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Music Business News, October 25, 2017

Major labels said they are paying $1.2 billion per year to indie labels and artists. Also, Billboard announced greater chart weighting for streaming platforms. And Pioneer released new technology to distribute artist royalties for music used in electronic sets.

 

Major Labels Paying Out to Indie Labels and Artists

 

The latest WINTEL report from the Worldwide Independent Network (WIN) showed that approximately $1.2 billion was given to indie labels and artists by major labels and major-label-owned music distributors in 2016.

 

Music Business Worldwide (MBW) reported that the report was compiled by researcher Mark Mulligan (MIDiA Research) and Dave Roberts (MBW). Tension has been building between majors and indies in the digital age, with concerns mounting that independent labels and their artists are not paid appropriately or significantly for their work.

 

When Universal, Sony or Warner signs a distribution agreement with an independent label or artists, the majors are the first to collect money after a payout, taking their cut before passing on money to indie partners.

 

A major question that has arisen in the streaming age is, when Spotify, Apple or any other platform is working out terms of a deal, “how should they analyze the global power of the music copyright market?” Should they base it on distribution revenue (putting the distributed label share in with the majors) or by copyright ownership (putting the distributed label revenue with independent labels and artists)?

 

The WIN report indicated that the “market standard” should be the second, and that $1.2 billion in annual revenue is being attributed to the major label sector “behind closed doors.”

 

Companies like Big Machine, Concord Music and Disney Music Group have distribution agreements in place with Universal Music Group and should be earning eight-or-nine-figure revenue from music every year. Sony Music/RED and Warner Music Group/ADA should follow suit.

 

Mulligan’s figures suggest that, when it comes to copyright ownership, the indie sector had a 38.4-percent market share in 2016, up approximately one percent from 2015. That means indie labels and artists raked in $6.0 billion, up almost 7 percent from the previous year.

 

$2.1 billion of last year’s indie revenues came from streaming, which was up 80.4-percent from the $1.2 billion indies got in 2015. That means streaming growth in the indie sector surpassed the 78-percent that the whole streaming market grew by in 2016.

 

Founder of the Beggars Group and VP of WIN Martin Mills said, “It speaks volumes for the tenacity, passion and entrepreneurship of independent labels, and the public’s desire for musical diversity, that even in these times of global dominance by major corporations, almost 4 out of every 10 dollars spent on music goes to the independent sector.”

 

CEO of WIN Alison Wenham added, “The WINTEL 2017 report tells the story of another strong year for the independent sector. It has seen solid growth overall and an astonishing increase in streaming revenues. Both are trends we are confident will continue … It is important when making sense of the global market for independent music that we continue to use ownership rather than distribution as the method of calculation. The claiming of market share through distribution by major labels distorts the true value of the independent market and creates a false picture of the amazing growth and vitality of our sector.”

 

Billboard Charts Putting Added Weight on Streaming in 2018

 

Billboard announced it will be putting greater weight on paid subscription streams on its charts in 2018 and that ad-supported activity will also continue to be an “important factor” in the Billboard Hot 100, Billboard 200 and others.

 

In a post on its website, the publication said, “It is our goal at Billboard to accurately portray in an unbiased manner how music performs relative to other music … That job has become much more complicated throughout the years. For decades, there were just physical retail sales and radio airplay, whereas today there are many ways to consume and not all are created equal – from an access perspective, from a user-control perspective, from a revenue perspective, from a fraud-protection perspective and so on. Thus, Billboard frequently reevaluates – with the advisement of our constituents (artists, labels, distributors, publishers, consumers, etc.) – how to properly measure and report this activity. It is our obligation to take all methods of distribution and consumption into consideration; similarly, it is our obligation to weigh the ramifications of any changes.”

 

The post continued on to say that “rapid adoption” of streaming and distribution technologies has significantly impacted artists and released music and thus needs to be accounted for in the charts.

 

Billboard also noted other changes that were “implemented or seriously considered” included: how to weigh paid vs. ad-supported and also free streams; the weighting of programmed streams on services like Pandora and other internet radio services; whether streams of YouTube official music videos should be part of the Billboard 200 albums chart; how to deal with the increase in sales of music through direct-to-consumer offerings and several other factors.

 

Starting in 2018, plays on paid subscription services (Amazon Music, Apple Music)/in the paid versions of “hybrid” paid/ad-supported services (Spotify Premium, SoundCloud) will get more weight in chart calculations than plays on purely ad-supported streaming services (i.e., YouTube) or on the non-paid tiers of combination paid/ad-supported services.

 

Billboard will have a number of weighted tiers of streaming plays for the Hot 100. Beginning in January, this chart will account for paid subscription streams, ad-supported streams and programmed streams. Streaming, plus all-genre radio airplay and digital songs sales data are now the main components of the Hot 100’s charting.

 

The Billboard 200 will now have two levels of on-demand audio streams: paid subscription streams; ad-supported streams. The chart will not yet account for video streams. The Billboard 200 ranks most popular albums of the week, taking into account traditional album sales, track equivalent albums and streaming equivalent albums.

 

Billboard’s new focus on multiple levels of the streaming market reflects listeners’ diverse habits, which include not only on-demand streaming but also playlists and radio. As the post explained, “It is Billboard’s belief that assigning values to the levels of consumer engagement and access – along with the compensation derived from those options – better reflects the varied user activity occurring on these services.”

 

Pioneer Developing New Technology for Royalty Distribution Related to Music Used in Electronic Sets

 

Electronics company Pioneer and the Society of Composers, Authors and Music Publishers of Canada (SOCAN) joined forces to create a device that helps track plays of artists’ work in live electronic music sets so they can be paid appropriate royalties.

 

MixMag explained that the device uses Pioneer’s KUVO technology. Select Canadian venues hosting electronic artists will be given free devices that can be plugged into the mixing board and uses extracted metadata to identify information about tracks played and send it to SOCAN so the organization can distribute royalties properly.

 

SOCAN’s vice president of distribution, Kit Wheeler explained, “DJs spin more music in one show than the cast majority of other live musical performances, but it’s nearly impossible for them to submit accurate set lists of music for shows that they perform.”

 

Toronto’s nightclub CODA will be the first venue to use the KUVO technology. CODA owner Joel Smye said, “For years we’ve been dissatisfied with the system in place, knowing that not all licenses we pay are getting into the hands of artists behind the music played in our venues and at our events … Now, through technology, the use of a simple device will ensure that the music licenses that we pay and have always paid will go to the right people.”