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Category: Music Business (Page 2 of 2)

Album Sales Sink to Historic Lows — But People Are Listening More Than Ever

It’s the worst year (so far) for music sales since the 1991 debut of SoundScan (now Nielsen Music). Album sales, including track-equivalent albums (TEA, whereby 10 track sales equal one album unit) are down 16.9 percent in the rst half of this year. But sales figures no longer tell the whole story of the record business.

First, let’s bottom-line those disappearing sales. Album units overall fell 13.6 percent, with 100.3 million total sales. The compact disc continued to crumble, losing 11.6 percent and moving 50 million. Digital album sales fell to 43.8 million, from 53.7 million in the first half of last year.

Vinyl sales continued to move up and to the right, growing 11.4 percent, to 6.2 million. New album releases have been most affected by the continued contraction, falling 20.2 percent overall, to 44.1 million units. Catalog albums fell “just” 7.7 percent, to 56.2 million.

Track sales also dropped, to 404.3 million units from 531.6 million units. Current track sales are leading the descent; songs released in the last 18 months saw sales fall nearly 40 percent. Catalog, again, saw a much smaller dip, down 6.4 percent to 236.6 million units.

Listeners streamed 208.9 billion songs (which translates to 139.2 million album units) between January and now (July 6), an increase of 58.7 percent. Of that 208.9 billion, 113.6 billion were audio-only, versus 95.3 billion video streams (defined as a music video view on YouTube, Vevo, Tidal and Apple Music — of which the latter two contribute a very small piece). It’s the first time audio has surpassed lower-paying video streams.

What’s that all mean?

Billboard estimates total U.S. revenue at $1.98 billion so far this year, versus $1.82 billion last year, an corresponding 8.9 percent increase. However, the rate that Billboard uses to estimate the revenue generated by streaming ($0.0063 per song), which is clearly a central part of the revenue estimate, has been disputed as too high by some indie labels.

Drake is clearly the year’s winner so far. The rapper’s newest album, Views, sold 2.61 million total units — 1.3 million album sales; 317,000 track- equivalent albums and 979,000 stream-equivalent albums (SEA, whereby 1,500 streams equal one album unit).

Drake has the year’s best-selling digital album, at 1.4 million units moved. David Bowie’s  Vinyl record, Blackstar, sold nearly 57,000 LPs, making it the year’s best-selling vinyl album.  Flo Rida’s “My House,” with 1.95 million track sales, is the best-selling song of the year and just one of 16 total songs to sell over a million so far (27 had hit that mark by this time last year — six of those had tipped 2 million). The year’s top 200 tracks have scanned 83.8 million units in total.

The most common place for people to purchase albums and songs was, unsurprisingly, at digital retailers, which captured 43.7 percent of the album market (and which, obviously, saw overall sales decline by 18.4 percent, to 43.8 million album units). Surprisingly, “non- traditional” CD retailers, like Amazon and supermarkets, saw an 8.3 percent growth in sales.

Executives that Billboard spoke to at the end of 2015 pointed, in no shock, to streaming as the main culprit in the sales cull, particularly song sales. And streaming is booming.

For the year, total album consumption — which includes TEA, SEA and overall album units — totaled 279.9 million units in the first half of 2016, up 8.9 percent, clearly driven by streaming.

About the Foundation for Musicians and Songwriters

The Foundation for Musicians and Songwriters is an IRS 501c3 Public Charity that is dedicated to helping Musicians and Songwriters develop their careers in the Music Industry.  We do so without taking a penny or rights from the artist we represent.

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Publishing Industry Expresses Confusion, Concern Over Dept. of Justice Copyright Decision

For over two years, music publishers and songwriters have petitioned the Dept. of Justice for changes to the 75-year-old copyright rules they were governed by, requesting amendments in order to stave off dwindling royalty rates caused, in their view, by antiquated U.S. government regulations. last week, in a decision one executive said would result in a “a clusterf—k of epic proportions,” the DoJ announced that it would instead impose further rules on music publishers and songwriters — all who now fear a further recession for their royalties.

In addition to refusing to amend the consent decree to allow partial withdrawals for music publishers from ASCAP and BMI’s blanket licenses, the DoJ ruled that the consent decree requires those performance rights organizations (PROs) to engage in what’s known as “100 percent licensing” for songs with multiple songwriters — meaning a music licensee only needs a license from just one of the songwriters to utilize a song, instead of each of them. That’s in contrast to the traditional fractional licensing — which has up to now been the backbone of the music publishing industry — whereby rights holders can only approve usage of their portion of a work.

One possibly litigious result of the ruling could involve a songwriter going to court for all of the royalties for a song they co-wrote, potentially insisting that they should be disbursing those royalties to their co-writers, not whoever licensed the work. Another case involves songs built brick-by-brick, especially sample-based music — those works could potentially fall outside of the blanket licenses. Yet another: Works where there is an agreement between the songwriters that certain co-writers will not be allowed to license that work, forcing PROs to determine whether those agreements are in place and exclude the exempted co-writers from any blanket license.

The DoJ is said to be giving ASCAP and BMI one year to prepare for the shift to 100 percent licensing. If ASCAP and BMI choose not to adopt 100 percent licensing, the DoJ could file suit against them on antitrust grounds — the reason for the consent decrees initially — leaving a court to decide whether the PROs were in violation. Sources suggest that ASCAP and BMI’s rate court judges, the people responsible for setting statutory license fees, also have to sign off on the DoJ’s interpretation.

“The DoJ decision is very disappointing; it places unnecessary burdens on an already highly regulated marketplace, further impacting the livelihood of hundreds of thousands of songwriters,” BMG U.S. president of creative and marketing Laurent Hubert said in a statement on the decision.

Beyond lower royalties, music publishers and songwriters also fear that the new decision will fundamentally change the way music publishing has operated for 100 years. The DoJ’s decision “is going to cause a tremendous amount of uncertainty and chaos in a marketplace that has worked well… and will adversely impact everyone in the licensing process, including PROs, licensees, music publishers and most of all songwriters, who can ill-afford to hire lawyers to figure out their rights under this inexplicable ruling,” Sony/ATV chairman and CEO Martin Bandier said in a statement. “The decision raises more questions than answers.” Sony/ATV has been one of two majors leading the charge to get the consent decree amended.

