Magical Streams from Bullshit Mountain

I just wanted to add some actual mathematics, courtesy of The Trichordist, to an aside I made in What Makes Hereit Different?:

The digital types sure love to talk about streams–music streams, revenue streams–that will somehow, some way, someday benefit artists. In the meantime, these magical streams just trickle off majestic Bullshit Mountain and form limpid pools of money in scenic Silicon Valley.

This is what that spitball from the back of the class looks like with numbers attached, courtesy of a post from last March titled “The Internet Empowered Artist? What 1 Million Streams Means to You!” (It is well worth reading in its entirety, so click through to it.)

Keep in mind that 1 million plays in a year equals 2,740 plays every single day; 114 plays every hour; two full plays every minute.

If you and your band manage to pull that off, here is the financial windfall you can anticipate. Don’t spend it all in one place.

From information in that Trichordist post:

Spotify pays $0.00521 per stream, payable to the master rights holder only. (Whoever owns the actual sound recordings. Many times, when bands sign with a label they are expected to relinquish the rights to the masters to the label. It is easy to see why it is smart to hold onto them. More on that here.)

That comes out to $5,210 for 1 million streams.

Spotify pays $0.00052 per stream (notice there is an extra zero after the decimal point in this one) to the song’s writer or writers, which they then split, and also each split 50/50 with their publisher, if they have one.

That is $521 for 1 million streams. (So if you and a friend manage to write a song that gets streamed a million times on Spotify, and you each have a modest publishing deal, you are going to make $130.25.)

For 1 million streams on Spotify, the royalty payments–total–are $5,731.

That is what a solo artist will make with no bandmates, no other songwriters, no label, no publisher, and no management. As soon as you have even one of those additional factors, what the artist earns drops to a mere fraction of the total.

And just how realistic is 1 million Spotify streams in the first place?

According to Spotify, there are 20 million songs on the service, of which, 80 percent have been streamed at least once. (Perhaps that one play was by the guy who paid TuneCore or ReverbNation 50 bucks to put it there. Just 999,999 more plays and he will earn the equivalent of a few months of pre-tax minimum-wage paychecks.)

But if 80 percent of 20 million songs have been played at least once, that means 4 million songs on Spotify have not been played at all. Ever. What percentage of songs on Spotify actually manage to rack up 1 million streams? Who knows.

On to YouTube.

YouTube pays $0.00175 per view, total, for all rights–video, master and publishing combined. That comes out to $1,750 for 1 million views. Which, again, will be split at least between whoever owns the masters, whoever wrote the song, any publishers involved, and the synchronization license holder and service.

YouTube pays $0.00032 to the master rights holder only for videos with ads, tracked by a company like Audiam (“Get Paid When Your Music Is Used on YouTube”), for a 25 percent commission, or AdRev (“Our white glove services allow you to focus on what you do best – making amazing music”), for a 20 percent commission.

That equals $321 for 1 million views. (Minus the 25 percent commission, it is $240.)

But how many videos on YouTube manage to get 1 million views? Just .33 percent. About 53 percent of YouTube videos have fewer than 500 views and about 30 percent have less than 100 views.

So the grand total for all these streams on these leading platforms for artists in the new digital economy?

$7,802. For 3 million streams on Spotify and YouTube.

Now, the argument leveled by the digital defenders is that these streaming platforms are tools for music discovery, not revenue. They help people find out about you so that they can come to your live shows because–as every musician knows–there are tons of great paying, seven-day weekend gigs being handed out left and right by totally ethical promoters and bar owners who would never dream of ripping you off on the door, if you even get anything from the door after the sound guy and everybody else is paid out of it, or any supposed guarantee just because you are alone and a hundred miles from home and there are a couple of bouncers hanging around waiting to see if you complain, you little ingrate, when you should be too tired from counting all the sweat-drenched 20s from the throngs of ecstatic new super fans who got all your music for free on Spotify but mobbed the merch table to buy a CD or a t-shirt anyway. So leave poor YouTube and Spotify alone–they are just trying to help you innovate. Get with the now, Luddite!

