Thursday, November 20, 2014

Apple Beats/iPhone Bundle Tries To Counter Music Key

Apple Beats image
The Financial Times is reporting that Apple plans to bundle its newly acquired Beats Music service into an upcoming version of iOS, making it instantly available to hundreds of millions of users. This news should come as no great surprise, since the company originally bought Beats with the intention of doing exactly that. What is interesting is the timing of the leak, however.

As I wrote in my last post, a beta version of YouTube’s new Music Key service has just been introduced, and that provides a far greater threat to Apple’s position in the music business than other services like Spotify and Pandora ever will. Considering that YouTube is the number one online source of music consumption, and that Music Key provides audio and video (with no adverts either) as well as the full Google Play library, Apple’s iTunes service faces a clear and present danger of being majorly usurped as far as market share goes.

For Apple, the real threat is that Music Key will hit the market in full stride before it can roll out the next Beats-baked iOS. Guess what? If too many people get a taste of Google’s offering, they’re not coming back to iTunes any time soon.

Apple suddenly finds itself in a dilly of a pickle in that even though it has those reported 800 million credit cards on file and a built in audience in iPhone and iPad users, the music side of the iTunes is shedding sales faster than even CDs. Read more on Forbes.
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Wednesday, November 19, 2014

The Pandora Effect On Music Sales

Pandora effect image
A study by Pandora earlier this year has found that the more a song is streamed on the service, the more actual sales it will generate. If that's the case, it turns out that Pandora is a radio-like service in more ways than one, as radio plays have always lead to sales as well.

The study, which was outlined in a Billboard article, found that the average positive effect resulted in a 2.31% increase in music sales for new music, and 2.66% for catalog in something they called "track equivalent albums," which is a metric that counts 10 tracks as an album.

This ratio really changed between music released by major and indie labels. New music from the major labels played on Pandora resulted in a 2.82% positive effect, but only 0.62% for indies, who fared much better on catalog at 3.85% compared to the major's 2.36%.

The study also looked at how the number of streams affected sales as well. It found that if the streams were at least 25 times the sales, the positive effect was around 5%. When the streams to sales ratio was 150, the positive effect grew to 15% (I'd like to see the methodology for this, as the results seem dubious).

As a result of all this info, the researchers could put a value on each Pandora stream that was higher than the actual royalty paid. For instance, new music was valued at 0.265 cents while the actual royalty paid was 0.13%. Catalog music didn't fare nearly as well though, being valued at only 0.135 cents for only a 4 percent increase.

While the numbers look impressive, it's important to remember that the study was sponsored by Pandora in the first place, and these numbers will be used in the various upcoming lawsuits and hearings that the service is involved in. That said, there have been previous independent studies in the past that have found similar results, like this one from the NYPD Group.
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Tuesday, November 18, 2014

Facebook's Post Reach Falls Like A Rock

Facebook EdgeRank image
Facebook is the largest social network by far with over 1.3 billion users, but its effectiveness as a promotional tool is dropping almost to the point where it's not worth even using despite those large user numbers. A new study by Forrester Research called Social Strategies That Work shows that a post may only reach as few as 2% of followers, making many artists look at the entire process and say,"Why bother?"

Up until about 3 years ago (before Facebook went public), if you had 100 fans or followers, a post would reach all of them. This dropped to about 15 (or 15%) when Facebook began monetizing its platform by requiring you to promote the post in order to reach all your followers. In other words, a post would only reach about 15 of your 100 followers unless you paid to promote it, in which case all 100 would see it.

This declined even further last year to around 6%, and now Forrester says it's down to 2%, which means that only 2 of your 100 followers will see your post unless you pay to promote it.

Yes, it's possible that these figures can go higher on an occasional post, depending upon a number of conditions set forth by Facebook's EdgeRank algorithm, which measures how relevant a post is and who sees it, but don't count on it.

Forrester suggests that advertisers move to smaller social networks with less competition and better platform terms, but that won't necessarily work if not enough of your followers are there. And by the way, the study also puts Twitter in the same category as Facebook in requiring payment to access all of your followers.

