By NationWide SourceEstimated reading time: 5 minutes
Sounds like a dream world, right? A magical place where artists would get fairly compensated for their creations.
Almost everyone in the music industry will admit that the current way that streaming music is set up is unsustainable for artists, labels (both major and independent), and even for the streaming services themselves (Spotify has yet to make a profit).
Despite these flaws, streaming music has become the normal way we consume music.
There is no perfect fix for streaming but Sharkey Laguana, a musician and entrepreneur, is trying to start a royalty revolution. We recently read a blog he posted about a protest called Silent September, and we think he’s on to something great.
But before we look at how to change streaming royalties, we have to understand how they are currently paid.
The Big Pool vs. Subscriber Share
Currently, streaming royalties are given to rights holders based on their percentage of all the plays on a service. This means that even if you never listen to Justin Bieber, he is still getting a hefty percentage of the total royalties a streaming service makes because he pulls in more listeners than your average independent musician.
This is the Big Pool system. It works great if you are an artist on a major record label who is getting millions of plays.
It doesn’t work so well for indie artists. You might have a good-sized fan base who listens to your music on streaming services, but if you’re not getting a half million plays, you aren’t significantly affecting the Big Pool percentages.This is why streaming income for independent artists is so low.
This is where subscriber share comes in. Subscriber share simply means that royalty payments are based on how much each individual user listens to a particular artist. Though not currently used by most streaming services, it has the potential to more fairly distribute income across the music industry.
Spotify takes 70% of its profits and pays them out as royalties for artists. This means that if you are a premium subscriber at $10 per month, $7 out of the $10 you give to Spotify are going to musicians.This is not a bad or unfair percentage. The problem with streaming royalties comes from the ways these payments are given out in the current Big Pool system.
For example, in the Big Pool system,if I am a premium subscriber and never once listen to Nicki Minaj, she is still getting a hefty percentage of the money I pay to Spotify because she makes up a large percentage of plays on Spotify.
However, if streaming services moved to subscriber share, and I listened to Odeza 15% of the time and Nicki 0% of the time, Odeza gets $1.05 out of my $7, and Nicki Minaj gets none.
Of course,this doesn’t mean that major artists won’t get paid. They will still get the money from the millions of plays they are currently getting. If Nicki makes up 35% of what another premium user listens to, she will get $2.45 out of the total $7.
What subscriber share means is that all artists get compensated fairly for their music. In the subscriber share system, when a music fan consistently listens to an indie artist they love, that artist will get paid fairly for the amount of time users are spending listening to their music.
Spotify loses no money in this system, major labels don’t lose, and indies don’t lose.
Time for Streaming to Make The Switch
The main problem is implementation. Spotify is not going to completely overhaul their entire system if they don’t have a reason to. This is where Silent September comes in.
Spotify needs a push from major players in order to switch their infrastructure. (We’re looking at you, Taylor!) This means that the 3 major labels need to be on board. This means that independent musicians need to shake up the majors and get them to pay attention.
We need to shift the percentages.
The best way to shift the Big Pool percentages is to listen to truly independent artists on whatever platform you normally listen on. But it’s going to take a lot of plays.
So when you aren’t actively listening to music, simply turn down the volume, but keep the music playing (this is where the “silent” in Silent September comes from).
If enough people are playing independent artists in the background, we can shift the percentages and make the majors take notice.
This September is a great time for this protest, because the 3 major labels’ contracts with Spotify expire in October of 2015. If we can make them take notice before they re-sign contracts, we can help be the catalyst for change.
Silent September is a simple way to help make a difference in the lives–and the wallets–of independent musicians.
The originator of Silent September, Sharkey Laguana, wrote a more in-depth article on Silent September, and exactly how streaming royalties work, which you can read here.If you have a few more questions, check out the FAQ here.
If you would like to participate in Silent September with us, we have created a playlist of completely independent musicians in our local area who deserve your support. We will be adding playlists regularly of great independent music, so be sure to subscribe to our Spotify account and follow us on Twitter to stay updated!
If you are an independent musician and would like to be featured on our playlist, you can tweet at us, or comment below!
By NationWide SourceEstimated reading time: 6 minutes
When it comes to digitally distributing your music, there are options galore. From the heavyweights like CD Baby and The Orchard, to smaller companies like Mondotunes, you have options, and can pick the distribution company that is exactly right for you.
