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.

What Makes Hereit Different?

I have held off on posting a comparison between Hereit and other digital music sites for awhile, but a few people have been asking what makes Hereit different, so I figured I’d better get one together.

Before jumping into it, though, I should say that I like to think that my critiques of other music services are best expressed by what Hereit is, what it does, and why it does it. Hereit is the best solution I could come up with, and the way I think things should be. (Pay as you go, no cuts to artists sales, no ads or data capture, organized by locations and genres so playlists are coherent and relevant.)

But if other sites work for you, that’s great. And I mean that sincerely. Different artists need different things. Hereit is young, small and grassroots; it is just getting going. There is some functionality I still want to build out and build on. As the site grows, with more artists and locations, the more it will be able to do what it has been designed to do. Go with whatever you think is best for you.

The last thing I would ever want to be is some guy with a website who tells artists what they should do. Those types just love telling musicians how to do things, and what their “business model” should be. Even though, if you take away the venture capital and the Wall Street valuation that is far more central to these companies than music, some of the big music sites are less profitable than the average busker on the corner with an acoustic guitar and a fedora in front of him.

My advice is to get legal advice from lawyers, medical advice from doctors, and avoid taking business advice from companies that manage to lose $12 million a quarter even when they are barely paying for their core product. But I am old fashioned that way.

Think about that, though: Pandora and Spotify–data mining operations masquerading as music platforms–each lose more than a $100,000 a day.

A friend of mine used to earn about $100 a day playing Neil Young songs on subway platforms. And he only paid about half a penny less than the streaming sites. And if he played a song from before 1972 (like anything from Everybody Knows This Is Nowhere or After the Gold Rush), he actually paid Neil Young the same: Nothing. Because Pandora exploits a tenuous legal loophole to dodge paying royalties on pre-1972 recordings. Stay classy, Pandora.

But, as usual, I digress. Suffice to say, don’t follow leaders and watch the parking meters.

There is a longer description of Hereit pricing for artists in this blog post, but here is a quick overview, followed by some information on other music services for independent artists to sell music. (Soundcloud, for instance, is more a service for hosting and streaming your music than selling it, though you can do it by integrating other services. And I’m not going to even dignify the streaming rates paid by sites like YouTube, Spotify and Pandora by including them. [Edit: Well, actually, I guess I am.] You can read about them in detail on the Trichordist.)

Hopefully some of this will help you make an informed decision. The choice, and the music, is yours.

Hereit
(sell direct to listeners)

Costs: A buck a song a month.

A Hereit profile costs $3 per month and comes with space for three songs ($3.40 total; 40 cents goes to cover the e-commerce provider’s service fee). Each additional published song is $1 per month ($1.03 with the service fee).

Hereit has been built to give the musicians who use it maximum control over their work. Artists set their own prices for songs and keep 100 percent. You can swap songs out as often as you like and all charges are prorated for actual time the songs are on the site, to the second. If songs are on the site for less than a full month, credit is given on the next month’s charges.

What it does: Hereit is a site to discover and support independent local music.

…(And if I might take a moment to expand on that: At a certain point, “support” means “support financially.” Seriously, just buy songs. It is ridiculously easy. Most are only a dollar, and you get to keep them forever and not be dependent on a monthly data plan just to hear ’em. And you actually help another human being, one who theoretically created something that you actually enjoy. Trust me, you have a lot more in common with an independent artist than the kinds of people who own and run the companies that tell you music can’t be devalued because it is priceless, and then pay artists 1/10th of a penny or less for use of their song, which they tack an ad in front of with a cpm rate of $7.60, keeping 45 percent. That’s some pretty specific “valuation,” there, Google.  And last year, Brian McAndrews, CEO of Pandora, made $29 million dollars–not bad for a guy whose company is losing a hundred grand every day–while Pandora lobbies aggressively to lower royalty rates to artists. For cryin’ out loud, forget these clowns. Just give your dollar to the kid who needs guitar strings.)…

Hereit is organized by locations and genres, and it dynamically generates a playlist of songs by artists on the site when selections are made. If you want to listen to alternative rock, acoustic blues, garage rock and folk music from Calgary, San Jose, Memphis, Portland and New York, you make those selections and the site builds a playlist of songs by artists on the site, ranked by the most liked songs for that day. Listeners can buy and download individual songs on the homepage, or click through to an artist’s profile page to buy whole albums. The e-commerce fee for the purchase is paid by the listener. So if an artist sets the song price at $1, it has a total cost of $1.34. The e-com provider gets the 34 cents and the artist gets the whole dollar direct deposited into his or her bank account in 48 hours. Hereit doesn’t add any additional fees or make any money off sales of the artists’ music.

