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Guest Post: We are Not Blind to the Harsh Economic Realities of Streaming: An Interview with an Indie Publisher

September 15, 2019 Comments off

[Following is an interview with a reader who is an independent publisher about how they view the future for songwriters and independent publishers in the streaming upside down world to the right of the decimal place.  The publisher requested to remain anonymous.]

Chris Castle/MTP:  I want to ask you about challenges in the streaming reality for an independent publisher.  So, readers get the context, about how many titles are in your catalog and what responsibilities do you have as a publisher or administrator?

Publisher: Our companies were originally founded in 1958 in Hollywood at Vine and Selma. We control over 2100 recorded known songs collectively – in four main publishing firms – which also includes 35 administrated composer artist’s own publishing firms as well, worldwide. We handle all licensing, collection, royalty accounting, back royalty recoveries and sync licensing, inhouse. This we do for 46 years now.

MTP:  One of the threshold problems that I’ve seen with the way royalties are calculated for streaming is that the per-stream rate shifts from period to period which makes it impossible to tell a songwriter—let’s not forget about them—how much they are getting paid.  Do you find that’s an issue for publishers or am I making too much of that information gap?

Publisher: That information gap IS holding us down, we have no way to know HOW it’s calculated as it is and those calculations ABSOLUTELY are not making any sense, there is no explanation, continuity or pattern to deciphering the differences for each part of the service’s tiers – and the amount of units reported to support the varied rates, it follows no logic at all. It changes from period to period and often you’ll see 25,000 units on a Spotify Premium plan that PAYS nothing. WHY? We have no rights to audit and are helpless to question this with hundreds of thousands of excel statements that keep making LESS sense.  

The rates are always different and incomprehensible!

PANDORA (PREMIUM/ AND PLUS

RATE             UNITS               TOTAL 

 0.1667          44755               0.57303

.24368         19756.5             0.24368

 ITUNES MATCH AND FAMILY AND ITUNES MATCH

RATE             UNITS               TOTAL

 0.000027       964                   0.02

 0.000511      1323                   0.67

 0.00048       2816                  1.35

 0.00001       1345                   0.01

 0.000011    4832                  0.05

SPOTIFY FREE!? PREMIUM

  0.00020  4765                      0!

  0.000174 1441                      0!

[NOTE: The Music Modernization Act creates an optional audit right for the MLC to audit service once every three years.  Remember this is an optional right created in the Mechanical Licensing Collective–not songwriters–to audit services operating under the blanket license (unclear when that three year period starts running, but probably 1/1/21, so the first audit can start after 1/1/24).  Unclear how songwriters can require MLC to audit services, or if the MLC’s audit right applies to periods before 1/1/21.  MLC is also allowed to use an “alternative verification process” which doesn’t preclude a settlement without an audit.  MMA is unclear on how audit recovery is shared.]

MTP:  Along that same line, Apple proposed a penny rate of $0.00091 in the last Copyright Royalty Board rate setting (aka Phonorecords III, which is currently being appealed for other reasons by Spotify, Google and Pandora).  Do you think that a fixed penny rate would be easier or more difficult to calculate?  Apple’s proposal was rejected.  Was Apple’s rate more or less than you collect now?

Publisher:  Of course, accounting with a penny rate would be easier than these fractional mini pennies.  YES, it seems as though GETTING at least a penny rate per stream, would be SOMETHING at least, better than all the units practically accounted AS free goods! The rate rise promised in the MMA is still on the horizon, yet that certain MMA Copyright Act granted yearly increase HAS NOT arrived yet, not until 2021 AND because the still HOSTILE-to-Creators and GREEDY Streaming Companies – are Appealing it now.

MTP:  Under the current regime, how difficult is it to calculate songwriter payments for streaming?

Publisher:  It’s real hell, you do your best to get it, account it and pay it out but honestly, it’s not making any financial sense. The logistics over the last 6 years on its delivery by excel downloads is absolute insanity. You can do five hours of just taking it off of each excel Song line – 0ver to the Individual Writer statement, and after the hours of cutting it – you find the grand total of the WHOLE STREAMING check with 21,000 rows turns out to be $10.00! The accounting is so time consuming, and with its tiny micro pennies, too often is beyond heartbreaking seeing the endless devaluation of thousands of copies of your famous songs for so little.

