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Tim Ingham http://www.musicbusinessworldwide.com 2/12/15
It’s tough running a major music company today. For starters, you’re reliant on off-the-wall creative types to help you hit your ever-stricter targets.
Then there’s piracy, cost-cutting and that big question mark over whether streaming, in reality, can ever really take this industry back to the promised land.
In fact, you might not realise just how many fears play on the mind of a major label boss every single day.
So we’re here to tell you. It’s 43.
Earlier today, Warner Music Group announced its fiscal results for the last quarter of 2014, recording Q1 net losses of $41m against a 1.7% revenue jump to $829m.
Buried within the company’s investor information lay something rather revealing about its biggest fears for the future: a list of what it deems its ‘risks, uncertainties and other important factors’.
This is the stuff that Warner warns, at any moment, could derail its hopes of hitting its financial forecasts.
Non-fiscal types might find some chuckle-worthy language in there: “Our indebtedness levels, and the fact that we may be able to incur substantially more indebtedness which may increase the risks created by our substantial indebtedness.”
But that doesn’t mean that many of the points below aren’t salient for any big music company in this day and age.
Don’t have nightmares.
1.The continued decline in the global recorded music industry and the rate of overall decline in the music industry;
2.Downward pressure on our pricing and our profit margins and reductions in shelf space;
3.Our ability to identify, sign and retain artists and songwriters and the existence or absence of superstar releases;
4.Threats to our business associated with home copying and digital downloading;
5.The significant threat posed to our business and the music industry by organized industrial piracy;
6.The popular demand for particular recording artists and/or songwriters and albums and the timely completion of albums by major recording artists and/or songwriters;
7.The diversity and quality of our portfolio of songwriters;
8.The diversity and quality of our album releases;
9.The impact of legitimate channels for digital distribution of our creative content;
10.Our dependence on a limited number of digital music services, in particular Apple’s iTunes Music Store, for the online sale of our music recordings and their ability to significantly influence the pricing structure for online music stores;
11.Our involvement in intellectual property litigation;
12.Our ability to continue to enforce our intellectual property rights in digital environments;
13.The ability to develop a successful business model applicable to a digital environment and to enter into artist services and expanded-rights deals with recording artists in order to broaden our revenue streams in growing segments of the music business;
14.The impact of heightened and intensive competition in the recorded music and music publishing businesses and our inability to execute our business strategy;
15.Failure to realize expected cost savings and other synergies and benefits contemplated by the PLG Acquisition;
16.Risks associated with our non-U.S. operations, including limited legal protections of our intellectual property rights and restrictions on the repatriation of capital;
17.Significant fluctuations in our operations and cash flows from period to period;
18.Our inability to compete successfully in the highly competitive markets in which we operate;
19.Trends, developments or other events in some foreign countries in which we operate;
20.Local economic conditions in the countries in which we operate;
21.Our failure to attract and retain our executive officers and other key personnel;
22.The impact of rate regulations on our Recorded Music and Music Publishing businesses;
23.The impact of rates on other income streams that may be set by arbitration proceedings on our business;
24.An impairment in the carrying value of goodwill or other intangible and long-lived assets;
25.Unfavorable currency exchange rate fluctuations;
26.Our failure to have full control and ability to direct the operations we conduct through joint ventures;
27.Legislation limiting the terms by which an individual can be bound under a “personal services” contract;
28.A potential loss of catalog if it is determined that recording artists have a right to recapture rights in their recordings under the U.S. Copyright Act;
29.Trends that affect the end uses of our musical compositions (which include uses in broadcast radio and television, film and advertising businesses);
30.The growth of other products that compete for the disposable income of consumers;
31.The impact of, and risks inherent in, acquisitions or business combinations;
32.Risks inherent to our outsourcing of IT infrastructure and certain finance and accounting functions;
33.Our ability to maintain the security of information relating to our customers, employees and vendors and our music-based content;
34.The fact that we have engaged in substantial restructuring activities in the past, and may need to implement further restructurings in the future and our restructuring efforts may not be successful or generate expected cost-savings;
35.The impact of our substantial leverage on our ability to raise additional capital to fund our operations, on our ability to react to changes in the economy or our industry and on our ability to meet our obligations under our indebtedness;
36.The ability to generate sufficient cash to service all of our indebtedness, and the risk that we may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful;
37.The fact that our debt agreements contain restrictions that limit our flexibility in operating our business;
38.Our indebtedness levels, and the fact that we may be able to incur substantially more indebtedness which may increase the risks created by our substantial indebtedness;
39.The significant amount of cash required to service our indebtedness and the ability to generate cash or refinance indebtedness as it becomes due depends on many factors, some of which are beyond our control;
40.Risks of downgrade, suspension or withdrawal of the rating assigned by a rating agency to us could impact our cost of capital;
41.Risks relating to Access [Industries], which indirectly owns all of our outstanding capital stock, and controls our company and may have conflicts of interest with the holders of our debt or us in the future. Access may also enter into, or cause us to enter into, strategic transactions that could change the nature or structure of our business, capital structure or credit profile;
42.Our reliance on one company as the primary supplier for the manufacturing, packaging and physical distribution of our products in the United States and Canada and part of Europe;
43.Risks related to evolving regulations concerning data privacy which might result in increased regulation and different industry standards
Dan Charnas http://www.ft.com 2/03/15
Rappers’ facility with commerce can teach us about the value of human capital, writes Dan Charnas
Back in 2007 it seemed that rappers had peaked as entrepreneurs. In that year, Jay-Z sold his clothing company, Rocawear, for more than $200m and 50 Cent had a reported $40m personal stake in the $4bn sale of Glacéau, makers of Vitaminwater, to Coca-Cola. But in the past year we have seen bigger and important milestones. In May 2014 Dr Dre sold Beats Electronics to Apple for $3bn. And a few days ago Jay-Z offered $56m for Aspiro, a Swedish music streaming company.