“We are disappointed with the DoJ’s recommendation, which after years of hard work and discussion brings us no closer to much-needed consent decree reform than when we started,” BMI president and CEO Mike O’Neill said in an internal e-mail to his staff. “Instead, the DoJ chose to address only the issue of 100 percent licensing, a concept we never raised and one that the marketplace has worked out on its own over the last half-century.”

At ASCAP, CEO Elizabeth Matthews, writing on the organization’s website, addressed the organization’s songwriter members. “We want you to know that while the DoJ has expressed their views, this is not the final outcome of this process. ASCAP strongly disagrees with the DoJ’s position, and we are carefully considering all of our options, including potential legislative and legal remedies.”

Jody Gerson, chairman and CEO of Universal Music Publishing Group, the other major publisher pushing for changes to the consent decrees, wrote in an internal email to staff obtained by Billboard that her company’s management “believes that the DoJ’s decision is bad for songwriters, and we are deeply disappointed. The DoJ not only declined to update consent decrees that haven’t been updated in over a decade and badly need to be modernized for today’s market, but they also decided that ASCAP and BMI must engage in ‘100 percent’ licensing.” She predicted that 100 percent licensing will lead to “unfair prices that do not reflect the true value of the music that our songwriters create. It will also provide a disincentive to songwriters to work with fellow writers who are signed with a different PRO.”

Tim Nichols, a co-writer of Tim McGraw’s “Live Like You Were Dying” alongside Craig Wiseman, echoed Gerson’s concern in a statement. Nichols writes that he and Wiseman “belong to different PROs, and if 100 percent licensing had been in effect, I’m not sure we would have written that song. You would really be stepping all over writing relationships that are based on special creative chemistry.”

“This determination is completely inconsistent with the manner in which ASCAP and BMI have issued public performance licenses,” writes Warner/Chappell CEO Jon Platt in a statement released today (Jul 5), “It is especially alarming that the DOJ has come to this determination despite the overwhelming concerns expressed by ASCAP, BMI, NMPA, publishers, songwriters and even the U.S. Copyright Office.”

Meanwhile, National Songwriters Association president Lee Thomas Miller, in a statement, called the DoJ decision “unimaginable and the worst possible outcome” for songwriters. “Earlier this year in Washington, D.C., I explained to DoJ that our profession was already decimated, and that mandating 100 percent licensing could put the final nail in our coffin. I am stunned and sickened.”

Yet not everyone is so starkly disapproving. Public Knowledge, which positions itself as an advocate for both consumers and musicians, says it is pleased with the DoJ’s stance.

“It appears that the Department has agreed with our view that antitrust protections should not be removed at a time when the music publishing industry is more concentrated than ever,” says Public Knowledge’s Raza Panjwani in a statement. “The state of the marketplace, and recent bad behavior by the publishers, have made it clear that granting the music publishers the changes they requested would serve as a green light for additional abuse.”

Many music licensees, like the digital streaming services, agree with the DoJ’s view, arguing that the industry has been operating under 100 percent licensing all along. One streaming service executive goes so far as to say the DoJ ruling changes nothing. “As far as we are concerned, we have been operating under 100 percent licensing, because both the ASCAP and BMI license says that if you have one you can play any song in their repertoire,” he says. “The license doesn’t say you can only play their share.”

About the Foundation for Musicians and Songwriters

The Foundation for Musicians and Songwriters is an IRS 501c3 Public Charity that is dedicated to helping Musicians and Songwriters develop their careers in the Music Industry.  We do so without taking a penny or rights from the artist we represent.

To Subscribe to our Music News Updates, Click Here

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Facebook Update will Impact Bands

Facebook once again is changing their newsfeed algorithm that will likely have a significant impact on band and musician pages.

According to Adam Mosseri, Facebook VP, Product Management in a Facebook Newsfeed Algorithm Change Update, “The goal of News Feed is to show people the stories that are most relevant to them. Today, we’re announcing an update to News Feed that helps you see more posts from your friends and family… As part of that process, we often make improvements to News Feed, and when we do, we rely on a set of core values: ”

  • Friends and Family Come First
  • A Platform For All Ideas
  • Authentic Communication
  • You Control Your Experience
  • Constant Iteration

He went on to say, “When we launched News Feed in 2006, it was hard to imagine the challenge we now face: far too much information for any one person to consume… That’s why stories in News Feed are ranked — so that people can see what they care about first, and don’t miss important stuff from their friends. If the ranking is off, people don’t engage, and leave dissatisfied.”

How do the Facebook Newsfeed Algorithm Changes Impact Band Pages?

Why do we believe that the recent changes to the Facebook Newsfeed Algorithm will impact band and corporate pages?  Anyone running a Facebook Page will certainly attest to seeing a decline in organic traffic.  To get content from a fan page to be seen has been a pay to play proposition since the last major change of the Algorithm that rolled in around April 2015.

Lars Backstrom, Facebook Engineering Director, said in his blog post titled Helping Make Sure You Don’t Miss Stories from Friends that “Overall, we anticipate that this update may cause  reach and referral traffic to decline for some Pages. The specific impact on your Page’s distribution and other metrics may vary depending on the composition of your audience. For example, if a lot of your referral traffic is the result of people sharing your content and their friends liking and commenting on it, there will be less of an impact than if the majority of your traffic comes directly through Page posts.”

The last sentence, “If the Majority of your traffic comes directly through page posts” is a big one.  People have been speculating for awhile that Facebook has been penalizing them for using third-party platforms such as Hootsuite, CD Baby, TopSpin or Bandcamp to post to their pages.

Facebook has historically avoided the direct answer to that question, but Mr. Backstrom’s statement seems to clarify this point.  It appears they will be promoting content that is created directly on Facebook or very few if any will actually see the post.

What does that mean in English?  Bands will not be able to schedule automatic posts for album releases using third-party systems using the Facebook API.  They will have to go to the page directly at the exact time and publish a post.

