INDUSTRY 2018-19 points

IN THIS POST:
See below for a list of themes/points/case studies covered.
The idea of this is to gather a range of resources, as I encounter them, which help to inform you on the music industry. it will be a rather big post! Use this with an earlier summary with examples mostly not referenced here, but also the various tags!!!

https://www.billboard.com/articles/business/8520844/money-makers-major-labels-individual-revenues

Do they pay enough? This audio atrocity made a lot of money for a charisma-free star... Read on to find out who

“At the beginning of the digital revolution it was common to say that digital was killing music,” said Edgar Berger, chief executive of the international arm of Sony Music Entertainment. Now, he added, it could be said “that digital is saving music.” [NYTimes]

......

Did you know that primitive, bleepy (polyphonic) ringtones were the 1st major market for the music biz on the then new smartphones? This headline comes from 2005, when people paid up to $/£4 for a single ringtone, changing these as the charts changed. Online distribution, popularised by piracy site Napster from 1999, began to be monetised by labels from 2000, and by 2003 this was a booming market. In a sign of how fast things change, digital downloads, the 2nd big market, are tipped to disappear soon ... and the ringtone market (and charts!) already has. Of course, there's now a retro market for this defunct technology, and Crazy Frog lives on...
....

TO EDIT......
http://ultimateclassicrock.com/metallica-napster-lawsuit/
https://www.rollingstone.com/music/music-features/tim-ingham-music-industry-status-2018-771105/

HMV is a bedrock of the British music industry – its loss would affect us all

https://www.theguardian.com/music/2018/dec/30/hmv-is-a-bedrock-of-the-british-music-industry-its-loss-would-affect-us-all?CMP=Share_AndroidApp_Copy_to_clipboard

IN THIS POST: 
I began this just as a summary on a report on UMG's increasing profits, but I've widened it out to provide key facts/figures on the music industry. As well as multiple tags (monetising, merchandise, music industry, Spotify, distribution etc) you can find key posts like this industry summary, ppt on Bicep example with more egs of monetising, and this post with graphs and stream revenue calculators, + this 2018 summary which drew on multiple articles:

• when did it peak (were revenues highest)? 1999
• why did revenues fall after this? Online distribution made piracy easy (eg Napster) and undermined the appeal of expensive CDs 
• by today a whole generation has grown up with the attitude that music is/should be free; not prepared to pay for albums (there's even a political party campaigning for this: The Pirate Party)
• ...indeed, the album is being undermined, with streams from albums on Spotify typically focused on just 3-4 songs
• monetizing recorded music is therefore not as easy as it once was;
• the existing business practice, distributing recorded music as physical media, was disrupted by convergence/digitisation
• the smartphone (+phablets/tablets) is the key converged device for the music industry, overtaking the PC where previously people would access the likes of Napster
• by 2012, streaming/digital sales revenues overtook physical sales in the US
• it wasn't until 2017 that this happened in the overall, global market (broadband, 3G/4G rollout and take-up being slower in many markets)
• the digital sales market was initially key, especially iTunes sales, but will soon be overtaken by vinyl revenues!!! 
• other early digital markets have quickly disappeared as technology accelerated: ringtones were a huge market just a decade ago
• the video in this post uses the 'polymorphic', 8-bit music style that people used to pay a few euros to get for their phones, before continued convergence made it easy to load your own (probably ripped from YouTube) MP3
• starting in 2000, this was the 1st way the music biz had of making money from phones - the US ringtone market alone was worth $300m by 2004 (Japan $900m, globally about $3.5bn [see Wiki]). It declined from 2008 on; by 2014, the ringtone chart was abandoned (see this article)

  

  a whole market that's now gone: polyphonic ringtones

• see this interactive website to sample a range of ringtones over time! 
• streaming now accounts for over half of all music industry revenues and is growing, while physical media sales continue to fall 
• UMG 2017-2018: digital (streaming/sales) up 1/3, physical down 20%
• the payment per stream remains controversial: the music industry strongly argue that YouTube especially must pay much more - see the calculator below
• the EU may pass laws to force YouTube to pay more...
• ...which may lead to millions of fan videos being taken down!!!
• touring (tickets) and merchandising, + sponsorship, tie-ins, etc are another key means of monetising for artists and labels
• but labels increasingly force artists to sign '360 deals' including image rights + a % of tour revenues

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DOES YOUTUBE PAY ENOUGH PER STREAM??
I've blogged on this (and Spotify and others before); here's a revenue calculator for 1 of the most streamed videos ever ... you can try it for others ...

UNIVERSAL'S PROFITS SOAR EVEN AS PHYSICAL MEDIA CONTINUES TO FALL

Lot of great details in this musicbusinessworldwide feature on the corporate fortunes of UMG (Universal Music Group), one of the big 3 that accounts for a combined 80% of the global music industry's revenues...