The cliché of the music business is that of the exploited artist. The legendary figures of jazz, R&B, rock and soul often seemed to be on the wrong end of the deal. So why is it that hip hop artists seem to have such facility with commerce, even when many of their contemporaries in other genres still do not?
The answer lies in hip hop’s DNA. The artists developed a sense of entrepreneurship because they had to. Hardly anyone wanted to do business with hip hop. The first rap records were released into the most hostile environment for black music since the 1950s. In the midst of the early 1980s backlash against disco, big music companies viewed rap as an even less palatable offshoot. And so for half a decade independent operators built a scene on their own — until Rick Rubin and Russell Simmons signed a distribution deal for their indie label Def Jam with CBS Records in 1985, when the major could no longer ignore the beats in the streets.
A closed market is also a captive market. Hip hop built a wholly separate and lucrative ecosystem with its own institutions, tastemakers and power brokers. When clothing companies rebuffed rappers’ attentions and balked at endorsement deals, artists started their own brands. By the time the biggest corporations woke up in the 1990s it was too late; they simply did not have the knowledge or credibility in the market. Most often, they did deals with established or budding entrepreneurs such as Sean “Diddy” Combs.
Combs was reviled in some corners of the hip hop world as a crass profiteer. But he was only the latest in a line of hustlers who went back to the beginning of the culture. They were the early club promoters, tape and record slingers, and artist managers whose class and race often limited their options for advancement and focused them, laser-like, on hip hop. These were folks for whom the separation of art and commerce was an artificial, unaffordable and frivolous bourgeois conceit.
Over the decades hip hop spawned a paradoxical consciousness that allowed it to be hypercapitalist and the voice of the underclass at the same time. Add to that the success and global adaptability of the culture — which provides its entrepreneurs with not only enormous influence but also an ideal focus group — and you will understand why rappers make better businesspeople than indie rockers.
Now that the corporate world has largely opened its doors to hip hop, the entrepreneurial impulse that arose from necessity has dwindled somewhat among younger artists. Superficially, this decline seems to be part of the normal life cycle of untapped cultural markets, the side effect of corporatisation.
But the real lesson of hip hop is what it can teach us about the value of human capital. Many of the great hip hop entrepreneurs were kids who had been given the worst of everything: housing, schools and expectations. When they became successful, we were surprised. We still are, obviously. Why? Hip hop, after all, has been calmly telling us where the gold is for about four decades. And it is not the music, not the products. The untapped treasure is what it always was. It is that smart kid you never saw coming.
The writer is author of ‘The Big Payback: The History of the Business of Hip-Hop,’ and an associate professor at New York University
Tim Ingham http://www.musicbusinessworldwide.com 1/29/15
As the world comes to terms with Apple posting the biggest quarterly profits in Wall Street’s history, it’s surely worth asking this question: just how much bigger is the iPhone giant than companies which the music industry considers ‘major’?
First, though, let’s explain that headline. Apple turned over US $75bn in its fiscal Q1, in the three months to December 27, 2014.
[Just take a moment to digest that. $75bn. That’s roughly the annual GDP of Jamaica, Iceland and Slovenia combined.]
Back to business… that gives Apple a mean average monthly turnover of $25bn.
According to the IFPI, the entire global recorded music business generated $15bn in 2013 – the last year we currently have on record.
In other words, Apple is making more money every three weeks than Universal Music, Sony Music, Warner Music, Beggars etc. combined manage to generate each year.
Let’s take a look at how Apple’s latest quarter stacks up against music’s biggest companies.
Universal Music group
Universal Music Group’s latest public quarterly results came in parent Vivendi’s Q3.
The French conglomerate reported the numbers by covering the nine months to the end of September 2014.
UMG – which owns Universal Music and Universal Music Publishing – posted revenues of €3.01bn, or $3.4bn, in the nine-month period, which averages out at a clean €1bn ($1.1bn) per quarter.
That means Apple’s turnover – wait for it – is around 75 TIMES that of recorded music’s biggest company.
It’s fair to note that because Apple’s results are hot off the press, they’re for the busiest consumer period of the year – the three months before Christmas – while Vivendi’s latest results cover quieter spring/summer/autumn months.
But as a rough guide, it certainly paints a telling picture. (Universal’s revenues in the whole of 2013 were €4.9bn, so its quarterly average income is slightly higher at around €1.2bn.)
In terms of net profits, I hope you’re sitting comfortably.
Vivendi posted a €442m net income in the first nine months of its latest fiscal year. That works out at around €147m ($166m) each quarter.
Apple notoriously posted a ginormous $18bn net profit for its Q1 this week, making its take-home quarterly income 108 times as big as the Universal parent’s average in 2014 so far.
One hundred. And eight. Times.
SONY MUSIC entertainment
We’re used to writing ‘Japanese technology giant’ or ‘Japanese entertainment giant’ when referring to Sony.
But, in reality, Apple now makes it look pretty weeny.
Let’s first look specifically at Sony Music. According to Sony Corp’s Q2 fiscal results for the three months to the end of September, 2014, Sony Music Entertainment – including Sony’s record company and its share of the world’s biggest music publisher, Sony/ATV – turned over $1.07bn in the quarter.
