
Open the Music Industry’s Black Box - stuartmemo
http://www.nytimes.com/2015/08/02/opinion/sunday/open-the-music-industrys-black-box.html
======
ruffrey
Some fellow entrepreneurs had an awesome idea recently to create a jukebox-
like service for businesses, where they could get payed per request and pay a
monthly fee for the streaming service.

I coded up an MVP and we got a few customers that agreed it was something they
would pay for, as long as they had a decent chance to make even a small profit
on song requests.

Once it looked like a viable product idea, the financial numbers guy did his
magic and researched more details about how royalties worked.

We got conflicting information from different lawyers and royalty aggregators.
After a couple months of research we determined it was completely impossible
to make a profit, until we hit maybe 5 million in revenue and could start to
negotiate better rates with copyright holders.

This assumed extremely cheap tech and bandwidth, and almost no salaries for us
three founders.

We killed the project because it became clear how sadly broken the music
industry has become. They wanted about 50% of our revenue, no matter how we
sliced the business model. We are totally miffed at how pandora or spotify
survive.

~~~
k-mcgrady
>> "We killed the project because it became clear how sadly broken the music
industry has become. They wanted about 50% of our revenue, no matter how we
sliced the business model. We are totally miffed at how pandora or spotify
survive."

Aren't Spotify running at a huge loss?

I don't see how this means the music industry is broken. They are trying to
get as much money for the content they own as possible. If they don't think
your service is worth much to them they probably don't want to bother
licensing you the content. Seems like simple business strategy. The problem is
with your business - you need to find a way to make money. If a business can't
make enough money to afford the thing it can't survive without then you have a
problem, you can't just blame the problem on someone else. I get where you're
coming from (they make it too expensive) but they have no need to license you
content. In fact it just fragments the market more making marketing more
difficult for them. I think ideally they would want one store where everyone
goes for everything.

~~~
disantlor
Startups and labels constantly jockeying for better position to maximize
profits, etc etc and so on; the plight of the artist at the bottom of the food
chain is generally brushed over, often with the supposed consolation that
"it's never been easier to get your music into people's ears". That may be
true in a technical sense but it's completely meaningless in reality. I've
worked as a full time programmer to subsidize basically every detail of
actually getting the music heard (recording, merch, subscriptions to
soundcloud and bandcamp and tunecore, gas money for shows). Granted we're
exactly striving for mainstream popularity but it's hard to even conceive of
how we could possibly make enough money, split three ways, to sustain it
without sacrificing most of the remaining hours to working to pay for food and
rent; and none of us have children to worry about. Yet we press on, for nearly
a decade, primarily because we love it of course but also people seem to think
we're not half bad. I suppose all these discussions matter but I guess all I'm
saying is if you really care and truly like a band (even a little) go to their
website or bandcamp and buy a tshirt and a record. PLEASE. And just cut all
this bullshit in the middle right out.

~~~
morgante
Maybe artists should accept the fact that the supply of music vastly outstrips
the demand.

99% of consumers would be happy if there were only 10,000 employed musicians
in the entire market.

~~~
disantlor
Of course my point is that as a musician it's annoying at best to hear people
talk about musicians like a) as a cog in the broader free-market disruptive
strategy blah blah and b) as though they should be grateful that there are all
these cool whiz-bang ways to be heard.

Secondarily, I'm just reiterating how much more helpful it is to the musician
to take the extra effort to buy from them directly. The penalty in ones
convenience is greatly outweighed by the benefit to the indie/DIY artist.

~~~
morgante
First off, I don't think it's actually about some sort of disruption.

Being a musician has never been a very good career path.

Why should I buy music from you at a much higher price than paying Spotify
$10/m? I have no ethical obligation to ensure that you can make a living off
your music, especially considering that I'm pretty ambivalent about whether
you make music at all.

~~~
disantlor
If you don't care all that much about music then there's no reason you should
and that's fine. I too pay 10/mo for spotify. It's worth noting though that
mostly likely the huge majority of that 10$ goes to music you aren't even
listening to.

------
S_A_P
So the problem as I see it is the layers of complexity of record deals. In my
limited experience with the music biz(released a record on itunes, a few side
soundtrack projects, and 3 friends with major label deals) there isnt much
chance of making money from the record deal itself until you have accomplished
the following: 1) > 2 profitable and high selling records 2) a solid fan base
3) luck

One of my friends was signed to Barsuk records, and released 2 albums with
them. He made about 25k per year including touring. He released 2 more albums
independently and licensed a song for a microsoft zune commercial. He was
telling me about some of the details of his record deal, and it obviously
wasn't a super good deal for him, but he was just taking whatever he could to
get on. He maintained a near constant touring schedule which broke up his
marriage, and it generally just made his life really hard. This guy still
struggles, I havent spoken to him in about a year or so but he may have given
up.

Another was signed to hollywood records, got major label promotion as a VH1
artist to watch with heavy rotation. His first album didnt sell very well and
he got dropped. He is still a semi full time musician in Austin right now.

