This morning I watched a concert video of Styx performing "Grand Illusion" and "Pieces of Eight" from 2010. These were two of my favorite albums with "Grand Illusion" possibly being in my desert island list. And even with only two original members, they still sounded great.
Usually, I avoid watching recent performances of my favorite classic rock acts. Partially because I don't want to lose the mental image that I have of the artists in their youth (most aging rockers are not a pretty sight). But I also generally don't like to see an incarnation that has only 1-2 original members. In my mind, it's just not the same band.
Some people might feel that it's kind of sad to see rockers clinging to their past and forced to survive by playing the same, worn-out, songs year after year. I feel very differently. I'm watching Styx have a great time on stage playing in front of a smaller but incredibly enthousiastic and appreciative audience.
How many people do their jobs every day without any appreciation or positive feedback? Most, I would argue labor in annonymity. Meanwhile Styx continues to do what they love doing - making music - and putting on an awesome show while making a lot of fans happy. Imagine if you received such positive reinforcement for doing the same work 20, 30 or even 40 years in row. Wouldn't that be incredible?
So, I actually admire the legacy bands of any era and think it's great that they can keep their music alive while continuing to manifest their passion.
Today, Getty Images announced a rebranding of their music platform from Pump Audio to Getty Images Music. On the surface, it is not really such big news. However, as I read their email blast, I came upon a very upsetting paragraph nestled (or perhaps buried) in the middle:
Performance Royalty Free - Flexibility and Simplicity for Customers
Why is performance royalty free an important new license model? Music licensing is fairly complex and not all music customers or potential customers fully understand the process. Many will license music only if the process is made simpler--one size does not fit all. There are also certain customers who need a simplified and streamlined licensing process because they routinely use high volumes of tracks, usually at a lower price which will accommodate their volume. Yes, this means individual returns are small or incremental, but these users are growing in number so we expect this sector (as part of the overall market mix) to be increasingly valuable for Getty Images’ contributors. We understand that it is possible that you may not want every track to be available for performance royalty free licensing, so we have added an option that will allow you to flag a track as “not available for performance royalty free” at the time of submission. We want to make clear, however, that excluding a track from performance royalty free limits its sales potential, so keep in mind it may negatively impact the likelihood of acceptance of your track. As usual, we will weigh the value of each track against its limitations.
This may seem innocuous however I feel that it represents a dangerous and growing trend in licensing music for audiovisual use (aka synch licenses.)
Getty Music (formerly Pump Audio) has made a thriving business of representing music libraries and independent artists for synch placements in a variety of audiovisual products. Along the way, they have been quietly amassing a catalog of music that is not only royalty free for the master recording rights, it is also free of any performance income royalties for the composition. While this is not mandatory, Getty is making a hard push to its artists to opt in for waiving their performance royalties. Right now, Getty has nearly 60,000 “performance free” music tracks as compared to 139,000 “rights managed”.
Why does this bother me? In my world of digital music, labels and publishers are in a constant fight to protect their royalty rates (see Pandora’s recent victory against music publishers). There is an unending struggle to maintain the value of music against the economics of the various digital music services.
However, Getty is now on the other side and is guilty of devaluing music by encouraging artists to forego one of the basic grants of copyright law: “…to perform the copyrighted work publicly” and the income derived from this right. Further, Getty is using fear tactics by saying that “…excluding a track form performance royalty free limits its sales potential…” Why is Getty creating a system that benefits from discouraging artists to defend their right to retain their basic rights? In other words, it seems like they managed to create a business model that purportedly will decrease your sales if you choose to protect your performance rights.
Their justification is that they are merely responding to customer demand. It is perfectly understandable that a large company like Getty wants to please its customers. That’s only natural. But Getty Music relies on artists to keep making music (all at their own cost) and licensing it to Getty. It seems counterintuitive to not only deprive the artists of a potentially long-term revenue stream but to actively encourage the artists to do so out of fear of lost opportunities.
Obviously, Getty draws a line in responding to other customer needs. It sets a price on its products and expects the customer to pay it. So why can’t they draw a line with regards to performance rights? It is because they generally don’t participate in such back end revenue streams. Their take is on the upfront license fees. So, it causes them no apparent harm to give the customers what they want in this regard. In fact it even gives them a competitive edge over other music services – all on the backs of the very artists that they purport to support.
