There is nothing fair about the IRFA

Going through congress now is a bill named, in classic Owellian Doublespeak, the Internet Radio Fairness act. This bill is being pushed by online "radio" companies, most vocally Pandora. The basic thrust of the bill would reduce an artist's royalties by 85%, but it goes beyond that to include censorship and eliminating a panel of copyright judges.

In old fashion radio you had to wait all day, maybe longer, to hear your favorite tunes, if they were popular enough to be on the radio to begin with. With Pandora you can hear them several times an hour. Many of my friends listen to Pandora and thus while I'm at their homes, so do I. When we select an artist on Pandora their hits keep being played over and over. Several songs an hour. Because of this we don't need to buy their recordings. This means that the artists are not earning a living wage from being played on Pandora. Not even close.

My last royalty check from BMI, for the first quarter of 2012, states that several of my songs were broadcast by Pandora. One song was aired 73,700 times on Pandora and my royalties totaled $1.88. That's only $0.00002550881954 per play!

Another song was broadcast by Pandora 165,500 times and my total royalties came to $4.81 or $0.00002906344411 per play.

These are not high royalties. SiriusXM pays much higher rates. One song of mine for example, was paid $0.135 per play. Significantly higher.

Pandora is pushing this bill hard because they claim that they have to pay more in royalties than traditional terrestrial radio. Rates that were set up by a panel of copyright judges. A panel of judges that the IRFA would eliminate. If Pandora has such an unfair burden compared to traditional radio, then why are giant terrestrial companies like Clear Chanel and other broadcasters be backing the IRFA?

Also, Pandora's business model is to not play too many adds per hour. This lack of ads leads to less revenue. It also turns out that those ads they do air are not generating much income, as internet ads are pretty much worthless. This business model was perfectly fine when they were selling their IPO to investors. But now, after they have racked in millions from going public, suddenly ad free radio is not working? Imagine how their new investors must be feeling duped!

The IRFA would also censor an artist's ability to voice descent about any royalty rate that Pandora and the record labels might agree to. In fact Pandora's own website states that, "This bill also muzzles any group that acts on behalf of ”rightsholders” (artists) by threatening prosecution under The Sherman act for “impeding” any direct licensing between broadcasters and record labels." Yeah, that sounds "fair". Plus if you are a small, independent label, like artist owned labels, you don't get to negotiate a rate, you have to take what they give you. Where have we heard this before? Oh right, from Spotify. We know how large their royalty payments are.

Personally I struggle with Pandora playing my material at all. Listeners get access to my songs for free and I am paid royalties that I consider pathetic. Some would argue that I'm receiving "exposure", but an artist needs exposure to generate a growing fan base and thus a greater income stream. Pandora's "exposure" does not do that. As the saying goes, "You can die from exposure". Given that Pandora plays songs by a given artist multiple times each hour why would Pandora listeners need to buy an artist's albums? They can hear them over and over for free.

Pandora needs to stop whinnying and pay artists more, not less. Their competitors do. If they can't earn a living through their current income model then they need to realize there is a new paradigm. That's what every one has been telling artists for years. That we need to find other ways to earn money other than from our core product, the music. One of the ways that is suggested frequently is through ads, or sponsors. But now Pandora has realized what all inde musicians know, ads don't make much, if any, money. Regardless, it is not the artist's job to subsidize Pandora's failed business model.

No surprise, I will not be supporting this bill.

If you are an artist, or just want artists to be paid a fair royalty rate then send Pandora your thoughts. While you're at it, let congressional backers of the IRFA know that here is nothing "fair" about the IRFA bill by writing to them:
Senator Ron Wyden (D-OR), Representatives Jason Chaffetz (R-UT) and Jared Polis (D-CO)

Pandora wouldn't even exist without the music that artists produce. As they are in the business of using music to make money, they need to pay artists, their suppliers, a truly fair rate.

Break It Down. Music Sales in 2011

Soundscan released their 2011 numbers for music sales. As we saw earlier, the first two quarters of the year saw a boom in music purchases and although sales lost some of their momentum during the last half of the year, 2011 was the first year since 2004 to see growth in album purchases from the previous year.

Before we go through the numbers, it is worth restating that TMD is primarily written for musicians and listeners of smaller genre categories. Independent music. As we will see, the major labels always claim the top prizes and determine the direction that the rest of us follow, if we can. A big IF.

The Good News: Barely
The good news is that album sales in the US grew a whooping 1.3%. Not much, but better than the landslide that has been happening for most of the 2000’s.

As always, the main forces behind these numbers are due to a handful of albums. This year there were only 13 albums that sold 1 million units or more. Led by Adele’s “21”. Those 13 albums make up only 0.0169% of the 78,875 newly released albums Soundscan counted for 2011. So for Independent musicians the story is pretty much the same. Only artists on labels can make it big, and realistically, even for those artists, the odds are still slim to none.

A Pointless Debate

Recently David Touve, an Assistant Professor of Business at Washing & Lee University posted a blog asking “Is a stream on Spotify (or any music service) really worth less than an iTune sale?”

His attempt to show that an iTune sale or a Spotify stream are basically worth the same, in terms of payment to the artist, is arrived at by fuzzy math that assumes a listener will play a song purchased from iTunes 250 times. (Where he gets this number is anyone's guess. A quick look at your iTunes app will show that most songs get played far less.) By prorating the cost of the song by 250 plays, he would have us believe that the price per play is $0.0028, which he believes compares favorably to the urban myth of Spotify's $0.0033 per stream payments.