Handily, that’s basically the same as Universal.
Looking at Sony Corp as an entire entity – PlayStation, mobile phones, music, TVs and all – it turned over an impressive $17.5bn in its Q2.
Impressive, that is, until you realise that’s a tenth of the size of Apple’s revenues in its latest quarter.
And let’s have a look at the balance sheet. Apple, remember, posted that whopping $18bn net profit in its Q1.
In Sony’s Q2? A $1.24bn loss.
WARNER MUSIC GROUP
Warner Music Group is technically a private company, owned by Len Blavatnik’s Access Industries – who bought it in 2011 for $3.3bn.
But it still reports its quarterly figures publicly, giving us an insight into its fiscal health.
In its latest public quarter – its Q4, the three months to end of September 2014 – WMG turned over $771m.
That makes its quarterly revenue slightly smaller than both UMG and Sony Music Entertainment. And a LOT smaller than Apple’s record-breaking Q1.
97 times smaller, in fact.
As for profit/loss, Warner posted a net loss of $24m in its Q4 2014 (narrowed compared to Q4 2013’s $57m).
That might sound like loose change to Apple, but it still makes Warner’s latest balance sheet $18.02bn behind the Cupertino company’s.
Ah, we hear you say. But that’s all records and publishing. Everyone knows they’ve been hurting for more than a decade.
Live music. That’s what will give Apple a hiding. That’s where the big money is.
Well, yes, it is true that in Live Nation’s latest quarter – its Q3, in the three months to end of September 2014 – it did turn over more than double that of any major label group, with $2.5bn on its books.
Even relatively speaking, that hardly cuts Apple down to size.
The iPhone company’s quarterly revenue is still 30 times as big as Live Nation’s.
As for what’s left after expenses, Live Nation’s net profit in its Q3 stood at a healthy-sounding $115.8m.
We don’t need to tell you how far behind Apple that is.
How far behind Apple everybody is.
Chris Kornelis http://www.laweekly.com 1/27/15
James Russell’s mother told him that his first invention was the “automated battleship” he built when he was 6. By the time he was 13, he was fixing toasters, irons and fans at a local appliance store in his hometown outside Seattle. The summer before he left for college, he was hired to set up a radio station — transmitter and all — something he’d never done before. He’d never even seen an antenna that big.
“That’s why I am an inventor,” says Russell, now 83. “I can envision how it should be.”
At Portland’s Reed College, Russell studied physics and built his first turntable. Unsatisfied with the standard needles of the day, he used cactus needles, which he sharpened with sandpaper, to play the first LP he purchased: Nikolai Rimsky-Korsakov’s Scheherazade. Even so, with his sharp ears, he could hear the quality of his LPs disintegrate after the 10th or 12th spin.
After he graduated in 1953, Russell took a job in the research laboratories at Washington state’s Hanford Works, the nuclear reservation that produced the plutonium used in the atomic bomb dropped on Nagasaki. Longtime classical music fans, Russell and his wife, Barbara, were subscribers to the Seattle Opera, even though it meant a 400-mile drive round-trip for each performance.
He worked on projects tangentially related to nuclear reactors for several years, then convinced his superiors to let him research ways in which optics — the use of light — could be used to improve the recording and reproduction of music.
Russell wasn’t trying to make recorded music more convenient or portable. He was trying to make it more accurate, a clearer reflection of the performance. “I wanted the symphony to sound like the symphony,” he says.
On a Saturday morning in 1965, Barbara took the kids to buy shoes. Home alone, free to think about his problem, Russell figured out how to bring optics, digital technology and other disciplines together to create the digital optical storage and playback technology that would be used in what is now known as the compact disc.
The CD revolutionized the music industry, but it was never cool. Even as CD sales eclipsed and nearly exterminated vinyl, the format was plagued by accusations that its sound was inferior, that it was merely a convenient alternative to the LP.
As consumers flocked to the convenience and ubiquity of downloadable and streaming music, they unsentimentally abandoned their CD collections. But as CD sales have plummeted, vinyl’s sales figures have been moving in the other direction. The CD-versus-vinyl debate — and, by extension, the debate over digital versus analog sound — has only grown.
By 2014, vinyl’s resurgence as a marketable product and fetish property appeared to be hastening the CD’s obsolescence. While CD album sales in the United States had dropped by 80 percent since their 2001 peak, LP sales hit 9.2 million, up 52 percent from 2013 and nearly 800 percent since 2004. Jack White’s Lazaretto moved 86,700 LPs, the most units in a calendar year since Nielsen SoundScan started keeping track in 1991.
Even purely digital music is now marketed using the trappings of vinyl. When U2 distributed 500 million digital copies of its new album to iTunes users — a reach unimaginable when the band released its debut in 1980 — the artwork depicted a vinyl record inside a sleeve with the initials “LP” scribbled on the exterior. And when Neil Young launched a Kickstarter campaign for PonoMusic, a digital music player and online store, his company’s stated mission was to “re-create the vinyl experience in the digital realm.”
Baked into the vinyl resurgence is the suggestion — fed by analog apostles such as Young and White — that an LP’s analog playback produces honest, authentic sound, while digital formats like the CD compromise quality for the sake of portability and convenience. Young articulated this sentiment earlier this month at the International Consumer Electronics Show in Las Vegas, where he told Rolling Stone’s Nathan Brackett that the vinyl resurgence is due to the fact that “[vinyl is] the only place people can go where they can really hear.”