Advertising on Facebook can actually be highly effective, but it also comes with some quirks (like text in graphics can take up no more than 20% of the graphic's area) that make it challenging. That said, if you continue to use Facebook for promotion, you'll have to be prepared to spend some money to do so.
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Monday, November 17, 2014

Artists Get Record Payout From Soundexchange

SoundExchange logo image
If ever there was evidence that streaming is becoming the new music consumption paradigm, this is it. SoundExchange, the not-for-profit performing rights organization that collects non-interactive distribution royalties for copyright holders, distributed a record $267 million in the third quarter. This is up 74% over the prior year period, and almost 40% more than the previous quarter.

The good news is that at the current rate, SoundExchange distributions could reach about $800 million this year, which is what the value of digital downloads for the year is predicted to be as well. In other words, there's as nycg money being collected from just this portion of the streaming business than from all digital downloads.

SoundExchange collects for both artists and record labels (whomever owns the copyright) from non-interactive radio-like services like Pandora and iHeartRadio, satellite radio and cable music channels. Interactive streaming services like Spotify and Rdio pay the royalties directly to the copyright holder or an aggregator like CD Baby or Tunecore.

It's interesting that download sales are falling a lot more rapidly than physical product sales at this time, but the good news is that decrease is being more than offset by streaming royalties. Considering that there's only about 28 million full-price subscribers world-wide at the moment, there's plenty of room for growth, which is great news for artists and songwriters.

If you're not yet signed up with SoundExchange, you're most likely leaving money on the table if your songs are getting played on non-interactive services, so register now!
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Sunday, November 16, 2014

How Long Do We Listen To A Song?

Out of skips image
We now live in a world where it's really easy to skip a song that we're listening to if we're not satisfied. This is a revelation of sorts because it wasn't always that way on a personal level in the days of vinyl and even CDs, and of course it's still like that when it comes to radio. But in today's streaming world a new choice is only a click away to switch to something that's more to our liking.

MusicMachinery.com had a recent piece called "The Skip" that looked in depth at the current listening habits of Spotify users. Why Spotify? It has some of the best user data available, making it easy to extract some conclusions from billions of music plays. Here's what the post found:
  • We're almost as likely to skip to another song as we are to listen to it. 
24.14% skip within the first 5 seconds
28.97% skip within the first 10 seconds
35.05% skip within the first 30 seconds
48.6% skip before the song finishes!
  • The average listener skipped 14.65 times per hour.
  • Mobile users skip more - 51.1% versus 40.1% for desktop users.
  • People skip more in the morning before they start work. The less they concentrate on the music, the less they skip.
  • The skipping rate is higher on the weekends, when people have more spare time.
The takeaway is that a true listen to your music may be very elusive. What may be counted as a stream may only be someone passing through until they find something that they really like!
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Thursday, November 13, 2014

YouTube's Music Key Ups The Ante For Other Streaming Services

YouTube Music Key image
Today YouTube finally unveiled its long awaited Music Key subscription service and at least at first glance, other streaming music services should take notice. It offers a number of features that other services might not be able to easily offer, making it more difficult for a company to be able to differentiate itself in an increasingly crowded space.

While it was common information that for a $10 per month fee, Music Key would allow the user ad-free and offline playback as well as the ability to listen in the background, what we didn’t know was that you’d also get access to the entire Google Play catalog too. This includes a large selection of not only audio, but video as well. Plus there’s also an abundance of playlists and the ability to listen and watch over compatible services like Sonos and Chromecast.

So why should the other services take more than a casual notice to the launch? First of all, its about video as much as audio. If there’s an enticement to get a heavy YouTube user to pay 10 bucks its getting rid of the pre-roll or popup banner ads when they watch a video. YouTube is already the most widely used service for consuming music online, and yes, you can still do that for free, but everyone hates the ads. I bet a lot of people will buy in for this reason alone.

