, so you can never be sure if the lyrics are correct or not. With Google's licenses in place, this is no longer the case, plus the lyrics are now easily accessible via the link in the search results.

Why did Google do this, you might ask? For Google, the search experience itself is paramount. You can see this in its rankings, where a page with a good user experience consistently ranks higher one where info is difficult to find. It seems that Google is using the same criteria on itself as well.

The Top 10 Best Selling Christmas Albums

Everyone thinks that Christmas albums are giant moneymakers, but while massive radio airplay may bring songwriters of Christmas songs some big royalty checks, Holiday albums haven't really sold that well.

Below is an infographic from Statista based on Billboard chart information that shows the 10 best selling Christmas albums since 1991. It's surprising that Kenny G is #1, but it's even more surprising that the total album sales is only 7.3 million units. Also a surprise is that Mannheim Steamroller has such a strong presence on the list, taking up the 5, 6 and 7 positions and totaling just under 11 million.

Of course, selling a million albums today is quite a feat, but remember that most of these top sellers were around during the heyday of the CD business, when selling a million merely got you into the game.

Have a very merry Christmas, and thank you kindly for your continued support of this blog!

The Music Royalty Ecosystem

If you ever wondered why an artist with a massive number of views or streams (or even sales for that matter) is receiving what seems to be a pittance in royalty payouts, then this overview infographic from Music Reports of the royalty payment infrastructure might explain it.

At the very top of the graphic is all the potential sources of income from digital, while the very bottom shows all the potential revenue sources from analog. Take notice how few lines actually lead to the performer or songwriter. There are a lot of fingers in the payment pie and unfortunately the artist's are the smallest.

This is one of the reasons why it's so attractive for an artist to go DIY, yet the real problem is you still need the infrastructure of a record label and publisher in order to get any traction, especially if you're a new artist. This is a dilemma that will continue to vex artists for a long time, I'm afraid.

That said, the graphic is very instructive and worth a minute or two of study.

Just Who Is Buying Vinyl Anyway?

Vinyl record sales are up 38% this year with projected total sales of over 8 million units, up over 200% since 2008. But just who's buying these records anyway? MusicWatch did a survey and this is what they found.

• 56% of all vinyl purchases are made by men

• Surprisingly enough, just under half of vinyl buyers are under 25 year old, with 13 to 17 year olds making up 21% of buyers and 18 to 25 making up 26%.

• The 26 to 35 age group makes up 25% of buyers

• 36 to 50 represent 14% of buyers

• Even more surprising is that baby boomers don't buy as much vinyl as previously thought, coming in at only 13%.

So how did the vinyl resurgence start? Most media watchers trace it back to Record Store Day in 2008, which has gone on to becoming a major retail event in not only the US, but Europe, Canada and Mexico as well. Many labels and indie acts prepared special releases for this day, which helped launch the event.

Another factor is that with vinyl being more in demand, record labels are releasing more vinyl as well, which helps prime the pump for more sales. Most labels now are confident that they can sell at least a small number of units (anywhere from 2,000 to 5,000) to justify the expense.

That said, vinyl still is only a blip on bottom line of the industry, although that blip is growing a little every year. As of December 7th, vinyl accounted for only 3.4% of US album sales and 6% of physical album sales.

The 10 Biggest Bombshells In Music In 2014

We’re almost to the end of the year and it’s always instructive to take a look back at the biggest stories that occurred in the music business. The ones that happened in the first two quarters seem so far away now, but that doesn’t mean they were any less important to the overall evolution of the business. I’m going to provide an arbitrary ranking of the top 10 stories from most to least important, but the order can easily change depending upon your outlook or station in the industry, or the current news that’s trending today. Here we go:

1. Apple purchases Beats Electronics and Beats Music. As I said at the time, I think this was more about acquiring the talent (meaning Jimmy Iovine and Ian Rogers) than the company, infrastructure or products, but time will tell. Not much has happened since the purchase in May, but look to 2015 to see how both Beats Electronics and Beats Music are implemented into the Apple ecosystem.

