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Insights Blog: [email protected] in five steps

By | Published on Wednesday 12 April 2017

Next week CMU Insights will present a three hour session at Canadian Music Week in Toronto. Based on the ‘Dissecting The Digital Dollar’ reports CMU Insights produced for the UK’s Music Managers Forum, this will be the first time we have presented our popular overview of digital licensing and the streaming business in North America.

Over the three hours we’ll explain how the music industry’s digital deals work, what happens to all the money, and what the big challenges are, for the music business at large, and for artists specifically. Here’s a five point guide to what we’ll cover along the way.

1. Dissecting The Digital Dollar
With streaming fast becoming the record industry’s majority revenue stream, it’s more important than ever for artists and managers – and anyone making music – to understand how the licensing deals with the streaming services work and what, exactly, happens to the digital dollars as they go from platform to artist and songwriter.

The ‘Dissecting The Digital Dollar’ reports produced by CMU Insights for the UK’s Music Managers Forum explain the complexities of the streaming business from a rights and royalties perspective. And for the first time in North America, next week we’ll outline the process in ten steps.

2. Converting Freemium
Both Spotify and Apple Music continue to add new premium subscribers at a rapid rate, so much so that, if you want to be optimistic, you can assume the streaming sector will continue to boom for the foreseeable future, facilitating the record industry’s ongoing return to growth. Though if you want to be pessimistic, you can fear that the big streaming services are going to see their sign-up rates peak before they have enough paying users to be viable businesses long-term – a streaming business needing significant scale for the math to work.

Even if you do want to be optimistic, it remains true that the majority of the population are unlikely to ever sign up to a $10 a month standalone music service. Does the industry just write all those consumers off and accept it will, at best, see nominal royalties from the free streaming services? Or are there ways that the music industry could covert more consumers to premium by offering a greater variety of streaming products and price points. Next week we’ll discuss all that with Vickie Nauman from LA-based digital media consultancy CrossBorderWorks.

3. Sustained Listening
Even if streaming works for the industry at large, does it work for individual artists? The business of subscriptions and streams is very different to the business of discs and downloads, and artists and labels are still adapting to the new model. The key is sustained listening. We know the royalties per stream are tiny, but if fans keep returning to an artist’s songs and tracks, over time those royalties can outperform what would have been earned via CD or iTunes.

But how do artists ensure that sustained listening? Savvy artists and labels are changing the way they market their music, though everyone is still on a steep learning curve. It’s possible the songwriting process too has an impact on how often people return to a track. We’ll bring everyone up to speed on current thinking and best practice with the President of Believe in Canada, Georges Tremblay.

4. Data
Once an artist has got the streams, how do they get paid? Ensuring the digital dollars flow to the right people is all about data, which is why the music industry has been talking so much about music rights databases in recent years. The challenge is all the bigger on the song rights side, because the streaming service doesn’t have a direct distribution link with the copyright owner. So how does it know who to pay? It doesn’t.

Numerous music data initiatives are underway to try and ensure the digital dollars flow to the right people as quickly and efficiently as possible. On the songs side, a lot of this depends on the collecting societies, who have the best databases of writers and publishers, though lots of work has had to be done to hone that data. We’ll discuss where we are at in tackling the data challenge, and what data matters exactly, with Tomas Ericsson, CEO of Kobalt’s performing rights organisation AMRA.

5. The Transparency Problem
Lots will be explained about the streaming business during the CMU Insights session at Canadian Music Week next week, the ultimate aim being to enlighten artists and songwriters on how their music is being exploited and monetised by the digital services. Though not everything about the deals between the labels, publishers, societies and streaming companies will be revealed, because many secrets remain about those arrangements.

In phase two of the ‘Dissecting The Digital Dollar’ project, the lack of transparency around the music industry’s streaming deals was frequently raised as the biggest concern for artist managers. Why are there so many secrets? And why is that such a problem? We will explain the work MMF UK is now doing to get more clarity for British music creatives, while artist managers Graham Stairs and Jake Gold, and entertainment lawyer Angelika Heim, will discuss the transparency problem from a Canadian perspective.

CMU presents ‘The Creators’ Guide To Digital Dollars’ on day three of Canadian Music Week next week, on Friday 21 Apr, from 10.00am-1.00pm, in Sheraton Hall C. More info here

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