What should a band do?

We routinely tell our Musician and Songwriter members to own their data.  The Facebook Newsfeed Changes are another good example of why.  A good case study is to think about the millions of fans that were following Bands on MySpace. Practically overnight MySpace was gone and the bands completely lost access to their fans that were following them on that platform.

Musicians who manage Facebook pages do not have access to personal information of their followers such as email addresses and they have no way to directly engage with them — even paid posts do not guarantee all fans will see the update.

Any time Facebook makes a change their is a potential to completely lose access to a fanbase and there is nothing that anyone can do about it.  Accordingly, the new Facebook Newsfeed Algorithms will look at how end-users are engaging with content.  If they don’t regularly click on a post form a Band Page then the chances are all posts from that page will be suppressed and never been seen by that fan again.

About the Foundation for Musicians and Songwriters

The Foundation for Musicians and Songwriters is an IRS 501c3 Public Charity that is dedicated to helping Musicians and Songwriters develop their careers in the Music Industry.  We do so without taking a penny or rights from the artist we represent.

To Subscribe to our Music News Updates, Click Here

Click to Subscribe to our Newsletter

 

The Problem With Music by Steve Albini

This oft-referenced article is from the early ’90s, and originally appeared in Maximum Rock ‘n’ Roll magazine.  While some of the information and figures listed here are dated, it is still a useful and informative article.

The record industry has been employing practices like these for decades and they get worse as the major labels consolidate.  The deals they force artist into signing now are even more restrictive than they once were — forcing artist to sing 360 degree deals that make every aspect of their lives and careers a profit center for the label.  When getting tangled up in this web, it is nearly impossible to get out on top.

The Problem With Music by Steve Albini

Whenever I talk to a band who are about to sign with a major label, I always end up thinking of them in a particular context. I imagine a trench, about four feet wide and five feet deep, maybe sixty yards long, filled with runny, decaying shit. I imagine these people, some of them good friends, some of them barely acquaintances, at one end of this trench. I also imagine a faceless industry lackey at the other end holding a fountain pen and a contract waiting to be signed. Nobody can see what’s printed on the contract. It’s too far away, and besides, the shit stench is making everybody’s eyes water. The lackey shouts to everybody that the first one to swim the trench gets to sign the contract. Everybody dives in the trench and they struggle furiously to get to the other end. Two people arrive simultaneously and begin wrestling furiously, clawing each other and dunking each other under the shit. Eventually, one of them capitulates, and there’s only one contestant left. He reaches for the pen, but the Lackey says “Actually, I think you need a little more development. Swim again, please. Backstroke”. And he does of course.

Every major label involved in the hunt for new bands now has on staff a high-profile point man, an “A & R” rep who can present a comfortable face to any prospective band. The initials stand for “Artist and Repertoire.” because historically, the A & R staff would select artists to record music that they had also selected, out of an available pool of each. This is still the case, though not openly. These guys are universally young [about the same age as the bands being wooed], and nowadays they always have some obvious underground rock credibility flag they can wave.

Lyle Preslar, former guitarist for Minor Threat, is one of them. Terry Tolkin, former NY independent booking agent and assistant manager at Touch and Go is one of them. Al Smith, former soundman at CBGB is one of them. Mike Gitter, former editor of XXX fanzine and contributor to Rip, Kerrang and other lowbrow rags is one of them. Many of the annoying turds who used to staff college radio stations are in their ranks as well. There are several reasons A & R scouts are always young. The explanation usually copped-to is that the scout will be “hip to the current musical “scene.” A more important reason is that the bands will intuitively trust someone they think is a peer, and who speaks fondly of the same formative rock and roll experiences. The A & R person is the first person to make contact with the band, and as such is the first person to promise them the moon. Who better to promise them the moon than an idealistic young turk who expects to be calling the shots in a few years, and who has had no previous experience with a big record company. Hell, he’s as naive as the band he’s duping. When he tells them no one will interfere in their creative process, he probably even believes it. When he sits down with the band for the first time, over a plate of angel hair pasta, he can tell them with all sincerity that when they sign with company X, they’re really signing with him and he’s on their side. Remember that great gig I saw you at in ’85? Didn’t we have a blast. By now all rock bands are wise enough to be suspicious of music industry scum. There is a pervasive caricature in popular culture of a portly, middle aged ex-hipster talking a mile-a-minute, using outdated jargon and calling everybody “baby.” After meeting “their” A & R guy, the band will say to themselves and everyone else, “He’s not like a record company guy at all! He’s like one of us.” And they will be right. That’s one of the reasons he was hired.

These A & R guys are not allowed to write contracts. What they do is present the band with a letter of intent, or “deal memo,” which loosely states some terms, and affirms that the band will sign with the label once a contract has been agreed on. The spookiest thing about this harmless sounding little memo, is that it is, for all legal purposes, a binding document. That is, once the band signs it, they are under obligation to conclude a deal with the label. If the label presents them with a contract that the band don’t want to sign, all the label has to do is wait. There are a hundred other bands willing to sign the exact same contract, so the label is in a position of strength. These letters never have any terms of expiration, so the band remain bound by the deal memo until a contract is signed, no matter how long that takes. The band cannot sign to another laborer or even put out its own material unless they are released from their agreement, which never happens. Make no mistake about it: once a band has signed a letter of intent, they will either eventually sign a contract that suits the label or they will be destroyed.

