Archive for the ‘sales’ Category

Stem Helps Split Royalties, and Takes Off as Music Distributor

February 7, 2017


When Frank Ocean’s album “Blonde” came out in August, it went straight to No. 1 and became the talk of the music business because it was released completely outside the usual channels of the recording industry. The mystery was how Mr. Ocean and his team did it.
One answer was revealed on Sunday in an online ad promoting “Blonde” as one of the most acclaimed releases of 2016 and noting that it was “powered by Stem.”
That service, which began only a year ago, has quickly become a player in a fast-growing corner of the music industry: online platforms that cater to independent artists by distributing their music to streaming services and organizing the many strands of royalties that accumulate from fans’ clicks.
Stem, founded by three 20-somethings in Los Angeles, has attracted a clientele of young artists who operate independently yet tend to collaborate frequently with other acts, some of them stars. For them, Stem’s attraction is its ability to easily manage the complex “splits” — the divvying up of royalties among multiple parties — that result from such collaborations. Stem Disintermedia, the company behind it, has raised $4.5 million from investors, including Upfront Ventures and Scooter Braun, who is the manager for Kanye West and Justin Bieber.
The indie music sector already has a well-established network of alternative distribution companies like TuneCore and CD Baby, which deliver unsigned artists’ work to online services for what is usually a small fee. But those services have no means to divide the royalties if a song has, say, two producers and five writers, an example of the kind of collaboration that is now common in pop. Instead, the main performer would be responsible for accounting.
Stem eliminates that burden by tracking every collaborator on a song, and requiring all parties to agree on percentage splits. Milana Rabkin, Stem’s chief executive and one of its founders, compared the service to online payment apps that let friends easily split a restaurant tab.
“In a world where Venmo exists,” Ms. Rabkin said in an interview, “why isn’t there a Venmo for Apple and Spotify?”
Stem’s consensus model, however, could also be its Achilles’ heel, since it will not allow any party to be paid until all agree on the splits, a process that gives holdouts bargaining power. Ms. Rabkin said that most projects reached consensus in a few days and that the longest had taken “a couple months.” The service takes a 5 percent cut on royalties.
Representatives of Mr. Ocean declined to comment on exactly how he had used Stem. But aside from the album’s initial appearance on Apple Music — when it was delivered directly to Apple — Stem appears to have been the vehicle used to release “Blonde” to most major services. Stem distributes music to Spotify, Apple, YouTube, Amazon, Tidal, SoundCloud and several other outlets.
While Stem’s model was novel when it first appeared, it now has competition. In December, CD Baby quietly introduced a new distribution service, Soundrop, which, like Stem, tracks royalty splits — although without the consensus requirement — and caters to a generation more likely to post songs on YouTube and think about making money later.
“It’s an opportunity to reach a demographic that wants to create differently,” said Kevin Breuner, the vice president of marketing at CD Baby. “Music distribution is a secondary thought to them.”
Stem, by contrast, is catching on among a class of young professionals who often operate independently but may be involved in the highest creative levels of the business. Its clients include Childish Gambino and the electronic producer Deadmau5. The company says it has distributed 6,000 pieces of content that have been streamed 500 million times.
Dina LaPolt, a lawyer representing Deadmau5, said her client was using Stem to track his music on YouTube, but explained that Stem’s royalty-tracking system was particularly important to artists in managing the otherwise daunting task of tracking royalty splits.
“Music is the only business in the world where the artist is responsible for doing all the paperwork,” Ms. LaPolt said.
Among Stem’s most vocal advocates is Anna Wise, 28, a singer and songwriter who won a Grammy Award for her work with Kendrick Lamar. She was working as a nanny before she began using the service, which she said had provided her with a steady income — “enough to pay Brooklyn rent,” she said — and devote herself fully to making music. Her latest album, “The Feminine: Act II,” released through Stem, comes out on Feb. 17.
The company’s system, she said, allows her and friends to quickly and transparently arrange deals among themselves, maintaining control and minimizing any disruption to creativity.
“It’s essentially like a smart contract,” Ms. Wise said. “It’s easier and simpler, and I love easy and simple.”


Music sales growing at fastest rate since 1998

April 13, 2016
   Robert Cookson 4/12/16

Record companies have reported their fastest revenue growth in nearly two decades, as the rise of subscription streaming services such as Spotify and Apple Music offset declines in CD and download sales.

Total industry revenues grew 3.2 per cent to $15bn in 2015, according to the International Federation of the Phonographic Industry, an organisation that represents recording companies. This is the highest rate of sales growth in the sector since 1998.

Frances Moore, IFPI chief executive, said: “After two decades of almost uninterrupted decline, 2015 witnessed key milestones for recorded music: measurable revenue growth globally; consumption of music exploding everywhere; and digital revenues overtaking income from physical formats for the first time.”

British singers Adele and Ed Sheeran were the top selling recording artists of the year, followed by Taylor Swift, Justin Bieber and One Direction.

However, Ms Moore argued that the industry’s revenues should be much higher, claiming that certain streaming services such as Google’s YouTube were paying too little to record labels for the use of their songs.

Overall, recording companies’ streaming revenues increased by 45 per cent to $2.9bn last year, IFPI reported. Of that total, $2bn came from about 68m people who pay for subscription streaming services such as Spotify and Apple Music.

By contrast, only $634m was from YouTube and other “user upload” streaming services in 2015, even though these services streamed songs to almost 1bn listeners, IFPI noted.

“We’re operating in a market that’s skewed,” Ms Moore said.

IFPI argues that YouTube has been able to avoid paying a “fair” rate to copyright holders by taking advantage of legislation that protects internet hosting companies from being liable for copyright infringement by their users. This has allowed users to upload unlicensed content on YouTube — and left it to the recording companies to request its removal. IFPI is now lobbying European and US regulators to amend the legislation.