Here is a little more detail:

  • $1 per published song per month, $3 minimum plus actual service fees for Stripe, the e-commerce provider (2.9 percent, plus 30 cents per transaction). Three songs costs $3.40 per month; four songs costs $4.43; five songs costs $5.46; six songs costs $6.49, etc. This covers the hosting and bandwidth costs. All charges are prorated to actual time a song is published on the site, to the second, with credit given on the following month’s bill. No contacts or commitments. Artists can stop or start at any time and can swap out their songs as often as they like.
  • Artists set their own prices for songs and receive 100 percent of the sales. The site sets artists up with their own private e-commerce account with Stripe, and they receive payments by direct deposit into their bank account within 48 hours. The site doesn’t tack on any additional fees or take any cuts from the sales. Hereit adamantly believe that artists’ sales should be theirs entirely, 100 percent. And that listeners have a right to support the artists they like, directly, without having a percentage of their money siphoned off by the platform.
  • There is no advertising or data capture of any kind. Here’s why. And here too. And because, short answer, I hate it. Hereit is totally artist supported and pay-as-you-go, and free and completely private for listeners.
  • Here is what Hereit does not do: The site doesn’t help sell merch, or write bios, or solicit tips, or fundraise in exchange for home-cooked meals and handmade thank you cards, or offer press kits, or charge you to pretend to market your band, or give social media strategy, or let you give away music in exchange for listeners’ personal information, or “connect you with today’s hottest brands to forge deeper engagement with prominent online influencers!,” or help you “discover alternative sources of revenue in the digital music ecosystem,” or show you how to “move stakeholders up the pyramid of engagement” by giving your songs away for free to people who don’t know, like or care about you which will somehow make some of them then want to pay you for the music you just gave them for free and–ta da!–new revenue streams appear. (Guffaw all you want, this is actually what Google tells artists to do. 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.)
  • There are also no featured artists or staff picks or tiered levels of service, or upsells of any kind. The site has been designed to be simple, equitable, transparent and affordable. All Hereit does is coherently organize artists and songs by locations and genres for better music discovery and give artists an affordable e-commerce platform that lets them sell songs without taking any cuts. That’s it.

Here are some of the other services and sites for musicians. Now, keep in mind, I flunked 10th grade math. But as you’ll see, with some of them, you could be selling music on Hereit, keeping 100 percent, for nearly two years for the cost it takes you to recoup the money you spend on some of these sites. And–just a heads-up–whenever a digital service claims to be be free, consider it a huge red flag.

Bandcamp
(sell direct to listeners)

Costs: Free for basic service, $10 per month for “pro” service; plus 15 percent of sales.

Bandcamp is a popular, much used service for independent music that also enables artists to sell directly to listeners. It is not awful by any means. It has a tagging system for locations, which is jumbled and only seems to allow one selection (you can search by location, or genre, but it doesn’t seem like you can look by both or by multiples of either). If you try browsing “blues” or searching by “Nashville,” you’re gonna find pages and pages of thumbnails of different artists. Some will be blues artists or bands from Nashville, but lots of it will just be stuff that has those words in the title or music that has that tag. Still, better than not having it at all. There are many, much worse sites for sure.

It is free to post music on Bandcamp (though, of course, there is a Bandcamp Pro version that costs $10 per month) and the site takes a 15 percent cut of music sales up to $5000, and then lowers to a 10 percent cut. But they also pass along their Paypal fee to artists–2.9 percent plus 30 cents per transaction. On a $1 download, that equals 48 cents in fees, though how they calculate and distribute those payments is a little confusing.

