Friday, July 11, 2014

The Delusions of Hipsters

Vinyl is not going to save the music industry. This chart explains why without even bothering to hide the reality that is apparent in the numbers. If there were 289 million albums sold last year, and if only six million of them were made of vinyl, then there is no "renaissance" at work. That's a blip, not a trend.

There's a major, major gaffe in this article. See if you can spot it:

The problem for the music industry is that the revenue generated by streaming (through royalties) is not making up for the decline in music ownership, at least not yet. However, when you add up all digital purchases of individual tracks and online streams, and combine them with physical sales, the total dollar “equivalent” of albums sold declined by only 3.3% in the first six months of 2014 (assuming 10 digital downloads, or 1,500 streams of a song, equals the dollar value of an album sale). This time last year the fall was 4.6%.

WTF? 1,500 streams of a song equals the dollar value of an album sale? On what fucking planet?

Pandora, which declined a request for an interview, says on its blog and in official statements that it fully supports artists making money through royalties, but that it needs to level the playing field with its competitors.

The response from ASCAP and from some performers has been that Pandora already makes a tidy profit and the time for feeling sorry for a little startup company is long past. Pandora, they say, by choosing to pay on a revenue percentage basis, rather than on a per play basis (which they are legally allowed to do) can pay a songwriter as little as eight cents for 1,000 plays.

Since Pandora pays royalties both to the songwriters and for use of the particular performance (recording), and since the publisher takes a cut and the performing rights organization also pays overhead expenses from royalties, it’s difficult to rationalize the numbers being thrown around in this debate. And because one play on Pandora reaches about one listener, while one play on a satellite radio program might reach millions, it’s even harder to make apples-to-apples comparisons. But here’s a useful one from Claire Suddath’s article “Should Pandora Pay Less in Music Royalties?” from Bloomberg Businessweek: Pandora paid out $258 million in royalties in 2012, streaming to 175 million users. Writes Suddath:

That works out to about $1.48 per user. That’s pretty cheap. (For comparison, Sirius paid $272 million in royalties and has 24 million subscribers, so that’s $11.33 in royalties per subscriber.)

Oh, and here's a specific for you:

In the end, artists, especially songwriters, get squeezed by the system.
“If I’m a young artist/songwriter trying to get into the music industry and I look at somebody with Allen Shamblin’s track record,” said Michael Aczon, an entertainment lawyer and educator:

This is not some guy who just started writing. This is a guy who’s got years and years of recognition and certainly a significant amount of success in the music business. So, if a guy like Allen Shamblin is earning less than $900 from his hit song being played 22,000,000 times on Pandora — if I’m an unknown songwriter, what am I thinking? Am I actually going to be able to make a living at this? That’s what I’m thinking! That’s the only way I can think.”


So, just to recap what should be blazingly obvious--the only way a company like Pandora or Spotify or whoever else can stay in business is to make massive profits, and the only way to do that is to not pay out anything in royalties to the vast majority of artists who have limited appeal. The answer, of course, is to eliminate all of the diversity in music and then leave us with a couple of dozen major artists who make all of our music.

Yeah, I haven't bought any of that stuff ever, either. I do buy vinyl, on occasion, but there's no chance that it will save the music industry because there will never be enough in sales generated from vinyl to compensate for the fact that an artist's livelihood is already being stolen.

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