Chart: Recorded music industry sales

YouTube, however, says it has paid out more than $3bn to the music industry to date and points out that it provides a tool, called Content ID, that gives record labels strong control over their copyrights. It makes the bulk of its revenues from advertising but recently launched a subscription offering.

While music streaming was surging, revenues from physical formats continued to decline in 2015 — albeit at about half the rate of decline in the previous two years. Sales from physical recordings, mainly CDs, were worth $5.9bn, a drop of 4.5 per cent.

These sales were boosted, in part, by the success of Adele’s latest album, which was withheld from streaming services, as well as a rebound in Japan, the world’s second biggest music market, where CDs are still the main medium for music consumption.

Revenues from performance rights — the use of recorded music by broadcasters and public venues — increased 4.4 per cent to $2.1bn.

However, download revenues fell 10.5 per cent to $3bn — a bigger decline than in 2014.

Will Page, director of economics at Spotify, said the growth of the Swedish streaming service alone more than offset the global decline in downloads in 2015, “which makes this streaming-based recovery feel increasingly sustainable”.

In Shift to Streaming, Music Business Has Lost Billions

March 25, 2016


There is plenty of good news in the music industry’s latest sales report released this week. Streaming is up. Vinyl has continued its unlikely renaissance. And did we mention that streaming is up?

But a closer look shows that the big sales numbers that have sustained the recorded music business for years are way down, and it is hard to see how they could ever return to where they were even a decade ago.

Revenue from music sales in the United States has hovered around $7 billion since 2010, according to the Recording Industry Association of America. For 2015, the number was $7.02 billion, up slightly less than 1 percent from 2014.

Within that steady total, however, have been drastic shifts in listener behavior. CDs and downloads have been gradually abandoned as streaming has become the platform of choice.

The result is that the music industry finds itself fighting over pennies while waving goodbye to dollars. For instance, the growing but still specialized market for vinyl records is generating more revenue than the music on YouTube, one of the biggest destinations on the Internet, but that’s because YouTube pays royalties in the tiniest fractions of cents.

Streaming — whether through paid subscriptions to Spotify or Rhapsody; Internet radio from Pandora; or even videos on YouTube — now makes up 34.3 percent of sales, edging out digital downloads as the industry’s biggest source of revenue. In 2015, the year that Apple Music arrived and Tidal was reintroduced by Jay Z, paid subscription services generated $1.2 billion in sales in the United States. After adding in free streaming platforms and Internet radio, the total for streaming is $2.4 billion.
Beyoncé with Jay Z, second from right, who announced his plans for the Tidal streaming music service in March 2015 in Manhattan. Credit Sam Hodgson for The New York Times

Getting people to subscribe en masse to streaming services has been a priority for record labels and the streaming companies alike, who have often claimed that by building robust subscriber ranks, they would eventually return the industry to its former glory.

But so far streaming has not saved the music business, and deep worries persist about the model. Many artists are suspicious of the deals that their record companies have cut with technology companies, and they want to know how much money is trickling down to them. In a rough analysis of the recording industry association’s numbers, Billboard magazine estimated that the average amount of money generated each time a song is streamed fell last year by about 24 percent, to 0.506 cent. (The fine print: That number, a retail sales figure, covers so-called on-demand streams, excluding Internet radio.)

What gets lost in the battles over fractions of pennies, however, is just how much money has vanished from the music business as consumers have abandoned its most profitable product: the CD.

In 2006 — years after Napster, and well into the iTunes era — record labels still reaped $9.4 billion from CD sales in the United States, more than the total sales revenue of the business today. Last year, CD sales stood at just $1.5 billion, a drop of 84 percent in a decade. And downloads, also once viewed as the industry’s savior, have now been falling for three consecutive years with no sign of recovery.

In a note accompanying the recording industry’s report, Cary Sherman, the group’s chief executive, criticized sites like YouTube — characterized in the report as “on-demand ad-supported” — for what he described as paltry payouts compared to their enormous popularity online. Last year, YouTube and sites like it generated $385 million in royalties. In comparison, vinyl records — a niche if there ever was one — brought in $416 million.

“Reforms are necessary to level the playing field and ensure that the entire music community derives the full and fair value of our work,” Mr. Sherman wrote. (In response, Google, which owns YouTube, objected to its comparison alongside audio-only platforms, referring to it as “apples to oranges.”)

It may be possible for the music industry to wring more money out of YouTube. But it seems doubtful that it will ever earn back what it has lost from the CD.

Music Sales Are Music PR

February 3, 2016

Platinum and Gold certifications now reflect streaming figures, but it’s still very hard to quantify a musician’s commercial success.

Spencer Kornhaber 2/2/16

When people talk about commercial success in popular music, they’re often talking about one of three concepts. There’s the reach of a work of music—the number of listeners it gets. There’s perception, or bragging rights. And there’s the money made—arguably the most important metric, almost entirely obscured from public view.

The announcement that the Recording Industry of America will now count on-demand streaming figures when doling out Gold and Platinum certifications for albums means such certifications will better reflect the first aforementioned category: actual listenership. Over the past few years, more and more people have stopped paying to download or physically own albums and started instead consuming music on platforms like Spotify, YouTube, and Apple Music (Pandora, too, but because you don’t get to pick individual songs its data still won’t factor into RIAA certifications). The RIAA’s rule change means those people can push an album to Gold or Platinum status, and that’s a good thing if certification is meant to capture real marketplace interest in a musical work.

But the rule switch-up also makes understanding what exactly Gold or Platinum status means more difficult than ever before. Until now, Gold indicated at least 500,000 copies sold in stores or through platforms like iTunes, while Platinum indicated a million. Now, those numbers are the sum of sales and the equivalent of sales. The formula for equivalency: “1,500 on-demand audio and/or video song streams = 10 track sales = 1 album sale.” The question of whether that’s a “fair” calculation is inherently unanswerable. What’s clear is that certifications will go from being a cut-and-dry benchmark to an approximation.

