Streaming Payouts (Yup, ANOTHER streaming post!)

music, music business, music industry

There’s a lot of talk about music streaming at the moment, partly thanks to TIDAL’s launch and subsequent flop, Apple’s pending entry into the game and labels, artists and songwriters shouting from the rooftops about how unfair the pay outs are.

Let’s be real, the payouts are shit but it’s not the streaming services’ fault (more on that in a second) and according to some mind boggling work posted here, streaming services actually pay more per play than radio does if we were to break it down by actual listener count.

**Before we continue, we know we talk about Spotify a lot but really they’re the only player right now until Apple step in so they’re the best example to use.**

When we say the payouts aren’t the streaming services’ fault what we mean is that they can only pay out from what they are making. If Spotify has 15 million paid subscribers that means they have $150million of revenue per month or $1.8bn annually. They pay out 70% of that which leaves $1.2bn in the pot to split between all the parties, if you want to know how they calculate what to pay check out their explanation here, it’s actually a very interesting read.

The problem with the music industry right now is the streaming services are lacking volume, we’ve said it before and we’ll say it again…more people equals more money. Those bitching about the money made from streaming services probably don’t subscribe to one which is rather ironic. Get on board the streaming train, music sales are dead! Tell your friends to get on it, tell your family, the more paid subscribers we can get on whatever platform they choose means a bigger pot.

Look a little closer at the Spotify article and you’ll see that by law in the US, statutes dictate that publishers be paid 21% the amount that master recording owners receive. This is actually equal to, if not more than the general 9.1 cents paid out to publishers when a song is purchased digitallty or physically (it’s hard to judge as the percentage that 9.1 cents equates to will vary depending on how much a song is sold for). So just like with radio, if you’re comparing apples to apples, streaming services actually pay out pretty nicely, they just don’t have much to pay out with. Like we mentioned above, Spotify only has 15 millions subscribers world wide, that’s nothing! Wait until there are 150 million, 500 million and hopefully one day billions of people subscribing to streaming services. That’s where the industry is headed and it sucks right now, but we’re all in it together (which is why TIDAL leaves such a bad taste in a lot of our mouths- successful, rich artists complaining they don’t make enough money. It created a bit of a ‘them vs us’.).

Buying an artist’s album isn’t supporting them as much as you’d like to think, they don’t make that much off of album sales- bands and artists never did. Check out the 30 Seconds To Mars movie ‘Artifact’ if you want to know more about that (or even if you don’t, it’s a really good movie). Go and watch them on tour, that’s supporting them, (unless they signed a dreaded 360 deal). Buying their album vs streaming it won’t make you a better fan nor will it likely make them that much more money.

What’s also worth noting is you don’t hear anyone complaining about DJs getting paid 6-7 figures for one night playing other people’s music (sidenote: there is NOTHING wrong with them being paid that but if the mentality that streaming services aren’t allowed to make money off of others’ music exists, why are you OK with DJs doing it? They’re not paying out 70% of their fees to the rights holders like the streaming services are). Sure, writers and publishers get performance royalties from our songs playing in clubs and bars but nothing like 6-7 figures (and the venue/DJ has to report the songs played so you’re relying on that too). There just seems to be a lack of understanding as to what people are actually complaining about when it comes to streaming pay outs. More money coming in means more money coming out. It’s that simple.

Rant over.

Until the next one.

-HS

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Original Content

music, music business, music industry

It’s surprising that music hasn’t caught up with TV yet when it comes to original content. Netflix, Hulu, HBO, Showtime and other TV/movie subscription services all create their own content as part of their USP (check us out with the marketing jargon). Why haven’t music services done the same? Spotify, iTunes et al have yet (as far as we’re aware) to create their own original content, sure they’ve signed exclusivity agreements, which is smart- we’re now seeing Tidal do it too- but it’s not the same as original content and here’s why..

Streaming services (should) have vast amounts of data about their users’ preferences when it comes to the type of music they enjoy, the time of year they play certain songs, the instruments that were used, the tempos etc so why not utilize that like Netflix did when they created House of Cards? They looked at the type of movies and TV shows people were watching- did they like suspenseful drama? was there humor in the one popular thriller, if so how much? How important were sex scenes or nudity? What was the lighting like in those movies? So many variables were analyzed and used to create the script and direction of the show. Look how popular the show is, it’s no accident!! It was created for mass consumption and people have eaten it up.  

Using data in a similar fashion could help write and produce the perfect song for certain genres. Imagine figuring out which key of song, chord progressions etc listeners gravitate to the most and crafting a track around that? Sure you might say it takes the creativity out of making music but the opposite could be argued. Less parameters mean you have to be more creative to make your song stand out. 

Now, we’re not arguing to make all music sound the same but if you want people to hear your music (why else do you do it?) then why not make it appeal to as many people as possible? If people haven’t latched on to your song in say, Germany, it could be for the simple reason that the German market don’t like 1 minute instrumental bridges like yours or that it’s the wrong time of year for that style of song there. If you knew to make those changes or wait for the best time to release the song you could save yourself money on marketing because you’ll know when to release and also be more confident it will gain traction. If a streaming service produce a song or an album that appeals to Germany, all of a sudden they’ll have more subscribers in that market. 

That’s just one of many examples of how creating original content using their data can really set a service apart from its rivals and lure in fans. Things like this could already be in the works but for now we’ll leave y’all with the idea, who knows, we may see it sooner than we think. 

-HS

The Value of Music

music, music business, music industry

How much do you value music? It’s pretty amazing that the conversation about people consuming music for free is still happening. We live in a world where people pay $4 for a cup of coffee once, sometimes twice, a day yet won’t stump up $9.99 a month to listen to virtually any release they want. It’s crazy!!

