The following guest post comes from Jeff Price, one of the original founders of Tunecore and more recently, Audiam, a company whose mission is to gets rights holders paid from the digital use of their music.
“As we grow, the amount of royalties we pay out to artists, songwriters and rights holders continues to climb faster than ever. We have now paid more than $3 billion USD in royalties, including more than $300 million in the first three months of 2015 alone. That’s good for music, good for music fans… and good for music makers.”
There is good news in their numbers. Unfortunately, that’s only part of the story.
In 2014, as Spotify’s Gross Revenue, subscribers and music royalty pool went up, the amount artists, songwriters, publishers and labels were paid went DOWN.
You can see this trend in the graph I posted at the top of this article. You can also see the decline across various metrics:
Some Notable Spotify Premium Statistics From January, 2014 to December, 2014.
In January 2014, an artist receiving 10,000 streams in Spotify Premium and controlling the rights to their recording and composition made $90.64.
In December 2014, for the same number of streams the artist made $74.72, this is a DECREASE of -17.56%.
Due to the drop in the royalty rate, for the artist to earn the same amount in December, 2014 as they did 11 months earlier in January, 2014 the artist needed an extra 2,131 streams.
The amount earned by the songwriter/publisher as a Mechanical Royalty each time a recording of their song was streamed in 2014 went DOWN-5.37% from $0.00071961 in January to $0.000681 in December.
The amount earned for a sound recording each time it was streamed in 2014 went DOWN -17.39% from $0.0074199 in January to $ 0.0061296 in December.
Why Is this Happening?
The Spotify Premium monthly per-stream rates are calculated by dividing the money in the royalty pot (the Spotify Reported Gross Revenue) by the number of streams in that month. The decrease in the per-stream rate is occurring due to the number of streams per month growing at a more rapid rate than the revenue.
In other words, it appears anyone that pays $10 a month for unlimited music streams a hell of a lot of music. In addition, as the rates drop, the money is being spread over a larger number of artists causing the money to spread more “thinly”.
The end result in 2014 for Spotify’s Premium service is an artist needs increased streams each month, at what appears to be untenable rate, to just stay even with were they were financially the previous month.
It also means that in many cases, they can have more streams than the previous month and make less money. But this isn’t just limited to Spotify, it can be seen more dramatically across all music streaming services we track:
This model could work if people treated the streaming service like a gym membership. That is, pay for a service and only 10% of them truly use it. If this was the case, the royalty pool would be much higher but not diluted so drastically by streams.
It could also work if there were limits on the number of streams each individual could have each month.
In addition to the lowering per stream and the money being spread wider across more artists, a significant percentage of the money earned by songwriters and music publishers is not being paid to them due to Spotify (and all interactive streaming services) building no infrastructure to make the payments. Instead, they outsourced the job to third parties who cannot fulfill their obligations.
(Based on recovery of past mechancial royalties for its clients, Audiam projects that between 7% to 15% of all earned US streaming mechanicals are either not paid at all, paid in part or are paid to the wrong entity.)
If these trends continue, it will be a forever diminishing return for the music creators and copyright holders to the point where there may no longer be an economic business model that generates any real revenue for the music creators and copyright holders.
A possible alternative business model may be to pay for the specific streams on a more direct basis. That is, if someone pays $10 a month, and only streams songs from the album Broken Boy Soldiers by the band The Ranconteurs, the money from these streams would only be paid for the use of these songs and not impact/dilute the royalties to another rights holder.
Finally, the launch of the Apple streaming service at the end of the June, 2015 could catalyze a quick en-masse shift of consumers from buying music to renting/streaming it. When this shift occurs (and it is a “when,” not an “if”), the impact on the artist, songwriter, label, publisher and the music industry as a whole will be significant.
It’s vital we address these issue now before we are left with more money being generated from the use of music than at any time in civilization with less and less of it going to the artists, songwriters, labels and music publishers.
The end result could be a strip-mined music industry in the wake of Silicon Valley IPOs and trillion dollar market caps.
You can view the vast amount of data and analysis that we’ve collected on Spotify and other streaming services here:
As music director at KCRW, Jason Bentley is one of the most influential tastemakers in the world. He’s also a major figure in electronica and dance, and will speaking at the upcoming EDMbiz Conference Expo, happening June 17th and 18th in Las Vegas.
Digital Music News: You’ve been a huge player in electronic music, dance, and ‘EDM,’ whether that’s with seminal deejays or lobbying the Grammys to expand its awards around the format. So here we are in 2015, but is EDM plateauing?
