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Ten ways that technology-driven changes have impacted musicians
- 1. ch.ch.ch.ch.Changes Kristin Thomson, Future of Music Coalition @kristinthomson How technology-driven changes have impacted musicians
- 2. 3 obvious and 7 not-so-obvious things that have changed recently for working musicians.
- 3. 1. Vast increase in number of platforms to share, distribute, license or sell music.
- 4. Physical retail Radio Record shops Big box retailers Indie shops Commercial radio NPR College radio Direct sales Mailorder Record clubs Sales at shows Prior to 1998
- 5. Physical retail Radio Record shops Big box retailers Indie shops Commercial radio NPR College radio Direct sales Mailorder Record clubs Sales at shows Digital retail Webcasters/satellite ++ + Direct sales
- 6. Interactive streamingOnline audio ++ + Online video
- 7. Positive • More options for consumers/music listeners • More efficient delivery • Music is way more accessible 1. Vast increase in number of platforms +
- 8. Negative • For listeners, “the paradox of choice” • Dispersion of fans/consumers to many platforms • Bands have to be present on multiple platforms • The “unbundling” of music (more about that later) 1. Vast increase in number of platforms _
- 9. 2. Musicians’ greatly improved access to the music marketplace.
- 10. Retail Radio • Limited by shelf space • Controlled by big distributors and retailers • Major labels a priority Prior to 1998 • Tightly controlled playlists • Payola • Major label dominated
- 11. CD Baby: $49 per album TuneCore: $30 first year $50 each following year 91% of revenues back to artist 100% of revenues back to artist 2. Greatly improved access to marketplace.
- 12. 2. Greatly improved access to marketplace. Other “free” or low cost platforms and tools • YouTube • Soundcloud • Pandora • Sirius XM • Websites/blogs • Bandcamp • Facebook • Twitter • Instagram • Snapchat
- 13. Positive • No barriers to entry! • Easy, affordable access to digital stores and platforms • Drastically reduced overhead costs • No need for distribution deal • Direct access to fans 2. Greatly improved access to marketplace. +
- 14. Negative • No barriers to entry! • Way more “noisy” • More competition for consumers’ attention/wallet share • Competing with the entire history of recorded music • For composers, significant drop in what they can charge 2. Greatly improved access to marketplace. _
- 15. “It’s not a novel observation on my part, but technology has leveled the field of distribution to a great degree.” – jazz manager interviewee 2. Greatly improved access to marketplace. money.futureofmusic.org
- 16. 3. Increased number of music- related revenue streams.
- 17. Composition income Sound recording income Mechanical royalties Public performance royalties Synch licenses Jingle writing/composing for hire/ commissions Prior to 1998 Physical retail sales Physical mailorder Selling music at shows Master use synchs
- 18. Composition income Sound recording income Mechanical royalties Public performance royalties Synch licenses Jingle writing/composing for hire/ commissions Physical retail sales Physical mailorder Selling music at shows Master use synchs Digital retail sales Digital performance royalties Interactive stream payments YouTube partner program Cloud storage payments AARC royalties + + Streaming mechanical royalties Mechanicals for cloud storage Lyric display royalties YouTube partner program
- 20. Revenue Streams: Existing, Expanded and New money.futureofmusic.org
- 21. Positive • More opportunities to make money from your compositions, recordings, brand. • Shift from one-time purchases to license-based payments for each listen. • Development of entirely new revenue streams. 3. More revenue streams +
- 24. Negative • Atomization of former income streams. • Many new streams are fractions of pennies. • Lengthening of payback period. • Discovery and payment increasingly dependent on proper metadata and attribution. 3. More revenue streams _ bit.ly/corzometadata
- 25. 4. Disruption of conventional music business models, and 7 related results.
