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Music Businesses

Music Streaming Hailed as Industry's Saviour as Labels Enjoy Profit Surge (theguardian.com) 87

Posted by msmash from the meanwhile-in-the-music-industry dept.
Not long ago, the music industry was losing money left and right. Recession, rampant piracy, falling CD sales and a fear that "kids just don't buy music any more" had giant record labels, once oozing wealth, counting the pennies. But that all changed this year, and the industry's saviour is not what many predicted. From a report on The Guardian: Profits from music streaming, first championed by Spotify and now offered by Apple and Amazon, have given some labels their largest surge in revenue in more than a decade. At the beginning of December, one of the world's biggest labels, Warner Music, announced revenues of $3.25bn this year -- its highest in eight years. More significantly, $1bn of that was from streaming, more than double its download revenue and more than $100m more than its physical revenue. The surge in profits is being seen across all the major labels. In the first half of 2016, streaming revenue in the US grew by 57% to $1.6bn, and worldwide digital revenues overtook those from physical sales for the first time in music industry history, mainly because of streaming. This year's most-streamed artist was Drake, with 4.2bn streams.
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Music Streaming Hailed as Industry's Saviour as Labels Enjoy Profit Surge More

Music Streaming Hailed as Industry's Saviour as Labels Enjoy Profit Surge

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  • A note about piracy (Score:5, Insightful)

    by grasshoppa ( 657393 ) on Thursday December 29, 2016 @12:27PM (#53572527) Homepage

    Piracy was only ever a symptom of the problem, not the cause. What's the problem? Music labels sticking their heads in the sand and ignoring changes to the consumer landscape. They were so used to dictating terms that they thought they would always get away with it. So much so that they continued trying even in the face of lost profits and outright consumer hostility.

    Not that I ever thought piracy was ever that big of a contributor to the losses, mind you. I think they lost more from folks like me who started refusing to buy full albums for a single song, or pay 15-20 for a single album altogether.

    • It sure comes in the nick of time, because their profits from their extortion racket have been declining.

    • Also, labels tried repeatedly to increase the streaming royalty, squeezing some providers out completely. The revenue surge is as much due to royalty increases, as streaming activity.

      A few more years and they will look for another increase, in an attempt to kill the golden goose.

      They have to accept that they lost control, that streaming is their revenue stream now. Of course the best outcome is everyone goes indie and the RIAA dies quickly, but that's just a dream.

      • But that's the real problem. In the long run the Internet means traditional labels will die. The artists will increasingly seize control since they no longer are as reliant on traditional record labels. As it is, the labels themselves have suffered a kind of institutional rot. A&R, which was the heart and soul of the record labels well into the 1990s has faded as the suits are increasingly unwilling to take chances, and want to prefabricate artists as much as possible.

        Right now I listen to a lot of newe

      • Accidental infringement (Score:4, Insightful)

        by tepples ( 727027 ) <tepples@gmai3.14159l.com minus pi> on Thursday December 29, 2016 @12:59PM (#53572811) Homepage Journal

        Of course the best outcome is everyone goes indie and the RIAA dies quickly, but that's just a dream.

        And here's why it's a dream: One of the common death throes of a dying company is copyright, patent, or trademark assertion. Once bands start owning their own compositions and recordings, the music publishers that share a parent company with the major record labels will start suing bands on grounds of accidental copyright infringement: "Your song sounds too much like one of our songs. Pay us." What's a good way to avoid such lawsuits other than becoming a licensed cover band or leaving music altogether?

        • Precisely.
          Thanks to recent legal precedents, every independent artist who eschews the music protection racket now plays for the profit farm team.
          End up making too much money and you might just find out your hit song just happens to "share the feel" or "style" of a song which is owned by a rights management org.
        • Comment removed based on user account deletion

          • What's sad is that there are probably people in their 60s that could say the same...

            And wait because we're due for another 20 years extension...

            • And wait because we're due for another 20 years extension

              Unlikely. In the past century, there has been only one major change in the underlying rationale of how the U.S. copyright term is set. The Copyright Act of 1978 and the interim extensions that preceded it represented a switch from the 1909 standard to the "life of grandchildren" standard [pineight.com] used in the rest of the industrialized world, and the Copyright Term Extension of 1998 (sometimes called the Sonny Bono Act) only reflected that the fact that improved healthcare has caused grandchildren to live longer than

      • Of course the best outcome is everyone goes indie and the RIAA dies quickly, but that's just a dream.