Back here on Earth, though, what those numbers show is that while everybody seems to accept that the streaming sites pay absurdly negligible royalty rates, Spotify and YouTube are actually pretty awful for music discovery too.

The Trichordist blog goes on to show that on iTunes, you would only need to sell 1,125 albums at $10 each to gross the same amount, taking into account the 30 percent cut from iTunes. Again, this is with the no band, no other songwriters, no label, no publisher, no manager scenario.

But there are now 37 million songs on iTunes. Of those 37 millions songs, which ones get bought?

The Trichordist post points out:

“In 2013 only 4.8% of new album releases sold 2,000 units or more. So if only 4.8% of artists can sell 2,000 units or more, how many artists can realistically generate over four million streams from the same album of material?…

Each 10,000 albums sold on iTunes (or 100,000 song downloads) generates $70,000 in revenue for the solo artist or band. To achieve the same revenue per 10,000 fans in streams, the band has to generate 30 million streaming plays (as detailed above) if they are distributing their music across the most common streaming services including Spotify and YouTube.

In 2013 the top 1% of new releases (which happen to be those 620 titles selling 20k units or more) totaled over 77% of the new release market share leaving the remaining 99% of new releases to divide up the remaining 23% of sales.”

Once again: 99 percent of all new releases must compete for just 23 percent of sales. And the discovery process for new music is so bad that only 620 new releases account for 77 percent of the sales.

What does this mean?

It means that the current most popular systems that are in place for finding, hearing and buying music are not working. They aren’t working for listeners. They aren’t even working for most of the biggest artists–the 1 percent, not the .01 percent. And they are especially not working for independent, local, traditional, experimental and eclectic artists.

The rates are too low, the cuts are too big and the platforms are too crowded.

But they must be working for somebody right?

Right.

Because, clearly, streaming is a total racket. It wouldn’t require so much convoluted logic, wishful thinking and corporate public relations digital echo chamber think tank double-talk to make its case if it wasn’t. But who is running the scam?

Oh, you know, the usual suspects.

The music industry tearfully bemoans the insidious harm of piracy:

It’s commonly known as “piracy,” but that’s too benign of a term to adequately describe the toll that music theft takes on the enormous cast of industry players working behind the scenes to bring music to your ears. That cast includes songwriters, recording artists, audio engineers, computer technicians, talent scouts and marketing specialists, producers, publishers and countless others.   

While downloading one song may not feel that serious of a crime, the accumulative impact of millions of songs downloaded illegally – and without any compensation to all the people who helped to create that song and bring it to fans – is devastating.

But since the major labels–including Warner Music Group, Sony Music Entertainment, and Universal Music Group–own 20 percent of Spotify, where they work in partnership with those music loving champions of creativity at Goldman Sachs (you just knew they couldn’t be too far away, didn’t you?), the difference between devastation and innovation is apparently just $0.00052 per stream.

The RIAA sued 12-year-old girls for file sharing, leveling thousands of dollars of fines against them and their grandparents, for crying out loud, in order for them to avoid prosecution. They said they wanted to send a strong message that the “distribution of copyrighted works has consequences.”

It sure does. If you are willing to give the conglomerates their cut, it makes you extremely wealthy.

Forbes claims Spotify has a “quick and dirty” valuation of $8.3 billion. How encouraging that Spotify CEO Daniel Elk, former CEO of uTorrent, owned by BitTorrent, has seen the error of his ways: You have to be a true starry-eyed digital utopian to not realize that you can rip off artists all you want, and treat listeners as mere repositories of personal information and receptacles for crappy targeted advertising, but you have to let the big companies in on the con first. Learning that little lesson has made all the difference. Maybe he can spring for a better prop guitar now.

And what about all those artists that the music industry used as talking points, red herrings and human shields in the piracy debate? Uh… did you read that part about playing live and selling t-shirts?

I know what you are thinking: This is a bummer, man. It’s a bummer.