Should the public mind? Probably not. An album sells what it sells regardless of certification; certificates are only handed out after a record company or musician puts in an application for one. For artists, the incentive to do so is the same incentive to pursue any kind of award: recognition for hard work. For everyone else, Gold and Platinum plaques have always been about that second idea of musical success that I mentioned earlier: appearances. Certificates allow musicians and their record companies to market themselves as successful. They give fans ammo in their online wars against rival fandoms. The RIAA’s own press release makes certifications sound like promotional gimmicks:

Gold & Platinum recognition is often among the most celebrated news in an artist’s social media feed. The RIAA utilizes a myriad of social media platforms – Twitter, Facebook, Instagram, Flipagram, and a YouTube page – to market and publicize artist award achievements. The RIAA also recently unveiled a new and Gold & Platinum database where fans can more easily search and share the award recognition.

That third version of commercial success, how much money a song or album has made, remains hard to talk about. Remember, RIAA awards are a marker of thresholds—an album can sell anywhere between 1,000,000 and 1,999,999 copies and still be Platinum. The other widely used commercial metric in music, Nielsen Soundscan, does keep precise sales and streaming totals, but much of that is only available to subscribers. The Billboard charts simply use those totals to render success in the relative terms of a ranking. And even when the public does know the full consumption figures for a work of music, that’s far from a full portrait of financial success.

It’s always been the case that the amount an artist makes from an individual sale—as opposed to how much the record company or distributor profits—has been confidential. But today, the picture is even less clear. That’s in part because streaming payouts are famously complicated and mutable. It’s also because in many cases, profitability has been largely decoupled from sales in favor of merchandising, touring, and, of increasing importance, sponsorships.

Take the case of Rihanna’s new album, Anti. On Friday, The New York Times reported that by Nielsen’s count, only 460 copies had been sold. That’s a shockingly low number, but as the reporter Ben Sisario wrote, it’s surely so small only because of quirks of rules and timing. As I wrote the same day, the RIAA certified Anti platinum within 14 hours of it hitting the Internet—apparently because Samsung, with whom Rihanna’s signed a reported $25 million marketing deal, bought up a million album copies that were then gifted to fans who typed in a download code. Nielsen doesn’t count such free promotions in its numbers; the RIAA does, on the theory that they still reflect consumer demand for an album. One measure of counting is certainly better for Rihanna’s publicity machine. Neither tells anyone how much money she’s made.

Now that’s what I call an oral history of Now That’s What I Call Music!

January 19, 2016

Now that’s what I call an oral history of Now That’s What I Call Music!

By Lauren Duca 1/15/16

Now That’s What I Call Music! feels like a distant memory, a present you got for Christmas when Juicy sweatsuits were a thing. Yet, the series continues to be successfully sold in CD form. It’s remarkable to think that anyone besides Adele might be able to move physical copies, never mind the irrelevance of professional curation in the age of streaming services. But this juggernaut of nostalgia has endured since the days of the teenaged music industry of the early ’80s.

At the time, the U.K.-based record company Virgin was a smaller unknown on the precipice of its golden age. Virgin was using a share of its fledgling library to license tracks to companies like K-tel and Ronco to recoup royalties. The compilations that came out of those negotiations were so cheesy and phoned-in that one of them was actually titled Raiders Of The Pop Charts. As Culture Club launched and The Human League’s third album began taking off, Virgin’s repertoire began expanding. It occurred to the company’s legal representative Stephen Navin and head of marketing Jon Webster that the label might be able to make its own compilations.

Before Now! was introduced in 1983, compilations were seen as tacky. The compression was messy with tracks often being cut off mid-song. Sleeves were simple, if not simply cheap. For the most part, the business was helmed by companies who dealt in TV advertising, sloppily pulling together songs as just another product to be sold. From the start, Virgin—and eventually Virgin in partnership with EMI—understood that the company needed to replicate the visceral joy of purchasing an album using the medium of compilations. Virgin needed to create a brand.

The other challenge was convincing major artists to participate. Along with their managers, big acts were concerned about how being on Now! would affect their reputation or cannibalize sales. But the promise that this was a record company curating the best of the best with care convinced them to take the risk. Well, that and a few personal calls from Richard Branson. Eventually, Now! came to represent the gold standard in compilations, with more No. 1 hits than The Beatles. It became a snapshot of the musical moment, and, at one point, allegedly had Queen and Paul McCartney vying against one another for a track one, side one spot.

The A.V. Club spoke to Webster and Navin; original compiler Ashley Abram, who worked on Now! from 1983 to 2012; the current U.K. heads of the brand, Peter Duckworth and Steven Pritchard, who joined the company in 1991; and U.S. compiler Jeff Moskow, who has been with Now! since the fourth edition of the series was released in the states. Together, the six men told the story of Now!, from the inception of its title—derived from a picture of a pig talking to a rooster—to the establishment of the current family-friendly iteration of the brand, and the way it has defiantly survived in spite of the rise of digital music and streaming services.

Jon Webster: Stephen and I came up with the idea, though we still slightly argue about who it was.

Stephen Navin: It’s one of those classic music industry comments: A flop is just a bastard, but a hit has many fathers.

Webster: In those days, there were three TV merchandising companies doing these compilations. I worked at Virgin and they were constantly telexing us—it was even pre-fax back then. These compilation companies were making us offers for tracks and often competing with each other. Stephen Navin called me and said “Who are we going to license these to? Should we give all to one company or some of them?”

Navin: I was a business-affairs lawyer at the time at Virgin, and one of my tasks was to license all of our tracks to third-party TV advertising companies, names like K-tel and Ronco. It was a lot of bargaining and convincing them to take lesser tracks as well when we needed to recoup royalties.

Ashley Abram: Ronco was barely even a music company when I worked for them on compilations. They had put out products and gadgets with compilation records on the side.