Jason Bentley: I think it’s finding its roots now, there’s a lot of talk about electronic music hitting the mainstream and threatening a saturation point. And there’s the referenced story of disco being ultimately rejected by the mainstream, though I don’t think that this is a case of history repeating itself. This is more of a continuum, there are layers of the onion.
I feel like it’s stabilizing, broadening its position, its history and identity. There are the superficial indicators, the trends in Vegas for example, but there’s also a more interesting, deeper, more thoughtful approach to dance music evolving.
DMN: EDM starkly stands apart from other verse-chorus-verse genres, and its popularity surged without any help from mainstays like traditional radio and TV. This is clearly a totally different terrain, the rules haven’t really been written. So how can an artist thrive best in this fundamentally different format?
Bentley: I’d say find a context, make a comment, at least have a strong point of view and stick with it. Music has a lot of parallels to fashion, especially this genre of music. There are trends that come from the grassroots, and you need to be a trendsetter and aware of what’s happening right now. And part of that is just standing in it, and being bold enough to stand by it — ‘ya know, it’s gonna be parachute pants,’ and when parachute pants are all the rage, you were there.
It’s your decision as an artist if you’re going to stand by the pop side of EDM, as well as its poppy structure. That’s cool, at least you have a point of view and are working from somewhere.
The most enduring artists have stuck to their guns, they’ve been purists.
Take Above Beyond, they’ve carved out an impressive career with no help from the mainstream, they sell out at the Greek, they sell lots of music, and they’ve stayed true to this idea of trance. They’re also not your typical rock stars, they lack those rock star qualities.
When you stay on message, whether it’s trendy or not, you put yourself in a better position to keep your fanbase along the way. I question artists that shift direction with where the winds are blowing — that can be very dangerous.
DMN: But can you get stuck sticking to those guns?
Bentley: The trick is to transcend the trend, to not be a sub-genre but to come out of that on your own terms and with a certain ownership of how people see you. That’s the goal, but yeah, I think you have to give your audience something that adds up, that makes sense to them.
I’ve seen a lot of different types of artists, everyone has a different set of pros and cons. You can start to assess whether they’ll have a great career or not. Especially at the early stages, you sort of have to dumb it down, at least down to a t-shirt slogan, at least for some people. There are some that aren’t going to fit a mode, but generally your sound has to match your presence and overall aesthetic, it’s the reason why a lot of stuff from Europe is too challenging for American audiences.
When it’s too difficult for people to grasp, it’s a fatal flaw. I see a lot of fatal flaws, sometimes starting with the name of the band.
I’ll often have the opportunity early on to advise — I can at least say – ‘it’s not too late to make a better decision here,’ they don’t always listen but sometimes I’m able to voice an opinion. I can say, ‘you’re not doing yourself any favors by making it really difficult for an audience to grasp what you’re doing.’
You don’t want to dumb down your message too much, but to achieve success over time, you need to set yourself up properly. And it all starts with finding, and connecting, with your community.
DMN: EDM attracts a much younger audience, yet sometimes ’standing your ground’ takes more than a decade of waiting. Which might explain why a lot of prominent DJs are actually in their 30s and beyond. How does age play a factor in all of this?
Bentley: We’re really in uncharted waters here. Only a handful of [older] people – Fatboy Slim, Carl Cox, Green Velvet – are still at the top of their game, but many are approaching 50 or are past 50, and there aren’t a lot of examples to look at.
One thing that everyone needs to look to and respect is when someone is passionate and driven to share their passion and craft. Age doesn’t trump that.
Take the talent of Carl Cox, the commitment, hookiness, relevance, the fun… these aspects are still readily accessibly to anyone. No doubt that club culture is more for the active, youth demo, maybe because festivals are more of an endurance test for people, and for older people priorities change. They’re not out trying to find that new track.
Look at Fatboy Slim, take that career track versus a newer artist today like Flume. The newer groups have a long way to go before they have a long-term career track like that.
DMN: Short-burst media is surging, whether via Snapchat, Vine, or YouTube, to name a few. And artists are connecting through so many different methods beyond just music. So is it still about the song?
Bentley: Well, I’m veiled in the song, that’s the connection, that is the tissue between us all, that’s what I play all day. And there are general themes that people are hitting over and over in those songs — love, heartbreak, feeling good and feeling bad, stuff falls into those categories. And honesty, the ability to hold it close over time, is one of the challenges for dance music, because it’s so much about the feeling of the moment, the type of the moment. The stuff that me and my friends were into at 21, we lived for new records and singles, and we would buy into the myth around these artists, we would be living for it. But do we listen to these records today? No, it’s just a postcard in the back of our minds; enduring music is really about a great song, one that makes a significant connection for people.