In some ways, yeah. But beware the professional problem-havers. There are lots of them out there these days. Some people love a bit of bad news, and you can get a lot of attention from having these problems. Because making the wholesale, wide scale exploitation of artists seem drearily inevitable directly benefits those companies and organizations that are doing the exploiting.

There has been an enormous amount of defeatism injected into this debate, and into the minds of musicians everywhere. I hear it constantly. “It’s just the way it is. There is nothing you can do.” As if this ridiculous, and relatively new, streaming Ponzi scheme is some foregone conclusion. The more people start thinking this way, the closer it gets to really being so.

But it’s like an Irish bar owner I once knew used to always tell me whenever I griped about some romantic double-cross or traumatic temporary setback. “Cheer up. Now you know what you already knew.”

If you play music, or like music enough to even remotely care about where it comes from and who makes it, it is obvious that all the fake innovation and alleged “disruption” created by powerful digital, media and financial industry nation states was going to be totally exploitive–for artists and listeners–and that the phony ruse math of streaming rates is never going to add up to anything meaningful for the vast majority of artists. We can all collectively disavow ourselves of our suspension of disbelief, and stop wasting breath on the elaborate charade that any of these entities really care about working musicians.

And if you don’t really care about any of this stuff–about artists, or music, or, you know, the basic human right to not have your work and effort exploited by powerful organizations (seriously, where’s the taxation is slavery crowd in all of this?), great news for you! You have lots of options for entertainment these days. From Spotify and Pandora, to corporate consolidated radio, to game shows, there is a veritable all-you-can-eat Sizzler buffet of auto tuned, bleached teeth, choreographed, consumerist, market researched, fictionalized and photoshopped corporate music to gorge on. Some of it is kinda catchy.

And if you are an artist who aspires to win the lottery that lets you be the scrapple in that sausage maker, I truly and sincerely wish you the best of luck. Everybody’s dream is their own, and if that’s what you want, go for it. (But oh how great it would be to show up at an American Idol audition with ten thousand copies of the first Ramones record…. “You don’t need to stand in this stupid line! You just need this!”)

On the other hand, if you happen to not be someone who hopes to be either the Twinkee or the Twinkee eater, the solutions are all around you and they could not be easier.

Got a dollar in your pocket? Congratulations. There’s one solution–and a ballot too.

I suspect that one of the reasons why all these digital platforms are trying to convince everybody that music should be “free” is because the way you choose to spend your money is like a vote. And by creating outlets where entertainment should be free, they are able to simultaneously take away your power to vote, while making sure you don’t spend money on anything but their devices, their platforms and their data plans.

It is a two-step process: First they limit your role to that of solely a passive consumer. Then they eliminate the consumer ability to affect any kind of influence or change, by removing basic purchasing power. Or by siphoning off the majority of your purchase’s impact and benefit through fees so that it doesn’t really matter where you spend your money.

In the big digital Vegas, the house always wins.

So stay out of the casinos. It is remarkably easy. And it can drive pretty astounding changes.

In the 1970s, thanks to consolidation and the influence of a small handful of powerful corporations (sound familiar?), two breweries–Anheuser-Busch and Coors–dominated the manufacture of beer in the United States. With large-scale industrial processes and low-cost ingredients like corn and rice, they created a watery, flavorless, uniform product designed for mass consumption and easy distribution (sound familiar? If not, turn on the radio.)

By 1983, the number of breweries in the U.S. had dropped to just 80 and American beer was synonymous with bad beer.

But beginning in California, as part of the California cuisine trend, the craft beer movement began to catch on, emphasizing quality and craftsmanship, and championing local brewers and regional styles.

Relatively quickly, the number of breweries exploded. Today, there are more than 2800 breweries operating in the U.S., providing more than 110,000 jobs and driving $14.3 billion in annual sales–an 11 percent growth in just a decade. And you can still find Coors Light in the supermarket just fine–it’s just right next to Yazoo’s Dos Perros, locally made in Nashville, which only costs a buck or two more. People have a choice.

