Music News Headlines - Yahoo! News

Sunday, April 21, 2013

The Music Industry Has 99 Problems. And They Are... Thankfully, this isn't one of the music industry's problems (yet).

But these are (sorted by category):

1. Overall recording sales continue to decline, pretty much every year.
2. Digital formats continue to grow, but not enough to overcome broader declines in physical CDs.
3. Vinyl continues to grow, but remains a tiny niche compared to broader album, download and streaming sales.
4. Streaming continues to grow, but potentially at the expense of more lucrative downloads.
5. A-la-carte downloads continue to grow, though the broader impact on CDs has been disastrous.
6. Post-album, labels have failed to establish a lucrative, reliable bundle to monetize their recordings.
7. Most consumers now attribute very little value to the recording itself, and most consumption (through YouTube, ad-supported piracy, or BitTorrent) is at little-to-zero cost.
8. A generally lukewarm and uncertain economic climate only adds to consumer resistance against paying for music.
9. Important artists that were largely developed by major label investment frequently leave the major label system. In the case of Metallica, they continue to enjoy substantial profits after these deals are over. Or, in the case of Amanda Palmer, catapult to much higher success.
10. Other times, artists refuse to deliver new material to their labels, even under contract. Or, they demand a contract renegotiation once successful.
11. Labels, which create and develop the content, often have little control over its subsequent distribution. For example, labels will often pay (in one form or another) for traditional radio play, while radio station conglomerates reap the advertising benefits and pay nothing in recording royalties. They also determine when to add or drop these songs.
12. Traditional record stores have largely imploded, with holdouts like Amoeba now relics of an earlier era. And for the chains that have held on, the picture is grim: HMV, for example, is soiled in bad debt and bait for vulture investors like Apollo Global Management.
13. So-called 'big box' retailers like Walmart often have strikingly-small music collections, often with heavily-discounted discs (ie, $5). This compounds the downward spiral on CDs by lowering availability, even though older demographics are often still receptive to the format.
14. Major labels never quite pivoted, forcing extremely uncomfortable mergers, continued losses, and an aversion to signing risky bands or trends. That includes the recent acquisition of EMI by Universal Music Group, which featured heavy concessions and ultimately, a very questionable valuation.
15. Most artists, understandably, have very little trust in major labels. And oftentimes, outright anger for them. All of which makes it difficult for labels to rally artists around their goals and agendas, or engage in collaborative, experimental, or more flexible deal structures.
16. Oh, and labels frequently forget to pay their artists, thanks to highly-complicated and deliberately-opaque accounting practices.
17. And when they do decide to pay their artists, it's typically in paltry amounts. For example, try 8 cents on a 99-cent download, for starters.
18. And thanks to heavy financial pressures, the creative process at major labels has become increasingly formulaic, overly refined, and often unsatisfying to the artists involved.
19. A large number of legacy artists are now suing their major labels, arguing that downloads should be classified as 'licenses' instead of 'sales'. And, thanks to a monumental victory by F.B.T. Productions, this shift will create a massive financial obligation for labels.
20. Most people who work at major labels have very low job security. Which makes it difficult for them to develop longer-term artist careers, while also making it difficult for the signed artists themselves.
21. Instead of enjoying some theoretical resurgence, indie labels are mostly getting squeezed by devalued and declining recordings, piracy, and far greater leverage from artists themselves.
22. A once-promising shift towards 360-degree models never quite generated enough money for major labels, even though major labels generally insist on broader rights deals with all new artists.

23. The average consumer goes to just 1.5 shows a year (per Live Nation). Songkick's Ian Hogarth pegged that number closer to 1.
24. Ticket prices to superstar shows (ie, the one or two shows that people actually want to attend) often soar into the hundreds of dollars. This is often pumped by an aggressive and/or rigged secondary ticketing market.
25. And, because fans are paying so much for these one or two shows, there's often heightened expectations and demand at these shows. Which means, a lot more pressure for the artists and everyone else involved.
26. And, the secondary ticketing market is often fed before the actual market, thanks to bots, aggressive scalpers, or the artists and ticketing providers themselves.
27. Fans frequently miss shows from their favorite artists, even when these artists roll into their hometowns.
28. But wait: despite an onrush of apps and services like Songkick and Bandsintown, attendance at shows hasn't really increased.
29. And despite rhetoric to the contrary, touring is actually extremely difficult and expensive for most artists. Even for more established artists like Imogen Heap.
30. Meanwhile, service fees continue to outrage fans, even though artist guarantees and advances are often a culprit (but it's complicated...)
31. Classical orchestras and ensembles continue to struggle, thanks to a continuing problem invigorating younger audiences. That has forced lots of smaller-market orchestras to downsize or discontinue, while applying plenty of pressure to bigger-city orchestras as well.
32. Merch table CDs, once a very solid source of on-the-road revenue for developing bands, has now basically evaporated.