One of my favorite bands was held hostage for the better part of two years by a slick young “He’s not like a label guy at all,” A & R rep, on the basis of such a deal memo. He had failed to come through on any of his promises [something he did with similar effect to another well-known band], and so the band wanted out. Another label expressed interest, but when the A & R man was asked to release the band, he said he would need money or points, or possibly both, before he would consider it. The new label was afraid the price would be too dear, and they said no thanks. On the cusp of making their signature album, an excellent band, humiliated, broke up from the stress and the many months of inactivity. There’s this band. They’re pretty ordinary, but they’re also pretty good, so they’ve attracted some attention. They’re signed to a moderate-sized “independent” label owned by a distribution company, and they have another two albums owed to the label. They’re a little ambitious. They’d like to get signed by a major label so they can have some security you know, get some good equipment, tour in a proper tour bus — nothing fancy, just a little reward for all the hard work. To that end, they got a manager. He knows some of the label guys, and he can shop their next project to all the right people. He takes his cut, sure, but it’s only 15%, and if he can get them signed then it’s money well spent. Anyways, it doesn’t cost them anything if it doesn’t work. 15% of nothing isn’t much! One day an A & R scout calls them, says he’s ‘been following them for a while now, and when their manager mentioned them to him, it just “clicked.” Would they like to meet with him about the possibility of working out a deal with his label? Wow. Big Break time. They meet the guy, and y’know what — he’s not what they expected from a label guy. He’s young and dresses pretty much like the band does. He knows all their favorite bands. He’s like one of them. He tells them he wants to go to bat for them, to try to get them everything they want. He says anything is possible with the right attitude.

They conclude the evening by taking home a copy of a deal memo they wrote out and signed on the spot. The A & R guy was full of great ideas, even talked about using a name producer. Butch Vig is out of the question-he wants 100 g’s and three points, but they can get Don Fleming for $30,000 plus three points. Even that’s a little steep, so maybe they’ll go with that guy who used to be in David Letterman’s band. He only wants three points. Or they can have just anybody record it (like Warton Tiers, maybe– cost you 5 or 7 grand] and have Andy Wallace remix it for 4 grand a track plus 2 points. It was a lot to think about. Well, they like this guy and they trust him. Besides, they already signed the deal memo. He must have been serious about wanting them to sign. They break the news to their current label, and the label manager says he wants them to succeed, so they have his blessing. He will need to be compensated, of course, for the remaining albums left on their contract, but he’ll work it out with the label himself.

Sub Pop made millions from selling off Nirvana, and Twin Tone hasn’t done bad either: 50 grand for the Babes and 60 grand for the Poster Children– without having to sell a single additional record. It’ll be something modest. The new label doesn’t mind, so long as it’s recoupable out of royalties. Well, they get the final contract, and it’s not quite what they expected. They figure it’s better to be safe than sorry and they turn it over to a lawyer–one who says he’s experienced in entertainment law and he hammers out a few bugs. They’re still not sure about it, but the lawyer says he’s seen a lot of contracts, and theirs is pretty good. They’ll be great royalty: 13% [less a 1O% packaging deduction]. Wasn’t it Buffalo Tom that were only getting 12% less 10? Whatever. The old label only wants 50 grand, an no points. Hell, Sub Pop got 3 points when they let Nirvana go. They’re signed for four years, with options on each year, for a total of over a million dollars! That’s a lot of money in any man’s English. The first year’s advance alone is $250,000. Just think about it, a quarter million, just for being in a rock band! Their manager thinks it’s a great deal, especially the large advance. Besides, he knows a publishing company that will take the band on if they get signed, and even give them an advance of 20 grand, so they’ll be making that money too. The manager says publishing is pretty mysterious, and nobody really knows where all the money comes from, but the lawyer can look that contract over too. Hell, it’s free money. Their booking agent is excited about the band signing to a major. He says they can maybe average $1,000 or $2,000 a night from now on. That’s enough to justify a five week tour, and with tour support, they can use a proper crew, buy some good equipment and even get a tour bus! Buses are pretty expensive, but if you figure in the price of a hotel room for everybody In the band and crew, they’re actually about the same cost. Some bands like Therapy? and Sloan and Stereolab use buses on their tours even when they’re getting paid only a couple hundred bucks a night, and this tour should earn at least a grand or two every night. It’ll be worth it. The band will be more comfortable and will play better.

The agent says a band on a major label can get a merchandising company to pay them an advance on T-shirt sales! ridiculous! There’s a gold mine here! The lawyer Should look over the merchandising contract, just to be safe. They get drunk at the signing party. Polaroids are taken and everybody looks thrilled. The label picked them up in a limo. They decided to go with the producer who used to be in Letterman’s band. He had these technicians come in and tune the drums for them and tweak their amps and guitars. He had a guy bring in a slew of expensive old “vintage” microphones. Boy, were they “warm.” He even had a guy come in and check the phase of all the equipment in the control room! Boy, was he professional. He used a bunch of equipment on them and by the end of it, they all agreed that it sounded very “punchy,” yet “warm.” All that hard work paid off. With the help of a video, the album went like hotcakes! They sold a quarter million copies! Here is the math that will explain just how fucked they are: These figures are representative of amounts that appear in record contracts daily. There’s no need to skew the figures to make the scenario look bad, since real-life examples more than abound. income is bold and underlined, expenses are not.

Advance: $ 250,000

Manager’s cut:

$ 37,500

Legal fees:

$ 10,000

Recording Budget:

$ 150,000

Producer’s advance:

$ 50,000

Studio fee:

$ 52,500
Drum Amp, Mic and Phase “Doctors”:
$ 3,000

Recording tape:

$ 8,000

Equipment rental:

$ 5,000

Cartage and Transportation:

$ 5,000

Lodgings while in studio:

$ 10,000

Catering:

$ 3,000

Mastering:

$ 10,000

Tape copies, reference CDs, shipping
tapes, misc. expenses:

$ 2,000

Video budget:

$ 30,000

Cameras:

$ 8,000

Crew:

$ 5,000

Processing and transfers:

$ 3,000

Off-line:

$ 2,000

On-line editing:

$ 3,000

Catering:

$ 1,000

Stage and construction:

$ 3,000

Copies, couriers, transportation:

$ 2,000

Director’s fee:

$ 3,000

Album Artwork:

$ 5,000

Promotional photo shoot and duplication:

$ 2,000

Band fund:

$ 15,000

New fancy professional drum kit:

$ 5,000

New fancy professional guitars [2]:

$ 3,000

New fancy professional guitar amp rigs [2]:

$ 4,000

New fancy potato-shaped bass guitar:

$ 1,000

New fancy rack of lights bass amp:

$ 1,000

Rehearsal space rental:

$ 500

Big blowout party for their friends:

$ 500

Tour expense [5 weeks]:

$ 50,875

Bus:

$ 25,000

Crew [3]:

$ 7,500

Food and per diems:

$ 7,875

Fuel:

$ 3,000

Consumable supplies:

$ 3,500

Wardrobe:

$ 1,000

Promotion:

$ 3,000
Tour gross income: $ 50,000

Agent’s cut:

$ 7,500

Manager’s cut:

$ 7,500
Merchandising advance: $ 20,000

Manager’s cut:

$ 3,000

Lawyer’s fee:

$ 1,000
Publishing advance: $ 20,000

Manager’s cut:

$ 3,000

Lawyer’s fee:

$ 1,000

Record sales:

250,000 @ $12 =
$3,000,000

Gross retail revenue Royalty:

[13% of 90% of retail]:
$ 351,000

Less advance:

$ 250,000

Producer’s points:

[3% less $50,000 advance]:
$ 40,000

Promotional budget:

$ 25,000

Recoupable buyout from previous label:

$ 50,000

Net royalty: $ -14,000
Record company income:

Record wholesale price:

$6.50 x 250,000 =
$1,625,000 gross income

Artist Royalties:

$ 351,000

Deficit from royalties:

$ 14,000

Manufacturing, packaging and distribution:

@ $2.20 per record: $ 550,000

Gross profit:

$ 710,000

The Balance Sheet: This is how much each player got paid at the end of the game.

Record company:

$ 710,000

Producer:

$ 90,000

Manager:

$ 51,000

Studio:

$ 52,500

Previous label:

$ 50,000

Agent:

$ 7,500

Lawyer:

$ 12,000

Band member net income each:
$ 4,031.25
The band is now 1/4 of the way through its contract, has made the music industry more than 3 million dollars richer, but is in the hole $14,000 on royalties. The band members have each earned about 1/3 as much as they would working at a 7-11, but they got to ride in a tour bus for a month. The next album will be about the same, except that the record company will insist they spend more time and money on it. Since the previous one never “recouped,” the band will have no leverage, and will oblige. The next tour will be about the same, except the merchandising advance will have already been paid, and the band, strangely enough, won’t have earned any royalties from their T-shirts yet. Maybe the T-shirt guys have figured out how to count money like record company guys. Some of your friends are probably already this fucked.

Steve Albini is an independent and corporate rock record producer most widely known for having produced Nirvana’s “In Utero”.

2015 Was a Record Year for Online Music Distribution

According to a 2015 Nielsen Report, 2015 was another newsworthy year for the record industry.  Not everything was good news, but overall, the demand for music is stronger than ever.

The following are some of the charts and figures form the 2015 Nielsen Music U.S. Report:

Streaming Nearly Doubles Vs. Prior Year

Nielsen On-Demand Music Streams

Digital Download Sales Continue to Decline

Nielsen Digital Download Sales Continue to Decline

Combined (Physical + Digital) Album Sales Continue to Decline

Nielsen Combined (Physical + Digital) Album Sales Continue to Decline

But When SEA (Streaming Equivalent Albums) Are Factored in, Consumption is Up

Nielsen Music Consumption is Up
Total Digital Consumption Surges 26 percent

Nielsen Total Digital Consumption Surges 26 percent

2015—The Year of Adele

“25’s sales loomed so large, it represented 3.1 percent of total album sales in 2015,” states a Billboard article from the beginning of 2016. Click below to read it:

Billboard – Adele’s ’25’ Rules as Nielsen Music’s Top Album of 2015 in U.S.

5 Ways to Build a Fanbase

Every Musician knows that fans are what drive their business.  Building a Fanbase of loyal followers is critical to obtaining success in the Modern Music Industry.  Of course, building a fanbase is not easy!  It takes a lot of work and dedication to create a audience of people that are loyal.

Why Build a Fanbase

Before diving into the 5 Ways to Build a Fanbase, we thought it would be good to get into some of the reasons why it is as important, if not more important, to build fans than it is to practice your music.  Seriously?  Is this a joke?  We can hear you ask these questions through the internet 🙂

Seriously, think about this point for a minute.  We all see some really BAD! musicians make it all of the time while many great artist never make it out of the local Bar Scene. What’s up with that?

Don’t take our word for it.  Here’s a video for you guys’s and gal’s to ponder.  This is a video of Britney Spears live in a couple of different concerts.  The fun part of this video is they isolated her wireless mic signal.  Curious what her voice sounds like without any processing?  Before watching this, keep in mind that Britney Spears is one of the top grossing female artist…

The Music Industry from a Social Perspective

Now that we have your ears bleeding from the Britney Spears video, we thought this infographic highlights some other interesting points.

 

The Music Industry As Seen From the Social Web

We thought it was interesting to see that Britney has more followers on Twitter than the President of the United States, which is impressive considering the number of the musicians out there that have incredible talent that have not been discovered.

Talent does not Equal Success

Have we hit the point home with you?  Talent does not equal success!  If not, maybe this may help.

Britney Spears Gross IncomeAccording to the Huffington Post Article, Britney Spears Net Worth is a staggering $46 million.

“Britney’s $46 million net worth saw a nice boost in 2014, most likely due to her Las Vegas residency at Planet Hollywood. And the steady and huge paychecks from Britney’s gig entertaining tourists are set to get even bigger.

With the combined income of $475,000 for each show (just under Celine Dion’s per-show earnings of $476,000 for her residency) and her other business ventures, including her fragrances and a new lingerie line, TMZ reported that Britney earns around $1 million each week.”

Who among us wouldn’t like to earn $475,000 for every show?  That is especially a compelling question when the average working musician makes about $35,000 per year.

How did Britney get to this point?  You guessed it, she has a loyal Fanbase!

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The Steps to Building a Fanbase Starts with Awareness

Awareness refers to any marketing initiative designed to provide visibility to your product. Awareness takes a number of different forms, but is most effective when you are targeting a community that is more predisposed to already liking similar things.

What does that mean to a Musician or Songwriter?  Building Awareness means finding fans that may like your music and letting them know you exist.  It is critically important for an emerging musician to get to know the types of fans that will connect with their music.   Look for and seek out bands, songs, etc. that are similar to what you do and research the demographic of their fans.  What type of person likes the type of music you create?