        I hope that actually happens. However, my cynical side sees the RIAA having their lobbyists influence congress to outlaw indie music because, you know, "free market," capitalism, otherwise total economic collapse.

    • Re: (Score:2)

      by Kjella ( 173770 )

      What's the problem? Music labels sticking their heads in the sand and ignoring changes to the consumer landscape. They were so used to dictating terms that they thought they would always get away with it.

      It's the role of consumers to want, we might want a super-sports car for $10k. It is the car manufacturers that "dictate" what cars are actually available, we vote with our wallet from the available choices. There's nothing that says the market should do what the consumer asks if there's no vendor willing to provide. "Give us what we want or we'll rob you" isn't ordinary market capitalism. Okay, so copyright infringement isn't stealing but we pretty much blackmailed them into changing. I guess you can argue

    • ^THIS. Piracy was blamed on:

      * VCR's
      * CD's

      Neverrmind the fact that consumers bought MORE then the imaginary losses they were claiming. Hell, it has been shown that people who pirate, on average, tend to buy more stuff.

      When the entertainment isn't available for purchase, or held hostage via region locking (aka price fixing), what do you expect some people to do ? "Gee, let me download (part of this) album for free." How about making it legally available for purchase instead ?!?!

      Sony completely missed the

    • Re: (Score:1)

      by MercTech ( 46455 )

      There was also the movement by record labels to let contracts for musicians that created melodic music drop while signing more and more cheap to produce rap artists. Yes, cheap to produce was one reason rap got more production in the last two decades; at least according to a couple of recording engineers for major labels. The major labels shot themselves in the foot. You find the creative cutting edge on places like CDBaby and Pledge Music.

      Look at the business model for Pledge Music... production costs c

  • "YouTube's $1 Billion Royalties Are Not Enough, Says Music Industry"
    https://news.slashdot.org/stor... [slashdot.org]

    Yet they keep bitching for more...

    • In other news today, the sole surviving music label has managed to wrestle the last penny from the last old granny in her hovel.

      The music label lawyer was quoted as saying "I can't believe we aren't able to make any more money now, it's just criminal, and we're looking into ways to forcibly take body parts in the future."

  • ...not "artists"? Am I right to be cautious in assuming one follows the other?

    What does "industry" mean in this context exactly?

  • the numbers say revenue but the headline says profit. Sames goes for the article...

    • A surge in revenue without a surge in expenses necessarily produces a surge in profit. The featured article doesn't appear to mention expenses. So which expenses might have also surged?

      • I can think of quite a few.

        Their employees (singers, producers, writers) might demand higher salaries, such as getting a bigger cut of the revenue. Marketing expenses might be higher. If I recall, Apple charged a pretty penny to have albums pop up on iTunes front page. I have heard anecdotal evidence on both sides. I know that enough things have changed over the last 10 years and one can't make an easy comparison between the two time periods.

  • Losing money? Prove it. (Score:3)

    by Filter ( 6719 ) on Thursday December 29, 2016 @12:43PM (#53572679)

    "Not long ago, the music industry was losing money left and right."

    Are we all supposed to accecpt that as fact? The kind of accounting they do will prove that they never make money and rarely owe artists any royalties.

    • Well, we did see quite a few bankruptcies. We saw back catalogs being traded multiple times, each time at a lower price. Staff fired, fewer releases of new records by the majors, etc. So we saw real impacts, not just accounting tricks.

  • ... first championed by Spotify and now offered by Apple

    I'm pretty sure Spotify was late to the game... they just had a service that was more popular. I listened to Pandora, and later Slacker for a long time before I had even heard of Spotify.

    • Re: (Score:1)

      by AvitarX ( 172628 )

      Pandora isn't really the same thing as spotify pay service, I never personally used slacker, but I do think it was closer to what one got paying for spotify.

    • Spotify was fundamentally different from Pandora, as it allowed you to choose the songs you listen to by building playlists and letting you listen to specific songs or albums.

      Pandor and Slacker are basically radio with limited customizability. Spotify gives you immediate access to virtually all music to create your own library.

