Tag Archives: David Lowery

Royalty rates paid musicians decline for some streaming services

When it comes to getting paid, the bigger streaming service is not necessarily better for most musicians and song writers.

While the revenue and market share have grown for the leading streaming services, some significantly, the royalties paid to artists have been declining.

According to a recent article in The Trichordist, a publication dedicated to the protection of artists rights in the digital age, streaming royalties paid to artists declined in 2017.

The blog took snapshots from a major indie portfolio for 2017, 2016 and 2013. It found that “when streaming numbers grow, the per stream rate will drop.”

This data set is isolated to the calendar year 2016 and represents a label with an approximately 150 album catalog generating over 115 million streams, a fairly good sample size. All rates are gross before distribution fees.

Spotify was paying .00521 back in 2014, two years later the aggregate net average per play rate dropped to .00437 in 2016, a reduction of 16%, reports the Trichordist. The current effective per stream rate at Spotify has now dropped to 0.00397, a reduction of 9% since last year. This a cumulative reduction of 24% since 2014, which is an average decrease of 8% a year of the per stream rate.

Business Model Questions

“If the music business could set a per stream rate that allowed revenue growth, proportionate to consumption growth that would be a much better model,” said David Lowery, editor of The Trichordist and leader of the band Cracker and Camper Van Beethoven. Lowery teaches in the Music Business Certificate Program at Terry College of Business, University of Georgia.

A notable change from last year is that Pandora replaces YouTube with the greatest value gap of streams at 21.56% volume with only 7.86% of revenue. YouTube drops to 8.38% of volume with only 1.70% of revenue.

Indie Label Sample: 115 Million Streams

Top Players

Apple appears to be the lone streaming service that is growing both in market share and revenue, and is paying relatively high royalties. It accounts for 22.29% of the revenue on 10.48% of the streams, and pays approximately six-times the per-stream royalty rate of Pandora. (Apple’s iTunes is a direct purchase model, while Pandora offers a more radio-like format, which precludes on demand listener selection.)

More than 95% of the streams and 98% of the revenue were concentrated in the top ten companies. The top three, Spotify, Apple iTunes and Pandora, comprise about 80% of the streams for this representative catalogue and 82% of the total streaming revenue.

For The Trichordist‘s 2017 streaming sample, go here; 2016, here; and 2013 here.

Image source: thetrichordist.com

 

Patent Holders can Learn from Angry Musician’s File Sharing Fight

A song writer makes a strong case against businesses that profit wildly from his and others innovators’ work.

Heavy metal band Metallica got serious about battling illegal downloading of their work in 2000 when drummer Lars Ulrich filed an unpopular copyright infringement law suit against Napster, naming 300,000 users. Everyone complained, but Napster was eventually shut down.

Recording artists and song writers remain easy prey for those who who make music files available to anyone with Internet access. Audiences including fans, businesses, software developers, and especially content providers, have portrayed victims as greedy and out of touch with the digital world, just as many tech companies depict all patent enforcers as “trolls.”

For better known artists, unpaid air time on sites like Pandora and Spotify serve as free publicity for their live performances and sales of their earlier or “private” work,  but for less wellfreeloading-cover-image21-known musicians who lack the ability to sell-out arenas, the lack of compensation for air play can mean the difference between having a decent year or taking a day job.

Phantom Royalty Stream

David Lowery, the leader of two bands, Van Beethoven and Cracker, has become a celebrity among musicians, reports The New York Times. He has been speaking out about artists shrinking paychecks and the influence of Silicon Valley over copyright, economics and public discourse.

Lowery, a San Antonio native,  is no run of the mill song writer. He is a trained mathematician and has worked as a quant trading derivatives and providing financial analysis, and is a lecturer in the University of Georgia’s music business program.

His blog, The Trichordist, has documented the income statements associated with his and other musicians work. He claims that 1.1 million plays of one of his popular song, “Low,” on Pandora has netted him just $16.89.

Song writers, recording artists, visual artists and inventors are innovators connected in spirit but bound to different innovation rights. As innovators, they share common challenges for acceptance of their ideas and for economic survival among those who have no qualms about not paying them anything if they don’t have to.

Their  problems are fueled by the speed and accessibility of the Internet, which are both a boom to artists and thinkers and a threat. Consumers and businesses crave low-cost products, or better-still free ones. Companies that need to sell new and more appealing products have a ravenous appetite for inventions. Often, they are actually incremental advancements, or “re-invention”, which their internal R&D is only partially able to provide.

Patent holders can learn from musicians’ copyright battles with content providers.  The frequency and scope of invention infringement has grown, and routine abuse of patent holders’ rights, like downloading, has been as widely accepted.

Inventors and their advisers need to educate audiences about how the patent system works and how it must be protected from bad actors. They also need to show the problem has a human face, and that unauthorized patent use affects not just “eccentric” inventors and aggressive businesses, but consumers, jobs, and the ability of the U.S. to compete with other nations. Invention theft affects the quality of innovation itself.

There are those who would prefer to turn the story line into one about patent “trolls,” when it is really about business acting in bad faith to get the best deal on inventions or improvements that are not theirs.

Lowery’s blog is subtitled “Artists for an Ethical and Sustainable Internet.” Patent holders would be wise to consider adopting a similar tag line for the ethics associated with patent filing and patent quality.

At the Roots

Audiences need to know that unauthorized use of inventions and demonizing all patent enforcement leave many talented, necessary individuals and businesses out in the cold. Moreover, it weakens the DNA of innovation, which is not easily repaired.

Illustration credit: Slashgear.com; thetrichordist.com


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