Fathers of the compact disc — and many audio engineers who make a living reproducing what transpires in the recording studio — bristle at this notion.
“As long as you can measure the difference, the CD will be better than the vinyl, absolutely,” says Kees A. Schouhamer Immink, a former Philips engineer in the Netherlands, who was a member of the Sony/Philips task force that created the compact disc standards. “But if you say the whole experience — just like smoking cigars with friends — [is better], well, do it. Enjoy smoking cigars with friends, and drink beer and brandy and enjoy listening to an old-fashioned record player. But don’t say the sound is better.
“You may say it sounds better to you. That’s OK. That’s a subjective matter.”
In 1968, a 23-year-old audio engineer named Bob Ludwig at New York’s A&R Recording was asked to create a test pressing of The Band’s debut, Music From Big Pink, so that the producers could hear what it would sound like on LP. During the process, he especially tried to preserve as much as possible of the deep low end of the band’s sound, which he believed was critical to its music.
But when he heard the final LP that was released, he was stunned. “All the low, extreme low bass that I knew was there, was chopped right off.”
Years later, when Ludwig was hired to provide the final edit (known as mastering) for a greatest-hits package for The Band, he got the album’s master tapes back from Capitol Records. On the box was a note from the cutting engineer who’d made the original vinyl master, saying the album’s extreme low end had to be cut out.
Of vinyl’s inherent deficiencies, reproducing bass is one of its most glaring. The other is that the last track on each side of a record sounds worse than the first, due to the fact that the player’s stylus covers fewer inches of grooves per second as it gets closer to the center.
“The vinyl disc is a steadily collapsing medium,” says Ludwig, who went on to become a Grammy-winning mastering engineer, with credits on Patti Smith’s Horses, Steely Dan’s Gaucho and White’s Lazaretto, among many others. “The closer it gets to the label, the more the information is getting compromised, the high frequencies getting lost.”
Ludwig’s colleague Bob Clearmountain is one of the industry’s most respected mixing engineers, responsible for setting the levels of a band’s performance before it’s sent to the mastering engineer. He has worked with everyone from The Rolling Stones and David Bowie to Ricky Martin and Lenny Kravitz.
When Clearmountain mixed vinyl albums for Columbia Records, he says the label required the test pressing of each LP to play on an old, cheap turntable without skipping, or it would have to be mixed again. Too much bass in one speaker could make the needle skip out of the groove, as would too much sibilance — a harsh “s” — in a singer’s voice.
Clearmountain, who now works out of Mix This! in Pacific Palisades, says that when he heard the vinyl test pressings of the albums he’d worked on in the studio, he always felt the same way: depressed.
“I’d just listen and go: ‘Jesus, after all that work, that’s all I get?’ It was sort of a percentage of what we did in the studio,” he says. “All that work and trying to make everything sound so good, and the vinyl just wasn’t as good.”
Not only did records provide only a sliver of what he’d done in the studio but they also came with plenty of sounds that hadn’t been there in the first place: ticks and pops.
“If you’re a musician like Bob and I,” Ludwig says, “and you get to do a mix and you listen to it and you love the way it sounds, and then it’s transferred to vinyl and suddenly it’s got noise and ticks and pops, for me that’s an extremely unmusical event.”
Unlike Russell, not all of the engineers and scientists whose inventions and developments laid the groundwork for the CD were motivated by the quest for clearer sound. Richard Wilkinson was searching for a better picture.
At MCA Laboratories in Torrance, Wilkinson was charged with developing ways to record television programs and put them on master discs with a laser beam at a time when few commercially available lasers existed. It was an experimental project with slim hope of success. “The director of the lab told me there was no guarantee the job would last more than six months,” Wilkinson says.
But he and his colleagues succeeded. In partnership with Immink and his colleagues at Philips, Wilkinson’s team helped create the standards for what we now know as the laserdisc. Under an agreement between the two companies, Philips built the players and MCA manufactured the discs at a factory in Carson.
“If you really want to have problems between Dutch people and Americans, then you should do this kind of thing,” Immink says. “If a system didn’t work, who was to blame, the disc or the player? That was a huge problem.”
The bigger problem was that the public was not impressed. Philips’ first commercially available laserdisc player — the Magnavox 8000 — was introduced in 1978, but Immink estimates that after half a billion dollars in development resources, only a few hundred players were sold.
But the excursion was not a total loss. While Immink and his colleagues were developing the video disc, management asked them to pursue a sound-only disc as well.
Immink grew up saving his money to buy 45s by American artists such as Elvis Presley. But when his team started testing the digital audio disc, they used recordings of performances such as Mussorgsky’s Pictures at an Exhibition. Classical music could demonstrate the format’s superior dynamic range over the LP better than popular music, which has a comparably smaller range — the distance between soft passages of music and loud ones.
“From a record player, it’s impossible to have such a dynamic range,” Immink says. “You have to suppress the dynamic range, otherwise the grooves will touch or you [have reduced] playing time.”
In 1979, Immink was brought into a joint task force between Philips and Sony to develop standards for the compact disc. In 1982, the new format went on the market.
Two years later, the first CD was manufactured in the United States. Fittingly, it was Bruce Springsteen’s Born in the U.S.A., an album that was mixed by Bob Clearmountain and mastered by Bob Ludwig.
Hearing Born in the U.S.A. on CD didn’t make either man a digital advocate. Clearmountain and Ludwig say that early analog-to-digital converters had an industrial sound, which made CDs sound brittle. But when Apogee Electronics — a company co-founded by Clearmountain’s wife, Betty Bennett — developed the first high-quality converters in 1985, the sound came into focus.
