John O.ReillyI recently received an email from someone who has been following me and my advice for several years now. And he wrote this “it seems that to be successful, I’ll have to be over the top salesy, high pressure and throw a spam fest at people in order to make any money at this. This is just not me!”So how do I stay real, build an audience with my message and stay true to myself?…Fair question!So I’d like to draw a real distinction here, the distinction between being over-the-top salesy and spammy as you pointed out. And being really passionate about what it is that you have, and that you know it has true value to your tribe. You need to realize that It’s you that has to motivate people and inspire them to take action.Not long ago I’d gone from being a more “behind the scenes” consulting kind of guy, to being more out-front with the publishing of my first book. Having the kind of success that it has achieved. This has caused me from having being more laid-back, to being more aggressive in my approach to doing business online.You see I know that what I’ve done, what I’ve created has value. It helps people and will continue to help people, by inspiring them to take action. I know it’s good because it helps people build businesses, and with patience become profitable.
By DAVID BYRNE
THIS should be the greatest time for music in history — more of it is being found, made, distributed and listened to than ever before. That people are willing to pay for digital streaming is good news. In Sweden, where it was founded, Spotify saved a record industry that piracy had gutted.
Everyone should be celebrating — but many of us who create, perform and record music are not. Tales of popular artists (as popular as Pharrell Williams) who received paltry royalty checks for songs that streamed thousands or even millions of times (like “Happy”) on Pandora or Spotify are common. Obviously, the situation for less-well-known artists is much more dire. For them, making a living in this new musical landscape seems impossible. I myself am doing O.K., but my concern is for the artists coming up: How will they make a life in music?
It’s easy to blame new technologies like streaming services for the drastic reduction in musicians’ income. But on closer inspection we see that it is a bit more complicated. Even as the musical audience has grown, ways have been found to siphon off a greater percentage than ever of the money that customers and music fans pay for recorded music. Many streaming services are at the mercy of the record labels (especially the big three: Sony, Universal and Warner), and nondisclosure agreements keep all parties from being more transparent.
Perhaps the biggest problem artists face today is that lack of transparency. I’ve asked basic questions of both the digital services and the music labels and been stonewalled. For example, I asked YouTube how ad revenue from videos that contain music is shared (which should be an incredibly basic question). They responded that they didn’t share exact numbers, but said that YouTube’s cut was “less than half.” An industry source (who asked not to be named because of the sensitivity of the information) told me that the breakdown is roughly 50 percent to YouTube, 35 percent to the owner of the master recording and 15 percent to the publisher.
Before musicians and their advocates can move to enact a fairer system of pay, we need to know exactly what’s going on. We need information from both labels and streaming services on how they share the wealth generated by music. Taylor Swift, when she forced Apple to back off a plan not to pay royalties during the three-month free trial period for its new streaming service, Apple Music, made some small progress on this count — but we still don’t know how much Apple agreed to pay, or how they will determine the rate.
Putting together a picture of where listeners’ money goes when we pay for a streaming service subscription is notoriously complicated. Here is some of what we do know: About 70 percent of the money a listener pays to Spotify (which, to its credit, has tried to illuminate the opaque payment system) goes to the rights holders, usually the labels, which play the largest role in determining how much artists are paid. (A recently leaked 2011 contract between Sony and Spotify showed that the service had agreed to pay the label more than $40 million in advances over three years. But it doesn’t say what Sony was to do with the money.)
The labels then pay artists a percentage (often 15 percent or so) of their share. This might make sense if streaming music included manufacturing, breakage and other physical costs for the label to recoup, but it does not. When compared with vinyl and CD production, streaming gives the labels incredibly high margins, but the labels act as though nothing has changed.
Consider the unanswered questions in the Swift-Apple dispute. Why didn’t the major labels take issue with Apple’s trial period? Is it because they were offered a better deal than the smaller, independent labels? Is it because they own the rights to a vast music library with no production or distribution costs, without which no streaming service could operate?
The answer, it seems, is mainly the latter — the major labels have their hefty catalogs and they can ride out the three-month dry spell. (The major labels are focused on the long game: some 40 percent to 60 percent of “freemium” customers join the pay version after a trial period.)
I asked Apple Music to explain the calculation of royalties for the trial period. They said they disclosed that only to copyright owners (that is, the labels). I have my own label and own the copyright on some of my albums, but when I turned to my distributor, the response was, “You can’t see the deal, but you could have your lawyer call our lawyer and we might answer some questions.”
It gets worse. One industry source told me that the major labels assigned the income they got from streaming services on a seemingly arbitrary basis to the artists in their catalog. Here’s a hypothetical example: Let’s say in January Sam Smith’s “Stay With Me” accounted for 5 percent of the total revenue that Spotify paid to Universal Music for its catalog. Universal is not obligated to take the gross revenue it received and assign that same 5 percent to Sam Smith’s account. They might give him 3 percent — or 10 percent. What’s to stop them?
