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Music The Almighty Buck The Internet

Why the Major Labels Love (and Artists Hate) Music Streaming 164

Posted by samzenpus
from the pay-us-as-you-go dept.
Hugh Pickens DOT Com writes "Jay Frank writes that the big four music distributors and their sister publishers (Sony, Warner, UNI and EMI) make 15% more per year, on average, from paying customers of streaming services like Spotify or Rdio than it does from the average customer who buys downloads, CDs or both. Each label makes 'blanket license' deals with Streaming services with advances in the undisclosed millions, which is virtually the same as selling music in bulk; they receive these healthy licensing fees to cover all activity in a given period rather than allowing Streaming services to 'pay as they go.' 'Artists are up in arms, many are opting out of streaming services,' writes Frank. 'Lost in that noise is a voice that is seldom heard: that of the record companies. There's good reason for that: they're making more money from streaming and the future looks extremely bright for them.' The average 'premium' subscription customer in the U.S. was worth about $16 a year to a major record company, while the average buyer of digital downloads or physical music was worth about $14. Thus, year over year, the premium subscriber was worth nearly 15% more than the person who bought music either digitally or physically."
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Why the Major Labels Love (and Artists Hate) Music Streaming

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  • Re:Of course... (Score:5, Interesting)

    by alen (225700) on Thursday January 16, 2014 @08:31PM (#45981347)

    if you're young and listen to recent music, then owning is not that expensive

    if you're older than dirt like myself and want to listen to lots of music from the last 40 years or longer than renting is a lot cheaper. add to this the fact that there is so much music to listen to that there is no sense in buying even single songs you might listen to a few times and then go on to something else

  • by kheldan (1460303) on Thursday January 16, 2014 @08:37PM (#45981393) Journal
    I remember back in the day you could get numerous channels of streaming music service 100% free. It worked reliably in your home, car, or even just walking around. You'd hear brand-new music just released, and you could even make requests to hear something specific, and it was all totally free. It was called broadcast radio. Of course we still have that but it's a shadow of it's former self (thanks Internet!).

    When I first starting seeing Shoutcast and other Internet music streaming services, they were free, and I thought it was pretty cool because I could actually get more diversity with fewer (if any!) commercials than over-the-air radio. Then of course the music "industry" made their unfunny dick move and ruined it for everyone. Yeah, nah, fuck the RIAA and fuck subscription streaming music services. I'll still stick with broadcast radio when I'm out driving around, and music from my own collection the rest of the time.
  • Re:Obviously! (Score:5, Interesting)

    by icebike (68054) on Thursday January 16, 2014 @08:45PM (#45981449)

    Neither of these articles say that. What they're talking about is domination - it's harder for a small number of artists to grab the majority of the revenue with streaming. So obviously not all artists are upset with streaming.

    They very carefully don't say that, but I bet it is true anyway.

    If the streamers pay the labels a blanket fee, that means they do not count (and may not be even able to count) listeners for each song, and provide labels with enough info to apportion these blanket payments in any rational way.

    So the labels divi it up any way they want, and pay the artists what ever miserly pittance the labels can get away with.

  • by Anonymous Coward on Thursday January 16, 2014 @08:50PM (#45981467)

    Broadcast radio was quite dead before streaming. The death of radio even predates napster. It was pretty sick and almost dead before the internet ever was a thing even.

    In the usa you can thank clearchannel for that. 12 stations all playing the same songs. all day long. and talk radio.

  • by melchoir55 (218842) on Thursday January 16, 2014 @09:44PM (#45981745)

    Let me preface this by saying I am totally on board the RIAA and record company hate train. I'm the guy pulling the whistle even. Choo Choo! They are greedy organizations who will ruthlessly do anything for profit.

    That being said, I have become convinced over time that the artist-record company relationship is actually fair. Artists don't make the majority of the money that gets plunked down for their songs. But, you know, what? They aren't really doing much of the work either. Artists write and perform the song.This takes work, surely. Let's be generous and say each individual song takes a full person year to write and get good at. Record companies dump enormous resources into promoting it. This includes the work of hundreds (thousands?) of people resulting in the expenditure of many years of person effort. It seems to me like the record company is actually the one contributing more value. What happens to artists who try to succeed without record companies, or grants from universities? A tiny percentage of them earn enough to subsist. There is a reason for this.

