1. ch.ch.ch.ch.Changes
How technology-driven changes have impacted musicians
Kristin Thomson, Future of Music Coalition @kristinthomson

2. 3 obvious and
7 not-so-obvious things
that have changed recently
for working musicians.

3. 1. Vast increase in
number of platforms to
share, distribute, license
or sell music.

4. Physical retail Radio
Record shops
Big box retailers
Indie shops
Commercial radio
NPR
College radio
Direct sales
Mailorder
Record clubs
Sales at shows
Prior to 1998

5. Physical retail Radio
Record shops
Big box retailers
Indie shops
Commercial radio
NPR
College radio
Direct sales
Mailorder
Record clubs
Sales at shows
+ + +
Digital retail Webcasters/satellite
Direct sales

6. + + +
Online audio Interactive streaming
Online video

7. 1. Vast increase in number of platforms
+
Positive
!
More options for consumers/music listeners
More efficient delivery
Music is way more accessible

8. 1. Vast increase in number of platforms
_
Negative
!
For listeners, “the paradox of choice”
Dispersion of fans/consumers
Have to be present on multiple platforms
The “unbundling” of music (more about that later)

9. 2. Musicians’ greatly
improved access to
the music marketplace.

10. Prior to 1998
Retail Radio
Limited by shelf space
Controlled by big
distributors and retailers
Major labels a priority
Tightly controlled playlists
Payola
Major label dominated

11. 2. Greatly improved access to marketplace.
CD Baby: $49 per album TuneCore: $30 year 1/$50 each
following year
91% of revenues back to artist 100% of revenues back to artist

12. 2. Greatly improved access to marketplace.
Other “free” or low cost platforms and tools
!
YouTube
Soundcloud
!
Pandora
Sirius XM
!
!
!
!
Websites/blogs
Bandcamp
!
Facebook
Twitter
Instagram

13. 2. Greatly improved access to marketplace.
Positive
!
No barriers to entry!
Easy, affordable access to digital stores and platforms
Drastically reduced overhead costs
No need for distribution deal
Direct access to fans
!
+

14. 2. Greatly improved access to marketplace.
“It’s not a novel observation on my part, but
technology has leveled the field of distribution to a
great degree.”
!
– jazz manager interviewee
!
!

15. 2. Greatly improved access to marketplace.
_
Negative
!
No barriers to entry!
Way more “noisy”
More competition for consumers’ attention/wallet share
Competing with the entire history of recorded music
For composers, significant drop in what they can charge

16. 3. Increased number of music-related
revenue streams.

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

18. Composition income Sound recording income
Mechanical royalties
Public performance royalties
Synch licenses
Jingle writing/composing for hire/
commissions
Physical retail sales
Physical mailorder
Selling music at shows
Master use synchs
Digital retail sales
Digital performance royalties
Interactive stream payments
YouTube partner program
Cloud storage payments
AARC royalties
+
+
Streaming mechanical royalties
Mechanicals for cloud storage
Lyric display royalties
YouTube partner program

19. 42 Revenue Streams
money.futureofmusic.org

20. Revenue Streams:
Existing, Expanded
and New
money.futureofmusic.org

21. 3. More revenue streams
Positive
!
More opportunities to make money from your
compositions, recordings, brand.
Shift from one-time purchases to license-based
payments for each listen.
Development of entirely new revenue streams.
!
+

23. 3. More revenue streams
_
Negative
!
Atomization of former income streams.
Many new streams are fractions of pennies.
Lengthening of payback period.
Discovery and payment increasingly dependent on
proper metadata and attribution.
!

24. 4. Disruption of conventional
music business models, and
7 related results.

25. 4. The unbundling of music
(Re)creation of the singles market. Great for consumers,
and a key factor in success of iTunes store model but...
> Significant drop in revenue from retail sales
> Significant drop in mechanical royalties to composers
> Reported drop in label support for artists
!

