Reasonable minds cannot seem to agree on the real reason why total U.S. album sales declined in 2013—1.5 billion units in 2013, down from 1.6 billion in 2012 and 2011. If this were ten years ago, the blame would have been placed squarely on pirates (re: peer-to-peer networks). Although piracy is no longer an industry buzzword, a recent MusicMetrics report indicates that it may still provide a plausible explanation for the sales decline—over 53 million music files were illegally downloaded through BitTorrent in 2013, representing about half of the difference in total sales between 2012 and 2013. Yet, today’s industry analysts suggest that the nearly 100 million-unit sales deficit in 2013 is the result of a consumer trend shifting to streaming and subscription services. This begs the question: does music piracy still matter?
Jay Z’s partnership with Samsung was probably the most talked about music partnership this year. And, probably the most genius music deal the industry has seen in quite some time. The deal brings to mind the famous line “I’m not a businessman, I’m a business man.” In a time where the music industry quite frankly doesn’t seem to be flourishing, Jay Z used his entrepreneurial mindset to adjust to the quickly changing music industry.
So what are the basics of the deal? Well, Samsung purchased one million copies of the “Magna Carta, Holy Grail” album to give away for free to the first 1 million Samsung Galaxy S3, Galaxy S4 and Galaxy Note 2 owners who download an app. Not only were the device owners getting the album for free, but they were getting it early. Samsung paid $5 million for this free, early album downloads.
But what does this deal really say about the current state and the future of the music industry. Times are changing; that much is evident. Artists aren’t selling music the way they were before. Most artists are barely making money selling singles via iTunes, so the thought of making a substantial sum of money through album sales, more likely than not, seems far reaching. It’s time for artists, record labels, and any other player in the music industry to think of innovative ways to do everything form making music to selling music. It’s time to capitalize on the changes on the American society and the American consumer. First and foremost, the industry needs to come to terms with the vast growth of the digital age and adapt accordingly.
The last few years have seen the growth of the digital, technological age. More and more consumers depend on the Internet and social media to learn about and access new music. With more and more consumers heavily depending on digital access to music and no longer purchasing physical copies of CDs or even purchasing music in general, this deal has shown multiple artists a new way to provide consumers with music and still make a living through their art. Jay Z and Samsung simply found a way to capitalize on the changing times on a grand scale. Giving away music the way the Samsung did with the “Magna Carta, Holy Grail” album wasn’t a first but the mere scale of this deal was what really changed the game. The deal set a brand new standard. Now it’s all a matter of artists seizing the opportunity and building on it.
Welcome to the digital music age!
The 2013 Nielson-Billboard report is in and even Beyoncé couldn’t stop digital music from moving to the left. Sage wisdom from Mr. Carter teaches us that men lie, women lie, but numbers don’t—so what do the numbers tell us about the year-to-year trends in the U.S. music industry? What impact will the 2013 trends have on the music industry this year?
A 360 View of The “360” Deal
Lets Face It Folks, The Recording Business Is Dying
The industry that once reported overall revenues of 40 billion dollars just a decade ago, can now only claim about one third of that success, raking in just 16 billion dollars in 2012. Billboard. Many industry soothsayers blamed the increases in illegal downloading; others blamed MTV and other mediums for which current music could be accessed; some even went to far as to blame the artists themselves for trying to make a quick buck from releasing a single, instead of the traditional notion of a cohesive album. I say it’s a combination of all of the above – but whatever the cause may have been, the effect was quite certain – record label executives were left scratching their heads, and wallets, desperately seeking a change so drastic that it would restore prestige to the once booming industry.
Crowdfunding is the collective effort of people who pool their money, usually by means of the internet, to support a purpose or goal. Crowdfunding circumvents traditional forms of investment. The typical examples of crowdfunding are political campaigns, disaster relief, and charities. In recent years crowdfunding has started to pour over into the creative world. More and more creators are starting to turn to crowdfunding platforms such as Kickstarter or Sellaband in order to raise money to cover the costs of their artistic endeavors. As advances in technology continue to make the cost of creating movies or music cheaper, the internet has not only provided a means for creative to market their works, but also a way to raise money for their projects. A good example of this is Kickstarter.
Some may have thought when they first heard Puff Diddy’s-“ I’m Comin Out”, Kanye West’s- “Gold Digger” or even Jay-Z’s- “Hard Knock Life,” that they were original works by the artists themselves. In fact, when I first heard “Puff Daddy- Ill Be Missing You,” a song I was a huge fan of, the thought didn’t even cross my mind that the chorus wasn’t Puff Daddy’s creation for his tribute to the late Notorious B.I.G., but it was from an original track by “The Police.”
“THE CHORUS IS MY FAVORITE PART, AND ITS NOT EVEN HIS?!” –was my initial reaction…
However, I quickly began to appreciate this art of sampling as a way to help introduce me to the older generation’s music. But also, it became a creative and lucrative method of not only bringing young artists onto a bigger platform, but helping reignite older artist’s careers’ and legacies as well.
The Fiery Debate between Radio and Record Industry
A long-standing issue among policymakers is whether to make broadcasters of traditional radio stations pay a “performance royalty” for every time an artist’s song is played on the radio. You are probably wondering, “What are performance royalties anyways?” A performance royalty is a free owed to a songwriter and publisher of a particular song whenever that composition is performed “in public” or “broadcasted.” Fees are not paid to record companies or a song’s performers.
In the United States, among a handful of other countries, performance royalties have been paid to songwriters and publishers. Funny enough though, Internet radio stations, such as Pandora, pay out royalties to labels AND artists. This, as you would assume, creates tension between digital broadcasters and traditional radio stations. Even with Internet radio, a vast majority of American’s still listen to AM/FM radio, but streaming services have replaced the sale of CDs. In today’s world, music is essentially free. Most music is illegally downloaded, which is killing the music industry. Therefore, labels and performers are itching to get every penny they can out of broadcasters to make up for the decline in CD sales.
Musical artists today earn the majority of their income through live performances. In order to ensure a strong turnout, artists understandably have to create a fair ticket price that will encourage sales and generate necessary income. In the “internet age” advanced technology has allowed ticket scalping to morph into a new form that quickly and easily profits off of concert tickets, with little benefits to the artists.
Once tickets are on sale, scalpers can easily make quick online purchases that they subsequently resell on sites like www.stubhub.com. Popular artists are likely to attract scalpers, which means that their concerts are sold out within minutes. The majority of the tickets end up in the hands of scalpers. It is then up to these scalpers to make a profit off the resale.
This past September, Representative Mel Watt (D-NC) introduced to Congress H.R. 3219, the Free Market Royalty Act. The purpose of this Act is to provide sound recording copyright owners with the “exclusive right to negotiate the public performance” of their works by means of an audio transmission. The Act addresses one of the more complicated areas in music copyright law (licensing) in an attempt to provide clarity and parity in the law and marketplace. In this article, I will discuss the changes the proposed Act would make in the music marketplace.
Earlier this month, I attended two panels discussing the recent cases and developments in the television industry (including one which I hosted at New York Law School, which is available to view here). Both panels honed in on the relevant issues related to copyright law, its interpretation and its application in the digital age. While I found both panels to be quite educational and enlightening, I am left stuck with one important, but unanswered question: what can the television broadcast industry (or television industry at large) learn from the music industry about disruptive business practices? More specifically, what, if anything, have we learned from the rise and fall of Napster and its progeny? And can those lessons serve as a teaching moment for the television industry?
In this article, I will humbly attempt to answer my own queries. To begin, let’s start with a brief history and revisit 1999, the year that Napster was born.