  • Back in my day... (Score:1)

    by Anonymous Coward

    Back in my day, streaming was called "Radio"

    Radio was great, it worked almost anywhere, you had choice of "channel" and there were no data caps.We could turn on the radio and listen to as much of it we wanted, all for the cost of a few watts of electricity/battery power.

    Cars come fitted with them too. Had them small battery powered ones that could fit in your pocket too, could have multiple radios going all at the same time and still no data caps.

  • All of this has happened before... (Score:4, Informative)

    by Solandri ( 704621 ) on Thursday December 29, 2016 @01:12PM (#53572961)
    All of this will happen again, given how backwards and recalcitrant the movie/music industries are when it comes to new technology.

    They said the exact same thing about the VCR. They fought it tooth and nail, were forced to accept it by the courts, and a couple decades later most of their revenue came from videotape and later DVD sales and rentals instead of theater releases. They fought movie rentals tooth and nail, were forced to accept it by the courts, and a decade later something like half of their revenue came from movie rentals. They fought DAT (digital audio tape) tooth and nail, actually won and succeeded in making the product fail in the market. Only to be overwhelmed by the inevitable tide of technological progress as CD-Rs and eventually MP3/FLAC served the same function as DAT.
  • I've been listening to broadcast radio my entire life and enjoyed it, and I used to listen to Shoutcast/Icecast internet radio (before the music industry more or less destroyed it), so at one point I thought I'd give these streaming music services a try. Lasted about half an hour for me before I got sick of it. Would let me skip things I didn't want to hear more of, but after so many it stopped letting me do that, and while it claimed to 'learn' what I liked, it kept throwing stuff at me from bands I've nev

    • Would let me skip things I didn't want to hear more of

      That's because you need to pay for that. Of course there are many services that allow you to skip songs.

      • It's just not worth it to me. Pay, pay, pay, that's the world we're more and more living in, and I don't care for it much.

        • It's just not worth it to me. Pay, pay, pay, that's the world we're more and more living in, and I don't care for it much.

          I know. Paying for things. What a bother. You've always had to PAY PAY PAY for music. Unless you are one of those people that decided that paying for music is not fair? Something something ARTISTS, something something RIAA, something something ROBBERY.

          I pay $14.95 / month for my entire family (up to 5 people) to stream (and skip) unlimited songs from any device from what seems like to me an unlimited catalog. That's not so bad when I consider in my 20s I was paying that much or more for a single album.

  • The music industry fought hard against streaming music services, claiming they would destroy the music industry, and what they tried to kill has actually saved them. This is just more evidence that the music industry does not understand their customers or their own industry. They blamed pirates for the falling profits when studies has shown casual pirates to be some of the biggest spending customers of legal music. Maybe the obvious point should have been that pirates do not like to wait for their music

  • First of all, there was a shift in revenue for the last several years. People were moving from physical to digital as various platforms dragged the industry kicking and screaming into the year 2000. Labels were not "losing money left and right", their revenues dipped briefly as the changes were made. Digital music sales surged for a number of years. While it may or may not offset the losses from the albums as the industry sued everyone, the shift happened.

    Secondly, piracy is responsible for offsettin

  • Let's get back to pirating... (Score:4, Insightful)

    by hackel ( 10452 ) on Thursday December 29, 2016 @02:39PM (#53573701) Journal

    The goal needs to be the complete *destruction* of the music industry as we know it. We cannot rest until 100% of the profits for music go to the artists (including sound engineers and all that) who create that music. We must keep fighting until the RIAA and all its members are bankrupt. This is far from over.

  • I don't know about anyone else but the moment I started using Pandora and then Spotify, that's the moment I knew this was the future of music.

    I couldn't have predicted how much profit there was to be made but I could tell you, buying music was dead. Any profits were going to have to be made from streaming. Oh, and live shows. CD? Dead. Downloads? Dead! Niedermeier? DEAD!!

  • And how many people were extorted or sued by their idiotic tactics in the meantime?

    While I am glad they have addressed their ignorance, I will not be upset if the continued proliferation of indie labels castrates their influence over time.

  • What service can I use to download to my stand-alone mp3 player ? I really don't care if they only play for a limited time, I just need a variety I can play while I am out fishing and have no network connection. I routinely stream at home or where I have Wi-Fi, but at the river I don't get cell phone service thus have no network access at all and buying CD's is getting harder to do.

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