Zoe Keating Releases Her Actual Pay

Add another item to the growing list of why Zoe Keating is one of my favorite artists. Hypebot discusses the numbers with her:

During a six-month period from October 2011 to February 2012, Zoe earned $84,386.86 before taxes.

Here's a breakdown of where that money came from:

....

A good chunk of Zoe’s support comes from her regular and super fans, who she feels remain loyal to her due to their interest in her story.

“They seem interested in my DIY-story,” Zoe told Hypebot. “Or the mechanics-of-how-I-make-music-with-a-cello-and-computer-story; or the classical-musician-gone-rogue-story; or the radiolab-Amanda Palmer-Imogen Heap-Rasputina-connection; or the I'm-a-geek-too-story, etc. The casual listeners might not know my story or anything about me.”

“Casual listeners won't [support], but they never did anyway,” Zoe added in her Google Doc. “I don't buy ALL the music I listen to either, I never did, so why should I expect every single listener to make a purchase? I think that a subset of my listeners pay for my music, and that is a-ok because... and this is the key... there are few middlemen between us.”

As an artist, you are kept afloat by the connection you have with your fans. Nourish them and they'll nourish you.

Music Industry News- June 2012

-Guitars are on the verge of getting much, much cooler.
3D printers are getting cheaper and more ubiquitous. No longer will you need a C&C or full workshop to make custom guitars, anyone with a few grand will be able to become a quality custom guitar maker. Check out this New Zealand professor who makes hollow, mesh guitars full of scarab beetles and butterfly designs. (Extra cool note, his guitars are using a material that is much stronger than traditional woods os they're durable too!)

The Pirate Bay already has downloads for object files to be printed. Once someone specs out a fender or a gibson, if they haven't already, the artists / makers are going to create some wild and crazy designs. I for one welcome our coming super-wild guitar overlords.

This is gonna create some copyright headaches though. Count on it.

-Songza is fantastic. Pandora continues to lose its edge.
New-ish internet radio service Songza got 1.15 million new downloads since releasing it's iOS app for iPhone and iPad. Pandora stock is down to $11 from $17 from its IPO a little over a year ago.

For me, Songza blows Pandora out of the water. Instead of Pandora's auto-generated playlists, Songza offers up human-curated playlists served up through an intuitive "concierge" menu that helps select playlists based on mood, genre, and time of day.

The difference between the two services is night and day.

Songza has better song choices with better playlists. Songza has a significantly higher hit-to-miss ratio than Pandora in terms of the percentage of artists I favorite over the total number of artists I hear on the station total. The human touch to Songza playlists makes all the difference. (Spotify just announced a free radio app for iOs, but the song selection algorithm is much weaker than Pandora or Songza)

My current "music discovery stack" on my phone is Songza for guided discovery and Spotify for targeted discovery. Pandora I only use to listen to stand up comedy radio. iTunes I'll use sparingly for releases that are essential to purchase, such as bands like Intronaut whose label Century Media left Spotify. This leads to my next point.

-Spotify pullouts
This is my primary method of listening to and developing fandom for new bands. For bands fans are crazy about, this leads fans to buy the digital album instead of stream it. But Spotify pullouts disincentivize new artist discovery on the label. While they get the increased revenue for one band, the label loses

-Where's my swear words Spotify?
When I search for Killer Mike on my phone it defaults to to the clean version of his album R.A.P. Music! Getting every other word removed is no way to experience an album.

I can't blame the label for making this the default version of the album though. This strikes me as a method of price discrimination similar to the delayed Spotify release as an incentive to buy the actual download. It's a smart business move actually, especially for rap where abrasive lyrics as an intergal part of the art.

But come oooooon man!

(Edit: If I search for the album itself and not the artist I can still find the dirty version. Phew. My point on it being a useful method of getting true fans to buy the digital download still holds. Censored albums won't fly with this musician.)

What Can Music Learn From Video Games?

In an interview at a recent tech conference, Gabe Newell, co-founder of Valve (the video game company behind Half-Life and Portal), gives some fantastic hard data on the economics of sale pricing and freemium models of digitally distribution.

For those of you who aren't gamers, Value has a web service called Steam where you can purchase a game online and have it download directly to your computer instead of having to buy a physical copy of the game. You can download the game any number of times, but you have to be signed in to your account online to play. Simple, unobtrustive DRM (digital rights management) that protects creators but doesn't screw legitimate customers.

Beautiful.

With an estimated 70% of the digital game distribution market, Steam has access to more data than you could ever ask for on pricing and consumer behavior.

And they decided to share some insights with us. Groovy.