DMN: Where does video fit into all of this? After all, the most ‘listened to’ format is a video, whether it’s highly-produced action, lyrics videos, or simple slideshows. Is this something artists should be focusing on?
Bentley: I’m not that visually inclined, I don’t want to be told what the situation in a song is all about, I don’t want that so much. I’m thinking first about the atmosphere, the sensibility of the sound, then I’m keying into lyrics, the aesthetics, the sounds and the atmosphere. But videos, you can’t deny it, it’s very important for a lot of people, I get it, MTV was big — I was just as glued to it as the next person. But generally in my world, it’s not what I’m looking at.
DMN: There’s a tremendous amount of thought, investment and capital around video. YouTube is now the most important format for the musicians and the music industry, Spotify is trying to layer video into its platform to complete, Vadio is trying to ‘video-ize’ streaming applications and just raised $7.5 million, startups like BAMM.tv are trying to reinvent companies through smart video content. But do people really care passionately about videos in the end?
Bentley: It’s a good question. Really, the video work we do every day, for example we do sessions for artists, there are cases where we’ll enjoy tens of thousands or maybe millions of views. But usually what we post on Youtube gets between 3,500 and 7,000 views, I just don’t know if people care that much about video. We post highlights on our Youtube channel, and we get a breakout for someone like Ed Sharpe or Gotye and it blows up.
I’m not so sure how this evolves with the whole move to streaming, it seems like there’s so much potential in how people are going to consume and listen to music. So maybe there’s something we haven’t thought of.
You mentioned lyric videos — those are kind of cool, you can at least meditate on the lyrics and think about the song. It turns out it’s something that a band can lead with, they can grow out of a lyrics video. So it would be great to see a resurgence in that space. It would be nice to see that.
DMN: We’ve talked about audiences shifting towards shorter bits of media, and the resulting surges we’re seeing around mega-players like Snapchat, Vine, and YouTube. But beyond that, data is now showing that music listeners frequently skip a song on Spotify before it’s done. That’s affecting artistry and career paths as well: Sean Mendez breaking out on Vine sticks out as a prominent example. Should we be reconceptualizing the full-length song in the process?
Bentley: It’s a sign of the times, the post-modern world where things are broken up into hooks and samples. But I personally love times when songs are so important to you — you just play it multiple times, over and over again.
As far as my point of view, I’m a deejay and I approach my craft with monk-like precision. I play attention to every single segue, I use music software programs that show me the waveforms and there’s no guessing when it ends; I can beat-match and loop sessions. I’m obsessive about the music environment that I’m creating, I’m like a pilot taking people on a trip, I’m creating an atmosphere and guiding them safely. I’m letting songs breath, I couldn’t imagine interrupting things and jumping around; I’m looking for the right transitions to different songs. If I play deejay at a party, I’m jumping around genre-wise, and you don’t even have to get up to do it. But I’m still really interested in telling the story and taking care of the transition.
DMN: There’s the convenience of streaming, but at what cost?
Bentley: There’s been a lot of talk about the rise of vinyl sale, but what’s the other side? Yes, everything is in the cloud, there’s no ownership, but I wonder if there’s a growing part of the populace that really does want to own something, and are we set up to cater to that interest? With the move to streaming, I wonder if there’s going to be an answer here, if people want to own something.
I totally love that there’s access to data on what the trends are, but I can only chalk it up to how the world is today: sometimes I only channel surf, I jump around and don’t watch anything for half-an-hour, because that’s how it’s presented to me. You just jump around.
Maybe that’s the strongest argument for the curatorial, giving people the better filters, the better signal-to-noise ratio, applying that opinion and human touch.
DMN: Maybe that explains the growth of more hands-off concepts like Songza, and the surge in listening hours on Pandora. Are you seeing similar increases for your curated, lean-back curatorial approach?
Bentley: I could only look at our membership with that test. At KCRW, we try to get the passive listener to become a paying member, so I have seen growth on that side, but I don’t pay attention to the ratings periods. Honestly, I don’t know how much reliability a service like Arbitron has: they have a panel that they put together and it seems so random to me. They coincidentally add one person who’s an NPR listener and our ratings go through roof.
But having a sense of our connection with our community is most important, and L.A. travels really well. People are really interested in what this station out of Santa Monica is doing, and we do world class programming. It’s a wonderful thing, it’s pretty unique, and yes I see the growth. We’ve had to keep pace with the changes: whenever a new platform comes along our policy is to embrace and inhabit it and not feel threatened by it — because ultimately it spreads the word on what we’re doing.