I recently stayed at an up and coming country musicians apartment(she is a
friend of a friend), she sold 1 million copies of her self penned single.
While she is doing way better than I was at that age, she lives very
modestly.( I dont know all the specifics of her deal, and she is young and
wants to live simply so she could have a million bucks in the bank but I doubt
it)

Anyway, I mention this because from what I know of their deals, the record
companies still treat them largely like they still spend big bucks at a big
studio, and manufacture vinyl, CDs and cassettes for the bulk of the revenue.
The music biz is making a killing on streaming because manufacturing is so low
these days, and anyone can have a laptop studio capable of professional
recording for 5-10k. The situation for artists wont change until record
companies are not their main outlet.

------
rectang
What I would really like to see is a non-profit alternative to
Tunecore/CDBaby/DistroKid, submitting music for digital distribution and
disbursing streaming royalties.

Tunecore has a nice model and they were great for a while, then they jacked
prices and forced out their founder. Distrokid seems good right now, but
what's stopping them from pulling a Tunecore in the future?

The only way to guarantee transparency and stability _permanently_ is for the
musicians themselves to control the distributor -- similar to how individual
Members of the Apache Software Foundation control it.

Speaking as a former mastering engineer and graphic designer, whatever QC
DistroKid and Tunecore are doing can't be too hard to reproduce. I've often
thought of writing some open source software for this purpose.

~~~
Zigurd
Those services as investor owned enterprises are not the problem, and and a
coop is not the solution.

Don't assume there is any way to make selling, or streaming, recorded music
pay for more than a few highly promoted musicians, and don't assume that the
business of promoting those musicians can stay clean. Compared to performing
and teaching music, selling a recorded performance is a relative novelty, and
the business of it was always an irrational hits business and always more or
less dirty.

Recorded music disrupted performance, and vastly reduced the demand for music
performers. Figure out how to reverse-disrupt that and you will do more to put
more money in the pockets of more musicians than a novel way of selling
recorded performances.

~~~
aikah
> Recorded music disrupted performance, and vastly reduced the demand for
> music performers.

This is totally untrue, on the contrary, recorded music has always been a way
to promote music performances. It never disrupted performance. How can anyone
say that? Before pop music and the record industry, there were no big concerts
with thousands of people attending them. Recorded music boosted the demand for
music performances.

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CamperBob2
Question for David Byrne (rhetorical, of course, since he's unlikely to read
HN):

    
    
       I asked Apple Music to explain the calculation of 
       royalties for the trial period. They said they disclosed 
       that only to copyright owners (that is, the labels). I 
       have my own label and own the copyright on some of my 
       albums, but when I turned to my distributor, the 
       response was, “You can’t see the deal, but you could 
       have your lawyer call our lawyer and we might answer 
       some questions.”
    

At some point, you signed a contract with that distributor. (Why you need a
"distributor" at all is an obvious question, but never mind that for now.) Why
did you accept terms like these?

~~~
rectang
David Byrne is associated with Tunecore, so I'm guessing that's the
distributor in question. The alternatives to Tunecore (CDBaby, Reverb Nation,
Distrokid) all have their own problems. Most indie musicians, perhaps
including even David Byrne, are not in a position to negotiate terms.

------
davidgerard
Contrariwise, Steve Albini - who's been at the sharp end of this stuff as
well, but without the "I used to be a rock star" bit - considers this _the
golden age_ , and that the Internet has solved The Problem With Music:
[http://www.theguardian.com/music/2014/nov/17/steve-
albinis-k...](http://www.theguardian.com/music/2014/nov/17/steve-albinis-
keynote-address-at-face-the-music-in-full)

~~~
williamcotton
_From my part, I believe the very concept of exclusive intellectual property
with respect to recorded music has come to a natural end, or something like an
end. Technology has brought to a head a need to embrace the meaning of the
word “release”, as in bird or fart. It is no longer possible to maintain
control over digitised material and I don’t believe the public good is served
by trying to._

It is with this paragraph the Steve's ignorance to the societal and legal
foundations around intellectual property and exclusive copyright are brought
to full attention.

It technically became "no longer possible to maintain control" over
intellectual property hundreds of years ago with the invention of the printing
press.

The idea that the decreasing marginal cost of making copies is somehow a new
concept and unique to the digital world is completely absurd.

The fact that the copyright system has been abused by corporate interests
doesn't mean we should blindly throw out one of the cornerstones of the
Western world.

~~~
alexvoda
Actually you are incorrect in multiple ways.

First of all, Steve's article refers strictly to music. I would argue
maintaining control was no longer possible since the invention of magnetic
tape. If you really want to stretch things, you can go as far back as grooved
disks (LPs, Vinyls, gramophone records) and claim it was possible to copy them
like so: [http://www.theguardian.com/music/2015/jan/29/bone-music-
sovi...](http://www.theguardian.com/music/2015/jan/29/bone-music-soviet-
bootleg-records-pressed-on-xrays) This is at least some hundred of years after
the invention of the printing press. As for music scores, see the next
paragraph.

Secondly, it was never possible to control information represented as glyphs
(text, music scores, etc.). People could easily copy such information as long
as they knew how to write and had some sort of writing utensil. In fact a
person doesn't even need to know how to read in order to copy written or
printed information. The more control is exerted the more determined people
will be to copy.

Thirdly, it was very much possible to control what was printed with a printing
press by using the might of an authoritarian regime. Printing presses were not
things you could easily hide. Sooner or later the source of unwanted printed
content could be tracked down. Besides, the very first copyright like laws
were made exactly to avoid such an adversarial situation. The British
government offered the publishers the power to control distribution (protected
by the government) as long as the government gained control over what was
being printed.

Also, I don't quite get what you mean by your last sentence.