- 26. (Re)creation of the singles market. Great for consumers, and a key factor in success of iTunes store model but... • Significant drop in revenue from retail sales • Significant drop in mechanical royalties to composers • Reported drop in label support for artists 4. The unbundling of music
- 27. “The thing that’s decreased—this won’t surprise you—is the income from recording. By that I mean the royalties, the advances, all of the income streams that go along with the recordings. It’s all decreased significantly over the last 10 years.” – Contemporary Chamber Ensemble interviewee 4. The unbundling of music: decreased retail sales
- 28. “Mechanical royalties have just been decimated; the statement that was 20 pages long and involved six figures has turned into this statement that’s 100 pages long and doesn’t even make five figures. It’s probably, I’d say, at least a 75% decline in mechanical royalties…” – Nashville Songwriter interviewee 4. The unbundling of music: decreased retail sales
- 29. 4. The unbundling of music 50% 22% 23% 4%Self-identified songwriters/composers: Over the past five years, have the mechanical royalties for the reproduction of your songs/compositions increased, stayed the same or decreased? Money from Music survey. N=1062 Half of songwriters/composers say mechanical royalties have decreased.
- 30. No label support, lower revenues overall means artists are asking their fans to: • pre-purchase albums • support tours • buy premium offerings Great for many musicians, but does add to workload. 5. Direct support from fans possible...and necessary
- 31. 6. Increased corporate presence 42% 35% 9% 14% Self-identified recording artists with a relationship to an indie or major label: Thinking back over the past five years, has your financial support from your label(s) increased, stayed the same or decreased? Money from Music survey. N=381 42% of signed artists say that label support has decreased.
- 32. Reported drop in label support for artists means musicians looking to other sources for support. • tour sponsorships • product endorsements • sync license deals 6. Increased corporate presence
- 33. “[...] it definitely seems that people in general are bummed that record sales are so shitty and while I would love to get paid more for records I, long ago, gave up chasing that particular ghost and have looked for money elsewhere.” – rock band guitarist and singer 6. Increased corporate presence
- 34. Drop in “traditional” revenue streams and tour support means that bands are more dependent that ever on income from live performance. • more shows • more attention paid to (and money spent on) stagecraft 7. More shows, and higher expectations
- 35. “Do I think that touring has become significantly more expensive? Yes. I think the bar has been raised for production…I think it’s required now and because of that it costs more to do that.” – hip hop business manager 7. More shows, and higher expectations
- 36. • Digital sales are very well documented. • No more dealing with distributors, hassling phone calls, getting stiffed on payments. 8. It’s way easier to get paid + • There’s just a lot more platforms you need to track and monetize • Accumulation of many tiny payments. _
- 37. Platforms like Bandcamp make it possible to: • use variable pricing • bundle physical and digital goods together • sell directly to fans 9. Market segmentation for the win +
- 41. “We have our own download card system in place. I, for one, definitely use that when I’m playing out, particularly with the vinyl. There’s a download card taped to the back of each record, and I try to do the same with t-shirts as well.” – indie label owner and performer 9. Market segmentation for the win
- 42. Prior to 1998: if you aspired to be on commercial radio, in big retail chains, playing big shows, you needed to sign with a major label and relinquish your copyrights. Now: artists can more easily retain control of copyrights and doing licensing deals, hire consultants for expertise. 10. Musicians can control more of their career +
- 43. 36.8 53.5 55.7 63.9 66.3 24.1 21.8 23.7 18.9 11.6 18.4 2.7 8.0 4.6 1.2 20.7 22.1 12.6 12.7 20.9 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% My day-to-day work is more about promotion than creation I can collaborate with other creators I can manage my career myself It's more competitive than ever I can communicate with my fans directly Strongly agree/Agree Neutral Disagree/Strongly disagree Not applicable I can communicate with my fans directly It’s more competitive than ever I can manage my career myself I can collaborate with other creators My day-to-day work is more about promotion than creation Thinking back over the past five years, how have emerging technologies and the internet affected your musical career? { N = 4617 Data from Artist Revenue Streams money.futureofmusic.org 5with greatestagreement
- 44. “There’s enormous structural differences from the day-to- day blue-collar existence of the musician in terms of how you organize a tour.” – indie rock composer, performer, sideman 10. Musicians can control more of their career
- 45. • Empowered music creators. • Created efficiencies. • Greater access to the music marketplace. • Direct connection to fans. • Possible to retain control of rights, and self-manage career. Recent changes are a double-edged sword ++
- 46. • Atomized income streams. • Support structures are changing. • More competitive than ever. • Created new work and additional responsibilities for musicians, whether it’s managing an online presence or self-releasing your music digitally. Recent changes are a double-edged sword _
- 47. The answer
- 48. The answer There is no single solution to the challenges facing musicians and songwriters.