Webster: These companies would write and say, “I want to license six tracks, I will pay you £2,000 and a royalty of 18 percent” or “I want eight tracks and I will give you £3,000 and royalty of 20 percent.” We’d say, “Okay, if you take these few tracks as well.” It just went round and round, until one of us said, “Well couldn’t we do this ourselves?”

After we came up with the idea, we drew up a plan for how we might do this and how much it would cost. Then we just sat there and went, “Wow, this could be fun. This could be really lucrative.”

Navin: The head of the company at the time was Simon Draper. I worked very closely with him in the context of whether we should license tracks or not and whether we should go back and get the artist’s consent or the manager’s consent or whatever, so I went to see him one day. I said, “We’ve just had an incredible run on licensing tracks, but it seems to me that there’s a real commercial opportunity here that we should be grasping, to do the licensing ourselves.”

Webster: We almost had enough tracks on our own to make that first record, because it was one of Virgin’s best-ever years.

Navin: We had such incredible talent on our roster at the time. You could put out a compilation album with just a mass of our tracks. But, of course, that’s not what the Now! series is about. The Now! series is about getting the very best, the actual cream of the cream of what was hot. So, we realized we needed partners.

Webster: EMI was our distributor and they were a big, old-fashioned record company in the U.K. So, we went to have a meeting with them and said, “Why don’t we do this together? You’ve got lots of hits, we’ve got lots of hits.” It’s like a show tune, you know, [Singing.] “Let’s fall in love!”

Navin: Simon said we ought to talk to EMI and perhaps we can talk to one of the other majors to make sure we get a fantastic combination of tracks. And I said we should get Jon in. Jon was the marketing director at the time and I knew he’d be great for it. Then the question became, “Oh, well, what should we call it?”

Webster: We just got an idea of the logo and did it on the back of a cigarette packet.

Navin: I’m afraid I’m a man given to punning, and looking around Simon’s room there was a little framed advertisement for Danish bacon, which is a lovely drawing of a cockerell on the wall and a pig with some musical notation coming out of his beak. And on the ground looking up at it in admiration is a pig and the shout line beneath the pig is saying, “Now that’s what I call music!” My eyes alighted upon the wording and it just seemed to me, “That’s it! Let’s call it that! It says exactly what we want to say.”

Abram: The series took its name from a picture of a pig saying, “Now that’s what I call music!” as he listened to a chicken singing. It’s ridiculous. There was a lot of worry that people wouldn’t know what it meant. I think there was a real concern of “What does that mean?” Or “What on earth is that?” But it’s like any name, once it takes a hold and people get used to it, it’s kind of a different story.

Peter Duckworth: I came on in 1991 and one of the ways I’ve been involved in marketing is with the visual element. The Now! logo has changed quite a bit over the years. There was a strange pig involved in the very early days. I’m not sure who came up with that.

Jeff Moskow: Compilations have always been, to this day, significantly more popular in the U.K. than they have in the U.S. There’s a separate compilation chart in the U.K. Retail is different now, but in the late ’80s and ’90s, you would go into a record store in the U.K. and there would be a compilation wall. There would be a whole separate compilation section. So, it just became more a part of their culture. And, for some reason, here it just wasn’t.

Webster: Before Now!, these three companies had carved out a compilation market for themselves. If you look back in the U.K., we always had a tradition—and I don’t think happened in America—of people doing cover versions of big hits, of putting out cheap albums of cover versions of hits. They were called Top Of The Pops. An album in those days might have cost £2 and an album of cover versions of hits would cost, like, 75 pence.

Navin: Compilations were considered irrelevant by a lot of record companies. The original albums done before Now! were done badly, because the compression was a mess. They’d be cut off randomly in the middle of the song to make them fit, and they didn’t sound very good because the grooves were so tight.

Abram: They weren’t always the best quality and didn’t always have the best artists, but they were fairly popular in the U.K. They were successful and did well in terms of sales.

Webster: Overall, they were seen as tacky. So, lots of big artists decided they didn’t ever want to be on those records, and they did have the kind of controls in terms of having to give permission to stop them happening.

Navin: You would have some fantastic discussions with managers and artists about whether it was a good thing for their career or not deep down to the sales of a single. Did it help? Did it hinder the sales of the album? All of those sort of conversations were had with artists and managers on a regular basis, especially in the beginning.

Steven Pritchard: I think for one of the first Now!s, Richard Branson actually phoned up Mick Jagger and got the Rolling Stones to participate. That was a few years before I came along, but that sort of attitude helped with U.K. artists.

Abram: Richard would say things like, “Oh, should we get The Rolling Stones for Now! 2.” And a lot of people would say, “Oh, no, they’re the past, they’re not really the cutting edge of 1984 pop music.” But I thought, if we could get them, we might be able to get someone else, which is what happened. Then, bit by bit, you walk away with a lot of acts.

Webster: We did have to work quite hard to convince people. Partly what we did was give better royalty rates than the third-party companies were offering. Then, of course, it got so successful, people began to see the cash flow that was coming in and going, “Oh, we like this.”

Navin: When the damn thing took off it just was so successful. It was a phenomenon.

Pritchard: Today, Now! confirms status. People expect to see artists of a certain stature on Now! Artists will share that they are included or tweet about it. It’s become a mark of having arrived.

Webster: Eventually, it got to the point of artists quibbling over being side one, track one. There was one particular battle, I think between Queen and Paul McCartney. They said, “Yeah, we’ll be on the album, but we want to be track one, side one.” Luckily, that was an EMI problem, not a Virgin problem. I think what they did is they put one on track one on disc one and the other on track one, side one on disc two or something like that. I can’t remember; it was some ridiculous compromise.

Abram: The first album I officially compiled was Now! 2. I managed to get superstar acts like Queen, David Bowie, Paul McCartney on the first Now! that I compiled. I think what convinced them is the fact that it was being done by the record companies. So, I managed to get some of these bigger artists on and eventually we got to a stage where a lot of the acts were coming on the album.

