• New singles to go 'on air, on sale' simultaneously• Record labels target X Factor generation
Jessie J’s Do it Like a Dude went on sale as it was launched on radio last month. Others are following suit. Photograph: Purple PR/PA
Ten years after piracy first began to ravage the music industry, Britain's two biggest record labels will finally try to play their part in stopping it, by making new singles available for sale on the day they first hit the airwaves.
Universal and Sony Music – home to Take That and Matt Cardle, respectively – hope the effort will encourage the impatient X Factor generation to buy songs they can listen to immediately rather than copying from radio broadcasts online.
David Joseph, the chief executive of Universal Music, said: "Wait is not a word in the vocabulary of the current generation. It's out of date to think that you can build up demand for a song by playing it for several weeks on radio in advance."
Songs used to receive up to six weeks radio airplay before they were released for sale – a practice known as "setting up" a record. But the success of selling the winner's single immediately after the X Factor final has made record bosses think again.
"What we were finding under the old system was the searches for songs on Google or iTunes were peaking two weeks before they actually became available to buy, meaning that the public was bored of – or had already pirated – new singles," Joseph added.
Sony, which will start the "on air, on sale" policy simultaneously with Universal next month, agreed that the old approach was no longer relevant in an age where, according to a spokesman for the music major, "people want instant gratification".
Cardle, who signed to Sony via an agreement with Simon Cowell, sold 439,000 copies of When we Collide when it made the Christmas number one, the track having gone on sale just as the X Factor final ended on television.
Industry insiders believe instant sales will make it easier for records to climb the charts as excitement about a new song builds, developing a trend first seen when download sales joined the mainstream.
In the past, heavy pre-release marketing had tended to mean a new single crash-landed at its peak position on its first week of release – making the top 40 a dull narrative of short-lived new entries leavened by falling songs and fading glamour.
Jessie J's Do it Like a Dude went on sale and on radio at the beginning of December, and the 22-year-old's R&B single climbed steadily to reach number 5 last week. As more singles follow suit, the charts will briefly become uneven as songs adopting the old and the new marketing policies mix.
Piracy remains a crippling problem for the British music business, where the overall market fell by nearly 6% in 2010 and album sales slumped 7%, despite the success surrounding Robbie Williams's rejoining Take That and Simon Cowell's television-fuelled hits factory.
Although pirating songs from the radio is as old as tape recorders, the record companies believe the move will show ministers that they are playing their part in fighting copyright theft.
Universal and Sony have both notified Ed Vaizey, the minister for culture and the creative industries, of their plans.
Monday, 25 April 2011
The music industry is finding other ways in which to make money
For the past ten years sales of recorded music have declined so steeply as to become a cautionary tale about the disruptive power of the internet. The rise of illegal file-sharing and the end of the digital “replacement cycle”, in which people bought CDs to replace tapes and records, caused spending to collapse. Sales of CDs, tapes and records have slid by 40% in Britain since 2001, according to the BPI, which represents record labels. In Japan, the world’s biggest CD sales market, the number of discs sold fell by 6% in 2008 and 24% in 2009. Price cuts meant that revenues dropped even more steeply.
The rise in digital music-sales is scant compensation. People tend to buy tracks, not albums, from sites like Apple’s iTunes. They can obtain their favourite music much more cheaply than they could in the CD era. And even digital sales are now stalling. In Japan, mobile and online single-track sales rose only a shade during 2009. So far this year Americans have bought 841m digital tracks, mostly from Apple’s iTunes, according to Nielsen Soundscan—down from 847m at this point last year. Apple now offers plenty of other opportunities to spend money, from iPads to more than 250,000 apps. Music executives believe the company is cannibalising the musical part of its own business.
Yet the music business is surprisingly healthy, and becoming more so. Will Page of PRS for Music, which collects royalties on behalf of writers and publishers, has added up the entire British music business. He reckons it turned over £3.9 billion ($6.1 billion) in 2009, 5% more than in 2008. It was the second consecutive year of growth. Much of the money bypassed the record companies. But even they managed to pull in £1.1 billion last year, up 2% from 2008. A surprising number of things are making money for artists and music firms, and others show great promise. The music business is not dying. But it is changing profoundly.