26. 4. The unbundling of music: decreased retail sales
“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 interviewee

27. 4. The unbundling of music: decreased retail sales
“Mechanical royalties have just been decimated; the
statement that was 20 pages long and involved six figures
has turned into this statement that’s 100 pages long and
doesn’t even make five figures. It’s probably, I’d say, at least
a 75% decline in mechanical royalties…”
!
– Nashville Songwriter interviewee

28. 4. The unbundling of music
50%
23%
22%
Self-identified songwriters/composers: 4%
Over the past five years, have the
mechanical royalties for the reproduction
of your songs/compositions increased,
stayed the same or decreased?
!
Money from Music survey. N=1062
Half of songwriters/composers say
mechanical royalties have decreased.

29. 5. Direct support from fans possible...and necessary
No label support, lower revenues overall means artists are
asking their fans to:
> pre-purchase albums
> support tours
> buy premium offerings
Great for many musicians, but does add to workload.
!

30. 6. Increased corporate presence
42%
35%
9%
14%
Self-identified recording artists with a
relationship to an indie or major label:
Thinking back over the past five years,
has your financial support from your
label(s) increased, stayed the same or
decreased?
!
Money from Music survey. N=381
42% of signed artists say that
label support has decreased.

31. 6. Increased corporate presence
Reported drop in label support for artists means
musicians looking to other sources for support.
> tour sponsorships
> product endorsements
> sync license deals
!

32. 6. Increased corporate presence
“[...] it definitely seems that people in general are bummed
that record sales are so shitty and while I would love to get
paid more for records I, long ago, gave up chasing that
particular ghost and have looked for money elsewhere.”
!
– Damian Kulash, rock band guitarist and singer
!

33. 7. More shows, and higher expectations
Drop in “traditional” revenue streams and tour support
means that bands are more dependent that ever on
income from live performance.
> more shows
> more attention (and money) paid to stagecraft
!
!

34. 7. More shows, and higher expectations
“Do I think that touring has become significantly more
expensive? Yes. I think the bar has been raised for
production…I think it’s required now and because of that it
costs more to do that.”
!
– hip hop business manager
!

35. 8. It’s way easier to get paid
+
Digital sales are very well documented.
No more dealing with distributors, hassling
phone calls, getting stiffed on payments.
!
!

36. 9. Market segmentation for the win
+
Platforms like Bandcamp make it possible to:
> use variable pricing
> bundle physical and digital goods together
> sell directly to fans
!
!
!

40. 9. Market segmentation for the win
“We have our own download card system in place.
I, for one, definitely use that when I’m playing out,
particularly with the vinyl. There’s a download card taped to
the back of each record, and I try to do the same with
t-shirts as well.”
!
– Tom, indie label owner and performer

41. 10. Musicians can control more of their career
+
Prior to 1998: if you aspired to be on commercial radio, in
big retail chains, playing big shows, you needed to sign
with a major label and relinquish your copyrights.
!
Now: artists can more easily retain control of copyrights
and doing licensing deals, hire consultants for expertise.
!

42. {
Thinking back over the past five years, how have emerging
technologies and the internet affected your musical career? Strongly agree/Agree Neutral Disagree/Strongly disagree Not applicable
I can communicate
I can communicate with my fans directly
66.3
11.6
1.2
20.9
with my fans directly
It’s more competitive!
It's more competitive than ever
63.9
18.9
4.6
12.7
than ever
I can manage my !
I can manage my career myself
55.7
23.7
8.0
12.6
career myself
I can I collaborate can collaboratewith other creators
!
53.5
21.8
2.7
22.1
with other creators
My day-to-day work!
My day-to-day work is more about promotion than creation
36.8
24.1
18.4
20.7
is more about promotion!
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
N = 4617 Data from Artist Revenue Streams
February 2012. money.futureofmusic.org
5 with!
greatest agreement

43. 10. Musicians can control more of their career
!
“There’s enormous structural differences from the day-to-day
blue-collar existence of the musician in terms of how
you organize a tour.”
– indie rock composer, performer, sideman
!

44. Recent changes are a double-edged sword
+
Empowered music creators.
Created efficiencies.
Greater access to the music marketplace.
Direct connection to fans.
Possible to retain control of rights, and self-manage
career.
!

45. Recent changes are a double-edged sword
_
Atomized income streams.
Support structures are changing.
More competitive than ever.
Created new work and additional responsibilities for
musicians, whether it’s managing an online presence or
self-releasing your music digitally.
!