The logic that Getty presents is that the loss of any potential performance income will be offset by the increase in license fees an artist may receive. On a macro level, it’s a no-brainer for Getty (read: Getty has nothing to lose). But, generally speaking, it will not work on the individual artist level. For the majority of artists on Getty, getting a synch placement will generate more revenue from performance royalties than from their share of the synch fee. (Certainly all the production music libraries understand this math.) With 1000’s of artists signed up to Getty Music, I find it very hard to conceive that any individual artist will see a substantial increase in the number of licenses issued enough to justify stripping away their performance royalties.
Royalty-free music libraries have been around for decades. Most such companies survive only because they earn performance fees from broadcasters, cable channels, etc. In fact, many have even given away their music for free knowing that they would likely make enough on the back end. But now we are seeing a decline in upfront synch fees (classic supply-demand scenario) AND a coordinated effort to remove all other revenue sources.
So the promise of a Pump Audio/Getty Music has been to give the indie artist a chance at a synch revenue stream that they would not normally have. Definitely a noble endeavor without a doubt. A win-win, you might say especially for large licensing deals where Getty takes only 25% of the upfront fee. So why not leave the performance royalties intact?
Fortunately artists have complete control of the situation (at least, for now). It is not mandatory to waive your performance rights when you submit music to Getty. I would strongly encourage all of Getty’s artists to think very hard of this classic, slippery slope before you tick the wrong box.
Last night, I saw an incredible concert by one of my favorite bands (from my college days): Kraftwerk. They performed at Disney Hall in LA which was a brilliant choice in my opinion. There was really no light show to speak of. But each song had a perfectly crafted and precisely timed music video. The song selection was great. The sound quality was amazing. They even thru in some new sections and elements into their songs so that they were substantially different from the album versions. Two hours of electronica before anyone knew that term (or EDM) from the band that invented "Techno Pop" from probably one of the most influential bands whose inspiration can be heard in 1000's of artists today. I'm sure that even the Daft Punk Robots would acknowledge the influences of Kraftwerk.
The show was intense with a lot to absorb. The audience was mostly enraptured and quiet. In fact there was very little feedback from the audience (e.g., explosive clapping, yelling, hooting, singing, etc.). In some ways, it was a bit like a music lecture in electronic, synth music. However, the band, as usual, never spoke to the audience. In fact, the only acknowledgment of the audience came at the very end when each member bowed and waved to crowd just before they walked off.
So even though I thoroughly enjoyed myself and was absolutely transfixed by the music and video, I was left with two thoughts: "Did the band need to be there?" or "Did we even need to see the band at all?"
I'm sure that I, along with everyone else, would have been very disappointed not to see the band onstage. But it was clear that they were merely props to the concert and that they were secondary to the elaborate 3-D videos on screen. We might have been even more disappointed if all of the music was completely pre-programmed or recorded and didn't need anyone onstage at all.
Would I have enjoyed the music and videos less if the band played off stage or was not there at all? Maybe a little. But I'm really not sure. The event would certainly have had to be marketed more as a multi-media "experience" as opposed to a concert. That could have been done I think but it might not have sold out four nights at the Disney Hall. If there were ever a band that could have just had their famous burgundy-colored robots take their place, it would have been Kraftwerk.
I've been waiting 40 years to see them ever since "Autobahn" was released. So I am glad that I saw real people onstage after all. (or were they replicants?)
Today, I finally updated the design of my blog. It made me realize how quickly style trends change and I have to admit that I haven't been on top of them as much as I would like. However, I am the first one to immediately judge a site. Whenever I go to an artist's webpage, there is an instant assessment that occurs. Usually, it can be expressed as "this artist has it together" or "this site sucks".
But when a site is great, you just know it.
What's a great site? It's one that is easy to navigate, has great content and, most importantly, actually works. The photos load, the videos play, the music streams, the links go to where they need to, etc. I think a good site reflects on the dedication that an artist has to their craft. It doesn't have to be fancy with a ton of amazing graphics. In fact, sometimes, sites can be overly complex.
