Noise

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Here’s a half hour radio programme about the music business that aired this morning on BBC Radio 4 (click on the logo).

For the past 15 years we have debated what it all meant. By 2007 it was pretty clear there was no going back, to even the most die-hard big label dinosaurs. The dust has largely settled now and some unambiguous features are emerging from a complex upheaval.

“The Pop Star and the Prophet” passes through many of the key points and is worth a listen although I’m not sure it really arrives at its destination.

Why streaming sucks

spotifyAs soon as digital copying became inevitable the record industry decided they could lock-up music delivery. Their first effort, the in-house SDMI consortium, failed. Subsequent attempts to use third party DRM also failed. CD copy-protection was a disaster and after a few years Amazon, then Apple, dropped DRM on downloads.

Streaming is the current plan for locking up music and breaking the retail power of Amazon and Apple, although it is not new. The customer never owns streamed music unless they pay again, and when their subscription ends no music has changed hands. This is called “access” rather “ownership”. The first comprehensive Major label streaming service, Listen, launched in 2002, it is now called Rhapsody and has about a million subscribers.

I have always been sceptical about streaming as a mass market substitute for music sales although many access evangelists would disagree. UMG expects streaming services to have 2 billion subscribers one day but after a decade there are just about 10 million, worldwide. Here are the main reasons why I think streaming has to change beyond recognition to succeed.

Premium pricing

Streaming subscriptions are priced as a premium product. That is, they are priced at twice what the average music buyer spends. And yet streaming doesn’t have a premium feature set: it is audio-only, it is not 100% reliable, its music repertoire and added-ons (e.g. band biographies, ticketing, lyric sheets, artwork, merchandise, etc.) are limited, new music is often delayed, and each service requires its own subscription. If you change services you lose everything, nothing is portable—you can’t share a subscription.

The record industry also hopes streaming will facilitate “music discovery”. A reliable music discovery service would be a premium product, if it worked.

The final drawback is that this premium product returns the smallest reward to its artists. This matters because music fans care about their favourite artists in a unique way. The most popular social media figures are not politicians, record company bosses, games designers or even media celebrities, they are music acts. Fans want to see artists rewarded fairly and artists want to get the market data they need from middlemen.

Either the price must drop—probably to $2.50 a month or less—or the product must change.

Audio v. YouTube and the rest

There are some audio-only situations: driving, jogging and background listening for example. Streaming—given suitable playlists—is a suitable product but it faces competition from radio, which does the same thing free.

Audio is only one aspect of today’s multi-media world. Artists play live, make records, make video, sell merch, blog and tweet. Any audio-only product is severely limited, especially when YouTube and other resources are just a click away. Why would any buyer blow their entire music budget on access to audio-only in 2013?

Streaming music repertoire

Daniel Ek likes to say Spotify has everything, everywhere but it doesn’t. There are still some big name holdouts but even without them there’s a lot of music missing. All the online music services offer about 25 million tracks out of the 100s of millions that have been recorded.

Streaming might be OK as a mass market product with just the chart music from the past 50 years, but it doesn’t even have that. And even if it did, chart music radio has that niche covered.

(Last year I tried the Apple Cloud music product. The repertoire record companies and digital aggregators make available to Apple, Amazon, Spotify and others is very similar. About 25% of my 11,000 track library was not matched by Apple.)

Streaming music reliability

Streaming music services depend on mobile carrier up-time and coverage, Internet availability, server up-time and device up-time.

I have seen many streaming evangelists claim they don’t keep any other music but we all experience Internet and mobile network down-time. Anyone who has a streaming subscription will have service interruptions. The evangelists can obviously live without their music because they will have to from time to time.

I have iPods, computers, CDs and mobile phones. I always have something that will play my music and I even have several copies of my digital library. It seems likely other music buyers in the premium market will have similar resources these days.

Music discovery

Many people have tried to crack music discovery: Peter Gabriel’s The Filter, Amazon’s collaborative filtering (“people who bought X also bought…”) and so on.

But music discovery is something we do, not something done for us. Here’s some of the places I discovered new music I like recently: cinema trailers, radio, YouTube, email from friends, Twitter, music media reviews, DVDs and TV. These sources help me discover music and lend context to it but they don’t do the discovery.

In short, anywhere music happens or gets discussed is a place where it might be discovered but streaming services are never going to offer this as a premium feature because nobody can.

Streaming sucks

OK, 10 million people pay for it and 20 million others like it enough to endure the adverts. Record companies get extra income and probably see it as a win but it’s not exactly taking off. Recently one of my favourite music biz economists, Will Page, moved from PRS to Spotify, and another, Ian Rogers, moved to Beats. They know what’s what and can point the way forward. But serious disruption is necessary if streaming is ever going to not suck.