And they increased that choice by making it with their dollars, by buying from local, non-corporate, independently owned and operated businesses. It wasn’t a big deal. It didn’t have to be endlessly debated. Some people just made a simple easy choice because they wanted something different and they wanted something better. So every time you buy a six-pack of craft beer, you are proving there is hope for independent music.

You can find more examples in the local food movement, in the rise of community supported agriculture programs and farmer’s markets–all sorts of systems that have been set up at the local level to directly benefit the independent producers and consumers of goods equally.

Equally. Imagine that.

There is no reason at all why the production and consumption of music should be any different–in fact, there are lots of reasons why it is even more possible with local music. It just comes down to a decision, made by artists and listeners alike, that there is a better way.

And if some people don’t want to make that choice or love the big streaming sites, that’s fine. If they think that everything should be free and they want to be foot soldiers in the wealth transfers of income from people making less than $18,000 per year to executives making $30 million dollars per year, hey, that’s on them. You still have a choice, and you can easily choose not to experience music that way and to support independent music instead.

That’s the decision that Hereit has been designed to encourage and support and, hopefully, make possible. Organizing songs and artists by locations and genres brings not only coherence, but relevance, to music discovery. It puts artists in front of the audiences that are actively looking for them–and hopefully, looking to support them.

That’s why it is so important that Hereit doesn’t take cuts from song sales. There are lots of services for independent musicians that take 20, 30, 40 percent cuts or more from the artists’ sales. They are like indie rock payday lenders.

But if a listener wants to support an artist, they should be empowered and allowed to actually buy music without having just half of their money or less go to the musician, and the other half or more go to some website.

This isn’t some anti-digital rant. Hereit is a website, after all. It just uses these amazing and powerful digital tools, technologies and principles–streaming, downloads, e-commerce, faceted classification–and tries to harness them to give artists and listeners basic tools for self-determination. And at least advance the possibility of the once-championed promise of the Internet, and digital distribution, to actually empower creativity and strengthen an artistic middle class.

Will it catch on? We shall see. Hereit is very small, independent and totally grassroots. But at least it exists.

If a band wants a pay as you go e-commerce tool that’s cheap and easy to use that doesn’t take any cuts from their song sales, it’s there. And if a listener wants to find music local to them, or find the particular type of independent music they like from other parts of the world, it’s there.

But most importantly, when those two people find each other–the independent artist and the person who wants to buy music–they are able to equitably exchange songs and payment without any predatory disintermediation. No cuts to the sales, no seizure of personal data. It is just a balanced, consensual and equitable transaction, a fair deal between two parties, who are able to buy and sell songs to each other if they happen to want to.

So there you have it. If you are a musician and you want to be a part of that, go to www.hereit.org and sign up. It costs $3.40 per month to have three songs on the site, and if you are one of those artists making less than $18,000 per year, like in the Sweet Home New Orleans report linked above (and again here)–especially if you are from New Orleans–write to info@hereit.org and I’ll see what I can do to help out.

And if you care about music, and you want to be a part of the solution that Hereit is hoping to offer, go buy some songs from the independent, local musicians who are joining Hereit. Or go buy some records from your local independent record store. The people who work there love music. Go talk to them. Ask them what independent artists and labels they like and buy some stuff you’ve never heard before. Go see a local band, hang around, buy a CD if they have one. If you liked them, let them know. Sometimes all it takes is a compliment to help someone keep going.

But whatever you do, don’t start thinking that the exploitation of musicians, and all artists, is some foregone conclusion, or prerequisite to innovation. Because the companies and entities promoting that line of thinking really aren’t all that innovative and they really aren’t all that powerful. All it takes is people deciding they want to be a part of something different, and a better, stronger and fairer alternative for artists and listeners will continue to grow.

So cheer up. Now you know what you already knew. And now there’s something you can do about it.

The Millennial Ruse

On this very special episode of Hereit Blog, let’s talk about inappropriate, predatory targeting of young people.