This is how Bandcamp details their revenue sharing process:

For simplicity, let’s say the revenue share rate is 10%, and you sell an album for $10. All $10 of that sale would go straight to you, but your revenue share balance (the amount you owe Bandcamp) would now be $1. Then you sell another album for $10. All $10 of that sale would again go straight to you, and your balance would now be $2. As more orders come in, the payments continue to go to you and your balance continues to grow by 10% of each sale. Upon the sale of your tenth $10 album, your balance would have reached $10, so that $10 sale, and only that sale, would go to Bandcamp, and the balance you owe Bandcamp would be reduced by $10. You can view your current balance at any time by exporting your sales history from the Sales section of your Tools page.

Got that? (Though, like an insurance company premium, the math they use depends on you having already sold $5,000 of music. And they don’t mention the additional Paypal fees.)

So here is how that math breaks down if you sell $5,000 worth of songs for a buck each, individually, on Bandcamp in one year:

5,000 transactions x 18 percent (15 percent for Bandcamp, 2.9 percent for Paypal): $900
5,000 x 30 percent per transaction (Paypal’s additional 30 cents per transaction): $1500

So it would cost you $2400 to sell $5000 worth of songs directly to fans on Bandcamp. That’s a 48 percent cut for an allegedly “free” service.

On Hereit those same sales would cost you $40.80 if it took you a year to sell them (less if you sold them more quickly). That is less than 1 percent (.82 percent, to be exact).

Digital Distributors

While Bandcamp, like Hereit, allows artists to sell directly to listeners, many sites are actually distribution platforms. You pay them and they get your music onto iTunes, Amazon, etc.

Giant digital music outlet malls like iTunes and Amazon certainly offer listeners a lot of convenience. (I once bought about 200 Ray Charles songs for around $5, which, as a musician, is awfully discouraging.)

Once you pay the fees to these distribution services, though–some of which then take additional commissions on your sales–they deposit you into incredibly convoluted and glutted marketplaces. There are more than 37 million songs on iTunes. Independent releases are buried, and receive limited attention. So you are on your own. The only way someone will find you is if you deliver them directly to your music.

And here is what happens when songs are bought on iTunes, which takes a 30 percent cut off the top.

From Rolling Stone:

Adele, who is signed to Sony Music, sells “Rolling in the Deep” for $1.29. Apple, as the retailer, keeps 30 percent, or roughly 40 cents. The rest, 90 cents, goes to Sony. From that, the major record label must deduct 9.1 cents as a “mechanical royalty,” paid to Adele and her co-writer, Paul Epworth (although they might split it with their respective publishing companies). That leaves about 81 cents.

Typical record contracts give artists 12 to 20 percent of sales, depending on the hugeness of the star, so let’s split the difference and say Adele’s percent is 16. That comes out of the original $1.29 price – so the artist’s cut for sale of the master recording is about 20 cents. (This is assuming Adele has made enough to “recoup” the expenses for her album – otherwise, it just contributes to paying off her debt to her record company.) And the remainder, a grand total of 60 cents, goes to Sony to pay for marketing, publicity, videos, executive salaries and obviously, profit.

Of course, many artists don’t want to share nearly half of their revenues with a major label like Sony, which is essentially a middleman. Before the Internet, and stuff like ProTools, an artist had to sign with a label even to be heard. That’s obviously no longer true. Today, an artist can pay a service like TuneCore to be included in the iTunes Store. At that point, after Apple takes its cut, the entire 90 cents goes to the artist.

Well, theoretically. Here are the fees for the companies that deliver you into a retail environment like that.

TuneCore

TuneCore does not take cuts from artists sales, though they do take a 10 percent cut of publishing if you use their publishing service. They also have a host of additional services you can buy, like TuneCore Track Smarts: “Get reviews and ratings from music fans, plus insights and analytics on your track to help you improve your music and advance your career.” (That’s what is so frustrating about the Internet–it is so difficult to hear people’s opinions. Thank goodness there is now the option to pay TuneCore $15 to hear what strangers online think of you.)

Here are their basic service costs. Like many of the digital distributors, you pay to have each release, album or single, distributed for an entire year, making it very difficult to do any kind of content strategy or limited-exclusivity to encourage sales.

Cost per album: $29.99 first year; $49.99 each following year
Cost per single song: $9.99 per year
Ringtone: $19.99 per year [Time travel to and from 2006 not included.]
Publishing: $75 one-time fee, 10% of publishing royalties.