In this article we are going to take a look at ONErpm. ONEprm is a digital distribution service based in Brooklyn, NY, with offices in Brazil, and a new office opening in Nashville. They are an iTunes preferred partner, as well as one of the largest multi-channel networks on YouTube. They have quite a few options for independent musicians and labels that distribute through them, and we’re going to give you the run down of their most notable features. Lets look at what your options are if you choose ONEprm as your digital distributor.
ONEprm has 2 main pricing options. But a great feature of ONErpm is their free distribution service.
Premium Package-a one time fee of $40 per album, or $15 per single. With the Premium Package, they also take a 15% cut of royalties.
Arena Package– an annual fee of $30 per album, or $15 per single. You get to keep 100% of your royalties (besides Youtube, but we’ll get into that later).
Free Option– ONErpm also has a free distribution tier. This option will distribute your music to Spotify, Rdio, Deezer and more. If you choose the free option, you can still opt-in to other stores, you just have to pay a small fee per store. Adding an album to iTunes is only $5, and since ONErpm is a preferred partner, your music could go live in less than 48 hours. This is a really cool option for a single that you only want to release in limited formats, or if you are using streaming services as a marketing tool instead of a distributor.
All major retailers are included in ONErpm’s digital distribution, although you will have to pay extra for ringtone stores and services like Shazam.
ONErpm’s services will cover all your basic digital distribution needs, but ONErpm stands out with a few features that aren’t offered on other digital distribution platforms.
One of the major advantages of digitally distributing with ONErpm is their relationship with YouTube. Right now, YouTube is the number one music streaming service in the world, and their music infrastructure is only set to grow. ONErpm is a YouTube certified company, and they have one of the largest multi-channel networks in the world. A multi-channel network, or MCN, is simply a company that works with channel owners to effectively monetize their channel, provide digital rights management, funding, and audience management.
When you distribute your music through ONErpm, you have the option to distribute to YouTube. This doesn’t mean that your music automatically get uploaded onto a YouTube channel, it simply means that ONErpm enters your music into YouTube’s ContentID. When your music is identified in YouTube’s system, you can manage how your music is being used. This means that when people use your songs in their videos, or even re-upload a video that you created, you can locate those videos, and either issue a take-down notice, or file a claim to receive revenue on that video.
ONErpm’s unique connection to YouTube can also help you get extra revenue from your own videos, since ONErpm works directly with advertisers to negotiate a higher ad rate for their channels. They will also help you optimize your YouTube channel for monetization.
Being a part of ONErpm’s MCN is free and open to any YouTube creator, even if you aren’t a musician, or don’t choose to distribute your music through ONErpm. A nice bonus if you live in the NYC area is that ONErpm has a video production studio that you have free access to as a member of their MCN.
A downside to ONErpm’s YouTube services is that ONErpm takes a 30% cut of all revenue generated from YouTube. However, it may be worth it to let ONErpm handle your YouTube revenue if the money you gain from their higher ad prices equals out the 30% you pay them for managing your account.
If YouTube is an important part of your music, and you’re interested in joining an MCN, ONErpm might be the best distributing option for you. Neither Tunecore or CD Baby offer YouTube ContentID tracking, and they don’t have an MCN.
ONErpm also has several marketing options for artists. Their basic package includes social media management, verified profiles on streaming services, and email marketing. You can also upgrade to their specialized marketing services.
Much like CD Baby, fans can also go directly to your profile on ONErpm’s website and download music there. ONErpm has several pricing tiers, and lets you choose which one best fits you. In addition to setting your own prices for your downloads, you have the option to give away a free download in exchange for an email address. You can then download those emails and export them into whatever program you use to send email newsletters.
ONErpm also provides a free Facebook app that lets fans download music directly from your Facebook page. You can use this app to sell singles, full albums, or give away a download in exchange for an email. You can make this app the landing page for your band’s Facebook profile, and use “fan-gating” to ask users to like your page before they have the option to download your music.
ONErpm also gives you analytics, and monthly sales reports. You get paid through Paypal, and can withdraw funds whenever you like.
ONErpm’s digital distribution has some great benefits, and they offer a great deal of flexibility to artists in terms of services and price points. This personalization helps makes them a good choice for indie artists.
ONErpm might be the right distributor for you if:
You are interested in flexible pricing options, or free distribution to streaming services
You would like to sell your music directly on Facebook
You are interested in joining a YouTube MCN, and want someone to help you monetize your YouTube account.