Kids, if anybody ever calls you a Millennial, say “No!” firmly and loudly, and then turn and run as fast as you can in the opposite direction. No matter what they promise, don’t trust them. They do not have good intentions.

“Millennial” is a marketing term for a demographic segment brands and businesses desperately want to target. It may have roots in the Strauss-Howe generation theory, but these days it is mostly used for one reason: To extract money from you. And, of course, to peddle any alleged expertise in extracting money from you.

But not just your money, of course. Brands and businesses now want as much of your personal information as they can get as well. Your personal information is, in fact, often far more valuable to them than money. That’s why it is usually the currency you are required to pay with under the con of a free service.

It’s not called a “target audience” for nothing. And when you see or hear people that vaguely resemble you in an advertisement, it means that you are the target. Duck!

Over the past five years, marketing agencies–armed with increasingly sophisticated digital measurement tools, and nearly unimaginable amounts of personal information to work with thanks to social media and all the streaming music platforms, among other things–have gotten a lot more aggressive and savvy in the ways they target so-called Millennials–online and off. That’s what $1.3 trillion can do to you.

Remember a few years ago, when all the Millennial talk was about young people and their helicopter parents and their collective sense of entitlement and their spoiled, lazy, gotta-give-them-an-award-to-get-them-out-of-bed work ethic? You don’t hear that so much anymore. Guess why?

Turns out it’s a lot harder to convince people to give you all their money if you are constantly insulting them. So now, all the formerly spoiled, coddled Millennials are “digital natives” who live their lives online, always connected, seamlessly integrating work into their personal lives through their deft use of mobile technology and social media! (Cough. Wage theft! Cough.)

Hold on tight to your dreams, coffee achievers. You are disrupters who are disruptively disrupting old models in the digital revolution, driving “fundamental shifts” and creating “new realities.”

The funny thing about new realities, though, is that they get old pretty quick. Especially when you’re staring at the ceiling in your childhood bedroom.

The unemployment rate among 18- to 29-year-olds is 15.8 percent, and more than 45 percent of recent college graduates are living with their families. That’s a 61 percent increase since 2001. In 2010, out of 41.7 million working recent college graduates, 48 percent were working jobs that didn’t require a college degree. And 38 percent were working jobs that didn’t require a high school diploma. By 2020, the number of college grads will grow by 19 million, but the number of jobs requiring a college education will only grow by 7 million.

But who wants to talk about that?

Not the the digital marketing experts, that’s for sure. Let fly with that kind of buzz kill, and it is gonna make it a lot harder to get the money and the info. So instead, marketers–and all the brands and companies that depend on them–perpetuate and propagate the Millennial ruse.

To distract from the actual stark (political, economic, social, environmental) realities that this generation is inheriting–many of which are quite profitable for the kinds of companies that are usually referred to as “major clients”– they provide a fantasy.

This particular fantasy–the one that says the Millennial generation is changing everything about how we connect, communicate and live–has an interesting common denominator, though. It is all contingent on digital technology.

The prerequisite for all this revolutionary change in human connection and interaction always seems to be the use of fairly costly devices and data plans to access services and platforms which are highly optimized to track and exploit user information. And all of which are owned and controlled by a small handful of unbelievably profitable and powerful companies that are not that concerned or constrained with, you know, basic ethics.

Herding people onto online platforms and calling it “disruption” or “innovation” is the digital equivalent of “free-speech zones”–the caged barricades at political conventions where protestors are contained and monitored. You can disrupt all the industries you want, so long as you do it in ways that are most profitable for companies that own the platforms and sell the devices.

They have built the mousetraps. Now all they need are the mice.

Which brings us to the cheese.

The big problem with all these platforms is that if you don’t have anything on them, nobody goes to them. You can’t data capture personal information with no people. So you need what is called, in the parlance of our digital times, “content.”

Now, “content” is a funny word. It can mean all sorts of things. The one thing that is true about it, though, is that it is kind of difficult to produce if you want it to be any good. And if it is not any good–no mice.

It turns out, as discussed in the How Much Does It Cost If It’s Free post, that one of the most effective types of cheese is music. (And not just online, either.) 