The music industry is finding other ways in which to make money
The longest, loudest boom is in live music. Between 1999 and 2009 concert-ticket sales in America tripled in value, from $1.5 billion to $4.6 billion (see chart 1). Ticket sales wobbled in America during the summer of 2010, but that was partly because some big-selling acts took a break. One of the most reliable earners, Bono, U2’s singer, was put out of action when he injured his back in May. Next year many of the big acts will be on the road again, and a bumper year is expected.
It is not that more people are going to concerts. Rather, they are paying more to get in. In 1996 a ticket to one of America’s top 100 concert tours cost $25.81, according to Pollstar, a research firm that tracks the market. If prices had increased in line with inflation, the average ticket would have cost $35.30 last year. In fact it cost $62.57. Well-known acts charge much more. The worldwide average ticket price to see Madonna last year was $114. For Simon & Garfunkel it was an eye-watering $169. Leading musicians have also, by roundabout means, seized a larger share of the mysterious “service” charges that are often tacked onto tickets.
Fans complain bitterly about the rising price of live music. Yet they keep paying for concerts. One reason is that the live-music experience has vastly improved. Lots of shiny new venues have been built since the mid-1990s, many subsidised by governments in the hope that they would revitalise decayed downtowns. And musicians are much more enthusiastic about performing live. The misery of touring was once a familiar musicians’ gripe, inspiring songs from the Rolling Stones’ “Torn and Frayed” to Ice-T’s “Lifestyles of the Rich and Infamous”. But those songs were written in the days when touring was a way of marketing recorded music. Now it is a direct source of profit.
However much fans pay to get into a venue (and thanks to ticket touts they often pay more than even the greediest artists charge) they tend to have cash left over. This they spend on merchandise. “We have grown along with the touring business,” says Tom Bennett, the head of Bravado, which sells T-shirts and other paraphernalia. Bravado’s revenues have more than doubled since 2007, when it was acquired by Universal Music Group—although that is partly because it has signed up new acts. And merchandise has moved well beyond the arena. Nearly all Bravado’s turnover used to come from sales at concerts. Now about half comes from retail stores.
The music industry is finding other ways in which to make money
The re-release of the Rolling Stones’ 1972 album “Exile on Main Street” in May was accompanied by a merchandising blitz that illustrates how far the business has evolved beyond selling black T-shirts. Bravado released more than 100 items, from baseball caps to boxes containing signed lithographs. There were not only album-cover T-shirts but also a higher-priced “as worn by” collection, featuring reproductions of clothes that members of the band happened to be wearing in the early 1970s. The huge range of items at different prices meant products found their way into budget stores like Target as well as dearer ones like Bloomingdale’s.
Music’s cachet and emotional pull also make it a potent weapon for businesses that want to build their own brands. The Rolling Stones (again) led the way in recruiting tour sponsors, from Sprint, a phone company, to Ameriquest, which sold mortgages. Sponsorship can lead to musicians wearing a company’s clothes and naming songs after it: Rascall Flatts, a country music band, has done both for American Living, a label carried by JCPenney. IEG, a firm that tracks the market, estimates that the value of tour sponsorships in North America will reach $1.74 billion this year, up from $1.38 billion in 2006.
Music’s best business customer is television. “Watch an evening’s worth of TV and count how many times you hear music in the background,” says Jeremy Lascelles, chief executive of Chrysalis. Your correspondent tried, and found that a new tune appeared, on average, every 40 seconds. Many necessitated payments to songwriters and the music publishers, like Chrysalis, that represent them. Publishers have become increasingly adept at hawking their wares to programme-makers. And music is not always in the background of TV programmes. Some of the most popular shows of the past few years—“American Idol”, “Glee” and “The X-Factor”—have been music shows.
Because it derives revenues from business as well as consumers, publishing is much more stable than recording. Record companies’ publishing departments, which once seemed rather dowdy next to sexy, talent-spotting A&R, have become vital cash machines. Publishing supplied 29% of EMI’s revenues and 45% of its profits in the year to March 2010. The outfit’s new boss, Roger Faxon, comes from that side of the business—a reflection of how the economics of music have shifted.