CD Baby

CD Baby charges a one-time fee to distribute music to digital retailers. They also take an additional 9 percent commission off the purchase price. (They also distribute CDs & vinyl, and take $4 per unit sold.) So, with the cuts for iTunes and CD Baby, that’s 40 percent taken from each sale. Plus their fees:

Standard: $13 single, $49 per album.
Pro: $39 per single, $99 per album.

ReverbNation 

In addition to digital distribution, ReverbNation also offers a morass of other services, with tiered pricing levels. There is Basic ($0, “For All Artists”); Pro ($19.95/month, “For Emerging Artists”) and Max ($41.67 “For Rock Stars”–that’s right, for rock stars.)

ReverbNation is fairly notorious for how aggressively they upsell their services, and that upselling is woven pretty tightly into their fuctionality. Some users who don’t read the fine print of the site’s terms and conditions of the distribution package are surprised to find themselves charged to remove their songs. The takedown fees are $30 for those on the Essentials Package and $45 for the Pro Package–but hey, those people are rock stars, right? If you don’t pay the fees, your songs are considered “abandoned releases.” ReverbNation can take down your music, with or without notifying you. When they do, “aggregator will earn all royalties from sales of your music” until you pay the fee. That means that if you sign up for ReverbNation and don’t like it, you have to pay to stop using it. And if you don’t, they continue to sell your songs and keep all the money.

Here are their prices for digital distribution:

Cost per year per single song: $9.95
Cost per year per album: $19.95 first year, $49.95 each additional year

ReverbNation also has location functionality and some type of “trending” system to help discover scrappy independent artists like this. She’s only 22 and just got her first kitchen, but she’s doing pretty well–she’s got 145 video plays and 40 widget impressions on her page. (To be fair, lots of independent artists use ReverbNation, of course.)

DistroKid

Now, for digital distribution, DistroKid looks interesting, and a lot cooler than the other options. It is a lot newer as well.

For a yearly fee of $19.99, they will upload unlimited albums and songs to iTunes, Spotify, Google Play, Amazon, Beats, Rdio and Deezer. DistroKid takes zero cuts to royalties, and while some of the other services appear to take weeks to get music into these online retailers, DistroKid does it in a matter of hours.

Like I said, there are many downsides to being on those platforms–from the cuts they take, to the set pricing and discounting, to the challenges of being found on them. But there are conveniences as well. If you choose to distribute your music through the platforms, DistroKid looks like a pretty logical choice when compared to all the others. I like that it is a simple, flat and transparent rate and that they don’t take cuts from artists sales.

So there you have it: the long and winding competitive analysis. If you are an artist, double check everything, do your own research, read all the fine print and then go with whatever best helps you get paid and make a living from the sale and use of your work.

If you are a listener, think about foregoing the cheapest route and spend a couple more cents on something that best benefits the people who made the music you are buying. Look around and find local music, made by bands and artists who live and work all around you, or independent artists from other cities or countries.

But, whatever you do, buy the songs–don’t just stream them. Streaming is far from free and you’ll probably like the songs a lot more if you actually buy and own them. More on that in How Much Does It Cost If It’s Free, in case you haven’t read that one yet.

In the end, none of the problems that artists are now experiencing can really be solved by a website. They can only be solved by musicians and people who love and care about music working together. Hopefully, more and more listeners will get tired of being forced into the passive, unsatisfying role of music consumers (and all the exploitation of their personal information that comes with it) and find ways to be more active participants, even citizens, in their own music communities. And that artists will find ways to help and encourage them do that. Because being a part of something is so much more rewarding than having thousands and thousands of audio files you got for free and never listen to clogging up your hard drive, or being able to stream any song you think to type into a search field. Music can be totally meaningless or deeply meaningful, and a lot of the time, that just depends on how you come to it and what you put into it.

The best thing a website can do is bring musicians and music lovers together and then just stay out of the way. That’s what Hereit hopes to do. If there are other sites or tools or platforms that do that better for you, that’s cool too. Whatever helps.

Thanks for slogging through all this. I hope to hear you on Hereit. And if I don’t see you there, in a long, long while, I’ll try to find you left of the dial. Best of luck and no hard feelings. Get out there and give ’em hell.

