Digital revenue streams for sound recordings

Musicians’ earnings
from digital platforms
Kristin Thomson, Future of Music Coalition @kristinthomson

How have these changes impacted
musicians’ ability to generate revenue
based on their creative work?
money.futureofmusic.org/about-the-project/

Source: RIAA via Future of the Music Business

Research question
What percentage of musicians’
income comes from each possible
revenue source?
money.futureofmusic.org/research-questions/

42 revenue streams
Mechanical royalties
Streaming mechanicals
Mechanicals for cloud storage, lockers
Commissions
Composing original works for broadcast
Sheet music
Lyric display
Label advances
Label support
Retail sales
Sales at shows
Digital downloads
Cloud storage payments
Digital performance royalties
Interactive service payments
YouTube partner program
Master use synchs
Performances
Salaried work
Session work in studio
Sesson work live
money.futureofmusic.org/40-revenue-streams/

Prior to 1998
Composition income Sound recording income
Public performance royalties
Synch licenses
Jingle writing/composing for hire/
commissions
Physical retail sales
Physical mailorder
Selling music at shows
Master use synchs

Synch licenses
commissions
Physical mailorder
Master use synchs
Digital download sales
Interactive stream payments
+
+
Streaming mechanical royalties
Mechanicals for cloud storage
Lyric display royalties

42 Revenue Streams
Served as the genesis of
the project, a framework
for the research, and lives
on as an outcome.
money.futureofmusic.org/40-revenue-streams/

Revenue Streams:
Existing, Expanded
and New
money.futureofmusic.org/revenue-streams-existing-expanded-new/

Qualitative and quantitative data collected
from US-based musicians and composers via:
• 80 in-person interviews
• six financial case studies
• over 5,300 completed surveys
Collected between 2010 and the end of 2011.
money.futureofmusic.org/findings/

Synch licenses
commissions
Physical mailorder
Master use synchs
+
+
Streaming mechanical royalties
Mechanicals for cloud storage
Lyric display royalties
Interactive stream payments

Q12: Survey respondents asked to
allocate money among these categories:
Composition income/being a composer
Sound recording income/being a recording artist
Performance income from guarantees/percent of door
Salaried performer
Session player (live and in studio)
Brand-related income
Knowledge of craft/teaching
money.futureofmusic.org/revenue-types/

Aggregate revenue pie for all survey respondents
6%
of income in
past 12 months
derived from
sound recordings
N = 5371

Range of revenue derived from sound recordings
for all survey respondents
3552
66% reported 0% of income
1183
from sound recordings
237 144 53 73 20 7 27 16 9 44
4000
3500
3000
2500
2000
1500
1000
500
0
0% 1 to 10% 11 to
20%
21 to
30%
31 to
40%
41 to
50%
51 to
60%
61 to
70%
71 to
80%
81 to
90%
91 to
99%
100%
Percent of music-related income derived from sound recordings in past 12 months.
N=5371
Number of survey respondents
22% reported 1% - 10% of income
from sound recordings

Revenue derived from sound recordings
Income from sound recordings,
in past 12 months, by primary genre
1%
4%
by primary genre
6%
12%
14%
6%
0% 5% 10% 15% 20%
All (N=5371)
Rock (N=569)
Hip hop (N=93)
Country (N=262)
Jazz (N=872)
Classical (N=1863)
Percent of music-related income in past 12 months

Perceived changes in revenue from sound recordings
over prior five years
Changes in revenue from sound recordings over past five years
Increased Stayed the same Decreased I don't know Not applicable
16% 18% 22% 3% 41%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Percent of survey respondents. N = 4447
N=4447
6% more report a decrease
in revenue than an increase
41% say changes in revenue
from SR is “not applicable"

“The thing that’s decreased—this won’t
surprise you—is the income from
recording. By that I mean the royalties,
the advances, all of the income streams
that go along with the recordings. It’s all
decreased significantly over the last 10
years.”
– Contemporary Chamber Ensemble