On the other hand, many music lovers access YouTube to find primarily their favorite song. They don’t necessarily care about the video attached, and many times the video only shows a static picture anyway. While the main attraction for users may be the ad-free environment at first, that can quickly change once they’re exposed to the other features. You can keep a customer with one killer feature, but for every additional feature that he comes to rely on, it becomes increasingly more difficult to pry that user away to another service. Read more on Forbes.
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Wednesday, November 12, 2014

An Artist's Look At Music Delivery Format Pros And Cons

In the recent past, there have always been multiple containers (a container is the way the music is packaged for distribution) of music that an artist had available for sale. First there were vinyl singles and vinyl albums, then vinyl albums and cassettes, then CDs and cassettes, then digital downloads and CDs, and now we can add streaming digital music to the list. With the recent resurgence of vinyl, an artist has four container options for distribution of his or her work. Here's an excerpt from my Music 4.0: A Survival Guide For Making Music In The Internet Age that takes a look at the pros and cons of each.


As you can see from the chart above, each of the current delivery methods has an assortment of pros and cons. This is not to say that one container is better than another in our current music world, but it helps to be aware of the benefits and disadvantages of each.

You can read additional excerpt from Music 4.0 and my other books on the excerpts section of bobbyowsinski.com.
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Tuesday, November 11, 2014

Spotify Royalties Overtake iTunes In Europe

Many high profile artists are railing against the royalty payments provided by Spotify, but it's paying out more and more money every day. In fact, the streaming service has now overtaken iTunes as far as royalty revenue in Europe, according to Kobalt, a company that helps collect music royalties on behalf of artists.

Kobalt has a number of big artists in its stable, including Maroon 5, Lenny Kravit, Dave Grohl, Max Martin, Bob Dylan and many more. The company reports that revenue from Spotify streams were 13% higher than from iTunes last quarter, but it only collects for its artist in Europe.

What's interesting is how fast this has flipped. It was only a year ago that Kobalt found iTunes earnings were 32% higher than Spotify.

People can deny that streaming isn't gaining traction or isn't paying, but the facts say that's definitely not true.

The problem is that many artists aren't seeing these new revenues mostly because of the deals they've struck with their record labels. Labels have always been good at siphoning off money from artist royalties, and even though we're now in the digital age, it seems just as difficult as ever to track.

That said, streaming is coming on strong, and soon it will mean more money for all involved. How much more remains to be seen.

Kobalt iTunes and Spotify income

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Monday, November 10, 2014

Streaming Service Grooveshark Gets Into Events

Grooveshark logo image
Grooveshark has always been one of the more interesting music streaming services in that it's always been a tiny outsider trying to stay competitive with the deep pockets of the industry. Starting as an alternative download service to iTunes in 2007, the company couldn't get much traction from the major record labels as far as licensing agreements. This lead to the service morphing into a more radio-like model that quickly ran afoul of a number of record labels, since licensing agreements were still not in place.

The company has since lost lawsuits filed by the major labels and even had its Facebook compatibility features pulled from its website and its Android app removed by Google.

None of this has stopped Grooveshark from trying new things though, and the latest is getting into events with Grooveshark Presents, a crowdsourced concert initiative that attempts to use the company's streaming data to help artists and promoters to better plan events.

The first concert occured on November 10th in Gainesville, Florida (where Grooveshark's corporate offices reside) with artists Autograf, Happy Accidents, and Bells & Robes.

Grooveshark.com currently calls itself a "Virtual DJ" allowing the user to broadcast a playlist, which is a great idea, except for the fact that artists and labels claim they're not being paid.

While Grooveshark is appealing its loses in court, it continues to try to stay relevant. The fact that it has 30 million monthly users is pretty impressive, but it still remains to be seen whether this new niche will ultimately be enough to keep the company alive over the long term in the face of continuing industry pressure.
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Sunday, November 9, 2014

The New Bandcamp Subscription Feature And Why It Won't Work

Bandcamp logo image
Indie music aggregator Bandcamp recently launched a new feature that enables fans to subscribe to its artists for a fixed amount per year (like the $32 that the UK band Candy or artist Steve Lawson are charging). During that time, the fan gets access to all the material that artist or band creates. The fan also has the option of paying more than the subscription amount if they so desire.