I often am asked about the necessity of having a website. I still think it is important. It is your brand and it is something completely in your control (as opposed to some corporate giant). I get a little annoyed when I am redirected to a Facebook artist page.
So, today, I realized that it was time for the doctor to heal thyself. Nothng fancy. Just something easier to read. The only thing left is to write something worthwhile to read. Stay tuned...
Do you know who is handling your music? You sign up with a digital distributor like CD Baby. . Perhaps you are an artist that selected all the services and options (e.g., Youtube, streaming, etc.). Hopefully, next thing you know, your content is everywhere. All is good. Right? Not always.
A recent article at Techdirt highlights a growing problem in the digital distribution community: Transparency. The main issue with this story is the trend for digital distributors to outsource a key revenue stream, Youtube’s content matching system. In this case, CD Baby utilized Rumblefish to manage their Youtube monetization process. (This system is a fingerprinting technology that can automatically recognize when a video has a certain sound recording in it. Then the administrator of this content – in this case, it was Rumblefish and not CD Baby - can decided to monetize the video by placing ads or issuing a takedown or do nothing.)
I don’t blame companies for trying to maximize their revenue streams. That is what artists and labels want from their distributors (physical or digital). But the process has become layered and opaque. It needs to be more transparent.
With Rumblefish, CD Baby fostered a typical channel conflict between Youtube and the original artist. The artist received a notice that Rumblefish was claiming rights to the artist’s song and that there would be ads placed on the video. Ordinarily, this would not necessarily be a bad thing. After all, Youtube’s ad revenues are providing significant income for a lot of indie artists.
In this situation, however, the artist had no idea why Rumblefish was making the claim. The band actually held the copyright to the song themselves and had signed on to do business with CD Baby, not Rumblefish. The automatic email notification from Youtube did not even have an email contact for Rumblefish.
The transparency issue gets even cloudier when the artist visited Rumblefish’s home page. At first glance, it looks like all they do is sync placement for film/TV/ads. Only the truly persistent and inquisitive artist would find the FAQ page and the proper email to voice their objections. Unfortunately, a less than sympathetic employee responded to the artist and reasserted Rumblefish’s authority to monetize the artist’s video . Clearly, CD Baby and RumbleFish had not anticipated this conflict. Nor had they developed a plan on how to respectfully deal with the artist’s reasonable complaints.
The problem in this scenario is not related to outsourcing or sub-distribution. Every distributor uses third party resources to one degree or another. There are always situations where it may be better, faster, and/or cheaper to subcontract versus doing it in-house. The challenge for distributers is to allow transparency without giving up their primary responsibility of customer service.
Some distributors might want to hide the man behind the curtain. That can be fine if the distributor takes responsibility for any conflict resolution. Unfortunately, secrecy usually wins and the client (the artist or label) is left wondering who to contact. When a non-transparent situation arises, it is further compounded by the immense size of most distributors. CD Baby handles 10,000's of artists and labels. Youtube claims from this large a catalog can exceed 100,000’s per month. It is no wonder that CD Baby decided to allow a third party to manage their Youtube account and deal with all of the disputed claims. It was a simple calculation of resource allocation versus ROI.
As with most complaints about the digital marketplace, it all falls down to customer service. The digital landscape is rife with channel. This is the nature of the beast and cannot be fully avoided. Outsourced customer service is another inherent flaw that seems to be the result of scalability and cost cutting.
The artist’s music is their single greatest asset. When they choose a company to distribute it, they are placing an immense amount of trust in that company. Transparency is the only way to maintain the trust and confidence to permit distributors to maintain their client relationships. In the case with CD Baby and Rumblefish, a little transparency would have gone a long way to avoid the anger and frustration that that Artist must have felt.
About six years years ago, David Goldberg (then GM of Yahoo Music) made a pronouncement that a la carte downloads were dead. Yahoo Music was the purveyor of a very ambitious music subscription service that has been gone for almost 4 years. At the time (circa ~2006) iTunes was advancing incredibly fast and proving itself to be the dominant online music retailer. The term “cloud computing” was not a common phrase (note: the first occurrence of “cloud computing” is arguably August 2006 by Eric Schmidt of Google). Spotify was just a dream. Rhapsody was going strong. Napster had launched its legal subscription service to great hoopla but slow adoption. Though I seriously questioned David’s pronouncement back in 2006, I find myself re-examining it in light of all the “cloud” and subscription services now being offered.