MTP:  Would you say that on a per-songwriter basis it costs you more to administer songwriter payments than you make?  How about on a per-stream basis?

Publisher:  THERE is NO question whatsoever EXACTLY how much the cost of Administration has exceeded the EARNED revenue since Napster and file sharing became legalized as Streaming. We have been under siege with OUR COSTS and our Administrative workload heavier and harder – but digital LOSSES are still growing each month.

If you ACTUALLY compared it to the example of the mechanical days of CD Song units sold at 9.1 cents – (pre-streaming) the resultant digital sea change to streaming NOT CD sales – has actually cost us over $126,000 in losses of normal record income in 6 years. My accountant thinks its just crazy. In order to survive the expense of administrating and office overhead and more- we were driven absolutely to the wall at the end of December 2018 and forced to personally leverage (my own private shares of some very famous songs controlled by a big company). Yeah, a ten-year loan against this income that was supposed to be part of my retirement.

The venture capital investors are buying up Catalog like vultures preying on the Indies who have been hurt. It’s a part of the history of Songs and it’s a travesty. But this is what Streaming rates have done to the business of Music Publishing/Administration UNTIL those rates are raised to an equitable and fair market value number. We have had to work DOUBLETIME in doing film/tv sync licenses at a fast pace just to help supplement our streaming income. It’s terrible that we have to do all this while the Corporations use our Creations and profit, while we collectively suffer. I’ve had to spend my own savings to advance to Writers and Clients in hardship during these times because THEY come first.

MTP:  Spotify’s failure to match is a key issue in the recent lawsuit by Eminem’s publishers.  How has the matching been for you since Title I of the MMA went into effect?

Publisher:  IT’S A friggin nightmare, I don’t have the personal time to DO all of this MATCHING and reclaiming our titles THAT THEY failed to even LOOK for. IT’S SO UNFAIR to put this on us the Victims of their infringing our works. YET we have no choice now BUT to GET THEM FOUND, FILED and claimed under The Spotify settlement, and The Rhapsody settlement too, and HELP get those PENNIES back for our Writers and Publisher clients.

MTP:  If you could change anything about the current system what would it be?

Publisher: The three major labels who first invested in this scheme and enabled themselves to ELIMINATE the manufacturing costs, and put all the Masters in the vaults – and devalued the price of songs with these terrible streaming rates really represents THE Corporate take over of the Song Business as we knew it.  The only thing other than setting us free from this slavery and unfair business competition and constant bleeding loss of royalty value – IS – WE want a fair market streaming rate that will help restore our Writers and Clients to some kind of sustainability in order for them to be able to pay their bills and survive these terrible years of attack on their livelihood and income. Nothing less.  Will the MMA law now bring us to that remedy and healing, I surely pray it does?

MTP:  Is there anything you’d like to add?

Publisher:  I hope this article reaches every creative person who’s suffering privately and silently and helps to show them they are not alone, and we are not blind.  That is my desire. Hugs and thank you for making it possible. Even anonymously I give this..this truth, as solace to all of us trying to make sense of it all.

A Look at Christopher Sprigman’s Recent Record

July 16, 2019 Comments off
Sprigman 1

Sprigman Throws a Definition at Blake Morgan

The Spitting Image of the Modern Major General

MTP readers may remember the name Christopher Sprigman.  Most recently,  we have identified him as a counsel to Spotify in the “Nashville cases” brought against his firm’s client Spotify by four plaintiffs represented by well-known and successful artist rights attorney Richard Busch.   These were cases brought against Spotify in Nashville for claims of copyright infringement by independent publishers who opted out of both the NMPA settlement and the Lowery & Ferrick class actions.  (Just to be clear, Lowery had nothing to do with the Nashville cases.)

Sprigman PHV

Professor Sprigman also teaches at the New York University law school in New York and evidently has an of counsel relationship with the distinguished New York law firm Simpson Thatcher.  According to his law firm biography:

“Chris is a tenured faculty member and Co-Director of the Engelberg Center on Innovation Law and Policy at New York University School of Law, where he teaches intellectual property law, antitrust law, competition policy and comparative constitutional law.”