33. An extremely high number of music-focused startups fail, even those that aren't reliant upon major label licenses. It's almost a death trap.
34. Oftentimes, specific sectors of the startup space are wildly oversaturated. That includes the artist DIY space, which still has fresh entrants despite numerous overlapping competitors and heavy concentration among leaders like ReverbNation, CD Baby, Bandcamp, and TuneCore.
35. In the case of digital label services, oversaturation and tepid consumer demand for the end product has forced consolidation. That includes the Orchard, which has swallowed competitors like IODA and Iris Distribution. Which has also led to layoffs.
36. Unfortunately, artists seem mostly hesitant when it comes to the purchase of higher-end DIY offerings like analytics packages. Part of that is rooted in tight budgets, though the irony is that artists frequently spend thousands on gear like guitars and amps.
37. Startups that are reliant upon major label licenses typically have trouble establishing a meaningful and sustainable profit level. In fact, that is a continuing concern for one of the most well-financed music startups today, Spotify. Others have crashed-and-burned in tragic ways.
38. Many investors, including David Pakman of Venrock, have decided not to invest at all in music startups based on licensing issues. Others, like Union Square Ventures, have decided to largely avoid financing startups that rely on expensive label licenses.
39. Even the largest music companies (far past startup phase) have difficulty launching in foreign countries. That includes iTunes, Spotify, and VEVO, thanks to a maze of licensing pitfalls and complications. That makes global scaling difficult.
40. The music startup space often falls victim to fantastic bubbles that quickly pop. That includes ad-supported downloads (ie, Spiralfrog), ringtones, anything Long Tail, and full-track OTA downloads (and many things mobile music). In the current environment, it might include tech-based, algorithm-oriented discovery.
41. Even highly-successful startup concepts can enjoy a very short shelf life, thanks to incredibly fickle and distracted audiences. The best example of this recently might be, a company still struggling to regain its peak from the summer of 2011.
42. Acquirers of hot startups often suffer from buyer's remorse, thanks to a gross misread of the value proposition and long-term prospects. CBS' $280 million aquisition of sticks out as one example.

43. The artist has greater and more direct access to fans than ever before in history. Unfortunately, so do millions of other artists.
44. Indeed, the typical music fan is flooded with music, not to mention videos, games, ebooks, and porn, all of which makes it extremely difficult to win and retain the attention of future fans.
45. This also puts pressure on the artist to shorten the release cycle, and pump out content at a quick pace.
46. The artist currently lacks a centralized hub online that is a default for music fans, thanks to the erosion of MySpace Music. Facebook was once viewed as a replacement for MySpace Music, but has since steered heavily towards OpenGraph.
47. Incidentally, Facebook's shift to OpenGraph also caused serious problems for a number of band-focused startups, most notably BandPage and FanRX, among others.
48. 99.9% of all artists cannot make a living wage off of their music, based on stats gleaned from TuneCore.
49. In fact, David Lowery, a top thinker in the space and an artist himself, feels that artists are worse off now than they were in the analog era. And, he points to lower payments, less control, a shift in revenue towards tech companies, and less secure copyright protections to prove his case.
50. Most artists are overwhelmed with tasks that go far beyond making music. That includes everything from Tweeting fans, updating Facebook pages, managing metadata, uploading content, interpreting data, managing Kickstarter campaigns, and figuring out online sales strategies. All of which makes it harder to smoke dope backstage, and enjoy one's groupies.
51. The average musician is underemployed. According to a musician survey conducted by the Future of Music Coalition (FMC) earlier this year, just 42 percent of musicians are working full-time in music. The rest are complementing their music with day jobs that have little or nothing to do with music.
52. Musician salaries are low. Also according to the FMC survey, the average musician makes $34,455 a year from music-specific gigs, with overall incomes (music+non-music) averaging $55,561.
53. Musicians are increasingly playing free shows, in the hopes of getting paid work down the line. According to a recently-released report from the UK-based Musicians' Union, more than 60 percent of artists have played at least one free gig in the last year.
54. The idea that artists can survive off of non-recorded assets and experiences remains speculative (at best). That includes everything from "selling t-shirts" to playing in-person concerts for big bidders. It doesn't seem to be paying the bills.
55. Even monstrously-large video superstars like OK Go can have trouble generating significant revenue (based on their own admission). And, big sponsors like State Farm can only attach themselves to so many videos.
56. Artists live under the constant threat of leaks, especially popular artists. The worst result is often the leak of an unreleased, half-baked recording, an issue recently experienced by both Skrillex and Ryan Leslie. For both, the thefts significantly disrupted their creative processes.