    To be frank, at the end of the day professional musicians who make a good living aren't really any better than many of the ones who are struggling. I've seen so many really talented musician friends go through school to finely hone their skills, only to find no one in the real world cares (ie they can't make money). The reason no one cares isn't because people don't value music. They do. That is why so much money goes into buying music. The problem is that reaching the threshold at which most people consider you "good" is attainable by a VAST portion of the population. Probably roughly the same percentage of the population who can be considered good at physically lifting things and then setting them down elsewhere. Good musicians are a dime a dozen.

    I know the musicians out there are going to crucify me for this. You'll all point out it is possible to discern the difference between the violinist who makes 10 mil and the one who can't get a job. I'm sure you can. The point is that most of society can't, and doesn't care to. This is why most of you make nothing and have to pursue other careers. I wish you would all wake up to it before dumping a decade or more into it. Unless of course you are wealthy enough to pursue it whether it brings you income or not.

    Music and the arts are for everyone, as a hobby, because any human can be good at them to some degree. The skills it takes to do them are part of what it is to be human. They have been pursued professionally by the rich, or friends of the rich, historically. This is because the rich can afford to spend 20 years getting good to maybe get paid well at the end. If you are a middle or lower class person trying to pursue music you are being irresponsible. You are more than likely wasting your time, except for the rare people who value the honing of skills higher than standard of living.

  • Older (Score:2, Interesting)

    by Phoenix666 (184391) on Thursday January 16, 2014 @09:53PM (#45981785)

    The last CD I ever paid money for, that I didn't buy from the artist himself, was in the pre-Napster days. Once Napster hit the scene I never looked back. Downloaded everything I wanted and a lot of what I hadn't heard of before and thought I'd try. It's lived with me on hard drive after hard drive since. Every once in a while when it rains or the sun shines a certain way and I'm feeling nostalgic I'll listen to a random selection, but mostly I don't. A recorded track is always the same, always what I've heard before, and it loses its appeal over time. Most of the time, I don't miss music at all. The only times I really enjoy music any more are live performances, by artists I've never heard of before, performing songs I've never heard before. Maybe it's a universal symptom of getting older, but it feels like something more akin to a post-musical existence wherein the human connection, music-as-communication in real time, is what makes it meaningful.

  • Re:Obviously! (Score:3, Interesting)

    by Eskarel (565631) on Thursday January 16, 2014 @10:18PM (#45981915)

    Artists are up in arms largely because they're irrational idiots. They see that they got a million plays and they look at their check which is only a few grand and think they're getting royally screwed, which simply isn't true

    The problem for artists is that they don't really understand what a million plays actually means, I've heard it over and over again in radio interviews and articles. 10 tracks to an album, presuming anyone who actually likes the album enough to buy it will listen to it at least 10 times and you're down to 10,000 sales if you go with the most optimistic result possible. In reality it's probably more likely that the people who would have actually bought the album would have listened to the album at least 100 times for their $13 and that more than half the people who listen to a song would never have bought the album and may never listen to it again.

    Fundamentally the issue is that while streaming opens up the number of artists that your average punter has available to listen to by several orders of magnitude the number of record companies is the same as it's always been. So when you have consumers spending more on music than they did previously with much lower overheads the record companies make more money and the artists(on average) make significantly less(more money available but spread over a much larger number of people).

    In the end, the problem is that making a living as an artist of any kind is difficult. It was difficult before streaming, it'll be difficult after streaming is replaced, hell it was difficult before there were recordings of any kind(though for different reasons). If you release an album every 3 years and you're making about $3 per sale, you'll be looking at needing 30,000 fans who buy every album just to get the kind of income you could earn at a pretty bog standard office job, and that's not even counting any of the costs associated with recording and makes a pretty optimistic assumption that you can actually produce an album every 3 years that anyone will actually buy for the entirety of your working life. A very few people get huge amounts of money, some people get a little bit of money or money for a little bit of time, most get a whole lot of nothing.

  • Re:Obviously! (Score:4, Interesting)

    by Anonymous Coward on Thursday January 16, 2014 @11:22PM (#45982207)

    When you are streaming, you can't know for sure how many are listening.