Simpson Thatcher is one of those ultra white-shoe corporate law firms, a very conservative reputation and also highly respected around the world.

Sprigman Lowery

Pot, meet kettle

Professor Sprigman has a history in copyright circles dating back to at least 2002, i.e., before he worked on Simpson Thatcher client Spotify.  His selection to represent Spotify may be explained as simply as Professor Lessig was not available, but it’s more likely that his past work informed his selection as is usually the case.  Nothing wrong with that.

Some of Sprigman’s academic writings can be found on his SSRN author profile.  At least a few of these papers (that we know of)  were co-funded by Google.  That Google connection evidently is a topic of some sensitivity with Professor Sprigman as it was that point that seems to have prompted his unprovoked and public comparison of David Lowery to Alex Jones.

Blake Alex

Aside from the depressing reliability of the Alex Jones Corollary to Godwin’s Law, this was both a shocking yet curious comparison.   Why Alex Jones, of all people?  What about Alex Jones is of relevance to David’s role in the artist rights struggle?  I am of the view that it carried with it an implied threat–Sprigman could get his buddies in Big Tech to deplatform David just like Alex Jones.  Why?   My guess is that it is because Sprigman apparently wants you to believe that David’s message was just as toxic to Twitter.   (David was not even involved in the initial Sprigman exchange at all and tells me he had no idea it was even going on.  He was on the road with Cracker and Camper Van Beethoven, you know, selling T-shirts like a good boy.)

Sprigman Lowery 2

The non denial denial

It All Starts with the Disney Fetish

Professor Sprigman has a long-term connection to Professor Lessig, beginning with a 2002 article “The Mouse the Ate the Public Domain” supporting Lessig’s losing argument in Eldred v. Ashcroft attacking the 1998 Copyright Term Extension Act.  (“Most artists, if pressed, will admit that the true mother of invention in the arts is not necessity, but theft.”  How very 1999.)

It will not be surprising to learn from the NYU alumni blog introducing Professor Sprigman that Lessig is his “mentor” (“Sprigman set a goal of writing an article within four months that he could take on the job market, if his mentor and the [Stanford Center for the Internet and Society]’s founder Lawrence Lessig deemed it satisfactory. The result was a paper that reintroduced the idea of formalities in copyright law. Its boldness won Lessig’s approval.”)  Ah, yes.  Fortune favors the “bold.”

A younger and perhaps bolder Sprigman held a 2003 fellowship at Stanford’s Center for the Internet and Society (founded by the very bold Lawrence Lessig III and later funded by the even bolder Google in 2006 with a $2 million gift).  This academic fellowship evidently produced his 2004 article “(Re)Formalizing Copyright” boldly published by Stanford and, in a nutshell, advocating a requirement of copyright registration.  (My view of this fascination that many of the Lessig crowd have with registrations is to create a giant loophole that would allow Big Tech to use “unregistered” copyrights (especially photographs) as they saw fit.  Boldly, of course.)

As a quick aside, MTP readers will recall that the “address unknown” NOI debacle makes clear that even if works are registered and readily available through searchable databases that currently exist, Google, Amazon, Spotify and some others cannot be trusted to look for the sainted registrations.  These companies appear not to have looked or not to have looked very hard before attesting that they had searched the Copyright Office records in their 70 million or so address unknown filings.  Even allocating 5 minutes per copyright for search time, it would have taken over 350,000,000 minutes (or 5,833,333 man-hours, 243,055 man-days or 665 man-years.  Roughly speaking.  Feel me?  Curiously, Apple never used the address unknown loophole.  It is unlikely that a registration-based system (which the US abandoned decades ago) would produce the promised results but would produce a substantial burden on all copyright owners, especially independents–not to mention the productivity loss to the Copyright Office itself.

This registration loophole is also a core Lessig concept that he pushed during the orphan works bills of the 2006-2008 period (see “Little Orphan Artworks”.  It is echoed in the Music Modernization Act with the requirements to register with the Mechanical Licensing Collective under Title I (at least if you want to be paid outside of the black box) and the registration requirements under Title II for pre-72 copyright owners imposed by Big Tech’s favorite senator, Ron Wyden.  Note neither requirement requires a formal copyright registration so doesn’t go as far as Lessig, Samuelson and Sprigman, but it’s headed that direction.