46. The
answer
Jenny

47. The
answer
Jenny
There
is
no
single
solution
to
the
challenges
facing
musicians
and
songwriters.

48. Be everywhere.

51. Leverage the internet to
offer different prices and bundles.

53. Play favorites.

55. Re-assert exclusivity.

57. Super-serve your fans.

60. Maintain control.

63. Measuring the impact of these changes.

65. FMC resources
Artist Revenue Streams Research
money.futureofmusic.org
42 Revenue Streams
Revenue Streams:
Existing, Expanded New
money.futureofmusic.org/40-revenue-streams/ money.futureofmusic.org/revenue-streams-existing-
expanded-new/

66. FMC resources
Music and How the
Money Flows infographic
HOW THE MONEY
FLOWS BACK TO
songwriters, artists,
publishers & labels
How are musicians and songwriters compensated when
their music is played on the radio, sold on digital platforms,
broadcast radio terrestrial broadcast of any AM or FM station
webcast, or streamed on interactive services?
C PROs ASCAP, BMI, SESAC
songwriter
publisher
performance of composition
In the US, terrestrial broadcasters
do not pay performers or
sound recording copyright owners
performance of sound recording
performance of composition
For digital stores and on-demand streams,
* At the end of 2012, Universal Music
Publishing Group and Sony/ATV-EMI
pulled their digital rights from ASCAP
and BMI, seeking to get a higher rate
by negotiating directly with webcasters.
how the money flows depends on what entity negotiated the license.
For record labels that have a direct deal with services:
digital sale
iTunes • Amazon
Google Play • eMusic
SR record label
publisher songwriter
mechanical reproduction of composition
artist/band*
sale of sound recording
9.1¢
/track
10-50%
* Rate of payment from label to artist/band
depends on terms of contract, and whether
digital sale is classified as a sale or a license.
0.5% Sound Recording
Special Payments Fund #
musicians
# Labels contribute a small percent of
sound recording sales income. If
recording was made under the AFM’s
recording agreement, payments are
disbursed to musicians who were paid
scale wages during the recording session.
C PROs ASCAP, BMI, SESAC
futureofmusic.C UMPG and Sony ATV-EMI* org/moneyflow
* At the end of 2012, Universal Music
For record labels that are represented by a digital aggregator/distributor:
SR aggregator
mechanical reproduction of composition
artist/band*
sale of sound recording
publisher songwriter
IODA/The Orchard
record label
9.1¢
/track
@50%
85%
AFM & SAG-AFTRA Fund
webcast
or digital performance
Pandora • Sirius XM • NPR streaming
any webcast stations
C PROs ASCAP, BMI, SESAC*
SR SoundExchange
songwriter
publisher
record label
performer(s)
50%
45%
5%
performance of composition
digital performance of sound recording background singers
and musicians
UMPG and Sony ATV-EMI* UMPG and Sony ATV-EMI
C songwriters
songwriter
songwriter
on-demand
stream
Spotify • Rdio • Rhapsody
SR record label
artist/band*
streaming mechanical royalty
licensed use of sound recording 10-50%
10.5%
minus payment
to PROs
publisher
performance of composition
publishers
Publishing Group and Sony/ATV-EMI
pulled their digital rights from ASCAP
and BMI, seeking to get a higher rate
by negotiating directly with services.
UMPG and Sony ATV-EMI
songwriters
PROs ASCAP, BMI, SESAC
songwriter
publisher
on-demand
C
* Rate of payment from label to
artist/band depends on terms of
contract, and whether digital sale
is classified as a sale or a license.
* Rate of payment from label to
artist/band depends on terms of
contract, and whether digital sale
is classified as a sale or a license.
performance of composition
big labels
indie labels
For radio and radio-like services,
blanket licenses determine who gets paid, and how much.
digital sale
iTunes • Amazon
Google Play • eMusic
New Business Models
Digital Distribution and
how to participate
futureofmusic.org/nbm futureofmusic.org/dd

67. Kristin Thomson | Future of Music Coalition
@future_of_music
@kristinthomson
slides posted at money.futureofmusic.org/contentcamp