Ultimately, we’re trying to get as much members to support our cause, and stimulate the intellect of our listeners and members.
DMN: Perhaps the biggest challenge for artists is connecting as strongly with their natural audiences, instead of searching around for something bigger and more ‘now’.
It’s just too tricky when you try to reinvent the wheel. I respect different looks, producers, and ideas, but it often doesn’t work out for the group.
It’s sad to say, but that’s one thing I really take away from our conversation.
Apple Music will be paying 71.5 percent of streaming revenues back to rights owners, at least after a three-month, free-access period (when royalties will be zero). That beats Spotify by at least 1.5 percentage points, and it’s not 58 percent, according to Apple, despite that figure surfacing in a recently leaked in a Apple contract.
“In the US, Apple will pay music owners 71.5 percent of Apple Music’s subscription revenue,” Apple iTunes Content Vice President Robert Kondrk told Re/Code this morning. “Outside the US, the number will fluctuate, but will average around 73 percent.”
The details are getting extremely confusing, though that’s become de rigueur for streaming. In the same contract, Apple outlines a 70 percent payout for a-la-carte downloads, which includes publishing payouts, yet the publishing component isn’t included for the streaming portion. That led to the clearly-stated 58 percent figure, though subsequently, the head of the National Music Publishers Association (NMPA) David Israelite informed Digital Music News that Apple is paying publishing royalties separately on streaming through separate transactions and contracts.
The higher number was subsequently backed up by top music industry attorney Steve Gordon, who pointed to an aggregate mechanical and performance publishing payout adding to 10.5 percent. “They’re handling publishing themselves now on streaming,” Gordon confirmed.
(Actually, 58+10.5 doesn’t quite add up to 71.5, but it does solidly add up to fugghedaboudit.)
Justin Blau, better known as 3LAU, is an in-demand producer and DJ. He’s been making electronic music for four years and has already seen massive success. Blau will be on the artist panel at the EDMbiz Conference Expo, which takes place June 16th to 18th in Las Vegas. He’s also playing EDC.
Digital Music News: You rose pretty quickly. How did you attract the attention of Dim Mak and other artists and labels that supported you?
Justin Blau: Honestly it all started with Revealed, Hardwell’s label. I obviously got some support from Dim Mak. Dim Mak wasn’t a really big part of the picture, but Steve Aoki has supported me forever.
To be honest though, I wouldn’t say my success is really based on artist labels, I would say it’s predominately based on just the music. I think it’s a little bit of a misconception that bigger artists’ labels help smaller artists. It’s nice to think that that’s true, but it’s actually not at all.
What really makes or breaks an artist is having a song that kind of transcends dance music proper.
“How You Love Me” was the one that broke me. For Audien, it was his Bastille remix. For TJR it was “Oi”. Songs that just go far and beyond what dance music offers are the songs that truly break artists. Artist labels are great and all, but I’m just giving you my honest answer. It’s really about the uniqueness of the music.
DMN: Besides not focusing too much on artist labels, what are some other misconceptions that you think upcoming DJs and producers might have about the scene?
Blau: I think… there’s so many… I think DJ co-signs. A lot of smaller artists think that co-signs mean everything, the reality of the situation is they don’t at all. They help build credibility in an artist’s career, which is really, really great.
You know what… when you’re smaller you have to do those things. I think it is important, but too many people spend too much time focusing on co-signs as opposed to focusing on making truly unique music. I’ll say that 20 times in this interview, especially now, at a time when everything is really starting to sound the same. It’s all about doing something different and doing something different that still sounds good. I think any smaller up-and-comer should focus on finding what they love to make, instead of mimicking what’s working right now.
All my future releases are kind of a combination of what’s working right now and stuff that I think hasn’t been made before. I’ve spent so much time doing that, cause some of my releases in the past have been following trends. I think for the first time my future records are significantly different.
DMN: Is that something that you wish you would have known going into the scene? Or…?
Blau: That’s something that I think everybody knows, right? Everybody knows that they have to make unique, different music that still sounds good. But it’s something that more recently has become a priority. It’s really a quality control thing.
At the end of the day lots of artists — we write a lot of songs, we finish a lot of songs, how many songs do we release?
A lot of artists are releasing every single song they finish just to keep their name out there. The reality of the situation is that when you have one thing that’s killer, you only need that one thing that’s killer. It’s a quality over quantity relationship.
That’s what I think is at the core of what I’m talking about.
DMN: Once you reached a certain level of prominence, how did you know how to find your team? Like your manager, your booking agent, how did you know they were the right ones for your career?