David Poe Woodward

Sprigman later was co-author with Lessig of the Creative Commons filing to “save” “Jewish cultural music” in 2005 orphan works consultation by Copyright Office.

creative-commons-2008-schedule-b ANNO

In 2006, Professor Sprigman was lead counsel with Lessig on the losing side in Kahle v. Ashcroft (later v. Gonzales) which unsuccessfully challenged the elimination of the renewal requirement under the 1992 Copyright Renewal Act.  He went on to write “The 99 Cent Question” in 2006 attacking iTunes pricing.

Association with Pamela Samuelson

Pamela Samuelson is another registration fan in the professoriate, so it was not unexpected that Samuelson and Sprigman would find each other.  Among his other accomplishments, Professor Sprigman was a member of Pamela Samuelson’s “Copyright Principles” project and co-authored its paper that also advocated registration (see Sec. IIIA of paper, “Reinvigorating Copyright Registration”).  (MTP readers will remember Samuelson and her husband the tech maven Robert Glushko from the Samuelson-Glushko IP units at various law schools in the US and Canada that consistently oppose artist rights.  A critic might say that the Samuelson-Glushko academic institutes are like Silicon Valley’s version of Confucius Institutes.)

The Copyright Principles Project is especially relevant to Professor Sprigman’s outburst regarding David Lowery because of what I would characterize as the utter failure of Pamela Samuelson to make an impact when she testified before the House Judiciary Committee’s IP subcommittee in 2013.  This missed opportunity was, I think, largely due to Lowery’s takedown of the “Project” that appeared in Politico hours before she testified which Chairman Goodlatte asked to be entered into the record of the hearing where it sits to this day.

Lowery Politico

It’s worth noting that there were no creator members of the Copyright Principles Project, and Samuelson was questioned sharply about this by the IP subcommittee–it sounded like staff had been fed the “Case Study for Consensus Building” without being told that an important group had been omitted from the “consensus”.  Her response was that she didn’t need any creator members on the Copyright Principles Project because she was herself an academic writer.  I think it’s fair to say that while I didn’t see any of the Members laugh out loud, her response was viewed as rather weak sauce in light of Lowery’s post in Politico.   That exchange appears to have led to Samuelson founding the “Authors Alliance” after the hearing evidently to shore up that shortcoming.  Too late for the Copyright Principles Project, however.

All Hail the Pirate King

Like his mentor Lessig, Professor Sprigman also seems to have an interest in defending the alleged benefits of piracy and apparently is a leader of the “IP without IP” movement (and co-author of the piracy apologia, The Knockoff Economy: How Imitation Sparks Innovation.)   (See also what we call the “pro-piracy” article “Let Them Eat Fake Cake: The Rational Weakness of China’s Anti-Counterfeiting Policy“.  “[M]ost of that harm [of counterfeits and piracy], at present and for the foreseeable future, falls on foreign manufacturers”–this means you, songwriters.)  He frequently writes on pro-piracy topics with Professor Kal Raustiala of the UCLA School of Law of all places.

It should come as no surprise then, that he represented Spotify in the Nashville cases.  He was co-counsel on Spotify’s papers (with Jeffrey Ostrow from Simpson Thatcher) famously making the losing argument that, in short, lead to the conclusion that there is no mechanical royalty for streaming (after the usual Lessig-esque Rube Goldberg-like logic back flips).  In Sprigman’s America, his Big Tech clients would not pay streaming mechanicals to songwriters at all, an issue that was emphatically put to rest in the Music Modernization Act.  (In a curious case of simultaneous creation, Techdirt came to almost the identically flimsy argument.)

David Poe Delete S

What Did We Ever Do to Him?