You want your distributor to give you marketing support.
As you are looking for a digital distributor, keep your individual needs in mind. With so many companies offering similar services, make sure you find the company that best fits your needs as an artist.
Have you used ONErpm? What was your experience? Let us know in the comments below!
By NationWide SourceEstimated reading time: 10 minutes
How charitable are you feeling?
You see, neither Spotify nor Pandora is making any money, and they could really use a little bit of yours. So, if you are feeling charitable and believe in their cause, sign right up, and let the giving begin!
If you heard the real numbers, though, you might change your mind about that donation. They’re quite staggering. Pandora’s stock price has tripled in the last 12 months, and they have a stock market valuation of over $7 billion dollars. At the same time, they have yet to create a profit. Spotify has not yet gone public, but it is anticipated to do so in the near future. Initial estimates put Spotify’s valuation at close to $10 billion dollars.
Don’t feel sorry for them, though. This is the new model for becoming a Wall Street darling. In effect, both of these companies have created a business model that offers a great product to music fans but fails to charge those fans a reasonable amount for the experience. Therefore, the companies lose money. Then, they use their losses as an excuse to pay musicians virtually nothing for their music. By the way, the best music streaming interface in the world is useless if it has no music to play.
These companies might feel that they cannot get fans to pay a fair amount for streaming music—probably a correct assumption, by the way—so instead they offer it for free and let the musician pay for it, not the listener. Sound crazy? Some people would argue that the listener pays by listening to commercials, or by paying a fee to hear commercial-free music. But, if you examine the pitiful payout that musicians receive, it will become clear who is footing the bill.
Somewhere along the way, the indie music community bought into the idea that streaming music is a good thing. After all, can’t a person listen to traditional (terrestrial) radio for free? How could streaming be any different? The answers are both subtle and significant.
Traditional Radio vs. Streaming
In the past, when we heard music on traditional radio and really liked it, off to the music store we would go. Why? We wanted control over our listening. A listener has no control whatsoever of what plays on traditional radio. The most they can do is change the station. Purchasing the music allowed us to control how often we were able to listen to it.
Streaming changed this. With streaming, there is no reason to purchase the music. On Pandora, users have substantial control because they can use the tools that Pandora provides to tailor the station to fit their taste. With Spotify, the listener has complete control. Play what you want, how you want it, when you want it, and as often or little as you like. This is nothing like traditional radio.
What’s worse is that traditional radio stations are jumping on the streaming bandwagon, just like everyone else. Platforms like iHeartRadio have the potential to be just as damaging to musicians as any other music streaming services. Don’t get us wrong; we are in favor of listening to traditional radio stations online; however, we are not in favor of traditional radio stations streaming music self-crafted to anyone’s personal listening preferences.
Worse still is this: Pandora is making the case with Congress to lower payments to musicians. Pandora says they cannot compete with terrestrial radio because radio pays a lower royalty. In fact, Pandora is asking for legislation that lowers their payments by 50% or more. This is ridiculous! Traditional radio and music streaming are two entirely different things.
Let’s call streaming music what it really is: a financial failure. Generally, when a business model fails because it is not financially viable, the business closes and declares bankruptcy. The only way that streaming music survives is if someone picks up the financial shortfall; right now, that someone is the musician.
What Does This Mean To You As A Musician?
A streaming music company’s success is realized at the expense of the musicians who unwittingly contribute to the corporate craziness with their music and receive very little in return. As a musician, the best move you can make is to put money in the stock market and invest in Pandora stock (Spotify, too, when it’s available). You should not contribute your unique sound to their portfolio of music.
Let us tell you why: if companies like Pandora and Spotify continue to make it big, you will not receive any of the benefits, and they will ruin the music business. Sure, they offer to expose you to large numbers of people who will listen to your music. But at what cost?
Some musicians believe using these companies results in additional sales of their music along with increased exposure, which is ultimately good for their careers. We believe this to be far from the truth. Our own experiences seem to demonstrate the complete opposite of these claims.
Confessions Of A Streaming Junkie
When we play music on Pandora, we enjoy the experience. Their technology does a nice job of playing music that we like, and it comes up with new artists that we have never heard of before. We have no control over who plays next, but we can select an artist or song that we want Pandora to consider when choosing what music to play. It also allows us to skip a song, hit thumbs up, hit thumbs down, etc. The software learns more about what we like and makes adjustments to better fit our listening style. All good, so far. (Good for users, that is).