Webster: From the start, we separated ourselves from the previous compilations with packaging. They were all basic black-and-white or black-and-red sleeves; there was no class to it. So from the first one, we made sure we put sleeve notes on there; we made sure we put pictures of the albums that they came from.

Abram: One thing that I helped in convincing artists is that Now! was sort of souped-up. It had beautiful packaging, liner notes and all that. It made for a luxurious product that was much more exciting than the original third-party compilations.

Webster: There were also the ad campaigns, which made it so easy to sell to retail. I said, “Look, we’ve got this album coming out. It is full of quality hits and we’re going to spend a quarter of a million pounds TV advertising it.” It was as simple as that. We went out and opened with a 60-second ad, which was unheard of at the time, and it just went mad.

Navin: You also have to remember, that first vinyl was gorgeous. It wasn’t the logo you see today.

Pritchard: But by the time I came one for Now! 19, they were really struggling with an identity. I was concerned that the sleeve was changing on every release. I felt the brand should have a logo and stick with it. So, Now! 20 was the first one where we developed the 3-D logo, that is still used today. It was an attempt at something that looked monumental, almost like 20th Century Fox. It was harder to do that than I realized. It would be easy to do that on a computer, but going back 25 years it was actually stretching the capabilities of 3-D graphic engineering. That first 3-D logo I think it took about a week to render and it was fairly expensive.

Navin: There are two components of sequencing. One is making something that’s listenable. And as important is making something that’s marketable. So, we know that when people look down a track list, they’ll often just scan the first and last tracks to see if there’s consistency. We have to make sure that the tracks toward the top and bottom of the CD are the most successful or the most popular in order to keep the consumer’s attention.

Webster: There is an art to compiling a record. It’s not just all by numbers. You’ve got to get a flow right; you’ve got to get ups and downs. It’s the same way a DJ would do it if you’re out clubbing or whatever. There are also certain tracks that, even though they were massive, they often polarized people. You’ve got to think about that.

Abram: In January 1983, about 10 months before Now! started, I was a young fellow compiling compilation records. The second one I did for Ronco was called Raiders Of The Pop Charts and it managed to get to No. 3 in our combined charts of everything. That got me a bit of attention. Eventually, I got phone call from the man himself, Jon Webster. He said, “If you phone this number, you might learn something to your advantage.”

Webster: After the first Now!, we hired a guy named Ashley Abram to compile the records and also to make sure that no fillers got on. The purpose was for him to be independent. He talked EMI and Virgin into what else they could do with those filler tracks and ensure Now! was the best it could be.

Abram: I phoned the number Webster gave me and didn’t know who I was speaking to. The soft-spoken man on the other end said, “Oh, we’re thinking about getting into this compilation business and I’m told you’re the person to talk to.” And at the end of the conversation he said, “Oh, I run a record company, you probably know me, my name’s Richard, and I work on a houseboat, so come see me and have chat.” Of course, that was Richard Branson.

They were talking to me about getting involved with compiling, but because they had so many of their own tracks, they weren’t licensing tracks from the outside. They needed a third party to look at the thing. And that was hard, because they were just looking to get this album into the marketplace for Christmas in 1983. The album actually came out in November, so it was quite late, but it did make it.

Moskow: I came on in the U.S. for Now! 4. In the beginning, I was involved in creating and compiling the record. That meant identifying what the songs would be, licensing the songs, negotiating for the licensing of those songs and then you compile them. So, there’s the aspect of actually deciding what’s going to be on it, getting the rights to put it on and then the ability to create a compelling story with the repertoire. This part usually makes people’s eyes glaze over, when I tell it, but there’s an art to the sequencing.

Abram: It was just kind of a feel for it that you sort of build up, really. You sometimes try to link the songs in some way.

Moskow: We don’t sequence by power, we sequence by story. I was a club DJ for a number of years in my hometown of Philadelphia. It was very similar really to being a club DJ, because, again, every club DJ will tell you that their job is to take listeners on a journey. You’re playing this and that and you’re playing it in a flow that makes sense. That’s the art. It’s like painting with these beautiful colors that these artists have created, which are the songs, and putting them together in a way that makes sense. I take it very, very, very seriously.

Abram: It’s also easy to look back now and say certain songs are missing from some albums, but you can’t really do that. At the time, not everybody wanted to be on the records.

Moskow: I can give you one example. With Now! 56, we opened with “See You Again” [by Wiz Khalifa feat. Charlie Puth] very specifically. We did that because what we’re saying to our fans is, “We’re seeing you again.” It had to be a huge song, but I didn’t have to open with it. But we’re saying, even though the song doesn’t mean that, it lets someone subliminally think “I’m comfortable with this brand again, they’re seeing me again.” It’s a little cheesy, but that’s the example I can think of right now. I can tell you that every song is thought about for hours, if not days.

Abram: A big challenge was keeping things current. We needed to make the album live longer, and that was hard since it took a while to get things to marketplace. I also liked to include upcoming hits. We put Culture Club on one album and had a little blurb on the cover that famously said, “Almost certain to be No. 1 by the time you have this LP.” I think it went to No. 3 or No. 4 or whatever it was. So, that kind of set the precedent.

Moskow: It would really easy to say, “Oh, these are the songs, let’s just put them in random order, it doesn’t really matter. But then, if you do that, you’re not really building the essence of what your brand is, and that is so key to us.

Navin: Now! reached the parts of the record-buying market place that, in some cases, no matter how much marketing money you would spend, it just couldn’t deliver those people from those recesses. We managed to get to those outlying areas of Britain who would never have gone into a record store, or may have, at most, bought one album a year.