While this might sound like a great idea and a good way for fans to support an artist or band, it's probably a feature that will benefit Bandcamp much more than any artist on the service. Here's why:

1. We're living in a different world than even 3 years ago. Fans are more interested in a song by an artist than the artist themselves in most cases. They can get the songs for free on YouTube or for a lot less money than subscribing if they already pay for a streaming service.

2. Most artists over-promise when it comes to future releases, but it's really difficult to turn out a lot of quality product over the course of a year and on a regular schedule. If the releases don't come as promises or they aren't as good as expected, the subscriber doesn't remain engaged. If there are fewer subscribers than anticipated (which is always the case), regular creative output becomes even more difficult for the artist.

3. Most artists concentrate on their subscribers or the non-subscriber fans, but not both. This leads to fan attrition rather than increasing the fan base.

4. You're competing against yourself if you expect people to buy your product on Amazon, iTunes, or  purchase a CD or vinyl. If they sign up for decreased subscription rate, that's a lot less money that you can get from someone who's already a fan and might be more willing to purchase on a whim.

That's not to say that subscription can't work in some cases (a jam band like Phish that's been around for along time and has a big catalog of recorded concerts for instance), but it's not a model that most artists will find useful, especially if you don't already have a large and well-established fanbase. The bottom line, Bandcamp may be trying to sell you on this feature, but it's not all it's cracked up to be.
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Thursday, November 6, 2014

The 10 Most Expensive Records Of 2014

Vinyl Collection image
People love to collect things, and paying stupid amounts of money for a collectible is something that's pretty common to feed the obsession. Vinyl records are no exception, but you have to wonder why some records are worth so much.

The Vinyl Factory recently posted the 10 most expensive records sold on the Discogs trading site so far this year. If you've heard of more than 2 of these then you are indeed a serious collector.

1. Coil – Gold Is the Metal (With the Broadest Shoulders) (1987), $1,889 
2. Bernard Purdie – Lialeh (1974), $1,875
2. Necros – Sex Drive (1981), $1,875 
2. Mammut – Mammut (1971), $1,875 
2. Dr. Z – Three Parts to My Soul (1971), $1,875 
2. Nicholas Greenwood – Cold Cuts (1972), $1,875 
2. Lee More – Free and Easy (1981), $1,875
2. Vicious Visions – I Beat You / No No’s (1983), $1,8752
2. Old Man & The Sea – The Old Man & The Sea (1972), $1,875 
2. Various – Sonatas for Violins (1964), $1,875

If you take notice there are 10 titles, but 9 of them sold for the same amount - $1,875.

What's the big attraction? Most are limited collectors items. For instance, the Coil record was one of only 55 pressed (you can listen to a sample here).

It's pretty cool to see the great drummer Bernard Purdie on the list though.

Any bets that the buyers of these records never actually listen to them?
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Wednesday, November 5, 2014

Soundcloud And Warner Music Make A Deal

Soundcloud icon image
Soundcloud has been trying to become more than just a way for artists, bands, and DJs to showcase their music, and the service took a big step forward yesterday with a new licensing deal with one of the major labels in Warner Music.

The deal means that Warners and Warners artists (hopefully) will get paid anytime someone plays one of their songs on the platform. This includes any of the very popular DJ mashups that the service is becoming noted for.

Warners will also take a cut of the ad revenue generated, as well as a cut of the revenue from Soundcloud's yet-to-be-introduced subscription service.

On top of that, the Wall Street Journal reports that Warners will also get a 3 to 5% stake in Soundcloud as part of the deal.

What the Warners deal does is legitimize Soundcloud in the eyes of other labels and in the investment community, allowing the service to raise additional capital and make the next major label deals a bit easier. For artists, it means that they'll finally get paid if someone plays their music on the platform (providing they're signed to Warners, at least at the moment).

On a related side note, I always suggest that people use Soundcloud if they want me to listen to their tracks. It's so much more convenient that sending a file.
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