WHOSE MUSIC IS IT ANYWAY? (Part 4/5)

Musicians and the internet: The Good, the bad and the  ugly.

March 17, 2016

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Dominic McGonigal - C8 Associates

This ‘giant billboard in the sky and virtual jukebox’, read here, has been a bonanza for consumers and hugely disruptive for the music industry. But what about musicians

The biggest impact has been connection with fans. Musicians can now have a direct dialogue with fans in a way that would be inconceivable before the Internet. Back then, an artist could communicate at a live gig, through recordings and through the press. They could also have an army of people answering fanmail, but even that doesn’t touch the experience of a Tweet from a hero, visible to everyone else.

Musicians can now connect with consumers in a way they have never been able to before through social media. It is perhaps not surprising that many of the biggest Twitter and Facebook accounts, with millions of followers, are artists. Fans can feel a direct connection with the artist.

The other big benefit has been the massive reduction in cost and ease of recording. This is not strictly the result of the invention of the World Wide Web, even though the Internet has facilitated recording one musician in New York and dubbing them almost instantly in a studio in Stockholm. It is the advance in digital technology which has allowed musicians to record, mix and edit on their own.
Famously, Daniel Bedingfield created his hit single Gotta Get Thru This in 2001 in his bedroom using PC and Making Waves Audio Software.

This has led to a proliferation of recordings. PPL, the UK licensing body for recordings, has about 1,000 new recordings registered on the database every day. That’s how much is being produced and registered within the industry.
On YouTube, there is even more.

And in theory, distribution is now a doddle. Once you have finished your track, you put it online on Soundcloud and, instantly, you can reach 100 million users.

You can reach 100m users. You probably won’t.

My latest track on Soundcloud has clocked up 22 plays in four months! The reality is that distribution is more than just availability. You still need marketing dollars. Arguably, marketing has become more difficult, because of all the ‘noise’ on social media.

There is another downside, from the ‘post first, license later’ model. Musicians have now lost control over the music they produce – once it’s out there, you lose control. Anyone can upload your music and even if you or your record company gets it taken down, it will most likely appear somewhere else within a few hours.

But, the biggest impact has been on their income. As consumption has moved from CDs and radio to streaming, it is easy to see why artists’ royalties have dropped. CDs and radio generated significant revenues, with a share (up to 50% for radio) going to musicians. Streaming generates around the same income as radio, but artists receive a much smaller share. This is because a stream is treated as a sale under older style artist contracts and, so can be subject to deductions such as packaging (25%), overseas sales (50%), TV advertising (50%) and even breakages (10%) – based on the early days of the industry when records were shattered as boxes of vinyl were loaded into the back of a lorry.

So what are musicians doing about it?

When Apple announced their new music service in June 2015, with a three month free trial, Taylor Swift said in an open letter, “Please don’t ask us to provide you with our music for no compensation.” Within 24 hours, Apple responded with a Tweet from Eddy @Cue, “We hear you @taylorswift13 and indie artists. Love, Apple.”

Another example is Adele. Her album 25 was the biggest selling last year – selling 3m units in the UK alone and 7m in the U.S. One of the reasons the album was so successful is because it was not on the streaming services. And sales generate significantly higher royalties than streaming services.

Taylor Swift did a similar thing in 2014, removing her back catalogue from Spotify. Interestingly, Adele’s manager Jonathan Dickins commented at the time,

“I think streaming’s the future, whether people like it or not, but I don’t believe one size necessarily fits all with streaming. Spotify have always been pictured as the bad guys in this, but the biggest music streamer out there is YouTube, without a doubt. If I make a search now for Taylor Swift on YouTube, give me 30 seconds and I can have the whole Taylor Swift album there streamed.”

And we know that YouTube revenues for a stream are a fraction of what comes from Spotify.

Perhaps most interesting, Ellie Goulding released ‘On My Mind’ in September 2015. She did post it on YouTube, but only a trailer. YouTubers were limited to a 30 second clip, with a still photograph and prompts to go to Vevo or iTunes for the whole track. And you can see why she wants to push people to those services. Each play on YouTube would pay Ellie 0.01c in round terms. Other streaming royalties would be nearer 0.1c while a sale would be more like 10c.

Recent research by ADAMI (the French collecting society for artists) shows the breakdown in revenue from streaming services, based on analysis of several hundred contracts

The result is that, out of the typical €9.99 subscription fee, the performers get less than 5%, smaller than all the other players in the value chain, including the government. Artists have recently got together in the International Artist Organisation, formed just over a year ago. They are actively campaigning for a change in legislation to create a fairer and more transparent market as part of the EU Digital Single Market.

The blog mini series Whose Music Is It, Anyway? is based on a guest lecture given byDominic McGonigal at Trinity College, Dublin in February 2016.

Dominic McGonigal is Chairman of C8 Associates, a consultancy dedicated to taking creative businesses to the next level. He also chairs two creative startups, CICI and JazzUK. Read more at www.c8associates.com