There is a fanbase for everything on the worldwide web.  Doesn’t matter what you do, there is someone out there that likes it.

There are 3 Quick Steps to Identify Fan Demographics:
  • Find artist:  Look for Artist that are ahead of you in the success curve…not the superstars backed by the Major Labels.  If you don’t know any, read the online blogs that are well known for seeking out and writing honest reviews of artist such as Pitchfork.   YouTube is another great place to research music.  Don’t limit your search to a local area.  Looking nationwide and even worldwide can make a huge difference in the audience you market to.
  • Social Networks:  Review the artist social networks and research the fans that are making comments, forwarding their tweets, etc.  The engaged fans that actively promote a musician is one that is passionate about them.  Finding out what motivates them is important to find fans like them for your band.
  • Bloggers: People who write articles on their blogs about artist are critical to the success of a band.  Bloggers can easily have a reach and following greater than Billboard and Rolling Stone magazine combined.  There is a search engine conveniently called the Blog Search Engine that makes it easy to search for a topic that returns blog results.

Awareness Continued: Demographic and Psychographic Overview

Traditionally, demographics have been the bread and butter of analytical information for marketers. Demographic information is the information that one typically sees on a census like age, ethnicity, gender, geographic information, marriage status, whether you have kids or not, and so on. While some of this information is helpful for music marketers—particularly geographic information, as it pertains to routing a tour—demographic information can be a lot less helpful than psychographic information.

Profile of Today

Psychographics is the study of interests, values, attitudes, and lifestyles. Fans of music can live anywhere, can be married or unmarried, can be of any age, and can have a range of income, and as such, it’s important to identify other shared characteristics that are less tangible—those traits that are not identified on a census—to properly target the correct market.

In many cases, the fans of bands mirror their favorite bands’ traits in many ways. Core fans of Morrissey might be more likely to be vegan, fans of Nine Inch Nails might be more focused on technology, fans of Phish might be more focused on a casual dress style, and so on. These psychographic bonds, or shared interests, between the fans and the band is a critical point to determine early on in any marketing campaign. It helps to dictate the high-level marketing campaign focus, including branding, images, communication strategy, and product offerings.

Ideally, a marketer integrates both the useful demographic information as well as the psychographic information, but it is important to note that psychographics often function completely outside of demographics.

The Second Step in Building a Fanbase is Acquisition

Once you have the attention of a prospective fan, it is a marketing best-practice to obtain some form of permission-based contact. From an online standpoint, collecting an email address from someone who has listened to one of your songs is a form of acquisition. From a social standpoint, Facebook fans, Twitter followers, Instagram friends, and YouTube subscribers can be considered permission-based contacts as well. Physical forms of acquisition include capturing the address of a fan, or collecting a phone number.

Collecting permission-based contacts allows musicians to continue a relationship with their new fan after the initial awareness phase. It’s important to note that the different forms of permission-based contacts result in different monetization opportunities down the line. Email marketing, for example, usually converts at a higher rate than social-based contacts.

One of the best ways to do this is to provide something FREE to the potential fan in exchange for their email address.  The Acquisition stage is far too early to ask for money.  Imagine the process being like a date.  The first step, Awareness, is like glancing at each other across the room in a bar.  The Second stage is walking up and talking with them…hoping to say the right things and get their phone number… This is the Acquisition stage for a band.  Now that they know you exist, you want to get just enough interest in what you do to get them to provide you with an email.  Giving something of perceived value away for FREE is the best way to do this.  Could be a song, but could also be something personal like a signed photo of the band or a recipe on how to make a killer Margarita.  Anything that has a minimal cost to the band, but enough perceived value for the potential fan that they would be willing to part with some personal information.

The Third Step is Building an Online Presence

The third Step may actually be the second or even the first step, but we want to make sure and include this in series.  It is important that your band and music is represented positively and professionally.  When a potential fan searches for you on the internet they need to find you!  It is critical that a Musician’s website, twitter, Facebook, Instagram, YouTube, etc. sites have a consistent design and present a professional image.

There are several sites that provide a variety of services to bands.  The most popular are Bandcamp and Topspin for general hosting of band websites.  Both of these services charge fees.

Bandcamp will host a site for free; however, they take money off the top for sales — 15% for digital sales and 10% for merchandise sales.  They have tiered pricing.  When sales are $5K or greater in digital sales the commission decreases from 15% to 10% (https://bandcamp.com/pricing).

Topspin charges a fee to host a site.  The pricing starts at $9.99 per month for basic services, $49.99 per month for presages and other marketing services and $99 per moth for Enterprise services that support split commission payouts (https://www.topspinmedia.com/products/topspinplatform/).  Topspin also charges percentage of sales as well that average 15-20%.

Here’s a video that provides a good overview of the Topspin services:

Other options

Something that many of you may be thinking is why not use a Facebook page to build our fans?  They are free…Right?  We highly recommend that you use Facebook to build Awareness and Engage with Fans, but it should not be your primary site.

The reason using a site you do not directly control is because they frequently change their terms and conditions that limit access to your own fans.  A good example of a social network that hurt many musicians when the tides of the internet changed is MySpace.  Remember those guys?  Bands, Record Companies, etc. invested major money and time building custom MySpace websites and developing fans only to see it all disappear practically overnight.

There is no way to reconnect with the fans that are lost if a social site changes their policies or goes out of business.  Those artist have to start building again from ground zero.  Same holds true with Facebook.  They keep most of the information about followers private and charge page operators to connect with their own followers.  Further, even when an artist pays to Boost a Post, there is no guarantee that their fans will ever see it.  Facebook uses an algorithm that promotes based on $$ spent.  One can hope a post makes it into a fans newsfeed, but there is zero guarantee that it will.