From the Geekwire transcript of the talks, Gabe Newell on piracy:

One thing that we have learned is that piracy is not a pricing issue. It’s a service issue. The easiest way to stop piracy is not by putting antipiracy technology to work. It’s by giving those people a service that’s better than what they’re receiving from the pirates. For example, Russia. You say, oh, we’re going to enter Russia, people say, you’re doomed, they’ll pirate everything in Russia. Russia now outside of Germany is our largest continental European market.

...the people who are telling you that Russians pirate everything are the people who wait six months to localize their product into Russia. … So that, as far as we’re concerned, is asked and answered. It doesn’t take much in terms of providing a better service to make pirates a non-issue.

Pay attention to your customer's wants and needs and they'll pay you for the effort. This business knowledge is far from new, yet it's also ludicriously easy to overlook. Don't do draconian DRM as it'll chase off paying customers and move them to less-hassle piracy.

Software-as-a-service / cloud platforms such as iCloud and Spotify seem to be the way forward as they balance DRM with customer service and price. However, royalties from these sources are small and will remain so for the foreseeable future. Use them as entry-level services for new fans but don't put your entire catalog on them.

Gabe goes on to talk about the company's pricing experiment by making Team Fortress 2 a free-to-play (aka freemium) game:

Why is free and free to play so different? Well then you have to start thinking about how value creation actually occurs, and what it is that people are valuing, and what the statement that something is free to play implies about the future value of the experience that they’re going to have.

And then the conversion rate, when we talk to partners who do free-to-play, a lot of people see about a 2 to 3 percent conversion rate of the people in their audience who actually buy something, and then with Team Fortress 2, which looks more like Arkham Asylum in terms of the user profile and the content, we see about a 20 to 30 percent conversion rate of people who are playing those games who buy something.

So that’s a fairly surprising and fairly recent statistic, which is that there seems to be something about the content that significantly changes how your monetization occurs, with apparently much broader participation than you would see out of something like FarmVille.

They first get the customer interested in the product, then increase the value they offer to the customer as the customer become more commited. Again, it's a simple concept that's simple to forget.

No matter whether your're talking about video games or music, It's all about making it easy to become a fan.

Spotify Takes Another Shot at Pandora

Spotify added a radio feature where you can build stations based on your favorite artist. Unlimited stations, unlimited skips, and access for both free and paid subscriptions.

I don't see any remaining competitve advantage for Pandora that Spotify can't match. Spotify is going to be the new heavy-hitter for the digital music marketplace.

My Crash Course for Streaming

What Do We Do About Streaming?

There's been quite a raging controversy over Spotify over at Hypebot as musicians across the industry chime in with their opinion on the streaming service. 

Zoe Keating, Cellist and brilliant DIY musician, talks about how independant artists are treated unfairly.

         That’s it. That’s my complaint: fairness.

If Spotify would level the playing field and make the distribution equal to all artists. I would lay off (since I am sure that my constant complaints are a total priority for them!). Now, if Spotify was to make those royalties algorithm-based, they’d have my full nerd support. For example if, thanks to their 'related' algorithm,  people listen to small-artist X after listening to large-artist Y, then I could see that a particular play, not all of them, of artist Y could be ‘heavier’. However, if people end up at artist Y by searching for them directly, the play-weight should reflect that. Data, do it with data!

But just to pay tracks from major labels more because they are major labels, that is so OLD. Where is the revolution in that?

Four indie labels have already withdrawn from the service. Sam Rosenthal of Projekt, the most recent label to pull out, issued a public statement explaining the label's decision bluntly:

For a stream on Spotfy.... NOW READ THIS CLOSELY..... on average $0.0013 is paid to Projekt's Digital Distributor. 5000 plays generates around $6.50. In comparison, 5000 track downloads at iTunes generates $3487. To be clear: I am not suggesting that every stream would have been a sale at iTunes. Believe me, I understand the reality of the music business. I am providing that as a comparison for you. Let's look at this another way: To earn the U.S. monthly minimum wage - $1160 - 892,307 plays a month are needed at Spotify. This is not a viable number for artists.  

Spotify responded to Projeckt by changing the subject:

Spotify does not sell streams, but access to music. Users pay for this access either via a subscription fee or with their ear time via the ad-supported service [just like commercial radio] - they do not pay per stream. In other words, Spotify is not a unit based business and it does not make sense to look at revenues from Spotify from a per stream or other music unit-based point of view. Instead, one must look at the overall revenues that Spotify is generating, and how these revenues grow over time.

Spotify is generating serious revenues for rights holders, labels, publishers and the artists that they represent.  We have paid over $100m to rights holders since our launch, and the overwhelming majority of our label partners are thrilled with the revenues we're returning to them. Spotify is now the second single largest source of digital music revenue for labels in Europe, according to IFPI.