As everyone knows, the general debate in the music business is “access vs. ownership.” The major prediction is that users are not going to want to purchase music as long as they have unfettered and unrestricted access to it. Such access can be in the form of the cloud that let’s you play your music from any connected device. It can also be in the form of an “all you can eat” subscription service that hopefully has all the music that you want to hear.
First, what is “The Cloud.” This was formerly (and fondly) referred to as the celestial jukebox. It refers to services that allow you to access all of your music from any device wherever you have Internet access (i.e., either thru wireless, wired or wi-fi). Cloud services are offered by major music retailers such as Apple, Google, Amazon, etc. They can also be offered by third party services such as the beleaguered MP3tunes.com. In most cases, they will learn/upload your offline music catalog and then offer it back to you via an Internet connection.
Aside from ubiquitous access to all of your music regardless of your device’s storage, a major advantage of the cloud approach is that most of these services include applying a uniform, upgrade in audio quality. For example, if you ripped some tracks from a CD at a lower bit rate (to reduce the size of the file), most cloud services will match it to a higher quality version on their servers and play it back at the higher rate and better quality.
Since a cloud service relies on having an offline music collection that you want to access anywhere or any time, it can be considered a derivative of the a la carte method of consumption.
Opposed to this are streaming and subscription services that try to get the largest catalog possible so that you can always find the music you want. They need to strike deals with as many labels and distributors as possible in order to ensure that a listener always finds the music they want. While most streaming services have done very well, there have been some very public gaps in coverage for freemium services such as Spotify. It’s quite possible for an artist to be one service and not on another.
I have to agree that both offer a tremendous value to the music consumer. Personally, I enjoy checking out a new artist by visiting Rhapsody, Rdio or Spotify. It is highly unlikely that any new artist will not be found on one of these services. I can easily listen to entire albums or “best of” playlists while I am discovering new music (or, at least, new music to me). Then, if I want to permanently add it to my collection, I can choose to buy it from these services or switch to dedicated a la carte service like iTunes, Amazon or eMusic.
On the other hand, as a music distributor, I often have a ton of unreleased music in my music collection. With a cloud service, I can access all of this content (provided that it is not encoded as a wav or aiff file) when I am away from my computer. This is incredibly useful for me. It allows me to be completely spontaneous about my listening habits.
So what is a music lover supposed to do? The cloud or the stream.
As I ponder this question, not only do I have the famous Clash song “Should I Stay...” stuck in my head, I wonder what the average music consumer does. It is very easy on both coasts to forget about middle America where broadband is still nowhere close to 100%, where CDs are still being sold and where “subscription” or “clouds” are more associated with Sports Illustrated and weather reports.
Adding to my growing befuddlement are recent statistics showing that a la carte purchases are not dead. Recently Digital Music News had a great chart culled from RIAA data.
Adoption of subscription services are definitely rising albeit slowly. A la carte sales continue to rise steadily even though subscription services could easily be presented as a much more bang for the buck. As you might imply from this chart, streaming and subscription revenues have not caught up with the a la carte revenues. Certainly, they have become a significant percentage of income for distributors such as BFM. However, in comparison, a la carte revenues are still the predominant revenue stream by far.
One thing that I find troubling is that that even Internet juggernauts such as Sony, Yahoo and Microsoft have all had great difficulties launching and sustaining subscription services. Microsoft’s Zune seems to be making progress lately. But it may not be enough.
The greatest concern about streaming and subscription services is that may cannibalize download sales without replacing the lost income. To date, several prominent labels and distributors (BFM included) have analyzed the data. All of the analyses indicate that this is not happening. Subscription and streaming services are proving to be additional income to the still-growing permanent download market.
Spotify has been the only one to have moved the meter, in my opinion. And still, it’s not a terribly significant portion of the overall music revenue. It is questionable if business models like Spotify can be sustainable in the long term.
A recent eMusic / AIM study conducted in the UK produced some intriguing stats. 87% of those surveyed still preferred the ownership model versus the streaming model. The reason being that there is still great doubt about the stability of streaming services and music consumers are worried that their virtual music library could suddenly vanish if the streaming company goes out of business.