Blau: Well I’ve actually moved between a lot of my team members. The only team member that stayed the same the whole time was my agent. I worked with a guy who is still a good friend of mine for four years, from the beginning. We had to part ways recently, as friends, for a variety of reasons. I have a new team now. I’ve changed lawyers in my career, my new lawyer is fantastic.
It takes time to find the right people that you work with and that you vibe with. I think for me, it’s taken four years. And I think right now I have the all star team and I might not have before. So it does take time to find the right people that work for you.
DMN: As far as software, I know that you use Ableton. Is that still your main software of choice?
Blau: Yeah, I actually use both Ableton and Logic, I always have. I do some things in one, some things in the other. But the truth is it doesn’t matter what software you use, it really just matters how you use it. Lots of different people use lots of different things.
DMN: Was going from production to live performances something that was hard for you?
Blau: Yeah, it actually is. It’s funny, that’s a really good question I think. It’s something that I might have a different opinion about than other artists.
But in the beginning of everyone’s career you get really excited about playing in front of tens of thousands of people. It’s the rush, the high, it’s amazing. And I still get that rush every time I go play and I LOVE playing, but the truth is I’m in this business to make music. I’m not in this business to play shows. I didn’t start DJing and start trying to make dance music because I wanted to be a famous DJ, I started making dance music because I love making dance music. I think that’s different for a lot of people, let’s be honest. A lot of people do what they do TO be famous or TO play for tens of thousands of people.
For me right now, the transition from being in the studio to going to play, sometimes I kind of resent going to play. That’s my honest answer. I really prefer being at home and working on doing what I love every single day.
Now there are some shows, like EDC, which I’m hyped as hell about. That’s a whole different story. Most of the time though, going to do smaller club gigs in different cities; it’s exciting at first, for the first two years of a career. But for me, it’s four years now. It’s not to say that I don’t get excited, trust me I do, I get excited every single show that I play. I always have an amazing time. But the truth is, the more you play, the less time you have in the studio. And that’s just the serious nature of dance music.
DMN: How do you keep your head on straight when you’re touring and playing all those parties and festivals?
Blau: Well I used to travel alone, and when I traveled alone it was pretty difficult. But I never missed a show and I’ve never missed a flight, knock on wood. It’s still difficult, I think there’s a lot of temptations when you’re touring. You want to drink, you want to party, you want to have a good time.
More recently one of my best friends and my tour manager, Nick, he’s a super fit and super health oriented guy. He keeps me on track when I can’t keep myself on track, which I’m pretty decent at myself.
But getting the right amount of sleep, making sure you’re eating well, making sure you’re working out on the road, making sure you’re not drinking excessively… it is very difficult to stay sane, I’ll give you that.
Nina Ulloa covers breaking news, tech, and more: @nine_u
Apple is now facing the prospect of a ‘massive withdrawal’ from a ‘very large group of indie’ artists and labels from Apple Music, according to multiple sources speaking with Digital Music News this weekend. That includes some of the largest independent artists on the planet, including Adele, The National, Alabama Shakes, and quite possibly, Radiohead, already a vocal opponent of streaming royalty payments (or lack thereof).
Given the brewing dissatisfaction over egregious Apple terms, it was estimated that more than 50 percent of indie artists will be absent during Apple’s critical launch period this summer.
According to more than four separate sources, including a pair a well-known independent labels, most of the artists and labels will keep their catalogs available for traditional download on the iTunes Store, but will opt out of streaming aspects.
“I don’t need to call Apple to tell them, ‘deal with this, or you’re looking at more than 70 percent of the indies holding out,’” explained one head of a large independent label. “This is just very clearly a raw deal.”
Since then, fecal matter has been floating towards the fan. In reaction, powerful, US-based independent label organization A2IM issued a letter warning its members to exercise extreme caution, or simply pullout entirely. “Since a sizable percentage of Apple’s most voracious music consumers are likely to initiate their free trails at launch, we are struggling to understand why rights holders would authorize their content on the service before October 1,” the note advised.
”Please do not feel rushed to sign Apple’s current offer.”
Now, that message is reverberating throughout the industry, with most indies deciding to either wait until after the initial three-month free window lapses on September 30th, demand Apple change its payout terms, or both.
Meanwhile, a number of artists and independent distributors are closely examining ways to opt-out of the service themselves. On Friday, independent artist Zoe Keating took to Digital Music News and noted that opting out is actually easy through the iTunes Connect interface, while distributors like DistroKid have already indicated that pulling out is not an issue.