The music industry is finding other ways in which to make money
On television, music is either supported by advertising or bundled invisibly into the cost of pay-TV subscriptions. That model is spreading from the box to the web.
Free music-streaming services like We7 and Spotify have proliferated in Europe: the latter claims 10m users. America has Vevo, a music-video website linked to YouTube and owned in part by Universal Music Group and Sony Music Entertainment.
Because Vevo’s content is consistently professional, it draws advertisers. Rio Caraeff, who runs the outfit, says companies pay $25-30 to reach 1,000 viewers. That is more than television networks tend to get, although Vevo reaches fewer people and runs many fewer ads (just 15 seconds every six-and-a-half minutes).
In 2009 ad-supported digital music earned just £8.2m for British record companies, less than 1% of total revenues. But some have started charging fans for tunes on mobile phones—charges that may be bundled into monthly voice tariffs. Some music executives view the streaming services as the industry’s best hope.
Whether they are or not depends on where the new users of free streaming websites come from. If Spotify and Vevo are drawing people away from the CD racks and the iTunes store, they are undermining the industry. If, on the other hand, people are streaming music online rather than downloading it illegally from a BitTorrent site, the industry gains. It has converted a user who is worth nothing to someone who is worth a little. And the pool of pirates is so huge at present (IFPI, an international trade group, reckons that 19 out of every 20 tracks downloaded are illegal) that it ought to be possible to make serious money from persuading people to make the switch. The growth of legitimate streaming services has driven overall revenues up in South Korea and Sweden.
The possibility that music-streaming websites will turn CD buyers into freeloaders is a concern only in countries where people still buy music. That is not the case everywhere. Rampant piracy means just $19m-worth of CDs were sold in China last year—about the same as in Hungary. In such countries it makes sense to give away music, surrounding and interspersing it with advertisements. Websites like Top100.cn and Google are doing that. Record labels have also licensed music to Nokia, which bundles it into the price of its mobile phones.
The music industry is finding other ways in which to make money
The proliferation of FM radio and multichannel television in emerging markets is also driving revenues from copyrights. At the same time, restaurants and clubs are being strong-armed into paying for the music they play. CISAC, an umbrella organisation for collection societies, has reported steady or rising receipts in the past decade (see chart 2). But there is still a long way to go before collections reach European levels in emerging markets or elsewhere in the rich world. In America, for example, radio stations do not pay performance rights, although there have been legislative efforts to change that.
Rising income from live performance, merchandising, sponsorship, publishing, online streaming and emerging markets has come to counterbalance losses from declining CD sales. As a result, some musicians are singing a different tune. Last year a new group, the Featured Artists Coalition, objected to government plans to punish file-sharers by suspending their broadband connections. Its leaders, including established artists such as Billy Bragg and Annie Lennox, argue that file-sharing is a useful form of promotion. But not everybody agrees.
The sharpest rebuke came from Lily Allen, a songwriter and pop singer who was then 24 years old. File-sharing was fine for long-in-the-tooth bands that “do sell-out arena tours and have the biggest Ferrari collections in the world”, she noted. But for new acts it is a calamity. As revenues dry up, record companies are becoming unwilling to invest in young artists, apart from those who have built an audience by winning talent shows on television.
Ms Allen’s intervention went down badly with the digital libertarians who dominate discussion of file-sharing on the internet. She was nonetheless right—and she could have gone further. Music piracy is fundamentally a generational issue. Polls have consistently shown that teenagers and young adults are the most likely to acquire music online illegally. They naturally prefer music made by people of their own age (such as Ms Allen), who write about the sort of things they experience. So the young steal from the young, while middle-aged fans continue to buy CDs put out by middle-aged musicians.
The music industry is finding other ways in which to make money
In a sense, the recorded-music market is not so much dying as greying. In 2002 people aged 12 to 19 accounted for 16.4% of all spending on albums in Britain, according to TNS Worldpanel. That was almost double the share of people aged 60 or over (8.8%). The two groups have now switched positions. By 2008 teenagers accounted for just 12% of spending on albums, whether digital or physical. By contrast, the older fans’ share had gone up to 13.8%. The over-60s do not just spend more on music albums than teenagers. They spend more on pop-music albums.