But is this current royalty structure sustainable? According to Spotify's filings in the UK, it lost $42 million on licensing fees in 2010 alone despite a five-fold increase in revenues from the previous year. 

What does all of this mean to an independant artist? Is streaming worth the loss in income so more fans can listen to your music? Can you ever break even on streaming? Is it better to just ignore the whole deal?

Here's how I see things playing out:
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1) Streaming services are similar to radio in that both benefit major labels with more money and muscle than independant bands. 

When it comes down to corporation-level negotiations, a DIY artist will always be at a disadvantage. Self-sufficent bands don't have legal departments, lobbyists, consultants, piles of cash, or a fanbase ranging into the millions that can be used in negotiations. If Spotify can't sign a DIY singer-songerwriter it's no big deal, but if Spotify doesn't have access to the entire Universal Music catalog, the streaming service will be severely crippled. The streaming service has to make that deal.

As such, these large entities leverage their influence and power to ensure that they maximize their benefit from negotiations. Organizations not at the table miss out.

It sucks, but I don't see a solution to this problem without either a PRO stepping into negotiations or a coalition of DIY artists forming their own right's group.

2) There's no turning back, the cloud is here to stay.

For better or worse, streaming services figured out how to monetize piracy. Judging by the success of Rdio and Spotify, businesses have made their services more appealing than piracy. Unless there is a game-changing method of piracy to replace BitTorrent, the ease of use of the cloud will continue to draw in customers. (Piracy in Sweden is down 25% since the Spotify's introduction.)

Businesses won't give up this revenue stream without a fight.

3) Streaming is marginally better for indie musicians than radio.
Radio was a passive music experience, with a song selection heavily influenced by who had the most cash for promotion.

Streaming/cloud services/piracy enable an active music experience by allowing curious fans to give new bands a try. It won't pay much, if anything, but it does benefit smaller and niche bands that wouldn't get much airplay on traditional radio.

A minor win.

4) Streaming an album is a moral dilemma.
As a fan, it was absolutely awesome to hear the new Mastodon the day it came out for free on Spotify. Now I've got no qualms about throwing dollars at Mastodon, I've bought every studio album because they're that gravy. But. having spun the album a few times, there wasn't any reason for me to buy the actual album anymore.

This is a mammoth moral dilemma.

Instead of Mastodon seeing my entire $10 for a digital download (minus iTunes' cut), the money is instead spent on a subscription to an intermediate who only offers the band a fraction of the $10. The middleman (streaming) scoops most of the profit off of album before it ever hits the band.

Owch.

How do we cope with this?

5) Delaying and limiting releases to streaming is an effective compromise.

By delaying release of new material to streaming services, we ensure that super-fans who are willing to pay for a "brand-new" album actually pay for the album, while not excluding casual listeners who may convert to a sale later down the line. This is the same method of price discrimination that movie companies use; movies don't come out on DVD/Netflix until months after they've left the theaters. This ensures that movie-buffs willing to pay a price premium to see a movie in theaters actually pay.

For the same reason, any b-sides, rarities or limited-edition material shouldn't be released to streaming services as this would discourage willing fans from paying at the cost of providing the material to casual fans, who really won't care about "extra" material.
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What are your thoughts on streaming?

Spotfy is Beautiful

I've only had it for 24 hours and already I'm a raving convert. Spotify is the promise of cloud music delivered.

From the Hypebot article interviewing Spotify's CEO:

Has Spotify, as some have said, helped eradicate music piracy in Sweden? 

Lagerlöf: Yes it has. Or to clarify, it has eradicated music piracy almost on its own. Sweden was the home of Pirate Bay. They even had their own political party and made the prime minister in national television declare "Off course the youth shall be able to download music for free".

Three years later, The Pirate Bay is not mentioned by anyone anymore. Spotify is, on the other hand, mentioned by almost everyone - including the old Pirate bay fans. 

This did not happen because some new radical law or brutal police force were implemented. Neither because a confused prime minister changed his mind again and embraced the music industry. It all happened simply because the users found a new legal service that they actually thought was much better than the old Piracy one. Now, some time later, when they have

invested their time and effort in making playlists etc. and would like permanent and unlimited access to it - they are starting to pay for music. For the first time in their lives - music is worth paying for.

 That's the core of the issue. Piracy was faster, better, and easier than any legit offering, so it won. Now, for $5 a month I can hear anything I want instantly with no DRM or glitches.

Spotify is another reason I'm optimistic about the future of the music industry. I was giddier than a twilight fan at a premier when I first tried this service. It's intuitive, simple and it works.


It's a great time to be alive for a music fan.