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.

How Much Does It Cost If It’s Free?

“How Much Does It Cost If It is Free?” That’s what renowned artist right’s advocate Col. Tom Parker always threatened to title his autobiography. Catchy. But he never wrote it. He was too busy managing Elvis, for a cut that grew over the years to 50 percent of all Elvis’ earnings–in some areas, it was rumored to be as high as 80 percent.

Fun fact: The Colonel’s real name was actually Andreas Cornelis van Kuijk. He was born in the Netherlands. Some people think he was from Sweden, but they are probably just confusing him with Spotify. (An honest mistake, but Spotify would never give an artist that generous a cut.)

Still though, it is a good rhetorical question. One that deserves an answer… How much does it cost if it is free? It reminds me of something a friend once told me that he learned in prison: “The cheapest way to pay for something is with money.”

Wise words in this age of allegedly free music.

Before we take a look at how you pay for music if you don’t pay with money, though, let’s take a look at the actual money, because it is surprising how much you need to enjoy all this free music.

For starters, what are you listening to the music on? Despite what they pay people to make them, an iPod is not cheap. Shuffle: $50. Nano: $150. Classic: $250. Touch: $300 or $400. Neither is an iPhone ($200 to $400). And if you’re streaming all this “free” music from “free” platforms like Spotify or Pandora, you are going to need some kind of service as well. Basic home internet with Comcast is about $40 to $50 per month. A 2 GB mobile data plan with AT&T is going to run about $80 per month and a 4 GB plan is $110 per month–with a two-year contract. Plus taxes and fees.

Yeah, I know, sometimes you get the phone for free with the contract and I guess you could just stream music over wifi at some corporate coffee shop all day. Point taken, cost cutter.

But actual money aside–what else are you paying with? You pay with you. Even if you don’t think your personal information is all that valuable, Pandora, Spotify and Google’s All Access sure do. In fact, it seems like that may be one of the main reasons they exist.

Check out this article on Google All Access: “Google’s music service could fail to capture market share from the big players and still be a success. That’s because delivering music and new accounts is yet another way for Google to amass personal, intimate details about its hundreds of millions of users — information that enables it to better target ads.”

Guess how much of Google’s $50 billion in revenue last year came from advertising? 95 percent.

Or as the New York Times puts it: “Listen to Pandora and It Listens Back.”

“Pandora has collected song preference and other details about more than 200 million registered users, and those people have expressed their song likes and dislikes by pressing the site’s thumbs-up and thumbs-down buttons more than 35 billion times. Because Pandora needs to understand the type of device a listener is using in order to deliver songs in a playable format, its system also knows whether people are tuning in from their cars, from iPhones or Android phones or from desktops.

So it seems only logical for the company to start seeking correlations between users’ listening habits and the kinds of ads they might be most receptive to.”

The article goes on to quote Eric Bieschke, Pandora’s “Chief Scientist”:

“It’s becoming quite apparent to us that the world of playing the perfect music to people and the world of playing perfect advertising to them are strikingly similar…The advantage of using our own in-house data is that we have it down to the individual level, to the specific person who is using Pandora. We take all of these signals and look at correlations that lead us to come up with magical insights about somebody.” 

Magical insights! Wow. Isn’t the Internet amazing? But insights into what exactly? From the Times story:

People’s music, movie or book choices may reveal much more than commercial likes and dislikes. Certain product or cultural preferences can give glimpses into consumers’ political beliefs, religious faith, sexual orientation or other intimate issues. That means many organizations now are not merely collecting details about where we go and what we buy, but are also making inferences about who we are.

“I would guess, looking at music choices, you could probably predict with high accuracy a person’s worldview,” says Vitaly Shmatikov, an associate professor of computer science at the University of Texas at Austin, where he studies computer security and privacy. “You might be able to predict people’s stance on issues like gun control or the environment because there are bands and music tracks that do express strong positions.”

Pandora, for one, has a political ad-targeting system that has been used in presidential and congressional campaigns, and even a few for governor. It can deconstruct users’ song preferences to predict their political party of choice. (The company does not analyze listeners’ attitudes to individual political issues like abortion or fracking.)