Coldplay sets a Digital Record without Streaming

-This post has been updated-

A few weeks ago Coldplay announced that it was not going to post its new album Mylo Xyloto on streaming sites like Spotify. To date they are one of the larger acts to publicly not allow their music to be streamed. At the time Coldplay's decision reportedly embarrassed their record label, EMI, who has a licensing deal with Spotify. But EMI may be singing a different tune now after Coldplay's new album Mylo Xyloto hit a "one week digital sales record" in the UK. According to a report by Digital Music News of the 208,343 units sold in the UK over 40%, or 83,000 were digital. U.S. sales figures from Soundscan are pending. In terms of percentage, digital album sales are still growing rapidly and Coldplay seems to be benefiting from this.

Land of the Free?

I was working on another post when two music news items caught my eye. Both about the same thing. Labels who are removing themselves from the streaming service Spotify because the streaming payments are so small it makes it not worthwhile having their catalog available.

One of the reasons that streaming services, and new music gurus, give to justify low payments, are that the labels and artists, due to piracy, now have to complete with free. And we are talking payments below 1/3 of a penny or lower with streaming services.

It is interesting to note that the labels in question couldn’t be farther apart in musical style.

The Dinosaur is Dead, Long Live the Dinosaur

It seems like every time I read an article about music and the music industry the topics seem to have the same underlying current. Whether it is about streaming, the cloud, owning verses access or the financial viability of subscription models, the media is constantly buzzing about the death of buying music. Even downloading is now considered passé as we are told daily that nobody wants to buy music any longer. It is now all about access and the cloud is king. Of all music industry articles, 90% are about some kind of digital services, ¹ and most of these seem to be about the latest services that the big boys like Apple, Amazon, and Google are pushing. These companies hope to make a lot of money from these new services and the media seems content to regurgitate their press releases. The truth, it turns out, is that most people aren’t buying it...

The dirty little secret that none of the these stories rarely discuss is that is the dinosaur of buying music is not dead, it is still alive and we, the music buyers are the dinosaurs. Recent studies have shown that despite the deluge of promotions and media blitz regarding music streaming, access and cloud services, people are still buying music.

Who Are They Fooling?

So, after years of waiting, Spotify is here in the U.S. What does this mean for artists? Already the contradictions have started. Sean Parker, who is on Spotify’s board, is giddy over the fact that the service will enable “music to be shared freely across the world -- all the while empowering artists to reap the economic benefits of selling their music". ¹ Am I the only one that sees the contradiction in this statement? There is no income from shared music.

As we all know, when the milk is free, you don’t buy the cow. The idea that a Spotify user, especially one that is paying $9.99 to be on the top of Spoitfy’s three tiered system, will go out and buy music they already have access to is absurd on its face.

Omnia Vanitas: The New Gate Keepers

About a month ago I attended a music festival where several friends of mine were performing. The festival was one of hundreds that focuses on one type of instrument, for example: didgeridoo, shakuhachi, drum, flute, banjo, dulcimer, harmonica, kazoo, harp, piano and guitar. Piano and guitar festivals are very popular, held in cities throughout the country like Dallas, L.A., Seattle, Portland Washington, D.C., Long Island, Boston, Tennessee and more all over the world. These festivals usually consist of performances by name acts, competitions, workshops, private lessons and booths set up by vendors.

Another thing that I see a lot of at these festivals is DIY CDs made by people that want to break into the music business. At the latest festival I attended there were dozens of CDs for sale by people who had recorded one trying to get some exposure, or just for family and friends. So called vanity albums. With the rise of inexpensive home recording equipment it has become pretty easy to make one's own CD. And with the growing influence of the Internet, especially Facebook and Twitter, an artist can attempt to promote their recording directly to their audience.

In part due to the rise of these social sites it is now considered possible to market your own recordings. The traditional Gate Keepers for the music industry: labels, managers and promoters are, supposedly, no longer needed. Once upon a time these gate keepers held the keys to a career in popular music. They had people that listened to acts, went to shows and gauged the strength of an artist's or a band’s appeal. This weeded out those artists that supposedly were not making good music and groomed the ones that were for success. Was this a perfect system? No. Would I be a working recording artist if I had to go through the filter of a record label? I’m thinking, “not so much”.

So who are the new Gate Keepers? And what, if any, stake do they have in your music career? And does this mean that every person that can make an album should?

The Digital Domain: 1's and 0's or just zeros?

In the last several posts we've looked at how many recordings an Indie musician would have to sell to make a couple of economic target goals: the U.S. minimum wage, and rent, specifically mine, which is a little more than $1,300. Up till now we've only looked at physical product, CD's, comparing sales on an artist's website, at a gig, and through retail stores. We have seen that the farther away the artist got from the customer the more units they have to sell to make our target goals. For example, if an artist sold a CD at a gig for $15 they would be able to apply more of the income from that sale to their rent than if their recording was sold through a retail store via a distributor, both of whom would take their cut.

Below is what this looks like on a graph.


Click image to enlarge

Now we're going to enter the mysterious world of digital downloads. I use the word "mysterious" because some of the of the definitions of that word, such as "difficult or impossible to understand", "having an atmosphere of strangeness or secrecy" and "deliberately enigmatic" are perfectly suited to the digital download world.