The consequences can be seen in the pop charts. America’s bestselling album since 2000 is “1”, a collection of Beatles hits from the 1960s. At one point last year four of the top ten albums in Britain were Beatles recordings and the number-one album was a collection of songs by Vera Lynn, who was then 92 years old. The bestselling album worldwide last year was “I Dreamed a Dream” by Susan Boyle, a middle-aged Scot. Universal Music’s bestselling album in Japan in the first half of this year was “Vocalist 4” by Hideaki Tokunaga, Japan’s answer to Harry Connick Jr. If most of your fans are middle-aged, CD sales are holding up well.
The ageing of the recorded-music market has been accelerated by trends in retailing. As independent record shops and specialist media stores like Zavvi (formerly Virgin) have closed, supermarkets have emerged as leading outlets for music. Britain’s four big supermarkets—Tesco, Asda, Sainsbury’s and Morrisons—accounted for 24% of all music sales in the country last year. By comparison, Amazon.com had 13% of the market and iTunes only 11%.
Supermarkets are patronised disproportionately by the middle-aged and the old (see chart 3). People aged 40 and over account for 62% of spending on music in Tesco, according to Kantar, a research firm. Partly because of their clientele, partly because supermarkets are mass-market enterprises, they tend to stock mainstream fare. “People who are shopping for Midlake or The National won’t find them in a supermarket,” says Geoff Taylor of the BPI, referring to two American indie bands. “But I bet Kylie Minogue’s album is there.”
The rise in digital music-sales is scant compensation. People tend to buy tracks, not albums, from sites like Apple’s iTunes. They can obtain their favourite music much more cheaply than they could in the CD era. And even digital sales are now stalling. In Japan, mobile and online single-track sales rose only a shade during 2009. So far this year Americans have bought 841m digital tracks, mostly from Apple’s iTunes, according to Nielsen Soundscan—down from 847m at this point last year. Apple now offers plenty of other opportunities to spend money, from iPads to more than 250,000 apps. Music executives believe the company is cannibalising the musical part of its own business.
Yet the music business is surprisingly healthy, and becoming more so. Will Page of PRS for Music, which collects royalties on behalf of writers and publishers, has added up the entire British music business. He reckons it turned over £3.9 billion ($6.1 billion) in 2009, 5% more than in 2008. It was the second consecutive year of growth. Much of the money bypassed the record companies. But even they managed to pull in £1.1 billion last year, up 2% from 2008. A surprising number of things are making money for artists and music firms, and others show great promise. The music business is not dying. But it is changing profoundly.
The music industry is finding other ways in which to make money
The longest, loudest boom is in live music. Between 1999 and 2009 concert-ticket sales in America tripled in value, from $1.5 billion to $4.6 billion (see chart 1). Ticket sales wobbled in America during the summer of 2010, but that was partly because some big-selling acts took a break. One of the most reliable earners, Bono, U2’s singer, was put out of action when he injured his back in May. Next year many of the big acts will be on the road again, and a bumper year is expected.
It is not that more people are going to concerts. Rather, they are paying more to get in. In 1996 a ticket to one of America’s top 100 concert tours cost $25.81, according to Pollstar, a research firm that tracks the market. If prices had increased in line with inflation, the average ticket would have cost $35.30 last year. In fact it cost $62.57. Well-known acts charge much more. The worldwide average ticket price to see Madonna last year was $114. For Simon & Garfunkel it was an eye-watering $169. Leading musicians have also, by roundabout means, seized a larger share of the mysterious “service” charges that are often tacked onto tickets.
Fans complain bitterly about the rising price of live music. Yet they keep paying for concerts. One reason is that the live-music experience has vastly improved. Lots of shiny new venues have been built since the mid-1990s, many subsidised by governments in the hope that they would revitalise decayed downtowns. And musicians are much more enthusiastic about performing live. The misery of touring was once a familiar musicians’ gripe, inspiring songs from the Rolling Stones’ “Torn and Frayed” to Ice-T’s “Lifestyles of the Rich and Infamous”. But those songs were written in the days when touring was a way of marketing recorded music. Now it is a direct source of profit.