“It wasn’t until CDs actually started to sound good [that I went]: ‘That’s what it sounded like. That’s what I remember doing in the studio,’ ” Clearmountain says. “The great thing for me about digital, about CDs, was that I could do things that I could never do for a vinyl record.”
Scott Metcalfe, director of recording arts and sciences at the Peabody Conservatory of Johns Hopkins University, says the move to CDs was especially beneficial for reproducing classical recordings.
“Really in every way measurable, the digital formats are going to exceed analog in dynamic range, meaning the distance between how loud and how soft,” he says. “In the classical world, [that means] getting really quiet music that isn’t obscured by the pops and clicks of vinyl or just the noise floor of the friction of the stylus against the [LP] itself.”
That said, every audio engineer L.A. Weekly spoke to said it’s not hard to find LPs that sound better than CDs. Mastering, production and manufacturing variables can drastically tilt the scale either way.
The seemingly endless possibilities of the CD also resulted in unexpected consequences.
“When the CD came, everybody discovered that they could do everything with the CD — or they believed they could do everything,” says Andres Mayo, president of the Audio Engineering Society. “So they started pushing and pushing and pushing the volume up and up and up, and that created a totally different sound.”
Even before the advent of the CD, there had been a “loudness war” in the music industry — the desire to make an album louder than its competitors, so it would catch the attention of listeners and radio programmers. But when CDs made it possible to increase the volume exponentially — no more skipping needles — nuance and dynamics often suffered.
Because vinyl’s restrictions do not permit the same abuse of audio levels as the CD, Mayo says that listeners might hear a wider dynamic range in an album mixed separately for vinyl over a compact disc version optimized for loudness — even though vinyl, as a format, has a narrower range than CD.
“It’s not just the format,” Mayo says. “It’s what you do with it.”
It is a fact that vinyl sounds different from CDs. And many people prefer vinyl’s sound. But it’s not clean reproduction of a recording that makes vinyl a preferred format; it’s the affect the vinyl adds to a recording that people find pleasing.
“I think some people interpret the lack of top end [on vinyl] and interpret an analog type of distortion as warmth,” says Jim Anderson, a Grammy-winning recording engineer and professor at New York University’s Clive Davis Institute of Recorded Music. “It’s a misinterpretation of it. But if they like it, they like it. That’s fine.”
It’s also clear that the vinyl experience is about more than just sound. Pete Lyman, co-owner and chief mastering technician at Infrasonic Sound, an audio and vinyl mastering studio in Echo Park, says he believes listeners are gravitating toward vinyl for the physical experience of owning, holding and flipping an LP.
“I don’t think that [sound is] really the appeal for people right now,” Lyman says. “They like the collectability factor. They like the whole ritual and process of listening to it. They’re more engaged with the music that way.”
Ben Blackwell, head of vinyl operations at Jack White’s Third Man Records in Nashville, says that he thinks some people prefer vinyl because it tells the world something about who they are. “It’s like the kid walking around with a copy of The Catcher in the Rye in his back pocket,” he says. “Does he really connect with it or does he think it’s making a statement?”
In the rush to get into the vinyl game, Lyman — who not only masters recordings but also cuts the master lacquer disc that is sent to the vinyl pressing plant — says a lot of corners are getting cut. In the 1960s and ’70s, when artists were recording specifically for vinyl, they recorded and mixed to fit the confines of the medium, he explains. They kept sides below 20 minutes, and put loud songs on the outside tracks and quiet ones toward the center to account for the natural deterioration of sound that occurs when the needle gets closer to the middle of the LP.
These days, Lyman says, vinyl is often the last thing artists and labels think about. Clients who employ Infrasonic’s services only for lacquer cutting often hand over albums that are optimized for digital downloads and CD but are too long for vinyl, with track sequencing that fails to account for the medium’s natural limitations.
To get an album longer than 40 minutes to fit onto one LP, Lyman says, high frequencies and bass are the first things that go. There’s also extra distortion because he has to cut the master lacquer at a lower volume to fit all that extra music onto the LP.
“As soon as you have to cut that record at a quieter volume, you’re going to hear more kicks and pops, you’re going to hear more surface noise,” he says, “because you’re going to have to turn your stereo up to accommodate the lower level on the disc.”
As labels seek to capitalize on a physical medium that is gaining momentum, some marketing efforts offering superior sound are downright misleading. Most notable among these is “audiophile-quality 180-gram vinyl,” which consumers assume is superior because it is heavier. Lyman, however, says the added weight offers no musical benefit at all.
“It increases shipping costs and sales cost of the record. That’s about it,” he says. “It’s the Super Big Gulp of vinyl, but you’re not getting more [sound quality], really, you’re just getting more vinyl.”
With PonoMusic, Neil Young is leading fans down the digital version of a similar “bigger is better” sonic trail.
It has long been believed that the human ear cannot hear frequencies above 22 kHz. This is why CDs sample sound at 44.1 kHz and 16 bits of information per sample. According to a theorem called Nyquist-Shannon, in order to reach a desired range, sound must be sampled at twice that range. Half of 44, obviously, is 22.
Pono — along with some other digital retailers such as HDtracks.com — sells some tracks that sample music as high as 192 kHz, with 24 bits per sample. Pono also offers a PonoPlayer (retail price: $399), which the company says is optimized to play those tracks.