Duckworth: From the start, we were selling to our version of middle America. The “middle England” market, as we might describe it, are the people who don’t have their finger on the pulse. They don’t measure their own sense of identity by music, but they are very much into music. So, buying a Now! album was fine for them. It didn’t have any meaning. They didn’t define their personality through music, so they could buy a Now! album and it wasn’t a guilty pleasure like some music can be considered. It was just a way of accessing the charts.

Webster: I’ve always thought that music buyers fall into two groups. There are people who are really into music, who buy a lot of stuff and pride themselves on what they like. And then there are the one-album-a-year buyers. Maybe they buy two or three, but it’s harder to get them into the record store.

I think you go through a sort of life cycle with Now! You grow up with them. Until you’re a young teenager, you’ve got the latest Now! album. Then, suddenly when you become 16 or 17, you think you’re the coolest person on the block and suddenly you wouldn’t be caught dead with a Now! album. Eventually, you might get married and have your first child. You might have a party and you need music, so you go out and buy a Now! album. I think there’s very much a sort of flow that happens in terms of the people who are predisposed to buy these records. I think there’s an age gap where they’re distinctly uncool, which is probably 18 to 30, but then after that they are very welcome and liked and people still buy them.

Pritchard: There are at least two generations of moms and dads, even grandparents now, who are using Now! to keep up with their kids’ music and to share music. But I think it probably took about 10 years for it to really develop into a family brand with a bit of nostalgia and trust. It’s been a fixture. If you look at the consumers of Now!, the end-user profile is strongly preteen and early teen. Then it starts coming back with peaks up in mid ’30s, who are people buying for young families.

Navin: I think the thing about Now! is that it cuts across generations. It’s like Adele, who has obviously has struck an enormous chord. People buy the album partly as a knee-jerk reaction either for their auntie or their daughter. It’s that must-have piece of music across the board.

Pritchard: Children never understand if you try to be nostalgic about a band. They’ll say, “You listened to this? It’s rubbish!” Whereas you can be nostalgic about a Now! album and buy it today and children will love it because it’s still current. To you, it’s a Now! album and to them it’s all the current hits. It does work far better than trying to be nostalgic with your children because not many artists try and transcend.

Moskow: We make statements like, “No one listens to CDs anymore” or we say, “No one has CDs in their car anymore.” And the truth of the matter is that there’s been something like 90 million CDs sold in the U.S. in 2015. I mean, besides what Adele did, which is a whole different story. Are sales down? Of course they’re down. No one is arguing that point. But it’s still a huge business.

Webster: We thought that digital music would be the death of CDs, but it’s not for two reasons. One is that they are a much better deals than buying individual tracks. And two is that when in the U.K. we killed off the CD single, which was just about when digital came in. There are still huge amounts of people in the U.K. who buy CDs. The only way you can buy a track, on a CD, if you don’t want to by the album, is on a Now! album. They just don’t exist anywhere else.

Moskow: There are still lots of people who have CD players in their cars in the U.S. Most do. So, imagine your family is going on a road trip and you have a choice. Your choice is, “I’m going to fumble around, connect my phone and play a playlist that may or may not be clean, where I have to fumble around and skip songs” or, “I can just get a brand that I’ve grown up with, pop it in the CD player and know that it’s clean and that it reflects reasonably recent pop culture.”

Abram: The CD format still lives on and it’s very successful. In the U.K., the CD sales now are largely through supermarket chains. So, in Tesco and Sainsbury’s, especially this time of year, they carry huge volumes of CDs. Digitally, it’s available and it sells, but 10 to 20 percent of the sales are digital, which is still fairly minor. CD is still a massive format.

Pritchard: We do have digital sales, but at the moment we’re about 90 percent CD. Of course, the next struggle is streaming services. When Spotify came along, we were very quickly into Now! in experimental ways, trying to draw more attention to the tracks. Obviously, going forward, we’re trying to devise ways of actually monetizing Now! itself instead of just the individual tracks. The digital download thing was quite easy to spot. We’re trying to look at that behavior within streaming products.

Moskow: CD physical sales are declining, yes, more people are consuming music by streaming or downloading, but there are still a substantial amount of people who buy physical CD or who buy the album via digital download and enjoy it because someone has done the curation for them. We’ve made the playlist for them. They come to us for the Now! brand, and I think they’ll keep coming to us for the Now! brand.

Adele Goes Viral, No Selfies or Tweets Needed

November 29, 2015

BEN SISARIO 11/27/15

While stars are now expected to live their lives in full self-promotion mode online, Adele barely touches her social media accounts. A 27-year-old mother who speaks with a working-class North London accent, she is revered by fans as much for her seeming approachability as for her vocal prowess. In interviews she speaks about being a full-figured woman in the image-obsessed entertainment industry, and about rejecting product endorsements to keep the focus on her music.

She also sells more albums than anyone in the struggling music business thought was still possible.
When official sales numbers are announced by Nielsen on Monday, they are expected to show that Adele’s new album, “25,” which went on sale Nov. 20, will have sold at least 3.2 million copies in the United States in its first week. That smashes an opening-week sales record that has stood since ’N Sync sold 2.4 million copies of “No Strings Attached” in 2000. But annual CD sales then were more than five times what they are now, and the music industry relied on a vast network of brick-and-mortar retailers that has long since eroded.

“This is beyond all expectations,” said Ish Cuebas, vice president for music merchandising at Trans World Entertainment, whose more than 300 stores include the F.Y.E. chain.

Since 1991, when SoundScan — a tracking service now owned by Nielsen — began collecting reliable sales data from retailers, only 20 albums have sold more than a million copies in a week. Three Taylor Swift albums accomplished that feat, though none had sales that approached the stratospheric figures for “25.” Target and Barnes & Noble both said that first-day sales for “25” at their stores exceeded those of any previous album.

Adele’s “25” also had the biggest opening week in Britain, where just over 800,000 albums were sold, according to the Official Charts Company there. That beat a record set in 1997 by Oasis, which sold 696,000 copies of “Be Here Now” in an abbreviated three-day sales week.