Cash Music

Cash Music is a non-profit company based in Oregon.  They have build a very powerful music marketing platform that is funded by investors, not musicians.  The platform is 100% free for musicians.  What is the catch? It takes some IT skills to setup.  Bandcamp, Topspin and other similar services do the backend legwork to create stock website templates, integration with Amazon for image hosting, commerce collisions, etc.  Cash Music provides the conduit to these services, but the Artist using their platform has to set everything up on their own.  Amazon S3, for example, is where files are stored for the sites.  The users have to sign up with Amazon and create an S3 account.  The good news is that anyone with an Amazon account can sign up for S3 for free.  They do charge fees for data traffic, but it is minimal.  Cash Music is a bit more technical to setup, but it will scale with an artist from a small band to a huge worldwide fanbase without any problems and it is free!  We believe it is well worth the time it takes to get the sites configured than to pay 10-20%+ of sales to a third-party.  That money can be used to make the next album.

 

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The Fourth Step is Engagement

Once a band has the permission and the means to reach out to fans, the next step is to properly engage with them. Engagement can take various forms, including email newsletters, social posts, text messages, direct mailings, and much more. Proper engagement is a key factor relating to the final step of marketing: monetization.

Fans love being connected with musicians they love.  The best way to do that is to give them a peak inside the lives of the band.  Writing posts that let fans know what you are doing, what city you are in, who you had dinner with, etc. will get a lot of traffic.  However, the best way to engage fans is through video.  Live broadcasts from Back stage using Google Hangouts, Twitter Periscope, etc. is a great way to get them engaged.

Fans, of course, have to know you are going to be live on video. This is where the emails come in handy.  Send them an update letting them know you will be live at a certain date and time (include the timezone).  You could even ask them to sign up for the event using free services such as Eventbrite.  This strategy goes back to the FREE exchange we mentioned earlier.  Tell them about an event they will be interested then ask them to give up something personal to get access to it.  Eventbrite can be used to collect more demographic details about your subscribers that can help with marketing efforts down the road.  The final step would be to send a notice to the Event subscribers letting them know a Live event is starting, but to also send a note via email and post to all social feeds (Facebook, Twitter, Instagram, YouTube, etc) announcing the event is going to start.

Engaging fans through various channels and providing them something FREE or exclusive will keep them engaged long term.

The Fifth Step is Monetization

Alright, we are almost through this post on 5 Key Ways to Build a Fanbase!  Monetization is the last, but most exciting step in the process.  This is when you can actually start making money!

Once you have made fans aware of you, captured their contact information, and been engaging with them, you have made it to the end of the “conversion funnel” — monetization. A common trait among new musicians is to attempt to monetize prior to having the previous three marketing pillars buttoned up. Of course, without fans with whom you can communicate properly, monetization is not going to be effective.  The VERY IMPORTANT point is NOT to try to get Fans to pay for anything until all of the above steps are in place.  If we think about the dating example we mentioned earlier, Monetization is the point dating moves to a marriage.  This process takes time to develop before the Fan is ready to commit to your band.  Rush it and you will likely put off the new fan and disengage them.

When Fans are engaged they will stay that way as long as you keep them engaged.  People are naturally fickle.  They will divert their attention elsewhere if you don’t continually communicate with the.  The key is to provide them with  communication that isn’t always asking for money.  When you drop in money making opportunities in-between times of routine updates it increases the probability they will convert.   For example, when you hold a concert email everyone in the area letting them know.  Offering a VIP gift of some sort helps.  Create an interesting product and then offer it as an exclusive for fans.  Customized lighters, coffee cups, mouse pads, gold plated sculls with the band logo, etc. can all be created easily now days.  Hold online concerts and charge a discounted fee for loyal customers to watch the event.  Live streaming is much easier now days with YouTube and Facebook live available.

Another good monetization step is to follow how the major record labels do business.  They promote an album before it is out.  Then they drop a song, making of video or something to peak interest, they will then release a single ahead of the record release, they will then offer preorder opportunities to fans giving them a few extra tracks or something, and finally they drop the release.  The more excitement that can be built before a release the more sales one will get at the release.  Preorders also give a good idea of the demographics of the fans that are buying the album.

Conclusion

Wow, you made it this far!  thank you for reading!  We compiled as much detail as we could for the 5 Key Ways to Build a Fanbase.  We will continue writing on the topic.  If you want to stay in touch with the music industry, please considering signing up for our newsletter.

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Warner/Chappell Music Recruits Mike Smith, President of Virgin EMI

Jon Platt, CEO,  is making a lot of changes at Warner/Chappell.  The changes he’s making seem to be good; however, too many changes at once could cause stability issues over there.  Will be interesting to see how things come together.

Warner/Chappel Music Names Mike Smith as Director UK Operation

Mike Smith

Mike Smith

Warner/Chappell Music has announced that in November Virgin EMI music president Mike Smith will join the company as managing director of its U.K. operation. Until then, the office will be overseen by Jon Platt, to whom Smith will report.

Through a career at MCA Music Publishing and EMI Music publishing, Smith’s signings have included Blur, Elastica, Supergrass, Doves, Gorillaz, The White Stripes, The Libertines, Scissor Sisters, Arcade Fire, and Arctic Monkeys. Smith’s music publishing career spanned from 1988 until 2006, when he began working on the record labels side of the business, first as the MD of Columbia Records U.K. and then as president of music at Mercury Records, and finally as president of Virgin EMI.

“Having started my career in music publishing, it is exciting to be returning to a sector of the industry where I enjoyed so many great times,” Smith said in a statement. “Warner/Chappell is one of the real icons of music publishing, and it is an honor and a privilege to have been asked to help guide this great company and the amazing songwriters and catalogs it represents.”

Jon Platt

Jon Platt

This appointment marks the latest in a series of moves that Platt has made since taking the reins as Warner/Chappell’s CEO in November 2015, and then becoming the company’s chairman at the beginning of this month. Other hires and promotions include Paul Kahn as CFO; Katie Vinten and Ryan Press to co-heads of A&R in the U.S. (excluding Nashville); and Chuck Gamble as VP, Catalog Promotions. Of his latest hire, Platt said in a statement, “Throughout his brilliant career, across both music publishing and recorded music, Mike has demonstrated his commitment to the art of songwriting, putting great songs at the heart of everything he does… With Mike overseeing our U.K. operations, we will be even more powerful as a global destination for the most distinctive, popular, and culturally significant songwriters in the world.”

