99 Problems with the Music Industry

March 25, 2015

Alan Willaert  -  AFM Vice President from Canada

I’d like to continue building on last month’s report, and my dissection of the “new business model.” I recently ran across an article by Paul Resnicoff, entitled “99 Problems with the Music Industry,” and while written some months ago, it has an interesting perspective on the current state of affairs. One might argue that some of the points are from an older era, their relevance is still noteworthy. Here are some highlights:

“ … Across the board, artists are experiencing serious problems monetizing their audio releases.”

“Recording revenues have been declining for more than 10 years, and they continue to decline precipitously year-over-year. This has dismantled the label system, once the most reliable form of artist financing.”

“… the evolution of formats keeps pushing the value of the recording downward. Streaming pays less than downloads; downloads paid less than CDs. And the next thing after streaming will probably be even worse.”

“Streaming is rapidly becoming the dominant form of music consumption. It also pays artists the worst of any formats before it.”

“Most consumers now attribute very little value to the recording itself, and most consumption (through YouTube, ad-supported piracy, or BitTorrent) happens at little-to-zero cost to the listener.”

“A massive, decades-long shift towards free (or near-free) music means that entire generations have never paid anything for recordings, and will continue to resist any requirements to pay for music.”

“The leading streaming music companies—YouTube/Google, Spotify, and Soundcloud—are also the most duplicitous and damaging towards artists.”

“Streaming services like Spotify offer very little transparency on their payout structures, which makes it a low-trust partner for artists.”

“… Spotify is suspected of completely misrepresenting its per-stream payout structure, based on discrepancies with extremely low rates publicly published by actual artists …”

“Spotify actually pays the labels, often with huge, multi-million dollar advances and/or equity positions attached. But labels frequently don’t pay their artists, either for legitimate (i.e, the artist is unrecouped) or illegitimate (i.e, they’re screwing the artist) reasons.”

“Google, the most influential company in the music industry, is actively resisting any efforts to reduce piracy across its key platforms, Search and YouTube.”

“The number of people actually paying for streaming services remains relatively low, especially when compared to the broader population of music fans. Part of the problem is that music fans are often extremely reluctant to upgrade from free, ad-supported, or carrier-bundled services.”

“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.”

“The artist has greater and more direct access to fans than ever before in history. Unfortunately, so do millions of other artists.”

“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, until the major shift to Timeline.”

“99.9% of all artists cannot make a living wage off of their music, based on stats gleaned from TuneCore.”

“… 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.”

“Most artists are overwhelmed with tasks that go far beyond making music. That includes everything from Tweeting fans, updating Facebook pages, managing metadata, uploading uploading content, interpreting data, managing Kickstarter campaigns, and figuring out online sales strategies.”

“Musicians are increasingly playing free shows, in the hopes of getting paid work down the line …”

“Vinyl LPs are surging year-over-year, but still represent a tiny fraction of recordings purchased.”

“Traditional record stores have largely imploded, with holdouts like Amoeba now relics of an earlier era.”

“… ‘big box’ retailers are accelerating the downward spiral in CD sales, both by dramatically reducing shelf space and by pushing pricing aggressively downwards …”

“Major labels, once the most reliable form of financing for new and established artists, are now a fraction of their former selves.”

“A large number of legacy artists are now suing their major labels, arguing that downloads should be classified as ‘licenses’ instead of ‘sales’ …”

“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.”

“Very little innovation now comes from inside the industry.  Instead, it is now dictated by nonindustry players like Facebook, YouTube, Twitter, and Instagram.”

“A large percentage of live music fans are frustrated with high ticket prices at concerts, and gouging on in-venue items like beer, all of which means that fans now regard live concerts as a one-off, infrequent ‘event,’ instead of a regular outing. In fact, the average consumer goes to just 1.5 shows a year (per Live Nation Entertainment).”

“Despite rhetoric to the contrary, touring is actually extremely difficult and expensive for most artists. Even for more established artists like Imogen Heap, who stopped touring despite solid crowds.”

“… despite an on-rush of apps and services like Songkick and Bandsintown, attendance at shows hasn’t really increased that much.”

“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.”

“Merch table CDs, once a very solid source of on-the-road revenue for developing bands, has now evaporated.”

“Traditional radio tends to play the same 14 songs in heavy rotation, with mind-numbing regularity and lots of commercials.”

“Songwriters are increasingly getting screwed by digital formats, including 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.”

“A good music education is now a difficult, risky investment.”

“Music fans have access to more music than ever, but are often completely overwhelmed. This often results in less interest in music that isn’t heavily promoted, already established, or somehow ‘viral.’”

“Music conferences are often expensive, both in terms of time and money. There are also too many of them, which is why music conferences frequently repeat the same information, over and over again.”

“Google 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, or worse, delivered in e-mail as part of a Google Alert.”

Here is the website if you wish to access the entire list. www.digitalmusicnews.com/permalink/2014/09/02/music-
industry-99-problems. It’s worth a read.

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