Another music biz links post

The mid-to-end August pick of my Twitter lists and general browsing is this. I read everything I retweet or post in these round-ups so if your music biz interests vaguely coincide with mine you should find them interesting and sometimes infuriating.

Interesting looking trailer from Musformation.com about a forthcoming video.

Wired UK French culture minister thinks Hadopi is a waste of money—France’s three-strikes ISP infringement policing under threat.

CMU Most stakeholders satisfied with Universal’s EMI concessions, but some push for more the UMG/EMI negotiations drag on.

Search Engine Land How YouTube Will Escape Google’s New Pirate Penalty Google said they would degrade search rankings for infringers… apart from YouTube of course.

CMU YouTube top music source for young Americans, though CDs still selling a big noise a week or two ago was a report revealing that young people use YouTube for music a lot.

Billboard.biz Updated: Jeff Price, Peter Wells Out of Tunecore astonishing news the public face of Tunecore has left the building. Users will be feeling unsettled, Jeff is a great champion of DIY and indie artists.

Buzzsonic A useful collection of music infographics, cartoons, etc. Adrian Fusiarski’s Pinterest page.

CMU Streaming revenues growing fastest, though overall music spending still declining—there was a report by Strategy Analytics about streaming and physical sales. Interesting but limited to the usual not-comprehensive sources.

Digital Music News A Breakdown of Every Single Dollar a Major Label Makes… in this case WMG, including publishing by the look of things (I thought Warner publishing was separate).

All Things D TuneIn Creeps Up on Pandora, With 40M Active Listeners a web radio aggregation app grows large.

Prescription PR Is social media really that helpful to bands? refers to a Guardian article asking the same about authors of books.

Paste Infographic: The Best Record Labels (2004-2011) good infographic showing record sales by year by label, not for the colour blind though.

NPD Group Teens Credit Word-Of-Mouth Most Reliable Shopping Source the No Shit Sherlock award this month goes to NPD for discovering word-of-mouth is how most teens pick up on the music they buy.

Daily Herald Spotify, Pandora spur U.S. digital music sales past CD purchases—another press release, about digital overtaking CDs, again. Nobody knows when or if this has happened. So many tracks and albums are not monitored.

Music Technology Policy Interview with Andrew Shaw of PRS for Music on Negotiating with Google a guest post by Jonathan David Neal revealing what happened behind the scenes with Google and PRS.

TorrentFreak The Copyright Industry – A Century Of Deceit Rick Flakvinge’s summary is useful and accurate but I don’t agree with his conclusion.

New York Times The New Rise of a Summer Hit: Tweet It Maybe how social media is pre-empting the old record label and radio hit-making process.

DGM News A Letter To Lucien Grainge by Sid Smith at DGM (Robert Fripp’s music company). UMG/EMI still confused about their non-ownership of the King Crimson catalogue after 19 years.

Soundboy Where free streaming music lives 2012 Ian Hogarth of Songkick analyses his online listening. I’m interested in this because a lot of music biz people claim to be Spotify-only (“I don’t have any CDs, just Spotify” what?). At least 25% of my record collection is not on any streaming catalogue, Spotty included.

Hollywood reporter Newt Gingrich Settling Lawsuit Over Use of ‘Eye of the Tiger’ good discussion of the legal grounds and case histories of liberal musicians suing Republican candidates.

Barry Sookman Fair use for Australia? informative look at Fair Use in Australia and elsewhere.

New York Times Pandora and Spotify Rake in the Money and Then Send It Off in Royalties

August links, articles and news

I’ll be distracted by Logic and music for a while longer, so no time for ‘proper’ blogs at the moment. In the mean time here’s a bunch of links from the first part of August. I have posted some of these—among many other things—on Twitter already. The big news of the month so far is the second part of Hooper’s copyright report with proposals for the Digital Copyright Exchange, now called the Copyright Hub (see below).

GigaOM Freemium has run its course another theme of the month has been the decline of Facebook and the growing flaws in the ad-supported web site economy.

Bandcamp Merch! Bandcamp adds merchandise functionality to its already excellent and rightly popular indie music store.

Ars Technica Apple’s case that Samsung copied the iPhone—in pictures

Wired UK French culture minister thinks HADOPI is a waste of money (that’s 3-strikes in English).

Wired UK How Apple and Amazon security flaws led to an epic hacking is a must read which reveals Apple IDs and Amazon credit card details are very easy to break into. The promised follow-up article did not appear yesterday but I will look out for it.