But before last week, Professor Sprigman most recently came onto the radar in his chairing of the American Law Institute’s Restatement of Copyright which many (including me) view as a political end-run around the legislative process.  Register of Copyright Karyn Temple said the Restatement of Copyright “appears to create a pseudo-version of the Copyright Act” and would establish a contrarian view of copyright under the mantle of the august American Law Institute.  It’s unclear to me who, if anyone, is financing the Restatement.  (MTP readers will recall The American Law Institute’s Restatement Scandal: The Futility of False “Unity”.)

Aside from the fact that the normal world is not waiting for the Restatement of Copyright, it is hard to understand how a person with such overtly toxic attitudes toward uppity artists like Blake Morgan, David Lowery and David Poe should–or would even want to–participate in drafting the Restatement.

Unless they had a reason.  Like providing a citable text holding that piracy is groovy, for example.  Originalists come not here.

As Kevin Madigan observed:

It’s not difficult to understand the creative community’s unease when taking a closer look at two of the projects leaders. The Restatement was originally the idea of Pamela Samuelson, a Professor of Law at UC Berkeley who is well known in the copyright academy as someone who has routinely advocated for a narrower scope of copyright protection. And while her knowledge and expertise in the field is unquestionable, her ability to take an objective approach to a project meant to influence important copyright law decisions is suspect.

While Professor Samuelson’s academic record reveals that she may not be the most suitable candidate to spearhead a restatement of copyright law, the project’s Reporters—those responsible for drafting the restatement—are led by Professor Chris Sprigman, whose work in academia and as a practicing attorney should undeniably disqualify him from this highly influential role.

Yet as of this writing, the American Law Institute still lists Professor Sprigman as the “reporter” of its Copyright Restatement project.

ALI Copyright

As one artist asked me of Sprigman, what drives him to be so consistently on the wrong side?  What did we ever do to him?

badbunny

(h/t to Fox of TO)

 

 

20 Questions for New Artists Sidebar: The Economic Reality of Streaming

May 16, 2019 Comments off

Streaming is all the rage.  But–it is cannibalizing higher margin goods, even digital goods.  Because of the industry standard revenue share method of dividing up royalties, all artists essentially get a market share allocation of streaming service revenue based on the number of streams.  Plus, with some exceptions, your royalty rate is dependent on factors you have no control over.  What this means in simple math is that streaming royalties on a per-stream basis will always decline over time (see also Malthusianism).

 

Artists’ dismal streaming royalties on music subscription services are largely based on a simple calculation:  A per-stream payment derived from a share of the service’s revenue prorated by number of streams.  Artists get a portion of a service’s monthly revenue (at least the revenue the service discloses) based on a ratio of your plays to all the plays.  Your plays will always be a lot smaller than the total plays.  (This is essentially what Sharky Laguana referred to as the “Big Pool.”)

Sounds simple, but mixed with the near-payola of Spotify’s playlist culture and Pandora’s “steering” deals, it’s really not.  Negotiating leverage allows big stakeholders to tweak the basic calculation with royalty floors, advances (aka breakage), nonrecoupable payments that help cover accounting costs, and other twists and turns to avoid a pure revenue share.  All of which approximate a per-stream rate on a Rube Goldberg level, by the way, which is one thing these services seem to resist.

Cartoonist Rube Goldberg’s Automatic Back Scratcher

It’s pretty safe to say that all new artists get hosed on streaming royalties.  Setting aside the fact that your distributor will never get all the goodies that the big labels get in their deals, this is because even if a fan listens to your tracks only for a month, well over 90% of that fan’s subscription payment is allocated to artists she didn’t listen to and may not even like.  Of course all these machinations happen behind the scenes.  Fans are not usually not aware that their subscription pays for music they don’t listen to and artists they never heard of or don’t care for.   Plus, it’s virtually impossible for any label, digital distributor or publisher to tell an artist or songwriter what their per-stream rate is or is going to be.

Revenue share deals for big stakeholders have some bells and whistles that leverage can get you, like per-subscriber minimums, conversion goals, top up fees, limits on free trials, cutbacks on “off the top” revenue reductions, and the percentage of revenue in the pool (50%—60%-ish).  Even so,  the basic royalty calculation in a revenue share model is essentially this equation calculated on a monthly basis:

(Net Revenue * [Your Streams/All Streams])

Or ([Net Revenue/All Streams] * Your Streams)

In other words all the money is shared by all the artists.