57. Music publishing, once thought to be insulated from digital disruption, continues to experience marked declines from mechanical licensing (based on imploding CD sales).
58. Actually, performance royalties are also getting disrupted as well. Societies like ASCAP and BMI are suddenly facing a huge threat from direct licensing technologies, with mega-publishers like Sony/ATV leading the charge.

59. Traditional radio tends to play the same 14 songs in heavy rotation, with mind-numbing regularity and lots of commercials.
60. And, this repetitive playlist is often cloned throughout the United States, thanks to formatting homogeneity and heavy ownership consolidation.
61. Even worse, a lot of listeners don't seem to mind. Which means very little music actually gets into rotation and discovery becomes harder.
62. Traditional radio doesn't pay for the performance of recordings. And, if they're forced to, they'll probably play fewer songs, or sign more direct deals with labels like Big Machine Records.

Internet Radio.
63. Songwriters are increasingly getting screwed by digital formats, most notably, internet radio. In one disclosure, songwriter Desmond Child reported more than 6 million plays on Pandora for "Livin' On a Prayer," only to receive a check for $110. Ellen Shipley, a songwriter whose biggest hit was "Heaven Is a Place on Earth," received $39 for more than 3.1 million plays.
64. Yet Pandora, the largest internet radio provider, still can't make a consistent profit.
65. Which is why Pandora's stock is in the crapper.
66. But that hasn't stopped Pandora executives like Tim Westergren from cashing in tens of millions in stock. Which compounds problems #65 and #70.
67. Oh by the way, almost every other music stock is also in the crapper (including traditional radio stocks).
68. And, Pandora still can't effectively license in most countries outside of the US. Most notably, that includes the UK (though the company recently found a way to enter Australia and New Zealand).
69. But this isn't just Pandora's problem. Others, most notably, have been severely curtailing their internet radio services based on licensing costs.
70. All of which is why in the US, Pandora is asking Congress to lower the royalties it pays to labels (via SoundExchange). But artists already feel like they're getting screwed, which is why they now hate Pandora.
71. And, the royalties that are being paid to SoundExchange often end up in massive, unpaid piles. That is, hundreds-of-millions-large piles of unpaid collections. Which of course, SoundExchange doesn't like to talk about but collects interest on.

72. Streaming services like Spotify offer very little transparency on their payout structures, which makes it a low-trust partner for artists.
73. Indies and smaller artists also complain that their rates are lower than bigger, major labels. Some have pointed to different tiers of compensation, though few have a concrete idea on exactly how payouts are structured.
74. Payouts to artists are not only hard to figure out, they are almost universally low. Which is why artists like Rihanna and Taylor Swift have opted not to license Spotify. And why Taylor Swift's label, Big Machine Records, has indicated that no future, frontline releases will be licensed to Spotify.
75. Spotify actually pays the labels, often with huge, multi-million dollar advances attached. But labels frequently don't pay their artists, either for legitimate (ie, the artist is unrecouped) or illegitimate (ie, they're screwing the artist) reasons.
76. The number of people actually paying for streaming services remains quite low, at least compared to the broader population of music fans. That could change, though YouTube remains a massively huge, and free, competitor. In fact, YouTube listening volumes absolutely eclipse those of Spotify.
77. Downloads remain a more lucrative purchase for artists (and labels), despite rhetoric indicating otherwise. Sorry, most fans aren't streaming songs thousands of times, even on their favorite tracks.
78. The priorities of streaming services like Spotify skew towards acquisitions, IPOs, and other liquidation events, not towards the interests of content holders and artists. And if you doubt that, just ask Goldman Sachs (a $50 million Spotify investor). Which means artist payout issues may improve somewhat, but probably not dramatically.