Hypebot Billy Van went from 2,000 to 100,000 fans (Case Study)—but the metrics exclude anything I would consider meaningful growth. It may be there but I can’t see it. Some of the comments also ask revealing questions.

All Things D TuneIn Creeps Up on Pandora, With 40M Active Listeners

The Atlantic How you turn music into money is another article about the truly spiffing DIY goddess Zoe Keating.

Dangerous Minds A statement by Nadya Tololokonnikova (Pussy Riot)—making our punks look rather tame, Pussy Riot will probably be jailed for calling out Putin as a faux democrat and the Russian Orthodox Church as political poodles.

The Telegraph Musicians getting ‘more than half of royalty income from online streaming’ was probably the hyperbolic story of the week—some musicians may be but the whole thing seems to have been cooked up for PR, there are few hard facts and no overall stats.

Music:)Ally Interview: DIY musician Alex Day talks fans, the irrelevance of radio and why YouTube changes everything

And finally the second part of the Hooper Report analysed by Out-Law.com New UK ‘Copyright Hub’ would help address problems with copyright licensing framework, report says with a link to the pdf of the IPO report itself.

A bunch of music biz links

 9 music biz stories from the past week…

The Recording: It's Been Losing Its Value Since 1962...

Big Four Music Labels Hire Students To Chase File-Sharers

Why are The Sex Pistols still the voice of anarchy in the UK?

A Record Label With A Midas Touch

When iTunes Becomes Obsolete

Map of the World’s Most Dominant Websites: Who Rules Asia?

Can Artists Get Rich In A Streaming Music Industry?

Recap: “The Future of Audio” Congressional Subcommittee Hearing

Did an Indie Band Inspire a Volkswagen Ad?

Digital is not outselling CDs

How a BPI press release included non-sales figures to get a headline, and succeeded

This week the BPI made a big noise about digital beating CD for the first time but this “significant milestone” included streaming royalties (such as Spotify subscriptions and advertising). Of course, the media—who should give the story behind the headlines—failed to explain what this press release actually means.

Although this Guardian story describes where the numbers come from they don’t say why income from music online is rolled up with “digital” but income from traditional broadcasters such as the BBC is apparently excluded. And this Guardian discussion  ignores the fact these numbers don’t reflect sales: “It’s good news that digital music sales are outstripping CD sales for the first time.

They aren’t.

CD sales figures don’t include sync, master licenses, PPL or PRS/MCPS royalties. So, when might the tipping point actually occur? Not for a few years yet.

Billboard story this week (“UK’s PRS For Music Says Digital Royalties To Match Physical By 2014“) tells us non-sales income from music is still heavily biased away from digital. Assuming this pattern applies across other categories such as PPL that suggests the BPI are suffering from premature proclamation.

Grooveshark self-interest explained

The head of Grooveshark Sam Tarrantino recently did an interview with Evolver to explain why his company—which streams music without paying artists and without permission—is not “dodgy”. Grooveshark is of course of doubtful legality and defending its business in court right now.

Tarrantino argued 6 main points in his defence. He didn’t mention the fact that he’s living off the music he plays for free (Spotify’s Daniel Ek is worth £300 million).

1. Record labels want too much money

Music licenses were established for traditional radio, TV, video and live performance. Those businesses have always paid up, otherwise they get shut down. Online companies like iTunes, YouTube and Spotify also pay music licenses.

If they can’t make make money that is not the artists’ problem.

2. Musicians already get paid more by touring

That’s not always true but even so it doesn’t mean the music is free (see 1.).

3. The music business is too slow and partially broken

Tarrantino favours 360° deals. He’s not in the record business but considers himself knowledgeable about how artists should be paid. Just not paid by him, obviously.

4. Grooveshark is modelled on early YouTube

YouTube is now licensed but Tarantino points out that YouTube hosts unlicensed content such as The Beatles. He seems to be arguing that two wrongs make a right.

5. Grooveshark complies with takedowns

In point 4 Tarrantino argued that unlicensed material is OK, now he says he takes it down. But we know Grooveshark doesn’t takedown effectively (and neither does YouTube).

6. Grooveshark’s ad platform can boost an unknown band

Is he really suggesting that screwing some artists is OK because he’s promoting other artists? Yes, he is. He has 30 million users and thinks that’s a great asset for promoting new bands as long as everyone is happy to give him free content.

Or maybe he really thinks Grooveshark is going to make him £300 million. That seems a lot more likely than his 6 rather confused points. Did he convince you?