• UMG's streaming revenues are greater than Spotify's total revenues, a reminder of the diversity within a market dominated by bug names like Spotify, YouTube and Apple, but with plenty more such as Amazon and Deezer.
• Overall revenues are rising despite continuing steep falls in physical media revenues.
• Rock music is very much secondary to rap/rnb/urban for sales (this goes back about a decade)

There's lots of business terms/abbreviations here:

• YoY = year-on-year (eg 2018 profits up on 2017's)
• Q4 = Quarter 4 (businesses publish reports on revenues, profits, losses every 3 months ... every quarter

If you were to ask Sir Lucian Grainge what his favorite genre of music is right now, you’d have to guess he’d say hip-hop.
According to Vivendi, Universal Music Group’s five biggest revenue-generating artists in the first nine months of this year were: (i) Drake; (ii) Post Malone; (iii) Kendrick Lamar; (iv) XXXTentacion; and (v) Migos.
These acts drove UMG’s recorded music sales in the first nine months of 2018 to an all-time high of €3.28bn ($3.93bn), up 10.2% YoY at constant currency.

Remember that the music industry constantly moans about piracy and the streaming platforms paying too little per stream ... yet profits are increasing overall.

HOW PROFITS BEGAN RISING AGAIN AFTER FALLING EVERY YEAR FROM 1999-2011

After years of falling from their 1999 peak, the industry (not just UMG) starting growing again in 2012, as this 2013 report highlights:

The music industry, the first media business to be consumed by the digital revolution, said on Tuesday that its global sales rose last year for the first time since 1999, raising hopes that a long-sought recovery might have begun.
The increase, of 0.3 percent, was tiny, and the total revenue, $16.5 billion, was a far cry from the $38 billion that the industry took in at its peak more than a decade ago. Still, even if it is not time for the record companies to party like it’s 1999, the figures, reported Tuesday by the International Federation of the Phonographic Industry, provide significant encouragement.
“It’s clear that 2012 saw the global recording industry moving onto the road to recovery,” said Frances Moore, chief executive of the federation, which is based in London. “There’s a palpable buzz in the air that I haven’t felt for a long time.”For years, the music industry’s decline looked terminal, with the record companies seemingly unable to come up with digital business models that could compete with the lure of online piracy. Last year, however, digital sales and other new sources of revenue grew significantly enough to offset the continuing decline in CD sales.

UNIVERSAL'S GRIP TIGHTENS AS THEY SIGN UP TAYLOR SWIFT
Universal just tightened its grip on the industry with the signing of Taylor Swift, though they agreed to give her ownership of the masters of all recorded music, a big change from usual industry practice, and to pass money from sale of its shares in Spotify to its artists.

Taylor Swift leaves lifelong label to sign with Universal Music Group

More details: Taylor Swift strikes a blow for fellow artists as digital revenues soar

https://www.theguardian.com/business/2018/nov/24/taylor-swift-blow-fellow-artists-streaming-revenues-soar-universal-spotify?CMP=Share_AndroidApp_Copy_to_clipboard

https://www.cbcmusic.ca/posts/20648/danny-michel-opens-up-about-reality-being-musician

$44.99 sales, including $0.003 per Spotify stream, for a Canadian artist's top 10 hit (Canada charts and figures)

New campaign to get Spotify etc to tag Indie artists and boost the 19.55% global share not taken by the big 3.

https://www.hypebot.com/hypebot/2018/11/spotify-apple-music-urged-to-label-indie-music.html

https://www.hypebot.com/hypebot/2018/11/the-music-business-is-about-more-than-just-the-big-three.html

Music biz revenues grew in 2017+2018 as streaming booms.

Universal expanding in China/Asia.

Metallica launch Enter Night Pilsner, building on whiskey (Rolling Stone).
They even released a 'making of' video! (Blabbermouth)

https://www.musicbusinessworldwide.com/jobs/spotify-manager-artist-label-marketing-us/

Physical sales so reduced, a Jan 2019 #1 only had 823 album sales!!!