Sounds fair, right?

Wrong.  First, all artists may be equal, but on streaming services, some are more equal than others.  Regardless of the downside protection like per-subscriber or per-stream minima, the revenue share model has an inherent bias for the most popular getting the most money out of the “Big Pool.”  (This is true without taking into account the unmatched.)

And of course it must be said that the more of those artists are signed to any one label, the bigger that label’s take is of the Big Pool.  So the bigger the label, the more they like streaming.

Conversely, the smaller the label the lower the take.  This is destructive for small labels or independent artists.  That’s why you see some artists complaining bitterly about a royalty rate that doesn’t have a positive integer until you get three or four decimal places to the right.  Why drive fans away from higher margin CDs, vinyl or permanent downloads to a revenue share disaster on streaming?  Because it’s all the rage.

Yet it increasingly seems that we are all stuck with the nonsensical streaming revenue share model with ever-declining per-stream rates.  Why is the rate guaranteed to decline?

If the month-over-month rate of change in revenue (the numerator) is less than the month-over-month rate of change in the total number of streams or sound recordings streamed on the service (the denominator), the per-stream rate will decline over those months.  This is because there will be more recordings in later months sharing a pot of money that hasn’t increased as rapidly as the number of streams.

As the number of recordings released will always increase over time for a service like Spotify that licenses the total output of all major and indie labels (and independent artists), it is likely that the total number of recordings streamed will increase at a rate that exceeds the rate of change of the net revenue to be allocated.  If there are more recordings, it is also likely that there will be more streams.

So streaming royalties in the Big Pool model will likely (and I would say necessarily will) decline over time.  That’s demonstrated by declining royalties documented in The Trichordist’s “Streaming Price Bible” among other evidence.

 

There is a move afoot to switch to a “user centric” model of revenue share allocation that rewards the artist with a share of everyone who listens to them.  I have a version of that concept I call the Ethical Pool.  But the simplest approach would be to abandon the revenue share model altogether and negotiate a per-stream royalty–unfortunately, no one seems to be interested in the simplest approach.

For our purposes, just understand that regardless of what you hear about streaming saving the industry, streaming is unlikely to save you.

 

The MTP Podcast: The Truth About Streaming Royalties

January 30, 2019 Comments off

Zoë Keating Gives More Evidence of the Streaming Hyper-Efficient Market Share Royalty Headlock on Indie Artists #irespectmusic

December 17, 2018 Comments off

zoe tweet

 

Driving traffic to Spotify just doesn’t pay off for indie artists (or probably for smaller indie labels).  See an explanation of the Ethical Pool method as a possible solution.  Whatever we do, the status quo is not sustainable.

And then there’s this:

Spotify Buyback

The Ethical Pool Future: Will Fans Cut the Cord to Big Streaming Services if Artists Leave?

November 30, 2018 Comments off

Everybody knows that the boat is leaking
Everybody knows that the captain lied…

From Everybody Knows by Leonard Cohen

I wrote up my take on “user-centric royalties” a few weeks ago in a post titled “Arithmetic on The Internet: The Ethical Pool Solution to Streaming Royalty Allocation.”  The post has been widely read in the artist community and stimulated conversation about the current model of royalty allocation by streaming services that artists like Sharky Laguana have led the debate on.  I argue that the current model results in the hyper-efficient market share distribution of streaming revenues that effectively bypass the independent artists who fans listen to on the subscription streaming services.

Hyper-efficient marketshare distributions can have unintended pernicious effects due to the impact on the per-stream rate.  If you have a big market share, you don’t care much about per-stream rates because you get minimum guarantees and probably non-recoupable “technology fees” that help protect your downside and defray your accounting costs.  (Particularly important to independent labels whose streaming accounting costs may exceed streaming revenue.)  If you are an independent or “niche” artist, the per-stream rate is everything because you won’t be getting advances or technology payments.