~~~
williamcotton
Calling a government that enforces a limited monopoly on intellectual property
an "authoritarian regime" is quite a stretch. Copyright is a foundation of
liberal democracies all over the world.

Again, I hold heartedly agree that "it was never possible to control
information represented as glyphs". So did the people who dreamed up
copyright. That's the whole point!

What happened was many hundreds of years ago someone wrote something, and then
someone else came along with a printing press and made 1000 copies and sold
them for a profit, but they didn't give any money to the guy that wrote it.
Someone pointed out that this didn't seem fair or just, and after a bunch of
arguments and legislation, copyright was born.

The very same arguments about limiting people's freedoms with what they can or
can't do with their own printing press have been going on for hundreds of
years. It's really boring to keep having to prove the same points.

------
l33tbro
I was signed to a major label at one point and would do so again in a
heartbeat.

What you're getting in exchange for surrendering publishing and the masters is
the huge network majors are tapped into. Syncs, marketing spend, publicity,
festival circuits, key relationships with tastemakers, etc - I found the music
industry incredibly nepotistic and benefitted over equally or more talented
unsigned artists. There's a Hollywood Accouting hustle to what the majors say
they are spending on you, but I believe you're building a better fanbase with
a major, which generally means a greater touring revenue.

Another point missed: it's hard to speak globally about "musicians". Artists
have very different outcomes and objectives, so it's very easy to project a
mainstream mentality on to the indie, as so with the converse.

------
Qantourisc
In the old days you REALLY needed the record companies. But with digital
distribution for sales. And the possibility to accurately log each play of a
song on streaming services, and compensate the artists for that. Why are they
still used ?

The biggest problems will occur from artists want a$ per play, but the
streaming services only has b$/(month*plays).

~~~
davidgerard
1\. Streaming is comparable to radio plays, not record sales. Radio plays got
royalties, but they were tiny as well.

2\. Spotify has more tracks than subscribers. Essentially, it's the vast
oversupply of artists in the modern age.

~~~
Jgrubb
Re: #1 - Radio play generates mechanical royalties for the publisher (usually
the songwriter). They vary I think based on when the song was published, but
they're currently at $.091 per play -
[https://www.harryfox.com/license_music/what_mechanical_royal...](https://www.harryfox.com/license_music/what_mechanical_royalty_rates.html).
This is probably 3, maybe 4 orders of magnitude more than what online
streaming rates are currently.

~~~
davidgerard
That's not per-listener, though, which would be the relevant number for
comparison.

------
amelius
> Perhaps the biggest problem artists face today is that lack of transparency.
> I’ve asked basic questions of both the digital services and the music labels
> and been stonewalled. For example, I asked YouTube how ad revenue from
> videos that contain music is shared (which should be an incredibly basic
> question). They responded that they didn’t share exact numbers, but said
> that YouTube’s cut was “less than half.”

Transparency is the problem not only with music labels. It is also a problem
with services like Uber, and with the App Store. The sad thing is: people
think they can make a decent amount of money on these services, but that might
just turn out to be an expensive mistake on average (there will always be
outliers, and those cases will hit the news, but they are not the norm).

I think the government should step in and demand complete disclosure on these
services.

------
hackuser
> Musicians are entrepreneurs. We are essentially partners with the labels,
> and should be treated that way.

There's no reason that Byrne and other musicians shouldn't earn as much as
they can, but let's try to remember that musicians are artists. I seem to
remember many of those disliking record labels for imposing onto their art the
desires of commerce.

~~~
aikah
> but let's try to remember that musicians are artists.

Well according to HN musicians should be artist, developer,sys-admin, graphic
designer,sells-man, accountant,lawyer all at the same time because "evil
labels". And if they can't do all these things well they shouldn't be paid
fairly for their art because they didn't try hard enough ...

------
sparkzilla
Hmm. I can see the problem right there. Google takes 50% for distribution. If
that figure was less then artists would get more.

~~~
nugga
The labels take most of the money because artists have agreed to very one-
sided contracts. Then the artists proceed to complain how spotify is screwing
them when in fact they screwed themselves signing on major labels.

MAFIAA et al do suck but you should read what you sign.

~~~
bnj
Is it preferable to accept a tiny slice of a large pie, or decide pre-
emptively not to put the pie in the oven?

I've been baffled by the contracts that artists sign with major labels, but
you have to remember that artists are confronted with a difficult choice. If
they don't accept these ridiculous deals, how do they achieve the mainstream
recognition required to be able to live off their craft?

Society should provide basic resources to people so that they can work less
and pursue music as a serious hobby without cutting into their food supply.

------
weems
great article. we need some disruption