Average Spotify user only paying 5.5o, and falling, as global rollout in poorer countries builds and family plans too.

https://www.hypebot.com/hypebot/2019/01/record-labels-evolve-to-stay-relevant-in-the-streaming-era-musonomics-report.html

https://www.billboard.com/articles/news/features/8492870/spotify-direct-to-artist-tools-label-territory

https://www.newstatesman.com/2019/01/is-the-music-industry-dead

DIGITISATION album sales halve 2015-18 singles rule again

Lot of great detail here, the bottom line being not just the accelerating decline of physical media sales, but the death of the album - with examples given such as Drake's 25-track album where 3 songs account for over 60% of all streams from the album, 19 others a combined 18%!

https://www.rollingstone.com/music/music-features/the-album-is-in-deep-trouble-and-the-music-business-probably-cant-save-it-753795/

MERCHANDISING Kylie duvets furnishing fortunes

Reclining album sales? Why pop stars are making sofas not songs https://www.theguardian.com/music/2018/nov/02/reclining-album-sales-why-pop-stars-are-making-sofas-not-songs?CMP=Share_AndroidApp_Blogger

DISRUPTION How Spotify may beat big 3

https://www.hypebot.com/hypebot/2018/10/is-spotify-already-too-big-for-record-labels-to-stop-it-from-competing-with-them.html

MONETISING pay a grand to be on stage

http://metalsludge.tv/pay-to-play-jack-russells-great-white-offers-fans-a-chance-to-play-with-the-band-for-1000-00/?fbclid=IwAR2mTplv2BSG51_xvPDZlGcvqW6avH4htdu7ZtXm7Vkk3ec7hluG7R8IkW8

DOWNLOADS DEAD? iTunes ceases from 2019

I've blogged on this before, predicting the digital download would all but disappear in as little as 2-3 years ... and here we go.

The market-dominating iTunes will cease to offer downloads to 'own' (the legal status is controversial, but ownership is clearly restricted compared to physical media) from 2019, as streaming surfs to the top of Apple's, and the wider music industry's, strategy.

The dominant mode of distribution not so long ago is rapidly disappearing, though I'm sure some smaller sites will continue to offer DL options. How many major artists will bother offering this? Could still be quite a few - many digipak and vinyl sets come with DL codes for MP3 or even FLAC files.

https://www.baeblemusic.com/musicblog/4-13-2018/itunes-announces-all-music-downloads-will-be-shut-down-and-its-not-a-black-mirror-episode.html

CD cease and desist as CDs booted but vinyl stays

http://loudwire.com/best-buy-ending-cd-sales-july/

DIGIPAK Streaming killing off Best Of comps

Useful industry context here for your digipak, which is almost certain to be a best of. The point is NOT to abandon that format but rather to show awareness of the declining commercial prospects of it, and why this is.

For every convention there are always exceptions, and here we can see re-recorded Best Ofs thriving, with the Elvis collection, freshly cut with a new orchestral backing track, the top-selling such comp in 2017, a trick Kylie has also used in the past, and one hit wonder Sophie Ellis-Baxter is set to in 2018.

The death of the best of: why Rihanna will never get her greatest hits https://www.theguardian.com/music/2018/jan/12/playlist-curation-killing-off-greatest-hits-album-rihanna?CMP=Share_AndroidApp_Blogger

WEB 2.0 INDIE Technology loosens record labels hegemony

Part of an in-depth series on the music underground, this is a great article for getting your head round the central concept that digitisation has created opportunity for artists to succeed without relying on record companies for production and distribution - or even on physical sales of recorded music.

This is exemplified most in 2017 by Chance the Rapper – Forbes estimates he made $33m (£25m) this year without the need for a label or even to sell physical music. But, before him, the dubstep and grime scenes in the UK saw a new generation of artists using YouTube for distribution, broadcast and community.

'We could build something revolutionary': how tech set underground music free https://www.theguardian.com/music/2017/nov/22/we-could-build-something-revolutionary-how-tech-set-underground-music-free?CMP=Share_AndroidApp_Blogger

STREAMING Warner soars past $1bn digital revenues

The conglomerate giant doing fine, artists less so...

Ed Sheeran’s Divide puts Warner Music’s streaming income on track to cross £1bn https://www.theguardian.com/business/2017/aug/08/ed-sheerans-divide-lifts-warner-musics-streaming-income-to-1bn?CMP=Share_AndroidApp_Blogger

FINANCING Carcass crowdfund album cover with ebook offer

Grindcore/death metallers legends Carcass (a vegetarian band who have developed considerable notoriety for their album art) have launched a modest crowdfunding appeal to cover the cost of a new sleeve design - yet another great example of the web 2.0 "former audience" and that rapid blurring of audience/producer, as well as an example of how the economics and financing of the industry are being transformed by disruptive digital platforms such as this.

Note that they're offering exclusive ebooks as part of this - another means by which artists can monetise their work is tabulating their track arrangements for fans to learn and play; ebooks don't pose the challenges of high production and distribution costs, and publishing does not require a book deal - it can be added to platforms like Kindle and then offered through the likes of Amazon, as well as directly through artist websites (self-publish, self-distribute).