This isn’t about money and getting rich, it’s about worth. The music we make has worth, or at least it should. Yet people are happy to disregard that and listen to a shit quality version on YouTube (and in most cases sit through an ad before it) instead of paying a pretty small fee (in the scheme of things) to consume music on demand and through their subscription pay the people who own those songs. Why does this happen? When did music stop being that thing we spent hours talking about or digging through new releases in record stores? (or online- how many people these days actively try to discover new music on iTunes or Spotify etc?). How have we become a society that will pay $6 for a bottle of water but won’t pay for art that can change your mood instantly, help you re-live memories and take you on an emotional rollercoaster? (thanks Jay-Z for that analogy).

People see the value in movies and TV shows- they’re willing to pay for subscriptions to cable, premium TV networks, online streaming services like Netflix and Hulu- so why not music? Why are we spending $60-$100 on video games, $30+ on TV boxsets, $700 on iPhones, iPads etc yet won’t pay for music? It comes back to worth- people don’t value music anymore and that’s a shame.

We’re pretty sceptical about TIDAL’s re-launch being the savior of artistry as some have branded it. It’s not really changing the game- it will still pay out the same percentages (have a look at the Jay-Z article above, they don’t talk specifics and essentially say if you have a record deal you’re still beholden to the crappy terms of that deal anyway). But what it is doing is bringing streaming to the attention of listeners who may not have been thinking about it. The downloads business model is dead, it didn’t work. It may have sustained the transition music was going through as it moved online but streaming is where it’s at. It’s now all about volume, MORE PEOPLE MEANS MORE MONEY. Vania Schlogel of TIDAL even said so in the aforementioned article that it’s about growing the pie (or pizza as she described it). As the size of the pie grows so does everyone’s slice. Netflix has more subscribers than all music streaming subscription services, when music catches up with TV and Film the money will come back.

We just need people to value music again. You can’t get a good glass of wine for less than $10 and for that price you have a month’s worth of music. From now on it’s all about drilling that message home. Music needs to be valued again. So much goes into making music (as you’ve hopefully seen from our site) and it’s about time we showed the artists and creators that we appreciate the work they’ve put in.

-HS

Jay-Z’s TIDAL and Higher Quality Audio

music, music business, music industry

We just saw this piece on Billboard about Jay-Z owned music streaming service TIDAL. We have nothing to comment on the content of the article but it did get us thinking about TIDAL and other high quality streaming services. Do we really need them? 

Let’s face it- the internet, laptops and mobile devices have killed music quality. As producers and engineers it’s soul destroying to spend so much time on a mix only for it to be played out of some shitty laptop speakers or those tiny little holes in your phone. All those nuances and adjustments to the sound get lost when they get played on those systems (where the hell did our bass go?!). Of course as engineers we have to mix a song to play across all formats but there is no avoiding the discrepancies in sound quality across the wide range of devices people consume music on. The other issue is that people tend to use the EQ presets on their systems that essentially turn the bass and treble up. This means we have to mix songs to counter that- keep the bass a little lower than usual and have the vocals a little louder than you would on a flat EQ setup. The trouble you run into there is that not everyone uses the same presets so it’s a guessing game as to whether your song is gonna sound like shit or not (this is particularly worrying when we visit A&R offices- there is one guy who runs a big label that uses computer speakers with a big subwoofer and the first time we played our stuff for him we were both cringing at how overpowering the bass sounded. Every time we see him now we keep the bass a little lower on the mix to counter this!). 

Now, having said all of that, the average listener can’t identify any of that. They don’t hear music through the same ears that folks who make music do. When producers or engineers hear music they are constantly analyzing it (it actually makes it a little harder to enjoy it if we’re honest). It’s the same for people who are in video when watching TV or movies, if something’s not quite right you notice it and it bugs the hell out of you. Without fail when we play our songs to our wives, families or close friends there is always the comment that they can’t tell the difference from the demo and the final iterations of our mixes- sometimes they even prefer the demo because they got so used to hearing it! This isn’t supposed to sound snobby or elitist but it’s true- music quality isn’t as important to the masses. This is why TIDAL and other HQ streaming services will remain niche products. There’s nothing wrong with that but for most consumers the quality that Spotify, Pandora and other services use is more than fine and they won’t pay a premium for better quality. Have a look in your settings on the streaming service you use (you do have one right? It’s 2015…) and most likely it’s set to 96kbit/s or 128kbit/s. For context, CD quality is about 320kbit/s. You’ve gone this whole time not caring and probably thinking it sounded great, which it most likely did! Spotify offers the use of 320kbit/s and we’re sure the others do too, so why pay double for more than CD quality?

TIDAL and the other HQ services offer what is called lossless audio. Basically what happens when an MP3 file is created is that the program takes out pieces of information that is deemed unnecessary (how much gets taken out depends on the bitrate- this is why 320kbit/s is better than 96kbit/s- more information per second means less needs to be taken out). The reason lower bitrates are used is to keep the file sizes down, pretty useful for streaming or storing multiple files on a phone as it requires less space. Lossless files don’t take anything out so are exactly the same as the original files. This has its obvious benefits as the sound quality is how the creator intended it but we challenge most people to notice the differences between a high quality MP3 and lossless file when not listening on high end systems. If you can hear the differences they’re really not that substantial and for most wouldn’t motivate them to pay a premium for it. 

We have nothing against TIDAL but just question whether consumers will utilize its lossless streaming because as we’ve learnt first hand, the average listener can’t tell the difference- especially on the systems that are typically used now. It definitely has it’s place with the hifi crowds but for most, they’ll stick with the cheaper services who do a fine job already.  

Just something to think about. 

-HS