    True, but the number of people listening in the room with the audio-playing device isn't particularly relevant to the royalty calculaton--it's the number of accounts, and that they do know.

    Its not a separate tcp stream for each remote device.

    Yes, it actually is. It's not streaming radio, it's on demand music. The streaming services know which songs you listen to, when you listened to them, and whether you interacted with the platform while doing so (to favorite, skip, alter your playlist, look at artist information, and so on). Even services that don't let you build playlists or select music and instead put together their own playlists for you (Pandora being a prime example) don't actually "broadcast" a stream that you just tune into the middle of. Each Pandora "station" starts at the beginning of a song, and what's playing on that station for you is not the same as what's playing for me, even if we're both listening to Justin Bieber Radio or whatever at the exact same time.

    Streaming services absolutely count the number of listening accounts, and the number of plays per account, and every other conceivable data point. They are fully capable of calculating royalties precisely to apportion them exactly proportionally to the revenue collected.

  • Re:Someone please (Score:5, Interesting)

    by VortexCortex (1117377) <> on Friday January 17, 2014 @09:19AM (#45984853)

    Not my problem.

    Not your problem, but you are to blame. You are knowingly supporting something that you know to be unethical and corrupt. That makes you part of the problem.

    Negative. You're making an assumption here. In fact I want to make absolutely sure that "Piracy" can never harm media companies or artists ever again...

    I put it to you that you're knowingly supporting Copyright laws which are unethical and corrupt. Indeed, there is zero evidence that copyright is required or beneficial for society, this is an untested hypothesis, and is unethical to run the world's economy of ideas based on untested hypotheses. There is only evidence in support of the null hypothesis that copyright laws are not needed for social benefit: Fashion and Automobiles are allowed no design copyright, and they are very lucrative.

    Is there any point at which the ethics of a company involved would stop you paying for a service?

    Yes, I have have not owned any Sony merchandise for many years. I spend no money to support their services.

    How is it ethical to sell something that is in infinite supply? Here's a crash course in Economics 101: Infinite supply = zero price (regardless of cost to create). Selling information in the information age is like selling ice to Eskimos, but worse, because information/electrons are far less substantial than H2O molecules. Now, I could sell igloos to Eskimos. I could charge them labor to do work. That's ethical. It's not ethical for me to prevent others from duplicating my igloo design.

    I can fix cars, I can agree on a price to do work for people, do the work and get paid once, then let the people benefit unbounded from my efforts afterwards -- I don't charge them each time they fire up the motor. Mechanics provide a 1:1 work to benefit ratio -- One driver benefits from the work. Because the number of times the driver can benefit from the work is unbounded a mechanic charges only once: For the entire total of unbounded benefit they provide, which sets the cost of the labor the mechanic provides. The Mechanic has an infinite monopoly over their work until they perform it, not afterwards; This is how they are able to come to a payment agreement before the work is done.

    Information is a post-scarcity resource. A musician can agree to make a new song. No one can extract this new song before it is created. Musicians have an infinite monopoly over their work until they perform it, not afterwards; They could come to a payment agreement for the work to be created. Reputation, skill, etc. will be factors in the negotiation. The musician can get paid for their creation once, and then should create more works to make more money. The information is in infinite supply, so market what is scarce: The ability to create new works. This is how all labor industries operate, it's ethical and sane, and doesn't leverage artificial scarcity, thus does not necessitate draconian laws to enforce coin-slots on steering columns, or DRM on media.

    Artists and Authors and other Information creators can provide a 1:many work to benefit ratio -- Many people benefit from the work. Therefore, many people should pay for the work to be done. One of the beautiful things about the information age is that when it occurs on your planet it also brings with it a planetary system for the distribution of payment so that these information creators can make a payment agreement up front with many people, do the work and get paid, and do more work to make more money. This is the first generation of the Global Decentralized Information Exchange, of course you will have to adjust to the post-scarcity economics. It is unethical for you to hinder such progress.

    That said, I believe the poster you are replying to merely stated that artists creating music doesn't mean they automatically deserve payment for it. Should you be forced to pay for something you don't want? Well, so long as your race embraces the

Thus spake the master programmer: "When a program is being tested, it is too late to make design changes." -- Geoffrey James, "The Tao of Programming"