2. Streaming is way up and downloads are way down. Although there’s still a pretty healthy business in CDs and downloads in terms of total revenue, it’s dropping off rapidly as streaming has finally breached the threshold of consciousness for most music consumers. Look for this trend to continue to gather steam in 2015, with the next big battle being between streaming platforms rather than the different delivery systems.

3. YouTube’s Music Key service is finally announced. Rumored for more than a year, Google’s Music Key subscription service was announced and launched as a closely held beta in November. With no ads, offline listening, and access to the entire Google Play catalog, the platform has the makings of a formidable competitor to iTunes, Spotify and every other streaming service. 2015 will tell the tale.

4. Taylor Swift pulls her music catalog from Spotify. This story would rank a lot lower except for the public uproar, as it’s really more of a money grab than a philosophical stand. Swift claimed that she was standing up against the low royalty rate that Spotify was paying, yet her music remained on other streaming services, which contradicted the argument. The real reason for the hubbub is that her record company (of which she owns a piece) is angling to get acquired, so selling more CDs would help the bottom line a lot more than additional streams. The controversy and the fact that many fans were driven to buy the CD because they couldn't access the songs on Spotify took care of that.

5. U2’s free iTunes album giveaway backfires. Both Apple and U2 proved to be both short-sighted and out of touch when a copy of their latest Songs Of Innocence album showed up in every iTunes account. The problem was that everyone under the age of 30 felt that they were spammed. Hopefully the lesson was learned that music is only valuable when it's wanted. Read more on Forbes.

What We Can Learn From The Top 20 Streamed Artists Of 2014

One of the ways that streaming music differs from radio is that it's so democratic. You listen to what you want to, so any streaming chart or list better reflects the musical tastes of the listeners.

Soundexchange put together a list of the 20 most streamed artists in 2014 based on royalties it has collected, and it will surprise you. The list shows a variety of new and classic artists, as well as a cross-section of genres. Here it goes:

1. Drake
2. Pearl Jam
3. Rihanna
4. Katy Perry
5. Bruce Springsteen
6. Lil Wayne
7. Luke Bryan
8. Imagine Dragons
9. Eminem
10. Pink Floyd
11. Usher
12. Maroon 5
13. Jason Aldean
14. Bruno Mars
15. One Republic
16. Lorde
17. Chris Brown
18. Tim McGraw
19. Beyonce
20. Taylor Swift

And the top 5 streamed tracks of 2014?

1. "Counting Stars" - One Republic
2. "Dark Horse" - Katy Perry
3. "Demons" - Imagine Dragons
4. "Royals" - Lorde
5. "Happy" - Pharrell Williams

The Billboard charts have always been skewed towards pop music because they were based on radio airplay, which has a very limited playlist that gets even more so every year. That said, streaming is a much better way to see what people actually listen to, and the analytics are far more accurate than the surveys traditionally used to determine radio airplay.

I think you'll see a much better reflection of music consumers tastes in the coming years, which could very well influence the music available, as record labels follow the analytics.

The Highest Paid Musicians Of 2014

When it comes to making money, it sure helps if a musician has another source of revenue besides royalties, touring, merch sales and licensing.

Take the case of Dr. Dre, who made more money than any musician in history last year on the basis of his interest in Beats Electronics, which was purchased by Apple for $3 billion. As a result, Dre comes in at #1 of the highest paid musicians with $620 million, according to the following chart by Statista.

Some familiar faces fill out the rest of the top 10, but relative newcomers Justin Bieber, One Direction, Calvin Harris and Toby Keith all had banner years.

Notice who's not on the chart - Taylor Swift, Lady Gaga, and Katy Perry, among other current stars.

Skinny Puppy Sues The US Government For Torture Songs

Skinny Puppy

When the spooks at the CIA were interrogating their terrorist captives at the prison at Guantanamo Bay Cuba in 2002, one of their techniques was to play songs at a very high volume from the industrial band Skinny Puppy for 6 to 12 hours straight.

Tipped off by a prison guard who happened to be a fan, the band is now suing the US Department of Defense for $666,000 (an interesting amount) for the unlicensed use of their songs.