- 49. Be everywhere.
- 52. Leverage the internet to offer different prices and bundles.
- 54. Play favorites.
- 64. Measuring the impact of these changes.
- 66. FMC resources Artist Revenue Streams Research money.futureofmusic.org 42 Revenue Streams Revenue Streams: Existing, Expanded New money.futureofmusic.org/40-revenue-streams/ money.futureofmusic.org/revenue-streams- existing-expanded-new/
- 67. FMC resources HOW THE MONEY FLOWS BACK TO songwriters, artists, publishers & labels broadcast radio terrestrial broadcast of any AM or FM station PROs ASCAP, BMI, SESACC songwriter publisher performance of composition performance of sound recording How are musicians and songwriters compensated when their music is played on the radio, sold on digital platforms, webcast, or streamed on interactive services? For digital stores and on-demand streams, how the money flows depends on what entity negotiated the license. For record labels that are represented by a digital aggregator/distributor: In the US, terrestrial broadcasters do not pay performers or sound recording copyright owners For record labels that have a direct deal with services: digital sale iTunes • Amazon Google Play • eMusic SR record label artist/band* mechanical reproduction of composition sale of sound recording publisher songwriter 10-50% 9.1¢ /track * Rate of payment from label to artist/band depends on terms of contract, and whether digital sale is classified as a sale or a license. 0.5% Sound Recording Special Payments Fund # # Labels contribute a small percent of sound recording sales income. If recording was made under the AFM’s recording agreement, payments are disbursed to musicians who were paid scale wages during the recording session. musicians SR aggregator artist/band* mechanical reproduction of composition sale of sound recording publisher songwriter IODA/The Orchard record label 9.1¢ /track @50% 85% AFM & SAG-AFTRA Fund webcast or digital performance Pandora • Sirius XM • NPR streaming any webcast stations PROs ASCAP, BMI, SESAC*C SR SoundExchange songwriter publisher record label performer(s) 50% 45% 5% performance of composition digital performance of sound recording background singers and musicians * At the end of 2012, Universal Music Publishing Group and Sony/ATV-EMI pulled their digital rights from ASCAP and BMI, seeking to get a higher rate by negotiating directly with webcasters. UMPG and Sony ATV-EMI* UMPG and Sony ATV-EMI songwritersC songwriter songwriter on-demand stream Spotify • Rdio • Rhapsody SR record label artist/band* streaming mechanical royalty licensed use of sound recording 10-50% 10.5% minus payment to PROs PROs ASCAP, BMI, SESACC publisher performance of composition publishers UMPG and Sony ATV-EMI*C * At the end of 2012, Universal Music Publishing Group and Sony/ATV-EMI pulled their digital rights from ASCAP and BMI, seeking to get a higher rate by negotiating directly with services. UMPG and Sony ATV-EMI songwriters PROs ASCAP, BMI, SESAC songwriter C * Rate of payment from label to artist/band depends on terms of contract, and whether digital sale is classified as a sale or a license. * Rate of payment from label to artist/band depends on terms of contract, and whether digital sale is classified as a sale or a license. performance of composition performance of composition big labels indie labels For radio and radio-like services, blanket licenses determine who gets paid, and how much. digital sale iTunes • Amazon Google Play • eMusic Music and How the Money Flows infographic futureofmusic.org/moneyflow New Business Models Digital Distribution and how to participate futureofmusic.org/nbm futureofmusic.org/dd
- 68. Kristin Thomson | Future of Music Coalition @future_of_music @kristinthomson