The labels also get money from three other sources, all of which are hidden from artists: They get advances from the streaming services, catalog service payments for old songs and equity in the streaming services themselves.
Musicians are entrepreneurs. We are essentially partners with the labels, and should be treated that way. Artists and labels have many common interests — both are appalled, for instance, by the oddly meager payments from YouTube (more people globally listen to music free on YouTube than anywhere else). With shared data on how, where, why and when our audience listens, we can all expand our reach. This would benefit YouTube, the labels and us as well. With cooperation and transparency the industry can grow to three times its current size, Willard Ahdritz, the head of Kobalt, an independent music and publishing collection service, told me.
There is cause for hope. I recently spent two days on Capitol Hill, with the help of Sound Exchange, a nonprofit digital royalty collection and distribution organization, to discuss fairer compensation for artists via the Fair Play Fair Pay Act, which would force AM and FM stations to pay musicians when their recordings are broadcast, as most of the world does.
Rethink Music, an initiative of the Berklee Institute for Creative Entrepreneurship, released a report last month that recommends making music deals and transactions more transparent; simplifying the flow of money and improving the shared use of technology to connect with fans.
Some of these ideas regarding openness are radical — “disruptive” is the word Silicon Valley might use — but that’s what’s needed. It’s not just about the labels either. By opening the Black Box, the whole music industry, all of it, can flourish. There is a rising tide of dissatisfaction, but we can work together to make fundamental changes that will be good for all.
A musician and artist and the author of “How Music Works.”
A version of this op-ed appears in print on August 2, 2015, on page SR4 of the New York edition with the headline: Open the Music Industry’s Black Box.
“I don’t even know why I would want to be on a label in a few years, because I don’t think it’s going to work by labels and by distribution systems in the same way. The absolute transformation of everything that we ever thought about music will take place within 10 years, and nothing is going to be able to stop it. I see absolutely no point in pretending that it’s not going to happen. I’m fully confident that copyright, for instance, will no longer exist in 10 years, and authorship and intellectual property is in for such a bashing.
Music itself is going to become like running water or electricity. So it’s like, just take advantage of these last few years because none of this is ever going to happen again. You’d better be prepared for doing a lot of touring because that’s really the only unique situation that’s going to be left. It’s terribly exciting. But on the other hand it doesn’t matter if you think it’s exciting or not; it’s what’s going to happen.”– David Bowie, 2002 in New York Times
MUSIC • THOMAS HONEYMAN • JUN 6, 2014 – 2:30PM
The old music industry is dead. We’re standing in the ruins of a business built on private jets, Cristal, $18 CDs and million-dollar recording budgets.
We’re in the midst of the greatest music industry disruption of the past 100 years. A fundamental shift has occurred — a shift that Millennials are driving.
For the first time, record sales aren’t enough to make an artist’s career, and they certainly aren’t enough to ensure success. The old music industry clung desperately to sales to survive, but that model is long gone.
Even superstars have it tough. Pitbull — despite having 50 million Facebook fans and nearly 170 million YouTube plays — has sold less than 10 million albums in his entire career. This is the reality of the new music industry, which is built off of liquid attention, not record sales.
Why? Well, the answer lies with us , the Millennials. We’ve taken over the music industry by controlling the two things that matter most:
1. The Demand
The music industry is just like any other big business: It follows cash. Over the past two decades, music has suffered through the CD bubble, torrents, Napster, iTunes (with Apple taking a 30 percent cut of everything) and now, the ubiquity of streaming services, which reduces sales below the already rock-bottom level.
The music industry has been rocked by new trends and over the past few years, has succumbed to a state of near free-fall. It’s clutching whatever few straws are left in an attempt to salvage profit from the remains of its broken business models.
As music becomes more and more entrenched in the digital realm, Millennials have emerged as the dominant consumers. More importantly, we dominate the most promising emerging market for music: mobile devices. We use music, media and entertainment apps more than 75 percent more and social sharing apps about 20 percent more frequently than any other age group.In a nutshell, Millennials consume the most music and tell the greatest number of people about it. While it’s obvious that consumption is important, why is it so important that we share what we listen to?
The old music industry had a banner metric of artist success: album sales. For years, album sales have been declining and the growth of singles and streaming services have accelerated the trend.
As we’ve transitioned into a digital music economy, new measures of success have emerged. A new generation of artists has hit the scene and they thrive on attention rather than units of music they sell.
The attention has become just as valuable as our likelihood to purchase, as it leads to festival and performance attendance, merchandising sales and other sources of revenue. However, we still won’t buy your music.