With positive reviews, a hit song — “Hello,” already the subject of a “Saturday Night Live” sketch — and saturation coverage of Adele from an adoring news media, the album should remain a hit through the holiday season. Analysts expect it to sell five million copies or more in the United States by the end of the year, a milestone that has not been reached since 2011. That hot-selling album was Adele’s previous release, “21,” another trend-defying phenomenon that went on to sell about 30 million copies around the world.

On Thursday, Adele announced that she would go on tour in the spring for the first time in five years, all but guaranteeing heavy promotion for the album well into 2016, and perhaps beyond.

Adele’s “25” — filled with confessional torch songs and heart-tugging ballads, and driven by Adele’s powerful and soulful voice — is being celebrated throughout the music world as an artistic and commercial success that has become all too rare. And huge numbers of listeners who otherwise have spent little or no money on music are plunking down $10 or more for the album.

“There are people out there for whom this may be the only record they’ve bought in five years,” said David Bakula, a senior analyst at Nielsen. “The last one may have been ‘21,’ and now they’re coming back in force.”
The success of Adele’s “25” is all the more remarkable given how the landscape of music retail has changed since 2000, when some 700 million CDs were sold annually through a network of chains like Tower, Sam Goody and HMV, as well as in big-box stores like Best Buy and Circuit City that devoted considerable floor space to music. Today, with digital outlets like iTunes, Amazon and Spotify having upended the way that music is distributed and consumed, thousands of record stores across the country have closed and the music acreage at the big boxes has been sharply reduced. Last year just 141 million CDs were sold in the United States, according to Nielsen. An additional 106 million albums were sold as downloads.

But Adele appears to have activated millions of customers for whom making a purchase is viewed as a sign of devotion and support for the artist they love.

“There’s a level of respect by buying the song, rather than just streaming it,” said one fan, Carlos Villa. “I acknowledge the work that you put into this song, and I appreciate you for that.”

Mr. Villa, a 29-year-old who works as an administrator at New York University, said that he placed an advance order for “25” as soon as it became available on iTunes, and also ordered a CD from Amazon. He would have also bought a vinyl LP, he said, “but I don’t have one of those players.”

The album has also heightened the industry’s debate over streaming, since, like Ms. Swift a year ago, Adele decided to withhold her full album from streaming outlets like Spotify, Apple Music and Deezer, although “Hello” was widely available for streaming.

In an interview on NBC’s “Today” show on Wednesday, Adele hinted at the reason for releasing the single but not the album that way, saying that she viewed streaming sites as being like radio — in other words, as primarily a promotional platform. When Ms. Swift kept her latest album, “1989,” from Spotify and other streaming outlets last year, she criticized those sites as being part of a “grand experiment” that does not compensate musicians fairly. (Ms. Swift later made a deal with Apple to include “1989” on its new streaming service, Apple Music. Apple Music, unlike Spotify, does not have a free version, although Apple lets people try the service for three months without paying.)

The sales of “25” are being hailed as a vindication of Adele’s strategy to block the full album from streaming, although analysts have also been quick to portray her as an outlier whose success — or stance on streaming — is not likely to be repeated by very many acts. The No. 1 title on Billboard’s most recent album chart is Justin Bieber’s “Purpose,” which opened with a record 100 million streams, and other young stars like Ed Sheeran have expressed gratitude to Spotify for helping to propel their careers.

Retailers report that the album has been bought by all sorts of consumers — male, female, old and young.
But Adele’s success may also be because of her following among a demographic group that the youth-obsessed pop music world does not often focus on. According to Nielsen, which has studied the demographics of the fans of various pop acts, the typical Adele fan is a college-educated woman aged 25 to 44, who watches “Family Guy” on TV and likes to shop at Target, Victoria’s Secret and Bath & Body Works.

Opening-week sales for Adele’s “25” are expected to be split almost evenly between digital downloads and CDs. ITunes represents the majority of digital copies and Target is the biggest driver of physical sales. The retailer had a special version of the album with three bonus songs, ran TV commercials promoting the release and placed cardboard displays filled with the CD by checkout lines.

“It’s something to celebrate, and miraculous to watch,” Russ Crupnick, an analyst with the market research firm MusicWatch, said of Adele’s sales. “But I think it’s like 75 home runs: It’s probably going to be a long time before we see one like that again.”

Why Norway and the UK produce the world’s most valuable music fans

September 11, 2015

By Tim Ingham 9/10/15

Ask those in the record business about the markets that really matter to the global industry’s bottom line, and they’ll tell you about ‘the big three’.

A few years ago, that would have meant the US, Japan and the UK.

But these days, it’s the US, Japan and Germany – the outstanding trio in terms of annual cash spent on music.

Last year, across record sales, sync and performance rights, these nations generated $8.9bn between them, according to the IFPI.

To put this dominance in context, let’s look at the US alone.

In 2014, says the IFPI, the country’s record business attracted US $4.9bn – a third of the global business’s entire revenue.

The US haul was close to double the $2.63bn pulled in by Japan in 2014 and not far off quadruple Germany’s $1.4bn.

But here’s a bit of a shocker – the US market also turned over more than all of the following markets combined:
South Korea

[If you want to go really in-depth on the figures, MBW recommends picking up the IFPI’s Recording Industry In Numbers 2015 book.]

However, sheer brute size possibly isn’t the best way at evaluating the true value of these countries for the record business.

Another way to slice the pie is actually to investigate how much per person in each market is spending on music each year.

MBW has crunched the numbers of this per capita spend- dividing 2014 recorded music income in the IFPI’s Top 20 markets by the size of their population.

This tells us which music fans are really spending the most on records.