Pedram Abrari, Pono’s executive vice president of technology and engineering, says the idea behind the player and the store is to sell and play back tracks at the rate at which artists record them. Since artists typically record at rates much higher than 44.1 kHz for editing purposes — such as 96 and 192 kHz — the company believes that offering recordings at their original rates drastically improves the sound.
This, however, is a matter of intense debate.
“There is no evidence that humans can perceive frequencies above 22 kHz,” says Dr. Daniel Levitin, a neuroscientist and author of the best-selling book This Is Your Brain on Music. “There is nothing in the auditory system or brain that processes sounds this high, as far as we know.”
In double-blind tests conducted by Levitin and others — some results of which were published in the Journal of the Audio Engineering Society — listeners cannot tell the difference between high-resolution audio and CD-quality audio.
But many audio professionals, including Bob Ludwig and NYU’s Jim Anderson, say they can hear an improvement over CD quality, and they prefer the higher frequencies and sample rates. Anderson even teaches a class at NYU in which he instructs students on how to listen for the differences.
“I think if people can’t hear it, they probably didn’t know what they were listening for,” Anderson says. “Someone has to say to you: Listen for this, listen for this, listen for this. And when you start to home in on those details, it starts to become very clear.”
Abrari says Pono doesn’t like to get into the science. And he says it’s not just about what a person can hear but what they feel.
But even if humans can hear or “feel” above 22 kHz, the experience of listening to high-resolution digital tracks is very different from listening to vinyl. If anything, it’s closer to that of the CD.
The ticks and pops are gone. There is no disc to ritually flip. The tracks sound closer to what the artist laid down in the studio, but that’s only because the distortion and limitations present in the vinyl pressing are no longer part of the experience.
It’s not as cheap an obsession, either. You can buy an armload of used LPs for the $21.79 it costs to buy a 192 kHz version of Young’s Harvest at the Pono store.
As he’s been pitching Pono, Young has continued to promote the idea that analog formats and recording gear offer the authentic sound, and digital is a compromise.
“I don’t think [Pono] can sound better than vinyl,” he said earlier this month at the Consumer Electronics Show. “Because vinyl is a reflection and any digital is a reconstitution; it’s not the same thing.”
Many audio engineers disagree. Scott Metcalfe, for example, says that recording to analog tape isn’t any purer than recording music digitally. But the distortion and pitch variation that analog tape adds to the recording are preferred by some artists and audiences.
“I think there are few people who would tell you that recording classical music to analog tape has any benefit at all,” Metcalfe says. But for some artists, he says — particularly in rock — those layers of distortion are preferable.
Ludwig says he mastered White’s Lazaretto on analog tape not because it’s a better way to master but because “it’s what [White] wanted.”
“For many world-class mixers,” Ludwig says, “mixing to analog tape has no advantages if what comes out of the console is exactly what you want.” However, for a less skilled mixing engineer, mixing to analog tape can “ ’glue’ the music together in the most wonderful way,” he says.
Whether it’s analog tape versus digital recordings, or vinyl versus CDs, objective quality is not the conversation: It’s about which one the artist and listener prefer.
“Every way you can measure it, digital is going to be superior,” Metcalfe says. “It really does come down to the preference of the end user.”
Or, as Kees Immink says: “Some people like marmalade and some people like mustard. If people like to listen to vinyl, do so, enjoy life. But don’t say that the sound is better.”
DEREK THOMPSON 1/25/15 TheAtlantic.com
That doesn’t seem like such a controversial statement. Maybe it should be. The music business sold 141 million CDs in the U.S. last year. That’s more than the combined number of tickets sold to the most popular movies in 2014 (Guardians) and 2013 (Iron Man 3). So “dead,” in this familiar construction, isn’t the same as zero. It’s more like a commonly accepted short-cut for a formerly popular thing is now withering at a commercially meaningful rate.
And if CDs are truly dead, then digital music sales are lying in the adjacent grave. Both categories are down double-digits in the last year, with iTunes sales diving at least 13 percent.
The recorded music industry is being eaten, not by one simple digital revolution, but rather by revolutions inside of revolutions, mouths inside of mouths, Alien-style. Digitization and illegal downloads kicked it all off. MP3 players and iTunes liquified the album. That was enough to send recorded music’s profits cascading. But today the disruption is being disrupted: Digital track sales are falling at nearly the same rate as CD sales, as music fans are turning to streaming—on iTunes, SoundCloud, Spotify, Pandora, iHeartRadio, and music blogs. Now that music is superabundant, the business (beyond selling subscriptions to music sites) thrives only where scarcity can be manufactured—in concert halls, where there are only so many seats, or in advertising, where one song or band can anchor a branding campaign.
Nearly every number in Nielsen’s 2014 annual review of the music industry is preceded by a negative sign, including chain store sales (-20%), total new album sales (-14%), and sales of new songs online (-10.3%). Two things are up: streaming music and vinyl album sales. Somewhere in America, an enterprising sociologist is fitting this into an interesting theory about how the emergence of new technologies in media ironically amplifies our interest in pop-culture anachronisms.
So what about vinyl? It is rising, yes, rising like a wee baby phoenix, from a prodigious pile of ashes. Nine million two hundred thousand vinyl LPs were sold in 2014, up 51 percent annually, even faster than the growth in video streams. Nine million is a lot more than zero, but commercially speaking, its overall impact on the market is meager. Vinyl accounts for 3.5 percent of total album sales. The CD market (which is dead, remember) is 15-times larger.
