The Rethink Music initiative recently published a report on “Fair Music: Transparency and Money Flows in the Music Industry”. The report identifies barriers in the money flows to artist and states:”[O]nly a small proportion of the money beyond the initial recording advances ultimately makes its way to artists as ongoing revenue.” (Rethink Music, 2015: 3). Especially in the digitized recorded music business the revenue streams are often obscure and non-transparent. And if it comes to music streaming, artists are sceptical about the underlying business model. Based on the report’s finding, the revenue streams from music streaming and the structures behind the business are analysed.
Posts Tagged ‘streaming revenue
Tags: copyright, music streaming, music publisher, collecting society, income of musicians, SoundExchange, Spotify, Deezer, rdio, iHeartRadio, streaming revenue, Pandora, artist income, record labels, Sirus XM, income distribution, revenue distribution, streaming income, ASCAP, BMI, SESAC, Harry Fox Agency, content aggregator, The Orchard, Believe Digital, Rebeat, mechanical right, sound recording right, master right, performance right, PRO, MRO, musical copyright, songwriter, composer, performer
The German Federal Association of Music Industry (Bundesverband Musikindustrie – BVMI) reported a slight growth of recorded music sales by 1.2 percent for 2013. The main reason for the first increase of music sales in the past 15 years were growing digital music sales by 11.7 percent from 2012 to 2013. At the same time, the physical music sales moderately declined by 1.5 percent to EUR 1.12bn. Whereas CD sales fell by 1.3 percent to EUR 1.0bn, the sales of vinyl records grew heavily by 47.2 percent to EUR 29.0m in 2013. Since the CD has still a market share of 69.8 percent, one should be cautious to speak about a turnaround of the German recorded music market. A stabilization of the physical music sales is unrealistic and the increase of digital music sales has to over-compensate the loss in the physical market segment. Although the revenue from ad-supported and subscription music services increased by 91.2 percent to EUR 68.0m, the single-track download sales fell for the first time by 4.4 percent to EUR 104.0m in 2013, which makes a turnaround scenario highly questionable.
In the following, the future development of the German recorded music market will be analysed based on the BVMI report as well as on historic empirical data.
The Recording Industry Association of America (RIAA) recently published the sales figures (shipment figures) for the recorded music market in the US for 2013. Accordingly, digital sales increased by 7.6 percent to US$ 4.36bn from 2012 to 2013. Nevertheless, overall sales (digital and physical) slightly decreased by 0.3 percent from US$ 7.016bn to US$ 6.996bn in 2013. Thus, the sales decline of 12.3 percent (US$ -325m) in the physical product (CD, vinyl, DVD, SACD) could not be compensated by the growth of the digital music market. All in all, digital music sales accounted for 64 percent of the overall recorded music sales in 2013.
The strong increase of digital music sales is fueled by the booming music streaming and subscription segment, which grew 39 percent in 2013, generating US$1.4bn in revenue. However, single track download sales shrank by 3.3 percent (US$ -54.6m) in the same period. Digital album sales have slightly increased by 2.4 percent or US$ 28.7m from 2012 to 2013. These figures seem to indicate a cannibalizing effect of music streaming on download sales, even if we consider recent price cuts by digital music distributors.
The following analysis does not only highlight the digitization process of the recorded music market in the US in past thirteen years, but also the tremendous change of the digital music market segment.
Tags: Artists revenue project, Atoms for Peace, Damon Krukowski, digital sales, Ellen Shipley, Future of Music Coalition, Galaxie 500, income of musicians, music royalty, music streaming, Pandora, physical sales, royalties, SoundExchange, Spotify, Spotify (UK) Ltd., streaming revenue, streaming services, Thom Yorke, webcasting, YouTube, Zoë Keating
In mid of July 2013 Radiohead frontman Thom Yorke caused for controversies when he pulled his song catalogue and those of his band Atoms For Peace from music streaming service Spotify. His straight forward argument was as cited in The Guardian that “new artists get paid fuck all with this model”. Several artists take the same line as Yorke. The co-author of the Belinda Carlisle hit “Heaven is a Place on Earth”, Ellen Shipley, complained that the royalty paid by Pandora to her for more than 3m plays was US$ 40. She accused Pandora, Spotify, YouTube and Google for “(…) the meager, insulting, outrageous amount of money songwriters are being paid” according to Business Insider. In fact some big names are not available on Spotify: The Beatles, AC/DC, The Eagles, Garth Brooks, George Harrison.
Thus, the question arises if and how music streaming services can be valuable for artists? In the following I would like to highlight the pros and cons of music streaming services form an artists’ perspective.
Tags: Access Industries, ad-supported, Apple Inc., Beats, Beggars Group, Bertelsmann Music Group, Charles Caldas, Daisy, Deezer, download revenue, EMI, freemium, iHeartRadio, indie labels, initial public offering, IPO, iTunes Radio, Kleek, major labels, Martin Mills, Merlin, music streaming, music subscription, Pandora, rdio, royalties, Sirius XM, Sony Music Entertainment, SoundExchange, Spotify, streaming revenue, Tim Westergren, UMG, Universal Music Group, Warner Music Group, WMG, XL Recordings
The Beggars Group chairman, Martin Mills, recently told the Guardian that “(…) 22% of the label group’s digital revenues came from streaming – and that the majority of its artists earn more now from track streams than track downloads” in 2012. Though the article does not report absolute figures, the revenue can be considered rather high with a roster including Adele, Jack White and The xx.
A member survey of the global rights agency Merlin representing more than 20,000 indie labels including Beggars Group/XL Recordings, Rough Trade, Naïve, Tommy Boy, Cooking Vinyl and Naxos unveils that “92% of respondents saw streaming and subscription revenues grow between 2011 and 2012, with a third enjoying increases of more than 100%” as recently reported by Musicweek. The same study shows that 24% of indies across the world and 30% of European indies generated more income from streaming than downloads in 2012.
These figures suggest that music streaming seems to be a promising revenue source for record labels. In the following the economic potential of music streaming and the underlying business model are analysed from the record labels’ perspective.