So all the news outlets are glossing over the 1.3 million sales of the new Taylor Swift album. As is the norm everyone in the mainstream media is trumping up the irrelevant and they are totally ignorant to the reality that exists in the music business. The reality is that more and more people are using streaming services.
So where do all of the profits go to from the 1.3 million sales. There is a common viewpoint put forward by the record labels that the music industry (which is funny how they refer to the recording industry as the music industry) is in dire straits. They blame piracy. The artists blame streaming services even though Spotify pays 70% of every dollar they get to the record labels and the music publishers. Pandora pays about 55% to 60% of every dollar they get to the record labels and the publishers.
In music, the deals between record labels and artists have two levels; a) a royalty percentage for recorded music that is sold like a CD, a VINYL album or a digital download and b) a different percentage for music that is licensed for use in a film, and other types of promotions like commercials, sporting events and so forth.
Different artists have different deals. Imagine being an artist, and the retailers get 30% of your music while the record labels keep more than 80% of the money they receive.
In the digital world, many artists like Enimen and Dave Coverdale have successfully argued that digital services are being licensed by labels and thus the licensed royalty amount should apply. Def Leppard couldn’t agree with their label and that is why their output is not on digital services. However we have current forgeries that the Def Leppard band re-recorded.
Retailers have built their business on the backs of artists. The record labels have built their business on the backs of artists. The live tour promoters have built their businesses on the backs of artists. The music publishers/rights organisations have built their business on the backs of artists. Radio has built its business on the backs of artists. It looks like everyone is building their business on the backs of artists except the artists themselves.
And how does all of this tie in to what fans of music want.
A digital music study that came out of the Nordic countries is being forgotten at this moment in time. For the uninitiated, the Nordic countries Denmark, Sweden, Norway and Finland are the earliest adopters of streaming services in a mainstream way and their growth of their recording industry is seen as a model for the rest of the world to follow.
So what we have is Spotify who has an estimated 7 million users in Denmark, Norway, Finland and Sweden. This is about 18% of Spotify’s worldwide reach. The takeaway is that 78% of Nordic Internet users are digital music consumers (an estimated 13.8 million), having used services such as YouTube, Spotify, Wimp or iTunes for accessing music content. Of those 78%, 20% said they had paid for some form of digital music, either downloads or streaming. YouTube was the most popular.
Fans of music like to listen to music for free and with each generation growing up this is more prevalent. However all of those organisations that built their businesses on the backs of music sales don’t like it. Got to give it to the technology retailers for adapting to an ever-changing marketplace. iTunes downloads are down however Apple are preparing for it with their own streaming service. Spotify is now offering one family account, which makes total sense, so expect Spotify’s premium user base to rise.
It’s a brave new fragmented world and it will be for a few more years, until streaming services in the large North American markets take a real foothold. Then watch out for a new battle to begin between artist and record label for unpaid monies.
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