And how about the hits? The top 1 percent of bands and solo artists now earn about 80 percent of all revenue from recorded music, as I wrote in “The Shazam Effect.” But the market for streamed music is not so concentrated. The ten most-popular songs accounted for just shy of 2 percent of all streams in 2013 and 2014. That sounds crazy low. But there are 35 million songs on Spotify and many more remixes and covers on SoundCloud and YouTube, and one in every 50 or 60 online plays is going to a top-ten song. With the entire universe of music available on virtual jukeboxes, the typical 3.5-hour listening session still includes at least one song selected from a top-ten playlist that accounts for .00003 percent of that universe. The long tail of digital music is the longest of tails. Still, there is a fat head at the front.
When Digital Thieves Strike, Artists Act Quickly to Seize Opportunity When Music Is Purloined, Artists Try to Exploit OpportunityJanuary 22, 2015
JOE COSCARELII NYTimes.com 1/21/15
When nearly 30 new Madonna songs, many of them unfinished demos, surfaced online last month, the singer and her team reacted both emotionally and with a savvy business acumen tailored to the digital era.
In public statements on Instagram, Madonna called the leaks “a form of terrorism” and likened the theft to “artistic rape,” urging fans not to listen to songs that were “stolen long ago and not ready to be presented to the world.”
But behind the scenes, Madonna’s team was scrambling not only to find the source of the leak, an investigation that resulted in the arrest of a man in Israel on Wednesday, but also to set the stage for her new album, “Rebel Heart,” which had not yet been announced. It wasn’t quite the surprise album strategy used most famously by Beyoncé, but something more makeshift: Within days, six songs from the album had been polished and officially released for sale on iTunes and Amazon, with the rest of the album promised on March 10.
This week, Björk mirrored that aggressive digital maneuvering when her new album, “Vulnicura,” which had been announced only four days earlier, leaked online in full more than two months before its scheduled release. After the appearance of “Vulnicura” on illegal downloading sites over the weekend, the singer’s record label rushed the entire album to digital retailers, and by Tuesday night, it was available for purchase worldwide.
In the online music age, advance leaks are all but inevitable — Björk’s and Madonna’s happened to come exceptionally early — but the same distribution methods that make downloading stolen songs a breeze can allow artists to take control of the chaos and try to make lemonade from a sour situation.
“In the past, labels tried to shut down leaks by hiring so-called ‘web sheriffs’ who stopped blogs from sharing the links,” said Staffan Ulmert, the founder of HasItLeaked.com, which tracks early album releases. “But it’s really difficult to shut down a leak once it starts.” Recently, the strategy used by artists and their labels has shifted:
“Madonna is the first big artist I’ve seen try to make money off of it by going to iTunes,” he said.
Previously, Mr. Ulmert said, labels would offer an online stream after an album leaked, either through a media outlet or a site like SoundCloud. “But I don’t think they are generating a lot of money,” Mr. Ulmert said. “I think when it comes to big artists, we’ll see more of this in the future.”
The six Madonna songs have sold a combined 146,000 units so far, according to Nielsen Music.
In addition to making some of the leaked songs available for purchase, Madonna pursued the matter through private investigators and, eventually, law enforcement. In December, Guy Oseary, the singer’s manager, approached Wizman Yaar Investigations, a Tel Aviv-based firm that specializes in intellectual property theft and commercial leaks.
Alon Levy, Wizman Yaar’s head of high-tech investigations, said the firm sent investigators to New York to check Madonna’s personal computer, and using the data they collected, tracked the theft back to Israel. After a few weeks of “undercover activity” and “surveillance,” Mr. Levy said, the firm had zeroed in on a suspect and turned the information over to the police.
Continue reading the main story
Continue reading the main story
On Wednesday, Micky Rosenfeld, the foreign press spokesman for the Israeli police, confirmed on Twitter that a 39-year-old man “suspected of hacking known artists’ computers, stealing and distributing songs” had been arrested, although Madonna was not named.
An Israeli police unit said in a statement that the suspect “broke into the personal computers of several international artists over the past few months and stole promotional final-cut singles which have yet to be released and traded them online for a fee.” Law enforcement officials did not identify the suspect.
The law enforcement unit added that it had “collaborated closely with the F.B.I., with suspicion of even more break-ins to computers owned by unknown international artists, stealing and selling their works.”
While online album leaks have plagued artists since the dawn of Napster in 1999, Mr. Levy, the investigator, said targeted thefts, which range in scale from a single song to the North Korean hack of Sony or the stolen batch of celebrities’ nude photos, are increasingly prevalent. “There is a full world in the dark net that specializes in trading data,” he said. “If you have a buyer for data, you will find someone to bring it to you.”
In a statement on Wednesday, Madonna thanked those “who helped lead to the arrest of this hacker.” She added, “Like any citizen, I have the right to privacy. This invasion into my life — creatively, professionally and personally — remains a deeply devastating and hurtful experience, as it must be for all artists who are victims of this type of crime.”
Björk’s label, One Little Indian, has not approached any law enforcement agencies about the leak because it was focused on releasing the music, said Derek Birkett, the label’s founder. “We had lots of discussions about alternative ways to get it out,” including preorders and streams, he said. While putting out the physical version of the album in March remains a priority, One Little Indian ultimately decided to release the full album digitally first: “Björk called me up and said, ‘Let’s go for it,’ ” Mr. Birkett said.
Björk, meanwhile, avoided directly mentioning the leak at all. “ ‘Vulnicura’ will be rolling out worldwide over the next 24 hours!!” she wrote on Facebook on Tuesday, announcing the change of plans. “I am so grateful you are still interested in my work!!” she added. “I appreciate every little bit!!!”