But good content–writing, art, songs–is difficult and expensive to produce. It is way easier to use other people’s already-created good content, and lots of it, to attract the mice. Once you do that, you have not just the mousetrap, but the cheese too.

Could the mice be far behind?

Maybe something to think about the next time you hear somebody gush that you are “single handedly killing the music industry,” offering a bunch of straw man arguments about private planes and champagne. (Millennials did not kill the music industry. But there are a lot of people–from all sides of the equation–doing everything they can to make sure Millennials’ fingerprints are on the murder weapons.) Check to see if the people saying things like that are in a position to somehow profit from claims such as, “Over a billion dollars will be spent for the opportunity to build customer relationships and brand equity with digital natives… What brands understand is that music is an important part of Millennials’ identity.”

That certainly puts all the fawning celebration of brands, branding and “being your own brand” to attract magical new “revenue streams” in a different context.

It’s quite a trick–to create a business built on the use of other people songs, paying them a negligible pittance, and then exploiting the personal information of listeners who like their music to sell targeted advertising. It’s an incredibly profitable one too.

But the bigger trick is convincing young people–especially those facing longterm, even lifelong diminishment of earnings because they have started their careers during the recession–that spending thousands of dollars to stream free music on iPhones and laptops with monthly data plans from telecommunications companies is somehow cheaper than buying a song for $1 or just going out and buying an album. And that not only is it cheaper, but that it is in any way positively innovative or disruptive. Much less worthy of generational self-definition.

Talk about the power of marketing.

There are glimmers of hope, though.

Take this recent report from CBS News about “the triumphant return” of vinyl. (Last year, vinyl sales grew 32 percent.) The report is filmed here in Nashville, and prominently features Nashville’s great independent record store Grimey’s. It features Dan Auerbach and Patrick Carney of the Black Keys talking about why they love records, and why they release their albums on vinyl.

But the coolest part of the segment comes from Grimey’s Doyle Davis, who says, “I see young people in their 20s bonding with people in their 50s, becoming friends, going to shows together. They meet up at the record store. It is a pretty cool thing.”

That is a pretty cool thing.

Hereit pleads guilty to being a website. But it is a website with no advertising and no data capture, that allows artists to set their own prices for their music and keep 100 percent when they sell songs. And, importantly, that encourages people to focus on and explore the independent music communities where they actually live, and then elsewhere. I’ve always said that I hoped Hereit would inspire people to be off it more than they are on it. (Going gangbusters so far, believe me.)

Hopefully, the site will inspire people to seek out and see some local bands. Go hang out at a record store, if your town is lucky enough to have one, and ask the people there who they listen to, who they like and who they recommend. Buy music by and from independent artists. You never know. You might find a whole group of people all around you that are doing something really cool. That’s the best way to discover music anyway. Privately, with all your friends.

As life becomes increasingly digitized and commercialized, maybe the most disruptive and revolutionary thing people can do is to stay out of the mousetraps in the first place. Don’t take the cheese, kids.

And that’s one to grow on.

The First Week

Hereit is one week old and I am just so humbled and thankful for all the support, encouragement, kind words and best wishes.

In the seven days that Hereit has been live, it has received visits from ten different countries, 34 states and 103 cities. Artists have started profiles in New York City, Nashville and, as of last night, Memphis. It has been incredible to receive emails from artists who posted songs, sold them and received 100 percent of the money—all in the same night. For me, that is the whole point of Hereit—to give artists a simple, powerful and affordable tool that lets them connect with listeners and then stays out of the way.

I have been contacted by some truly great and exciting artists—blues, punk, soul, honky tonk, indie rock, garage rock, americana—who are all planning on posting in the days and weeks ahead, and I can’t wait to hear who else is out there. This site is going to be built band-by-band, artist-by-artist, city-by-city. I wouldn’t want it any other way.

Keep visiting Hereit, like and buy songs, and help spread the word by passing it along and sharing the site. Thank you!

Ari
ari@hereit.org