79. The DMCA, once considered a reasonable method for flagging and removing infringing content while protecting online companies from liability, has now become an unmanageable and dysfunctional process for most content owners.
80. Even worse, the DMCA has become a highly-profitable, aggressive, and artist-unfriendly loophole for companies like Grooveshark.
81. Even Google, perhaps the greatest beneficiary of the DMCA, is now complaining. The search giant is now getting flooded by nearly 3.5 million takedown notices a week, causing Google legal director Fred Von Lohmann to oddly question its fairness.
82. Yet Google also remains a huge part of the problem. Searching for torrents and pirated material is not only easy, it's frequently auto-completed for the user in Google's searchbox.
82. The RIAA, a group with only limited success fighting piracy and more powerful tech, radio, and other lobbies, remains a questionable luxury for labels. In fact, top RIAA executives like CEO Cary Sherman are still somehow pulling multi-million dollar salaries from their major label constituents, despite questionable effectiveness.
84. The RIAA has also burned endless amounts of money chasing defendants like Jammie Thomas, who is challenging a recent fine of $222,000 for downloading 24 songs to the Supreme Court. That case is now more than 7 years old, with a near-zero impact on file-sharing and piracy levels.
85. Enter iTunes Match, which is offering to upload user collections for a modest yearly fee. That sounds great, except one concern is that Apple is effectively validating and granting amnesty on massive collections of illegally-downloaded music.

Music Conferences
86. Music conferences are often expensive, both in terms of time and money.
87. There are also too many of them. Which is why music conferences frequently repeat the same information, over and over again.
88. Music conferences are sometimes held in far away, difficult-to-reach places, and last for days. Which also means that music conferences can be giant distractions from work that needs to get done back at your office.

89. Headphones are great, and the world has progressed past the white earbud. The only problem is that lots of users are blasting them non-stop, with little regard for near-certain ear damage ahead. Which is why numerous reports continue to ring the alarm on future hearing loss.

The Environment
90. One thought is that digital formats and cloud-based access is an environmentally-friendly step forward for the music industry. But some environmentalists theorize that the digital transition may actually be more damaging to our Earth. Part of the reason is that cloud-hosting requires massive server facilities while comsuming massive amounts of energy and pumping out lots of waste.
91. On top of that, digital formats only coexist alongside physical devices like iPads, iPhones, laptops, and sophisiticated headphones, all of which gets thrown away and replaced after a few years (or shorter).
92. Other, more traditional music assets, like vinyl, t-shirts and merchandise, are also damaging to the environment yet a major revenue focus for artists and labels.

93. Conservatories and music schools like Berklee charge exorbitant amounts for their programs, though post-graduation job and income prospects are generally dim. Indeed, the cost of attending Berklee College of Music for one year is $62,319, according to the school, which is actually on-par with institutions like Julliard and Oberlin.

General Disruption & Misguided Thinking
94. Most of the innovations upsetting the music industry are coming from the outside, typically from Silicon Valley. That includes everything from Twitter to Facebook to apps to the MP3, with the industry typically scrambling to adapt or otherwise keep up.
95. The Long Tail may have minted Chris Anderson a lot of speaking fees, but it never quite panned out in reality. Instead, rankings like the Ultimate Chart are clogged with heavily-promoted, mainstream acts like Katy Perry and Pitbull. And, that goes for top rankings across platforms like iTunes, YouTube, and Spotify, as well.
96. The concept that great music naturally finds its audience seems elegant in theory, but is ultimately unrealistic. Buried gems remain in the digital era, while the most successful artists still seem to be those with the best backing, team, or combination thereof.

97. Established music companies often overpay their executives by a wild margin, despite massive and ongoing losses. That may have the effect of skewing the executive focus towards personal enrichment, while sending red flags to investors. Glaring examples of this include Warner Music Group, Live Nation, and Pandora, among others. The RIAA also suffers from this convoluted compensation problem.
98. Facebook Likes are often useless to artists.
99. Very few music companies actually make a solid, consistent profit

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