Exclusives are managed in many ways: limited edition digipaks or vinyl with remixes, demos, live recordings, bonus DVD etc or even collectible cover, and book/lets are fairly common too; new album only with a concert ticket (Prince, RIP, did this), music and extras exclusive to website subscribers (Metallica a great example) ...

It also demonstrates convergence - I came across a plug for this on a Facebook group via my phone; good viral marketing.

CIE Eval Q3b DISTRIBUTION

See also: INDUSTRY ISSUES SUMMARY Digital streamed past physical in 2015

CIE Evaluation Q3 asks:

How do your products engage with the audience and how would they be distributed as real media products?

As part of your background research you should investigate how the music industry works, considering issues such as those below - a more extensive list of issues can be found in this post:

• who are the 'big three' (now big two?) of the music industry?
• what's the difference between Indie and conglomerate or subsidiary (consider vertical and horizontal integration + synergy - terms from AS learning)?
• how has digitisation impacted ('disrupted') the music industry?
• has streaming effectively replaced lost revenues from physical media sales for artists and labels?
• how else are musicians seeking to monetise their work, brand and fanbase?
• why is vinyl making a comeback, and how wide or narrow a range of artists/genres are publishing in this format? is it just for older, nostalgic audiences (Simon Reynolds: Retromania)? 
• do you still need a record label/deal? think about Soundcloud, Vimeo, YouTube ... but also how difficult it is to make real money from streaming (Harlem Shake for the opposite!), and Elberse's argument/case studies (Jay-Z and Gaga) in Blockbusters (cheap as an e-book)
• does the rise of crowdfunding, Kickstarter etc, prove the audience/producer divide is dead?
• are social media interactions as important as the music itself?
• where does video fit into this picture? consider convergence and what this means for the increased accessibility of video and the expansion of video production too (you're a part of this), plus UGC such as lyric videos and digipak/CD unwrapping videos

Evaluation Q3 asks:

How do your products engage with the audience and how would they be distributed as real media products?

Focusing mainly on the second part of this, use the following resources to create a post on music video distribution. You should make some reference to recorded (CD) music distribution too, linked to your digipak, and any notes/examples on marketing, social media and audience engagement/interaction will also help.


CREATIVE APPROACHES
Interview a record shop owner
International Record Store Day feature
Interview someone (or multiple people/roles) at the record label 
The artist does a promo for record store day, or speaks out about why they're unhappy with YouTube especially...
Band/act's accountant discusses their hits/streams/followers/subscribers data (screenshots!) on any streaming platform they are on (soundcloud, YT, Spotify...). Don't forget that lyric vids etc are still distributing the music

Will Internet kill creativity?

[NB: this post contains strong language quoted from a Thom Yorke interview]

IN BRIEF:
A series of high profile artists have expressed strong views on the business model of streaming sites such as Spotify: some (Thom Yorke, David Byrne) argue its grossly unfair to artists, who receive very, very little even for huge international hits; others (Dave Stewart, Dave Allen) argue they offer promotion and that we should accept this is what the market and today's consumers, who prefer 'renting' to purchasing, want, and that the music business as it currently is is no more 'worthy' than others like the travel industry which have been 'disrupted' and transformed by new media.

There have been a spate of major names in the music biz recently speaking out about what they perceive as the inequities of the record industry, specifically the new streaming services (particularly Spotify), arguing that their revenue isn't reaching artists. Here's an excerpt from a lengthy diatribe/considered attack (which do you think?) from Talking Heads' David Byrne, an artist well known for experimenting with digital technologies:

Many article comments disagreed with Byrne

The amounts these services pay per stream is miniscule – their idea being that if enough people use the service those tiny grains of sand will pile up. Domination and ubiquity are therefore to be encouraged. We should readjust our values because in the web-based world we are told that monopoly is good for us. The major record labels usually siphon off most of this income, and then they dribble about 15-20% of what's left down to their artists. Indie labels are often a lot fairer – sometimes sharing the income 50/50. Damon Krukowski (Galaxie 500, Damon & Naomi) has published abysmal data on payouts from Pandora and Spotify for his song "Tugboat" and Lowery even wrote a piece entitled "My Song Got Played on Pandora 1 Million Times and All I Got Was $16.89, Less Than What I Make from a Single T-shirt Sale!" For a band of four people that makes a 15% royalty from Spotify streams, it would take 236,549,020 streams for each person to earn a minimum wage of $15,080 (£9,435) a year. For perspective, Daft Punk's song of the summer, "Get Lucky", reached 104,760,000 Spotify streams by the end of August: the two Daft Punk guys stand to make somewhere around $13,000 each. Not bad, but remember this is just one song from a lengthy recording that took a lot of time and money to develop. That won't pay their bills if it's their principal source of income. And what happens to the bands who don't have massive international summer hits?