And it makes for a quite surprising list:
1.Norway: $23.58 per person
2.UK: $20.81
3.Japan: $20.64
4.Sweden: $19.75
5.Germany: $17.42
6.Australia: $16.26
7.USA: $15.36
8.Austria: $13.56
9.Switzerland: $13.39
10.France: $12.76

As you can see, Norway’s population, on average, shelled out US $23.58 on recorded music in 2014.

According to the IFPI, the Scandinavian country generated $119.9m from records last year – a spend driven by a population of just 5.084m people.

Brits can feel pretty chuffed with themselves, too. The UK market generated $1.334bn in 2014 – from a population of 64.1m people.

Germany may have overtaken the UK market in terms of revenue generation in 2011, but in terms of per-consumer spend, it’s more than $3 behind at $17.42.

And then there’s the other side of the story.

Those countries whose population – for a variety of economic, cultural and legal reasons – just aren’t pulling their commercial weight for the record business.

Below, you’ll find the sin bin of markets (in the world’s Top 20 biggest recorded music territories) whose per capita spend is the lowest.

It’s led by China; according to the IFPI, the 19th biggest recorded music market in the world, generating $105.2m in 2014.

But China also has the world’s largest population at 1.357bn people.

It’s a similar story in India (1.252bn people).

(Here’s an especially miserable stat about India, which generated just over $100m last year: according to the IFPI, subscription streaming revenue fell 42% in the country to $12.37m in 2014. Cash from free streaming? That grew 108% to $22.72m. Problematic.)
1.China: $0.07
2.India: $0.08
3.Mexico: $1.07
4.Brazil: $1.23
5.Spain: $3.87
6.Italy: $3.93
7.South Korea: $5.29
8.Canada: $9.74
9.Belgium: $9.93
10.Netherlands: $12.19

Note: All local currencies translated into US dollars at 2014 exchange rates

US streaming revenues overtake CD sales

April 14, 2015

Matthew Garrahan 3/18/15

Streaming music services such as Spotify have eclipsed CD sales and are closing in on digital downloads as the largest source of revenue in the music industry’s biggest market, according to new data from the Recording Industry Association of America.

US revenues from subscription streaming brands such as Spotify and Rhapsody and streaming radio services including SiriusXM hit $1.87bn in the US in 2014, a 29 per cent increase on 2013 and equivalent to 27 per cent of total music industry revenues.

Sales of CDs slipped 12.7 per cent to $1.85bn, even as the decline in total sales of physical formats was cushioned by the renaissance of vinyl records, which accelerated in 2014, with a near 50 per cent jump in sales of LPs to $315m.

Downloads have been the US music industry’s largest source of digital revenue for a decade but they peaked in 2012 and have been in decline ever since. In 2014 download revenues fell 8.7 per cent to $2.58bn, equivalent to 37 per cent of total industry revenues.

“The music business continues to undergo a staggering transformation,” said Cary Sherman, chairman and chief executive of RIAA. “Record companies are now digital music firms, earning more than two-thirds of their revenues from a variety of digital formats.”

The growth of streaming has sparked a new power struggle in music between the creators of music and the companies that distribute it. Taylor Swift, pictured above, pulled her music from Spotify late last year following a dispute about its free service, which it uses to attract paying users.

Music labels such as Universal Music Group are also pushing for the company to amend its free tier because they think it is overly generous and is not converting enough users into paying subscribers. Spotify, meanwhile, has insisted that the free service is an essential and necessary marketing tool.
Chart: US streaming and permanent download revenues
Income from advertising-supported free streaming grew slightly in 2014 to $295m in the US and continues to represent a relatively small proportion of industry revenues, compared with downloads. However, revenues from streaming radio services, such as Pandora — which are collected and distributed by SoundExchange, the digital rights agency — grew sharply from $590m to $773m.

All physical music sales together — including CDs, vinyl and music videos — slipped below a third of the industry’s total revenues for the first time, falling from 35 per cent to 32 per cent.

Across the US music industry, retail revenues were flat for the fifth year in succession at $6.97bn.

Sales of Streaming Music Top CDs in Flat Year for Industry

March 20, 2015


The American market for recorded music was flat in 2014, but income from streaming services like Spotify and Pandora has quickly grown to become a major part of the business, eclipsing CD sales for the first time, according to a report released Wednesday by the Recording Industry Association of America.

The association, a trade group that represents the major record companies, said that recorded music generated $6.97 billion in 2014, down less than 0.5 percent from the year before, when revenue was slightly more than $7 billion.

Overall revenue from recorded music, after falling from a high of $14.6 billion in 1999 — when CDs were the dominant format — has remained relatively stable for the last several years, hovering around $7 billion, according to the recording industry association. But within that total, the sources of income have changed significantly as consumers have increasingly shifted their purchasing habits online

In 2010, for example, when 253 million CDs were sold, sales of physical formats, like CDs and vinyl LPs, made up about 52 percent of total music revenue; downloads represented 32 percent, and streaming about 6.6 percent. (Ringtones and other miscellaneous income made up the rest.) By last year, the number of CDs sold had fallen to 144 million, and the split between formats was evening out: Physical formats were 32 percent of revenue, digital downloads 37 percent and streaming 27 percent.

The finer details of the industry association’s report, which is compiled from data supplied by the record companies, show how quickly the shifts are happening. In 2014, downloads of singles and albums generated about $2.6 billion, down 8.5 percent from the year before. CD sales were down 12.6 percent to $1.85 billion. (Vinyl records, a growing niche, were worth $321 million, up 50 percent.)

In aggregate, the various kinds of streaming outlets generated $1.87 billion, up nearly 29 percent from the year before — and, for the first time, slightly more than the total for CDs. That figure includes not only paid subscription outlets like Spotify, Rdio and Rhapsody, but also Internet radio services like Pandora, which does not let users pick exactly what songs they will hear, and outlets like YouTube and Spotify’s free tier, which let users pick specific songs and are generally supported by advertising.

The Death of Music Sales If CDs are “dead,” so is iTunes.

January 26, 2015


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.