“Infographic: Streaming Boom Changes Music Landscape”>
You will find more statistics at “http://www.statista.com
By Tim Ingham Musicbusinessworldwide.com 01/09/15
If you’re an LP fan – and considering they’re still the industry’s most lucrative product, you probably are – the stats make for depressing reading: according to Nielsen Soundscan data, full-year LP sales in the US across all formats dropped by a shocking 61.5% between 2004 and 2014 – from 667m all the way down to 257m.
But now Nielsen has released its in-depth report about 2014 in the States. And it appears the album might not be completely doomed after all – so long as it’s not being sold in a massive retailer like Wal-Mart.
Independent stores and ‘non-traditional’ retailers? They’re doing just fine.
Total album sales in the States dropped by 11.2% to 257m in 2014. Digital album downloads – a market which is dominated by iTunes – dropped 9.4% to 106.5m.
But it’s in the physical world where things get interesting. Vinyl LP sales had a stormer, but to no great effect on the wider market – up 51.8% to 9.2m.
And on paper, CD sales had a howler, falling 15% from 165.4m to 140.8m; the biggest format hurting by the biggest amount.
But to really get an accurate picture of physical album sales, it’s important to understand where CD’s decline is taking place – because it ain’t Rough Trade New York.
According to Nielsen, physical album sales in chain stores across America were slashed by a fifth in 2014 – plummeting by a massive 20.6%, from 39.1m to 31m.
Meanwhile, ‘mass merchant‘ stores – like Walmart and Target – suffered a similar fall, with album sales crashing 19.3% from 77.9m to 62.9m.
Between them, these two types of retailer alone saw 23.1m album sales wiped off their bottom line in 2014 – making their tills almost entirely culpable for America’s annual decline in CD sales.
As for independent US music stores, their year in album sales was flat – down just 0.5% in unit terms to 18.2 million.
But the positive story of the year in US physical music retail was the ‘non-traditional’ outlets – including direct-to-fan sales, CD purchases at gigs and internet retailers such as Amazon.
Their sales of physical albums increased by 5.2% to 38.5m units – meaning they are now a bigger category for overall music purchases than the chain stores
Honor Whiteman medicalnews.com 1/09/15
There is no doubt that music can influence our emotions; some songs can make us feel happy, while others can bring a tear to our eyes. And according to a new study published in the journal Frontiers in Psychology, some of the ways in which music affects us are the same worldwide, regardless of cultural diversities.
The research was conducted by investigators from McGill University and the University of Montreal – both in Canada – and the Technische Universität Berlin in Germany.
To reach their findings, the team compared the reactions to 19 short musical extracts between 40 Canadians who live in Montreal and 40 Mbenzélé Pygmies who live in the Congo rainforest.
The researchers note that, compared with Canadians, the Mbenzélé Pygmies live a significantly different way of life; they have no access to electricity, television or radio and are extremely isolated.
Of the musical extracts, which lasted for around 30-90 seconds, 11 were Western and included orchestral music from three well-known movies: Star Wars, Psycho and Schindler’s List. The remaining eight extracts were Pygmy, which consisted of primarily upbeat vocal pieces that are normally performed during ceremonies – to provide comfort following a death, for example.
Because Mbenzélé Pygmies are accustomed to singing during ceremonies, the team recruited Canadians who were amateur or professional musicians to make the comparison between the two groups fairer.
After listening to each extract, the study participants were required to identify how the piece of music made them feel by selecting from a range of emoticons that represented different emotions, including happiness, sadness, anxiety, excitement, calmness and anger.
In order to gain a better idea of how each piece of music affected the participants, the researchers measured their heart rate, respiration rate and the amount of sweat on their palms as they listened.
Both groups reported similar feelings of calmness and excitement
According to study author Hauke Egermann, of the Technische Universität Berlin, the team found there were significant similarities in how listeners in each group reacted to each piece of music.
“Our major discovery is that listeners from very different groups both responded to how exciting or calming they felt the music to be in similar ways,” Egermann explains.
He hypothesizes that this is likely to be down to the tempo, pitch or timbre (tone or quality) of the music, but notes that further research is warranted.
When looking at the differences in reactions to the musical extracts between the two groups, the researchers found that the Canadians reported experiencing a wider range of emotions upon listening to Western music, compared with when Pygmies listened to Western music and their own music.
In general, Pygmies reported feeling more positive emotions, regardless of the style of music they listened to.
According to study author Nathalie Fernando, of the Faculty of Music at the University of Montreal, this particular finding may be to do with the different roles that music plays in each culture.
“Negative emotions are felt to disturb the harmony of the forest in Pygmy culture and are therefore dangerous,” she explains.
“If a baby is crying, the Mbenzélé will sing a happy song. If the men are scared of going hunting, they will sing a happy song. In general, music is used in this culture to evacuate all negative emotions, so it is not really surprising that the Mbenzélé feel that all the music they hear makes them feel good.”
Based on their findings, the team believes while culture can influence an individual’s reactions to music, some responses are universal. Study author Stephen McAdams, of the Schulich School of Music at McGill University, says:
“People have been trying to figure out for quite a while whether the way that we react to music is based on the culture that we come from or on some universal features of the music itself. Now we know that it is actually a bit of both.”
In August 2014, Medical News Today reported on a study published in the journal Social Psychological & Personality Science, which suggested music can make us feel powerful, particularly if it has high bass levels.