Crucially, that hyper-efficient distribution almost guarantees to a mathematical certainty that per-stream rates will decline over time if service revenue fails to increase at a rate that exceeds the increase in the total number of streamed recordings.  The Trichordist has documented that the per-stream rate has declined by 16% over the 2014-16 period–which happened at the same time as we are told that streaming accounts for over 50% of industry-wide recorded music revenues.  If streaming revenue declines on a per-stream basis while expanding to a larger share of over-all recorded music revenues, the negative effects on the per-stream rate will almost inevitably hurt independent artists, as well as genres like instrumental jazz and classical.

As we found in a recent reader poll, many fans–even many MTP readers–are unaware that an overwhelming share of their streaming service subscription revenue is paid for music they didn’t listen to (and performed by artists they don’t care for in some cases).  Assuming that MTP readers may be more aware of these inequities than the average fan, many if not most consumers may be in the dark about where their money actually goes, which may have an effect their buying decisions and a ripple effect through the market.

question 1

question 2

There’s little doubt that the status quo is unsustainable even though the transition from high to low-or-no margin goods may be irreversible.  Recently, Canadian artist and producer Danny Michel wrote a must-read op-ed for the current edition of the Vancouver Weekly that highlights the motivation behind the Ethical Pool.  Titled “The Expiration Date on Music”, Danny describes his own experience, which of course is echoed by a chorus of independent artists and songwriters around the world:

I’ve been a full-time musician for 25 years. It’s been nothing but hard work, but I love hard work. My songs bought my home, my studio, paid the bills and more. Through it all, the conversations backstage with other musicians have always been about music, family, guitars, friends, art, etc… But in 2018 that conversation changed. Everywhere I go musicians are quietly talking about one thing: how to survive. And I’ve never worried about it myself UNTIL 2018. What I can tell you is my album sales have held steady for the last decade until dropping by 95% this year due to music streaming services.

And therein lies the rub:  You cannot trade a high margin sale at a wholesale price of $5-$10 for a replacement with a wholesale price of a fraction of a fraction of a penny without an unrealistic corresponding exponential boost in activity.

The math is stacked.

Based on the Trichordist’s Streaming Price Bible, it takes roughly 1,600 streams on Spotify, 950 streams on Apple Music, or over 10,000 on YouTube to replace one physical or digital album that sells at a venue or retailer with $7 of net revenue to the artist.  (This revenue variation across services is one reason the TEA math doesn’t really work.)   Venue sales are incremental revenue–you’re already spending to market the show.  Due to streaming, venue sales have all but evaporated in the last few years at an increasing rate as Danny Michel observes.

The fan at the show is in direct contact with the artist in real time when the fan comes to a show the artist is already promoting.   If the fan leaves the show empty handed, it will probably be difficult to get that fan to remember to stream the new artist when they launch their service player.

Getting fans to stream the record usually requires additional effort if not expense–a key reason why it’s important at the show to get that fan’s email at least or some other way to get in touch with them outside of the music service.  As one astute independent label put it, “if the devil made me choose between selling 25 CDs at a show or getting 25 fans to sign up to an artist’s email list, I’d have to think about it for 5 minutes.”  The email signups are a hope for future revenue to make up a shortfall that will likely never be made up on streaming.

Absent getting that fan’s email, independent artists are largely at the mercy of playlist gatekeepers to the point that many are asking if they really want to continue to participate in the major streaming services.  As long as those services have little interest in allowing subscription rates to increase or pay royalties at a level that allow independent or niche genre artists and songwriters to sustain themselves, there’s less and less reason to participate.  And hyper-efficient market share distributions are already causing some artists to like cutting the cord with big services–the only question is how to get their core fans to follow them.

 

And You Know It Makes Me Wonder What’s Going On: @theDavidCrosby’s Streaming Royalties

August 6, 2018 Comments off

David Crosby was in this band called The Byrds which covered “Mr. Tambourine Man” aka Bob Dylan’s first #1 hit as a songwriter.  Then he was in another band called Crosby Stills Nash & Young.  He’s done a lot of other things, too, but I mention those two bands because each of those bands were inducted into the Rock Hall.  That’s right–David Crosby was inducted into the Rock & Roll Hall of Fame twice.  And, one more thing–he is a pre-72 artist for many of his classic recordings and songs.

So here’s his reality.  Oh, and PS Spotify closed at $175.50.

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