During the next federal election cycle, for instance, Pandora users tuning into country music acts, stand-up comedians or Christian bands might hear or see ads for Republican candidates for Congress. Others listening to hip-hop tunes, or to classical acts like the Berlin Philharmonic, might hear ads for Democrats.

Because Pandora users provide their ZIP codes when they register, Mr. Bieschke says, “we can play ads only for the specific districts political campaigns want to target,” and “we can use their music to predict users’ political affiliations.” 

Valuable insights indeed.

In 2013, out of $427.1 million in revenue, Pandora generated $375.2 million from advertising. (Imagine how much additional user information Spotify and Facebook receive through the integration of their platforms.)

Spotify has seven different ad formats: Audio, Display, Homepage Takeover, Branded Playlist, Lightbox and Advertiser Page. And here’s some advice for how brands can use them, such as, “Add to the listener’s experience by integrating marketing messaging into their Spotify ecosystem.” And, “Encourage listeners to build playlists around your brand.”

But the one that sums it up most succinctly is this: “Leverage users’ musical passion points and positive affiliation with music to accentuate your brand’s message.”

Because that is what it is really all about.

Music, as much and maybe even more than any other art form, can inspire pure, deep and powerful emotional connections and associations. Advertising and marketing–whose role in the experience of listening to music has become completely commonplace and accepted now, under the incredibly insidious and disingenuous ruse of “compensating artists”–is completely parasitic to that connection.

Advertisers are so drawn to these platforms not only because how we interact and respond to music reveals to them more than we ever would willingly or consciously–but also because it provides them the ability to feed off the genuine feelings that music creates in listeners and forge an association and emotional connection to a brand. Like a virus looking for a host.

So you pay for this free music with your time, sitting through these absurd and obnoxious sub-radio ads, and the mindshare that they try to extract from you. But you also pay with the potentially permanent association they forge between music you like or even love and  some stupid brand.

But the worst part is what it is doing to that actual emotional connection. If advertisers are hoping to take advantage of listeners’ strong connections and associations with music, there may be less and less there to exploit.

Now that it is so easy, so banally convenient to have tens of thousands of songs at your fingertips–legally or illegally–it feels like the process and the act of discovering and experiencing music grows less consequential and meaningful every day.

When you expend no energy on something, you have no personal investment in it. Songs become meaningless, just files on a computer or a passing stream. As music itself grows increasingly toploaded with convenience and stripped of the relevance that comes from expending effort on something, it becomes more and more disposable. You wind up paying for all this endless free music with something far more valuable than money–your actual emotional connection and love for the music itself.

Now, certainly, paying money for something is not the only way to expend effort on it. But it does–as the marketers like to say–“add value” to the experience. So does going to a show, so does jumping around in a crowd or somehow experiencing something collectively. To be a part of something–not just as a passive, marginalized consumer, but as a citizen and an active, important participant.

It is bleakly but oddly fitting that performance royalties are paid on streams based on an audience of one–as opposed to royalties for terrestrial radio, which are based on broadcast market size. Instead of listening to and experiencing something together–baby, they’re playing our song–the image is of one person, alone and disconnected, with ear buds on, streaming songs on a platform that is tracking their information to exploit with advertising.

That’s why Hereit doesn’t have any advertising of any kind and doesn’t engage in any kind of data tracking either. It is also why Hereit is constantly trying to encourage people to buy music. Don’t just click the Like button. Don’t just stream it. Buy it. Own it.

The artists on Hereit receive 100 percent of the song price. Not only does actually buying music directly, entirely support independent artists and bands at the community level–it also feels good. It feels good to buy music straight from the people who created it, with no cuts siphoned off by some digital platform, and to know that you have made a difference in their lives, emotionally and financially, through your support and encouragement. It’s like voting for something–a very clear way of making your opinions known and your voice heard.

And it feels good to actually own it too–to be able to play it whenever you want, and to do it without connecting or exposing yourself to predatory companies looking to exploit your love of music for their own financial benefit. That’s a lot of freedom, power and peace of mind for the buck or two that songs cost. And that’s a lot to give up in order to pretend you’re not actually paying for something. Because you are probably paying a lot more than you think. The worst thing about free music is what it costs.