So, can subscription services beat a la carte downloads or, even, The Cloud? Who will prevail?
To me, the answer is simple…No and no one. Different strokes for different folks and some of the folks may use both. To think that the bulk of consumers will substantially go one way or another is highly unlikely. If you look around, there are plenty of examples of polarized opposites. A few come immediately to mind: car leasing vs owning, free vs. pay TV, VOD vs. movie theaters, monthly subscriptions vs. annual fees, etc.
The music business may be headed for a predominantly digital world. But that does not obviate the need for a wide variety of consumer options that can exist concurrently. In my personal world, I love the combination of a la carte, subscription and cloud services. Together they fit a need that, individually, would leave gaping holes.
(Author’s Full Disclosure: Steven Corn is co-founder and CEO of BFM Digital, a competitor of both IODA and The Orchard.)
Recently it was announced that IODA and The Orchard are merging and majority stake will be owned by Sony Music. Universal Music still owns a large stake in InGrooves. Kobalt just purchased AWAL. What does all this activity mean for the indie artist? After all, for most of them, their relationship with their digital distributor is beyond critical. This appears to another example of the majors trying to do a land grab and the impact on the indie market could be significant.
(Note: I prefer the term “distributor” over “aggregator. Not because the latter has some sort of menacing sound to it. Rather, “distributor” is much more accurate to describe the functions of companies such as BFM Digital, IODA, and The Orchard. Distributors are companies that get product placed into retail outlets and work with retailers to develop promotional programs and placements. Aggregators are companies that buy up product. You could say that BMG Rights is an aggregator but not a distributor. So I always prefer the phrase “digital distributor”.)
Normally when large companies merge, there are definitely benefits that aid the bottom line. They will certainly have economies of scale and, no doubt, the combined company will result in redundant offices around the world. And once they complete their integration process (a very complex procedure), they will not need two sets of delivery and royalty accounting systems.
Sometimes, large corporate mergers can benefit its customers. Usually there is a significant amount of spin generated by the joint PR departments that tries to make this point (especially in Europe where sensitivity to anti-trust violations is greater). Usually the argument is that the new entity will likely have a larger market share. That in turn creates greater buying power, lower costs that may be passed to consumers, etc.
In regards to the IODA/The Orchard merger, what is the benefit to their labels? Personally, I don’t think there are many, if any. Instead, this appears to be a corporate move that will benefit the new behemoth and it’s major label partner, Sony. In fact, in many ways, it even be detrimental to many of the indie labels currently signed with IODA and The Orchard:
Small Fish – Big Pond: BFM was formed to give indies special attention (and so was IODA for that matter). In other words, we strived to create a “big fish/small pond” scenario. Those days are long gone for IODA already. Under the new merged company, it will be nearly impossible to get the attention of your own distributor. If you can’t get their attention, then how in the heck are they supposed to get your message across to the digital services? This new merged company will be as ineffective at “telling your story” as Tunecore and CD Baby is. But at least with those two companies, they don’t pretend to do so.
No Longer Indie: “I” in IODA stands for “independent.” Not any more. The Orchard, once boasting the largest catalog of independent music, is now under the auspices of a major label. Any sense of “indie cred” or caring about the indie artist is essentially gone now that Sony Music is in control.
No Additional Buying Power: IODA and The Orchard, separately, have very similar, if not identical, deal structures with the major digital outlets such as iTunes, AmazonMP3, etc. The merged entity will not wind up getting better deal terms. That is, they will not have greater buying power and can’t pass along that savings to its labels.
Developing Promotions Will Be Much Harder: Say that you are an indie label with a dozen albums and you want to create a discount or bundling program to pitch to the services like Amazon or iTunes. This will require first convincing your distributor that it is worthwhile and hoping that they will do the selling to the services. Now imagine your distributor has just doubled in size and has twice as many labels to listen to. They can still only pitch so many discount programs to the services. The odds of your program being successfully adopted by any of the major services has just plummeted.