Brands know this, too. Companies like GUESS, Red Bull and Steve Madden will pour more than $1.34 billion into sponsoring music venues, festivals and tours this year.
Over a billion dollars will be spent for the opportunity to build customer relationships and brand equity with digital natives. In contrast, the top 10 highest-earning electronic artists last year cumulatively made just over $240 million — less than 20 percent of what brands will spend in 2014 to capture Millennials’ attention.
What brands understand is that music is an important part of Millennials’ identity. It’s more than entertainment for us. The music we listen to can be as important as how we dress and influences who our friends are.
Going to festivals and shows is an expression of identity. Brands know that if they can identify with a DJ like Skrillex and his dedicated fan base, they’ll have more than just the consumer’s brief attention. The brand will become part of the fans’ lifestyle.
That’s why Steve Madden is teaming up with up-and-coming female DJs to attract Millennials.The end result is that the music industry and the big brands are both chasing the new generation of artists; artists who can capture, retain and monetize attention— instead of album sales — and who can keep Millennials interested.2. The Supply
All that’s required to make a modern record is a computer and a piece of affordable recording software. One of the most powerful professional DAWs (a digital audio workstation, used to produce music) is Logic Pro from Apple, which costs only $200.
Inside the DAW are virtual instruments like pianos, synthesizers and drums, as well as all the necessary tools to edit and produce audio.
Most of the equipment required to create music has been absorbed into the DAW, while the software continues to get easier and easier to use. The end result is that artists can create music more quickly, more efficiently and less expensively than at any other time in history.
Gotye created his song “Somebody That I Used to Know” in his parents’ house near Melbourne, Australia. The self-produced track reached number one on more than 23 national charts and charted inside the top 10 in more than 30 countries around the world. By the end of 2012, the song became the best-selling song of that year with 11.8 million copies sold, ranking it among the best-selling digital singles of all time.
A young Dutch producer named Martin Garrix reached the top of the charts in more than 10 countries with his smash hit, “Animals,” which he produced and released at 17 years old. The song hit number one on Beatport, making Garrix the youngest person ever to receive the honor.
Millennials, who can simply record after class or work, are mostly familiar with this technology, but our open-source attitude toward learning is much more important.
Search “How to use Logic Pro” in YouTube and you’ll find thousands of free tutorials. Sites like Reddit have entire communities with tens of thousands of members who are dedicated to learning about music production.
Technology is cheap and high-quality learning resources are free. As the result, artists have massively successful records without having set foot in a recording studio.
3. Music Discovery Is At An All-time High
It goes without saying that music discovery and music production go hand in hand. However, just as technology has enabled easy music production for young, emerging artists, it has also provided them with a way to reach fans all over the world.
There are the classic success stories like Justin Bieber and Lana Del Rey, of course, but below the YouTube empire rests an entire culture of Millennials who are discovering music online.
Platforms like SoundCloud have more than 250 million active users each month and Millennials discover their music predominately through these digital platforms. Incidentally, when digital natives produce new music, they release it first on the digital platforms.
This is how Millennials are playing both sides of the field: They’re creating more music than ever and releasing it onto platforms where their peers go to discover music.
The music industry middleman has been cut out and a back-and-forth conversation replaced it. Of course, huge stars like Katy Perry still dominate sales, but Millennials are eroding that model with a new, grassroots discovery model.
4. Millennials Are Forming Dominant Musical Teams
Powerhouse songwriting and production teams back dominant artists like Rihanna, Taylor Swift and Katy Perry. These production teams are one of the main drivers that keep the superstar artists on top. Working in teams allows these writers to churn out tons of highly listenable pop tracks.
Now, Millennials are breaking down this final barrier, too.
Services like FindMySong are connecting independent musicians so they can form their own dominant songwriting and production teams. The FindMySong model takes advantage of the fact that there are more independent musicians than ever before who want a piece of the major artist success without the major label strings.
With cheap recording technology and an effective way to distribute the music, these independents team up online to rival major labels.
You have the power now. What are you going to do with it? For the first time in its long history, the American music business is firmly in the hands of the artists and the consumers. You have the ability to lead the industry wherever you want it to go.
Photo via We Heart ItMAVERICK LIVE MEDIA.COM
This summer — Nine Inch Nails‘ first as a living, breathing entity in four years — Trent Reznor has been taking the stage alone. Muscular and short-haired, he opens his shows by marching to a synthesizer in full view of tens of thousands of festival goers, all of whom had strong reason to believe they might never see this band again. Usually wearing a sleeveless black t-shirt, heavy boots, and cargo shorts, he begins to sing the stealthy “Copy of A,” a track from Hesitation Marks, the imminent new NIN album those same festival goers had equally strong reason to believe might never exist.