“Have you ever earned any income from....”
13%
17%
35%
62%
79%
74%
Interactive streaming
services
Digital performance
royalties
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Physical sales
Sales at shows
Digital downloads
Interactive streaming services
Synchronizations
Percent of long-path respondents who are participating
Physical sales
Sales at shows
Digital sales
Synchs
all long-path respondents

16%
full-time musicians
19%
37%
66%
76%
79%
services
Digital performance
royalties
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Physical sales
Sales at shows
Digital downloads
Synchronizations
Physical sales
Sales at shows
Digital sales
Synchs

primary genre: rock
31%
16%
36%
72%
83%
74%
services
Digital performance
royalties
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Physical sales
Sales at shows
Digital downloads
Synchronizations
Physical sales
Sales at shows
Digital sales
Synchs

“iTunes is a specific technological
development that’s been helpful to
revenue…”
– Jazz manager

“Digital sales have boosted and that’s one
thing instance where we’ve been lucky.
Whoever those people are who buy
iTunes singles seem to like us. So we have
that going for us in that we sell a shit ton
of those.”
– Guitarist in platinum selling rock band

Sales at shows
“What puts the money in our pockets
from record sales is concerts.”
- Contemporary chamber ensemble

Interactive service royalties
“Yeah, it’s still small, it’s still not a lot of
revenue but every month it gets better…
or every quarter, whenever we get our
statements, it’s better.”
- Rock band manager

“...the royalties that are collected for
featured artists for digital broadcast by
SoundExchange has become a real
source of income…”
- Jazz publisher

Perceived changes in revenue from sound recordings
Changes in revenue from sound recordings over past five years
Increased Stayed the same Decreased I don't know Decline to answer
45%
39%
50%
58%
26%
33%
24%
30%
28%
20%
31%
20%
33%
14%
34%
17%
11%
49%
4%
5%
4%
11%
11%
2%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Physical sales (N=772)
Sales at shows (N=818)
Digital sales (N=646)
Interactive streaming services (N=362)
services
Digital performance
Digital performance royalties (N=140)
royalties
Synchs (N=312)
Percent of long-path respondents
23% more
report decrease
even split
41% more
report increase
39% more
report increase
31% more
report increase
5% more
report increase
over prior five years, by category
Physical sales
Sales at shows
Digital sales
Synchs

Technology has had a significant
impact – both good and bad – on
the sound recording landscape.
money.futureofmusic.org/sound-recording-income/

Sound recordings are part of a
bigger revenue picture.

Jazz bandleader Chamber music group Professional orchestra member
Live
Performance
77.8%
Grants and
Awards
7.5%
Record Label
Advance
5.0%
Commission
2.6%
Sideman
Record Sales 1.8%
1.7%
PRO Royalties
0.8%
Other
2.8%
Salary:
orchestra
64.8%
Freelance: live
27.3%
Knowledge of
Craft
3.1%
Freelance:
studio
Prize Money 1.9%
1.8%
Recording
Income
0.8%
Radio
Royalties
0.3%
Jazz sideman Indie rock composer/performer Background vocalist
Sideman:
Performance
32.4%
Live Performance
15.0%
Administrator
14.9%
Grant
11.6%
Teaching
CD Sales on
the Road
0.4%
Recording
0.9%
PRO Royalties
Sideman: 10.5%
Performance +
Organizer
8.0%
2.1%
Sideman:
Recording
4.3%
Live
Performance
30.5%
Salary
29.8%
CD Sales on
the Road
12.1%
Publishing
Royalties
9.4%
PRO
Royalties
6.2%
Publishing
Advance
5.6%
Record
Sales
3.5%
TV
Royalties
0.4%
Producer
0.7%
Session
Musician
1.5%
money.futureofmusic.org/case-studies/

Future(s) for musicians.

Data memos and
financial case studies
money.futureofmusic.org/findings/

Kristin Thomson | Future of Music Coalition
@future_of_music
@kristinthomson

Digital revenue streams for sound recordings

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