• market 7 of 7

Music Business News, April 18, 2017

An RIAA study showed listeners prefer access models over music ownership. And the struggle over licensing attached to Prince’s massive catalog continued. Also, Slacker radio announced massive layoffs.


market 7 of 7


Listeners Preferring Music Access Over Music Ownership


Listeners are getting more music – and the industry is making more money – from “access models” than they are from music ownership, according to a recent study published by the RIAA.


According to Forbes, the RIAA’s latest industry summary indicated that streaming services are now the majority source of recorded music revenue for the industry, having overtaken the totality of CDs, vinyl and downloads.


The report also showed that the majority of this revenue comes from on-demand streaming services like Spotify, Apple Music, TIDAL and others that allow users to pick the exact music they want to hear. These services are “directly comparable” to ownership models like physical products and downloads.


There are other types of digital music models that are considered part of the “access” market, including AM/FM radio streams, pure-play internet radio platforms like Pandora, satellite radio like Sirius XM and music channels on cable TV.


The biggest “access” model is traditional AM/FM radio. Nielsen Music and Mediaguide said the number of songs heard by Americans on AM/FM radio last year was over four times greater than the number of plays on on-demand streaming services. Record labels and recording artists do not earn any revenue from this source in the U.S., although the music publishing industry does.


The most effective way to measure the impact of access models is to compare on-demand streaming with “ownership,” as both types allow listeners to choose the music they hear. Internet radio services like Pandora allow for personalization, but do not offer as much engagement with music as on-demand platforms, and many who listen to radio-based services just have music on in the background.


When record industry revenue from on-demand streaming is compared to revenue from “ownership” models, these comparisons show that the recorded music industry will officially hit a point where it is making more money from access than from “ownership” sometime this year. Though not broken down as much as they are for recorded music, music publishing industry figures are consistent with these trends.


Some analysts who advocate for ownership rights for digital music have pointed out that the fact that the record industry makes more money from access models than from ownership models does not necessarily make access models more popular. However, they are according to statistics.


A portion of on-demand streaming is free/ad-supported. Services like YouTube, Spotify Free and SoundCloud do not cost users money. The RIAA keeps track of revenue for ad-supported on-demand streaming in a different category. When this category is analyzed on its own, the numbers show free music tiers do not negatively impact revenue paid to artists.


The move from music ownership to access models will occur at some point in 2017, even for paid models alone.


Nielsen music has tracked total on-demand music streams in the U.S. every year since 2012 by collecting data from the on-demand services. Nielsen has not yet xome up with a way to convert radio plays to purchased music, but it uses a ratio of 150 to one to convert on-demand streams to music purchases in order to come up with music charts. It also uses a ratio of one to 10 to convert albums into tracks.


The results of Nielsen’s analysis show even more pointedly that the industry will soon move definitively towards access models.


Prince Licensing Fight Raging On


Prince’s estate continued its fight to process his business affairs after his sudden death almost a year ago. Billboard reported that in February, Universal Music Group announced its deal to take over the licensing for Prince’s recordings and unreleased works post 1996. The company added that it will take the rights to “certain renowned albums” from Prince’s 1978-1996 WMG recordings starting in 2018.


At first glance, that deal answered many questions that swirled around the complicated rights structure of Prince’s catalog. However, questions soon arose over which albums were licensed to Warner Music Group and which belonged to UMG … and when an official handover of rights will occur. For instance, the rights to Prince’s soundtrack albums, including Batman and Purple Rain were set to remain with WMG for years, and other rights do not expire until 2021.


In the past week, UMG has been increasingly unhappy with the deal it made in February, which was speculated to be worth $30 million. The company claimed that representatives from the estate misrepresented which parts of Prince’s catalog will be available to UMG and when.


This deal plus others that are coming together around Prince’s publishing, merchandising and branding and streaming licenses and rights were negotiated while L. Londell McMillan and Charles Koppelman were advising the Prince estate in its entertainment deals. But on April 10, former manager of Lady Gaga and Meghan Trainor, Troy Carter took over.


In a recent statement, Carter discussed the confusion over negotiations: “The Prince estate is currently focusing on exciting new opportunities in all areas of entertainment and intellectual property, and looks forward to further preserving Prince’s rich cultural legacy … With respect to Prince’s recorded music rights, the Estate has no further comment regarding inquiries relating to the contractual arrangements governing those rights.”


The statement concluded, “While the existing recorded music rights agreements were not overseen, negotiated or consummated by the Estate’s current team … the team is nonetheless in the process of assessing all rights relating to Prince’s recorded music and continues to be dedicated to cultivating, maximizing and protecting all of the Estate’s intellectual property rights.”


Carter became the global head of creator services for Spotify in June 2016 and was appointed entertainment administrator for the Prince estate last week.


Slacker Radio Laying off 25-Percent of Workforce


Slacker Radio got rid of 25-percent of its workforce, marking one of the most “dramatic downsizing” in the Internet radio world.


Music Business Worldwide said that the iHeartRadio and Pandora rival announced that it needs to “focus on efficiency and accelerate the path towards profitability.” Internet radio services not in the on-demand streaming universe have seen decline in the past year as more listeners move towards choosing and curating their own music.


This move happened three months after Pandora announced the cut of seven-percent of its own staff – 100 employees.


Slacker Radio was launched in 2007 by Dennis Mudd, ex-CEO of MusicMatch. MusicMatch was bought by YahooMusic and turned into Yahoo! Music Radio.


Current Slacker CEO Duncan Orrell-Jones released the following statement: “Slacker Radio is laying off approximately 25-percent of the team as part of our ongoing effort to focus on efficiency and accelerate the path towards profitability … Our strategy has always been to innovate in the radio and music space, and we’ve been working hard to develop new experiences that we believe will fulfill the promise of radio reimagined. The Slacker Radio app will not be affected by these changes, nor will several new product releases that are scheduled for later this year.”


Orrell-Jones joined Slacker in 2014 after working at Nintendo of America and Disney Interactive Media Group, Asia Pacific.


Slacker had between 500,000 and a million paying subscribers in the U.S. in 2013 and 35 million registered users.


The company claims to offer “next-generation personalized radio, allowing music lovers to choose from the broadest selection of human-curated music, news and sports stations that are personalized to their taste.” Listeners can also create their own stations.


Slacker’s latest initiative was a “SoundBytes” feature that allows listeners to hear artists like John Legend, Luke Bryan and others introduce their favorite songs and tell the stories behind them.

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