“The long drawn out demise of recorded music revenue is well documented, as is the story of artists, labels and managers all trying to make sense of a world in which music sales can no longer be counted upon. But the contraction of recorded revenue has occurred at the exact same time that the live music sector has undergone a renaissance. The net effect, when coupled with publishing revenue holding its own and the growth of albeit modest, merchandise revenue, is that the global music industry has largely held its own, contracting by just 3% between 2000 and 2013 (see figure). Compare and contrast with the 41% decline in (retail) recorded music revenue over the same period. Indeed it is the 60% growth in live revenue that has done most to offset the impact of declining music sales.
It is probably fair to say that we are approximately half way through a huge period of transition for the music industry. The realignment of revenue is merely a precursor to the new business models, products and career paths that will emerge to capitalize on the new world order. It is in this next phase that the real ‘fun’ will start. Expect every traditional element of the industry to be challenged to its core, expect dots to be joined and old models to be broken. But be in no doubt that what we will end up with will be an industry set up for success in the digital era.”
Rather than spend years practising an instrument and writing songs, he compiled music from clunky electronic MIDI files and later by applying algorithms that squashed together public domain audio.
He then purchased three Amazon compute instances and wrote a simple bash script to simulate three listeners playing his songs 24 hours a day for a month.
Filimore wasn’t bothered when online listeners dubbed the tunes “rubbish”, “horrible” and of a quality perhaps only appealing while “on cocaine”.
Rather, the payments security expert was curious whether fraud detection mechanisms were used across music services like Spotify, Pandora and CDBaby.
“I’m not a musician,” Filimore told SC at the Ruxcon security event in Melbourne this week. “But I kept hearing that artists were going broke and wanted to look into it.”
“As it turns out, you’re doing it wrong if you want to make money in music by being a musician.”
A report from MIDiA Consulting suggests that 60-80 percent of ad-supported accounts on services like Spotify, Pandora, and Deezer are effectively inactive. These inactive listeners contribute little value to the music service. After all, if someone never logs on, they’ll never see ads.
The MIDIA report confirms something we’ve seen happen with many services: A small segment of hyper-engaged users is responsible for the majority of overall engagement and listening hours in any given month.
Interestingly, we’ve noticed that the characteristics of these high-value users vary from service to service. The traits that make one user “high value” to one service don’t necessarily apply to another.
As such, it’s really important for a music service to understand who those high-value listeners are for their service specifically, and, ideally, to target acquisition and engagement strategies directly to those listeners. It’s possible. In fact, it’s exactly what The Echo Nest has been working on.
via The Echo Nest Blog.
Here’s a tip for people who object to artists using Kickstarter, PledgeMysic etc: don’t pledge, and STFU about it. It’s not your call.
— Bemuso (@Bemuso) August 11, 2013
Earlier this month, Norway showed startling 17% growth year-on-year for the first half of 2013, with streaming now accounting for 66% of all recorded-music revenues there. This, on top of 7% year-on-year growth for 2012 as a whole. Now it’s Sweden’s turn for some updated figures.
Swedish music industry body GLF has announced its first-half numbers today. Total recorded-music revenues are up 12% year-on-year to SEK 499.4m (around $76.4m).
Digital accounted for 75% of those revenues, and streaming now accounts for 94% of that digital income. Physical sales fell by 24% in the first half of 2013 (although vinyl was up 50% as part of that) and downloads were down 20%.
Or, in summary: streaming music HAS cannibalised downloads in Sweden, but grown the overall pie again, although the growth in the first half of 2013 is slightly down on 2012 as a whole, when recorded-music revenues rose by 13.8%.
In that year, digital was 63% of all revenues, with streaming accounting for 90% of digital income, as a comparison.
Which brings us back to THE central question here: how can streaming music help new artists make a living? Pink Floyd and Jay-Z will be fine. The Eagles aren’t losing any sleep over bank overdrafts. Paul McCartney has nothing to fear from the UK’s new bedroom tax for housing benefit. They’re all set.
How can Spotify ensure the next Pink Floyd and Jay-Z don’t give up before even recording their The Piper at the Gates of Dawn or Reasonable Doubt, though? How can streaming services not just find an audience for talented new artists, but also help them to find those workable revenue streams?
There’s a ‘jam tomorrow’ argument to be made here, although it hasn’t washed that well so far.
As a new artist with 500-1,000 fans, what if Spotify can put you in front of 10,000 or 100,000 people whose listening habits indicate they’ll love you? Those streams will start to add up, but it depends on the streaming services being much bigger than they are now.
Greater reach may also bring greater opportunities for some of those other income streams for artists, especially if streaming services share more (anonymous, obviously) data with them on their fans – for example, to help them plan tours.
But my inkling is that the biggest way streaming services can help new artists make a living is to go further still, and become the bridge between people discovering music, and spending money with its creator elsewhere.