Most Musicians Don't Get More From Streaming Than Other Revenue
Don't be suckered into believing a Telegraph headline,
possibly rehashed without thought by a blog, that musicians are
getting more from online streaming than other revenue sources. The
claim has a sliver of truth but requires a few dozens asterisks and
footnotes for the necessary clarification.
The headline twists this quote from Beggars Group chairman Martin
Mills: "Some of our catalogue artists earn more from streams than
downloads of individual tracks [or] any other format." Mills
continued to say that physical is important but digital is vital
because it allows content owners "to strike a balance between giving
people what they want on the one hand and actually being a
business."
This is a good opportunity for a
reality check. Let's look at the first quote and see what Mills,
who is based in the U.K., actually said while taking into
consideration revenue from the U.K. recorded music market in 2011.
Point #1: The main problem here is the
Telegraph took a very limited statement about a particular group of
artists in a single label group and (incorrectly) extrapolated it to
the entire record business. Mills didn't say all artists, all
Beggars artists or even most Beggars artists make more from
streaming than other formats. He referred only to "some" "catalogue"
artists, or artists that don't have current releases. Older
releases are less likely to have either digital or physical sales
(brick-and-mortar stores are unlikely to carry a typical catalog
title on an indie label) and their songs aren't likely to get much
radio play. Depending on the song, however, they may get some sync
royalties from use in commercials, TV programs or movies.
Point #2: Revenue from purchases far exceed streaming revenue.
Let's look at the revenue breakdown of the U.K. market in 2011: 58%
from physical purchases, 32% from digital sources, 8% from
performance royalties and 2% sync royalties. Within the digital
bucket, 85% of revenues came from downloads and just 8% came from
subscriptions. Those numbers don't show what actually gets paid to
artists (see below) but they make very clear where the money was
last year. Not much will change next year in the UK, either. By the
end of this year, download revenue will dominate subscription
revenue even if subscription services double or triple.
Point #3: Differences in royalty rates don't make streaming
royalties greater than download royalties. Artists tend to make a
lower royalty from downloads than they get from streaming: downloads
are treated as purchases and streams are treated as licensed media.
Assuming artists get an 18% royalty on downloads and 50% of
streaming revenue, total artist revenue from downloads still
outweighs subscription revenue by almost a factor of 6 ($69 million
to $12 million).
Point #4: UK artists got
more from sync licenses than subscription services in 2011. UK
labels got $35 million in sync revenues in 2011, according to the
IFPI. Artists get half of sync royalties paid to record labels and
would get half of the royalty paid to the publisher if they wrote
the song, too. Total subscription revenue was only $24.3 million.
Half, or about $12 million, went to artists.
Points #5: The second part to Mills' quote is very important.
Streaming is quite important even though its revenue lags behind
other sources. Beggars and other labels have found they need to
offer their music in a mix of formats and at a variety of services.
People expect to legally access music at streaming sites as well as
download stores and brick-and-mortar stores. Labels need to balance
consumer expectations -- which may not lead to much revenue -- with
their need to generate a profit. In fact, this balance has been in
the news quite a bit this week. NBC's Olympics coverage has sought a
balance between unrivaled online access and broadcast TV revenue.
Although NBC has been
pilloried by the digerati for its broadcast strategy, it has put up
strong primetime ratings
even though many people already know the outcomes. The message is
clear: you can't buy Olympics rights for $1.18 billion, give people
everything they want and still turn a profit. (
The Telegraph)
CD Baby Jumps Into Rdio
CD Baby's catalog is now available at subscription service
Rdio. Such a big hole in a digital service provider's catalog is not
unusual but is becoming more rare as the weeks and years pass (Rdio
launched in August 2010, so it's not exactly new to the game). And
the CD Baby-sized hole that used to exist in Rdio's catalog is a
reminder that not all music is available when and where customers
want it. Some people may use this as an excuse for file sharing or
widespread piracy (people will steal what they cannot buy or access
legally, the thinking goes). No matter. Labels are going to continue
to work collectively (through rights groups or distributors) so
they are well represented in negotiations with retailers and
services. It's efficient for both sides of the tranaction. But it
also means catalogs will have the occasional hole (or a big hole in
the case of Google Play and Warner Music Group). (
Rdio blog)
Facebook's Downward Slide Continues
Facebook's black eye just gets bigger and darker. The
company's stock dropped to an all-time low of $19.91 and closed down
4% at $20.04 after
Facebook disclosed
that 8.7% of its accounts -- over 83 million of them -- are either
duplicates (4.8%), user-misclassified accounts (2.4%) or undesirable
accounts (1.5%) that violate its terms of service. That's up about
30 million accounts from the company's last estimate in March.
Of course, none of this means much to artists, labels, brands
or other parties who use the social network for engaging fans,
posting audio and video and even selling concert tickets. Even as
its market value falls and reputation takes a few hits, Facebook
continues to be the world's biggest social network with 955 million
monthly active users and an Open Graph that's used by many music
companies. Tumblr can't match it. Twitter can't match it. (
CNET)