About the Foundation for Musicians and Songwriters

The Foundation for Musicians and Songwriters was established to help in all areas of artist development.  FMS through the generous donations of our sponsors can bring in the resources artist need to establish a career that can influence future generations.

FMS has the connections, insight, eCommerce expertise and business acumen that the vast majority of Musicians and Songwriters don’t have.  Accordingly, as a 501(c)(3) organization, donations to FMS are 100% tax deductible, which helps our Donors pay-it-forward and promote the continuation of music for future generations — benefiting all of humanity.  As a Music Foundation, every dollar we rase is used to develop the artist so they can make a living in the Music Industry and get their music to the world.

 

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Making it in the Music Biz

Is it even possible to make it as a Musician or Songwriter now days?  The music industry is, no doubt, complicated and out of control!  I’m you or someone you know, feels the pain.  We all love music, but loving music isn’t enough to pay the rent.  Navigating Musicians the complicated music industry is not easy for anyone — not even the biggest names in the industry.

This infographic shows the typical organizational hierarchy of a Record Company:

Record Label Industry Org Chart

The big labels have resources that can take someone with minimal talent and make them a star.  We all see the performances and wonder, how did they get on TV, Radio, Morning Show, etc. when we all know x people that are better?  The reason is simple.  The labels know how the system works — they created it!

But what about the guy or gal that can’t even get a meeting with a label?  What about you or your friends?  Why can’t we make it?   Right!  We are with you on that!

Do you ever wonder why record labels require musicians T-shirts to effectively give away their names, lives and careers by requiring them to enter into 360 degree deals? They do so because they can.  They are in the business of making money for their investors, not making music. wholesale NFL jerseys  Think about it…How many record company CEO’s were ever making a living as a musician or songwriter?

This is where the Foundation for Musicians and Songwriters steps in.  We leverage our connections and resources to help the artist we huge represent develop their careers.  In many ways we function similar to how an Independent or Major Label works with one BIG exception — We DO NOT take any ownership of the Intellectual Property of our artist.  They come in with music — they keep it.  We help them write hit tunes — they keep them.  They make zillions of dollars as a superstar — they keep the $$ (although we hope they thank us when they win a Grammy ;).

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Artist DO Make it on their Own!

As an independent artist, how can anyone make it on their own?  We not only believe — we know, that it is very possible to make a good living as independent musicians and songwriters.  The key to success, however, is not simply being talented — there are millions of talented artist that never make it!  We believe the key to success is through learning how to navigate the complex nature of the industry.  It isn’t a secret that record labels and publishing companies make money through the artist they represent.  How many record label CEO’s actually made a living as a Musician or Songwriter?

Yet, we all know artist that have made it big largely on their own.

Sheryl Crow

After being a school teacher, jingle singer and backup vocalist (for Michael Jackson and Stevie Wonder) throughout her 20s, Minimo she released her debut album at 31 and didn’t get a massive hit until a year later with “All I Wanna Do.”

Pharrell Williams – 40 years old

Pharrell is an excellent example of someone that has figured out how to navigate the music industry. He created his own production company, he has had a very successful career as an independent producer (his production duo, The Neptunes, wrote and produced Britney Spears #1 hit “I’m A Slave 4 U” in 2001 when he was 28). However, he also Off-Shoulder-Obsession was the singer/songwriter/producer for “Happy.” One of the biggest songs of the decade.

Bill Withers – 32 years old

After serving in the US Navy for nine years and working on a factory assembly line, Withers released his debut album cheap NFL jerseys with the hit “Ain’t No Sunshine” at age 32.

Talented Artist Walk Away from the Music Industry Every Day

We are tired of seeing amazing talent walk away from the industry and give up their dreams because they can’t make a living as a musician  or songwriter.  Humanity suffers when people are not creating music.  Think about cheap jerseys our world history.  From the beginning of time people were creating music and sharing it with others.

Music Matters — Future Generations are Counting on us!

Every generation has created new music that has influenced future generations — Classical, Jazz, Blues, Rock, EDM, etc.  Every genre of music can be heard in the next.  The Rolling Stones, in fact, were deeply influenced in the UK by the Blues music that was coming out of America.  Heck, they got their name from a Muddy Waters tune titled “Rollin’ Stone!”  If the Blues music wasn’t being recorded and shared from America, the chances are we would have never had the Rolling Stones, Jimi Hendrix, The Beatles, etc…

We have been fortunate as a society to have had an industry that, good or bad, has backed artist and helped them get their music out.  That all started to change sometime around the Napster era circa 2001.  15-years later, music is not being created or discovered like it once was.  Now days there is more music available in the word than ever, but there is no filter that helps people discover music they like.  It is very difficult for the average consumer to weed through the constant barrage of media hitting them daily.

Musicians need to create music that targets their core audience and generate fans if they ever want to make it in the music business.  Fans drive plays, which drives credibility, that drives interest, that drives revenue…  And the entire process starts by creating good quality music that is at a level that consumers expect — not a Garageband competition recorded in the basement.

The Internet is Quickly Evolving

Let’s talk a minute about developing fans and how the industry and the internet is evolving.

Here’s a video wholesale jerseys of Ian Rogers, former GM of Yahoo Music, CEO of Topspin and now the CEO of Beats Music talking about the Stages of the Internet and the importance of trusted sources.

Ian Rogers Discussing the Phases of the Internet

The Foundation for Musicians and Songwriters can, and will, make a difference…

The Foundation for Musicians and Songwriters was established to help in all areas of artist development.  FMS through the generous donations of our sponsors can bring in the resources artist need to establish a career that can influence future generations.

FMS has the connections, insight, eCommerce expertise and business acumen that the vast majority of Musicians and Songwriters don’t have.  Accordingly, as a 501(c)(3) organization, donations to FMS are 100% tax deductible, which helps our Donors pay-it-forward and promote the continuation of music for future generations — benefiting all of humanity.  As a Music Foundation, every dollar we rase is used to develop the artist so they can make a living in the Music Industry and get their music to the world.

To Subscribe to our Music News Updates, Click Here
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