More Do-It-Yourself Attitude: The Orchard is well known for its dashboard featuring a lot of plug-in DIY services. IODA also has its version of such a dashboard and affiliated services. Together, they will have no choice but to continue down this DIY path and become less and less interactive with their customer labels. It won’t be economically feasible to offer any real advice or customer service about a widget program or a one-sheet program. Figure it out on your own. That will be the likely customer service message.
This merger looks to me like a means for a major record company to capture a portion of the recorded music market that they have been unable to monetize and control. Now, Sony will generate profits from sales of its own copyrights, distributed labels and 10,000’s indie artists. More importantly, since they will have a majority stake in the new merged company, what’s good for the goose (Sony) is going to have to be good for the gander (Indies).
I guess I shouldn’t complain. These kinds of mergers leave the truly independent digital distribution companies like ours more and more attractive to a growing pool of labels and artists. After all, based on the lack of clear benefits for artists and labels with these types of mergers, where else are they going to receive personalized digital distribution and marketing services?
P.S. – Moments before publishing this blog entry, layoffs were announced at The Orchard/IODA: “Today [The Orchard has] made some personnel adjustments to ensure that the Orchard is efficiently structured to serve the needs of our expanded client base and won't have any negative impact to our clients.” I have to wonder how a smaller staff and a larger clientele equates to better client service.
I am not sure why I felt inclined to rediscover one of my favorite bands, Styx. Of course "Come Sail Away" is a perennial favorite of classic rock stations. But I can't recall the last time that I intentionally listened to one of their albums. Last night, I listen to "Grand Illusion" from start to end and loved every minute. For those of you a bit younger than me, Styx was one of the most successful progressive rock bands of the late 70's and early 80's. They had four, triple platinum albums in a row!! Although I am sure that there are some other superstar artists that have had this accomplishment. I am quite confident that it is a very elite club.
Aside from the excellent music (all done without the aid of computers, sequencers or autotune!), I was reminded of when I purchased this album. As with most of my other record buys, it was stimulated either by radio play or friend recommendations. Occasionally, a record store clerk would suggest a new artist or release. But, generally speaking, I already knew what I wanted when I entered the record store.
As we all know, the overall music business has shrunk drastically. Digital downloads have not replaced the decline of CD sales and subscription services have failed to be the savior everyone has predicted they would be. Online radio and music discovery services like Spotify, Pandora, etc are ubiquitous now. But their revenue streams are still not able to sustain the music industry. I know that many music pundits, much smarter than me, have written volumes explaining the lack of music sales. After listening to Styx and remembering my old buying habits, it suddenly became clearer to me what happened.
The one thing that has not changed since my youth is the "pride of discovery". To discover a new band or some new music was as much a marker of coolness as it is today. Back then, we shared our musical discoveries with cassette tapes or listening parties or just one-on-one. Today, we share our discoveries with playlists, blogs, and other cool tools like the new "soundtrack your life". Helping expose your friends (and, now, friends of friends of friends) to great music is real sense of accomplishment. I'm not sure exactly why. But it always feels great to know that someone else is enjoying music you helped them to discover.
The biggest difference between then and now is not the "pride of discovery". It's the "pride of ownership". Back then, in order to share any music, you had to own it. That is, you had to go down to the store and actually buy a physical product. You could make a copy of a cassette loaned to you. But after a few generations, these copies would be unlistenable. So eventually, you bought the album. It was only after making such a purchase that you could then fully enjoy the music as well as showing your friends how cool you are.
Today, there is no requirement to buy anything in order to show how wonderful your musical tastes are. You can blog about new albums (as some of my staff do). You can create and share playlists. You can share Pandora stations. You can send links to full length streams in Soundcloud. You can repost music videos from Youtube. The methods are many and practically endless.
The one common theme here is that none of these techniques require any purchases. In other words, there is no longer any need for a "pride of ownership." I think that the desire to find and share great music is no less than it was 30 years ago. The only thing that has changed is that the requirement to buy music before you expose others to it has disappeared. The entire music industry has been struggling for the past fifteen years to figure out how recapture the pride of ownership. So far, it has not succeeded.
I'd like to challenge my readership to share your buying habits and, possibly, that of your kids:
1) What was the last album that you bought?
2) What format was it (e.g., CD, digital, 8-track, etc.)?
3) When did you buy it?
4) Why did you buy it?
Please post your answers in the comments section and let's see what develops.