Having your songs used as a torture device isn't exactly a badge of honor for any artist, and the band can't even be faulted for being "un-American" since they're from Canada, but the suit probably has more value for its promotional merits than its legal ones. Since the band's CD was played in a private setting by the owner (presumably the CIA) of the CD, you can't call it a public performance, so the suit most likely has no legal basis. That said, there may be some legal precedent that we're unaware of, so you never know how a judge might rule, or even if the DoD might settle to make the whole thing go away.

You still have to wonder if 12 hours of very loud Bon Jovi, Britney Spears, or Iggy Azalia might have the same effect though. Thankfully, most of us will never know.

Universal Music Group Using Big Data For Big Decisions

For most of its lifetime, the music business was run on the gut instincts of its executives in everything from artist signings, which songs to release as singles, marketing, promotion, and just about everything else.

The major labels of today and their precursors were built on these decisions, but we live in the age of Music 4.0, where just about any decision can be a lot more precise and pragmatic, thanks to the influx of data on just about every aspect of the business, and that's exactly how Universal Music Group is going about things, according to an article in the Wall Street Journal.

The company is using a new software tool that was built in-house called Artist Portal to help its execs make smarter marketing decisions. The app allows a user to track everything from artists sales, music streams, airplay and social media buzz happening globally and in real time, then overlay sets of data that include television appearances, concert dates, commercials featuring an artist's songs, social media posts and promotional events. This allows the company to be able to better analyze sales and interest spikes, which in turn helps it to better allocate marketing funds as needed.

Something that's a bit more insidious is that upper level label management can also track how much each Universal employee uses the app, which could play into future staffing decisions, which seems to take the gut instinct out of the picture entirely, which at least some is needed when it comes to creating, selling and creating art. That said, the tool is proving a big help in a variety of ways, with one major example being that its data used as a help to show promoters in Finland that there was indeed an audience for the label's hip hop acts in that country.

UMG isn't the only major label to employee a big data app though, as both Warner Music Group and Sony Music are also developing their own versions of Artist Portal. In fact, Sony now has 25 people on its analytics team, showing its deep commitment to the concept.

I equate this to baseball in that it took the sport a long time to begin to use precision metrics to help executives get a better picture before they made their biggest decisions. It took the music business a long time to come to the same party, but big data is now becoming a major part of the way a major label does business.

Top 10 Highest Grossing Concerts Of 2014

The results are in and the highest grossing concerts from this year will astound you. The following chart from Billboard shows that some music acts are making some serious money on the road. Keep in mind that the chart isn't for an entire tour - it's only for 1 show!

The One Direction/5 Seconds Of Summer tour was obviously a blockbuster, capturing 5 slots of the top 10, including the single highest attendance with 236,566 at London's Wembley Stadium, but The Stones were the highest grossers, capturing almost $28 million for a single date at the Tokyo Dome.

All that said, actual total concert attendance was actually down a little over 1% in 2014, but people paid more money than ever, as the concert industry made nearly 20 billion worldwide - a record.

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Spotify Gaining Ground On YouTube

While YouTube is still the king of the online music stream, it looks like Spotify is gaining ground, a development that might mean more money to songwriters, artists, labels and publishers alike.

According to Billboard, the on-demand streaming marketplace has risen by 50% in 2014. This means that Spotify has delivered about 413 million streams this year so far as compared to 274 million in 2013.

Spotify's market share in the streaming market has gone from 22% to 33% this year while YouTube's has decreased from 66% to 58%. That said, 91% of all on-demand streaming traffic is from these two services.

One of the more interesting aspects of YouTube's market share is that it can fluctuate greatly depending upon the posting of a hot new video. For instance, there was a large spike in activity in August when Taylor Swift's "Shake It Off" and Nicki Manaj's "Anaconda" were released. "In fact, Anaconda" now holds the Vevo record for most views in 24 hours at 19.6 global views.

With the introduction of YouTube's new Music Key streaming service next year, you have to wonder whether the market share numbers will increase at Spotify's expense instead of the current trend. Then again, there's always Apple Beats that can change the equation yet another way when it's released in full in 2015.

One things for sure, the music streaming market will continue to be one of the most interesting aspects of the music business next year.

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