This is what makes Pandora so compelling. Free music that is tailored to our listening tastes is much better than a traditional radio station! In fact, if we are willing to invest just $0.10 per day (that’s 10 cents), we can get the music without any commercials. Wow, what a deal!
Spotify is a little different. It offers more overall functionality through its apps, artist radio, library function, messaging, etc. The biggest difference for users is that they can create playlists and choose exactly what they want to listen to. Spotify will also make artist recommendations, but not in the same way as Pandora. Spotify offers a free service for a limited time but you can pay just $0.334 per day (that’s 33.4 cents) to get full access without commercials. Some people we know, in an effort to avoid paying anything, keep signing up for the 30-day free trial after the initial trial period expires by using a new email address. Spotify also lets paying users download playlists to listen to offline.
Truthfully, both services are great for the listener, and that is what makes them so popular. Several other streaming services are also available that offer similar features. Every one of them is focused on the listener experience, and most do an acceptable job. This is where the problems begin for musicians. Fans love these products for what they offer: your music the way they want it. Most importantly, it’s free (or almost free) and it enhances the listener experience.
Since we began using streaming services, our purchases of music have dropped considerably. In fact, we no longer open iTunes to listen to our library of music. There is no need. Why would we do that when we can access everything we want on a streaming player? Plus, the players offer features that iTunes does not. (While we might be unique, our conversations with others suggest that we aren’t the exception.)
The Tale Of The Tape
An artist friend of ours recently showed us her statement of income from digital streaming services. Over the past 12 months, she had a total of 14,932 streaming downloads and was paid $71.02. This is an average of $0.004756 per stream.
During the same period, she sold 2,200 CDs at her gigs. The income from the CD sales was $20,300.00. It is only fair to note that she had to pay something for the CDs to be manufactured, but that cost was only $2,046.00, making her net income from the CD sales $18,254.00.
In addition to the sales of physical CDs at gigs, our friend did have some sales from digital downloads of music on iTunes. iTunes is her only way to sell digital downloads; because she mentions it frequently at her shows, she believes that most of her sales on iTunes come from people who attend her shows. For the same period that we mentioned above, her album sales on iTunes were 113 albums for a total of $668.57.
Let’s run those numbers. She made 257 times more money selling CDs at her gigs than she did with streaming her music. That’s impressive… or, it might be more appropriate to say that the streaming income was dismal. Either way, she would not have survived without the physical CD sales at gigs. (She also made money on other merchandise sales and a fee from doing the gig, but we are not including that income in our example.) She could have gone to the gigs and not sold any product, but who would choose to do that?
You might make the argument that she had to gig to sell physical CDs, whereas with streaming services you don’t have to do anything other than sign up, and you would be mostly correct, but…
We want you to consider one thing: the expense to create quality music is significant. Even if you do not place a value on the time it takes to write music, write lyrics, practice, etc., the production costs are still high. (Just for the record: we think you should consider all time and effort necessary to produce your music. Even if you don’t write yourself a check for your time, it doesn’t mean it’s free.)
It would be fair to say that a solo indie artist could easily spend $3,000 to $5,000—excluding the cost of CDs or paying other artists—to produce one album, if they stayed on a tight, tight budget. How do the numbers work? Let’s suppose you spend $3,000 to produce your album and then posted it with several music streaming companies. If you used our artist friend as a test case, it would take 40+ years just to recoup your initial investment. Even if you are an incredible success and experience 10 times as much play as she did, it would still take more than 4 years to get your investment back. That’s 630,782 streaming plays just to break even. Of course, you haven’t made any money yet.
So, What Can Artists Do?
Clearly, streaming music complicates things, and it’s not the best business plan for an independent musician to adopt. If you feel that streaming is a necessary part of your music marketing plan, then try posting just a single song or a small sampling of your work. Hopefully, this will help you gain exposure with a larger audience, who will then purchase your music.
Is the future of the indie music business bleak? Absolutely not. There is a great deal more to it than streaming downloads. The future holds great promise, and as an artist you have to be prepared to grab it. For indie artists, the biggest challenge remains the same: how do you, as an independent artist, build a sustainable career?
We’ll continue addressing that question in future articles.