Tuesday, November 9, 2010

New Music Industry Lies

Sometimes I just get full from all of the lies people tell concerning the music industry. Today is one of those days after hearing for the umpteenth time that music sales had fallen to an all time low. And that the music industry was failing I decided to do a little research on my own.

Here is the story on why people are upset and you continue to get misinformation concerning the industry. Under the old model an Independent record label would have to finance the recording of the music, manufacture album product, manufacture singles, and create posters, flyers and point of purchase advertising. Then find a distributor that would buy the product for a healthy $8.00, the distributor would then sell the product to the retail store for $12.00 who in turn marks the product up to $16.98.

If you were unlucky enough to get a major deal then the numbers get even smaller. After the label has recouped the advance to artist, marketing funds, packaging deduction, producer’s funds and video advance a “HIT” CD would average $1.40 - $1.70. Placing that equation into today’s digital world you can sell 2 singles online at $.99 and get more money than you could receive on selling a complete CD while on a major label.

What I have found out is very illuminating.

Nielson SoundScan has reported that in the four years of 2006 to 2009, music purchases increased from a record starting point of 1 billion purchases to the new record point of 1.5 billion music purchases. This does not take into consideration the sales or other revenue streams that Nielson SoundScan doesn’t track.

So let’s take a moment and look at the non tractable revenue streams.

Public performance income

Pay what you want donations

Show income

Ringtone sales

Synchronization license

Subscription based streaming services like Rhapsody & Mog

DMCA (Digital Millennium Copyright Act) streams like Pandora. Last.Fm, Jango, Slacker and satellite radio XM, Sirius

Direct Fan selling sites

Bundling or selling music with merchandise like t-shirts or video games.

Fan Club subscriptions

All of these uses, plays, licenses and purchases generate revenue, just like a paid download. When you include these additional revenue streams the numbers go off the graph. The reality is:

More musicians are making money off their music now then at any point in history. This is occurring around the world and new exciting music is being created daily.

The cost of buying music has gotten lower but the amount of money going into the artist's pocket has increased. More music more money this is a natural phenomenon.

There are more people listening, sharing, buying, monetizing, stealing and engaging with music than at any other point in history. The Internet has opened up a brand new “wild wild west” where new and innovative ideas concerning music and music usage are being explored.

There are more new ways for an artist to get heard, achieve a fan base and make a living off their music now than at any point in the history of this planet.

The gate keepers have been eliminated because technology has made it possible for any artist to get distribution, to get discovered, to pursue their dreams with no company or person making the decision that they are not allowed “in the industry”.

Once there was a “traditional” system for music to be created and distributed, now The majority of music is happening outside of the “traditional” system

The conclusion that is not realized is that more and more artists are selling singles to the population that wants them, while CD and album sales and downloads are decreasing. Why pay $16.98 for an entire CD when the single you want is only $.99, simple arithmetic.

Even vinyl is making a comeback for independent artists and labels. Big labels still aren't buying the vinyl comeback, but it wouldn't be the first time the industry failed to identify a new trend in the music biz.
On Oct. 17, Amazon.com launched a vinyl-only section stocked with a growing collection of titles and several models of record players.

"Our numbers, at least, don't really point to resurgence," said Jonathan Lamy, the Recording Industry Association of America's director of communications. Likewise, Nielsen SoundScan, which registered a slight increase in vinyl sales last year, nonetheless showed a 43 percent decrease between 2000 and 2006.
But when it comes to vinyl, these organizations don't really know what they're talking about. The RIAA's numbers are misleading because its member labels are only now beginning to react to the growing demand for vinyl. As for SoundScan, its numbers don't include many of the small indie and dance shops where records are sold. More importantly, neither organization tracks used records sold at stores or on eBay -- arguably the central clearinghouse for vinyl worldwide.
Vinyl's popularity has been underreported before.
"The Consumer Electronics Association said that only 100,000 turntables were sold in 2004. Numark alone sold more than that to pro DJs that year," said Chris Roman, product manager for Numark.
The realization of this is spellbinding, the truth is mesmerizing.

Number one is that music fans are buying more music from a wider spectrum of artists.

Contrary to popular belief, despite the cost going down to purchase music, the net revenue for a self-distributing artist is up as compared to what an artist traditionally earned via a label.

Finally the entire business model of the major labels was built around selling a full-length physical album. Because of this, those artists signed to majors net less money off the sale of the music, while the label makes a killing.

Think about it, what other lies are you being told?

1 comment:

labatterie said...

The broadcasters unilaterally cut their digital royalty rates and lowered their terrestrial royalty payment from the agreed upon amounts ...