However much fans pay to get into a venue (and thanks to ticket touts they often pay more than even the greediest artists charge) they tend to have cash left over. This they spend on merchandise. “We have grown along with the touring business,” says Tom Bennett, the head of Bravado, which sells T-shirts and other paraphernalia. Bravado’s revenues have more than doubled since 2007, when it was acquired by Universal Music Group—although that is partly because it has signed up new acts. And merchandise has moved well beyond the arena. Nearly all Bravado’s turnover used to come from sales at concerts. Now about half comes from retail stores.
The music industry is finding other ways in which to make money
The re-release of the Rolling Stones’ 1972 album “Exile on Main Street” in May was accompanied by a merchandising blitz that illustrates how far the business has evolved beyond selling black T-shirts. Bravado released more than 100 items, from baseball caps to boxes containing signed lithographs. There were not only album-cover T-shirts but also a higher-priced “as worn by” collection, featuring reproductions of clothes that members of the band happened to be wearing in the early 1970s. The huge range of items at different prices meant products found their way into budget stores like Target as well as dearer ones like Bloomingdale’s.
Music’s cachet and emotional pull also make it a potent weapon for businesses that want to build their own brands. The Rolling Stones (again) led the way in recruiting tour sponsors, from Sprint, a phone company, to Ameriquest, which sold mortgages. Sponsorship can lead to musicians wearing a company’s clothes and naming songs after it: Rascall Flatts, a country music band, has done both for American Living, a label carried by JCPenney. IEG, a firm that tracks the market, estimates that the value of tour sponsorships in North America will reach $1.74 billion this year, up from $1.38 billion in 2006.
Music’s best business customer is television. “Watch an evening’s worth of TV and count how many times you hear music in the background,” says Jeremy Lascelles, chief executive of Chrysalis. Your correspondent tried, and found that a new tune appeared, on average, every 40 seconds. Many necessitated payments to songwriters and the music publishers, like Chrysalis, that represent them. Publishers have become increasingly adept at hawking their wares to programme-makers. And music is not always in the background of TV programmes. Some of the most popular shows of the past few years—“American Idol”, “Glee” and “The X-Factor”—have been music shows.
Because it derives revenues from business as well as consumers, publishing is much more stable than recording. Record companies’ publishing departments, which once seemed rather dowdy next to sexy, talent-spotting A&R, have become vital cash machines. Publishing supplied 29% of EMI’s revenues and 45% of its profits in the year to March 2010. The outfit’s new boss, Roger Faxon, comes from that side of the business—a reflection of how the economics of music have shifted.
The music industry is finding other ways in which to make money
On television, music is either supported by advertising or bundled invisibly into the cost of pay-TV subscriptions. That model is spreading from the box to the web.
Free music-streaming services like We7 and Spotify have proliferated in Europe: the latter claims 10m users. America has Vevo, a music-video website linked to YouTube and owned in part by Universal Music Group and Sony Music Entertainment.
Because Vevo’s content is consistently professional, it draws advertisers. Rio Caraeff, who runs the outfit, says companies pay $25-30 to reach 1,000 viewers. That is more than television networks tend to get, although Vevo reaches fewer people and runs many fewer ads (just 15 seconds every six-and-a-half minutes).
In 2009 ad-supported digital music earned just £8.2m for British record companies, less than 1% of total revenues. But some have started charging fans for tunes on mobile phones—charges that may be bundled into monthly voice tariffs. Some music executives view the streaming services as the industry’s best hope.
Whether they are or not depends on where the new users of free streaming websites come from. If Spotify and Vevo are drawing people away from the CD racks and the iTunes store, they are undermining the industry. If, on the other hand, people are streaming music online rather than downloading it illegally from a BitTorrent site, the industry gains. It has converted a user who is worth nothing to someone who is worth a little. And the pool of pirates is so huge at present (IFPI, an international trade group, reckons that 19 out of every 20 tracks downloaded are illegal) that it ought to be possible to make serious money from persuading people to make the switch. The growth of legitimate streaming services has driven overall revenues up in South Korea and Sweden.
The possibility that music-streaming websites will turn CD buyers into freeloaders is a concern only in countries where people still buy music. That is not the case everywhere. Rampant piracy means just $19m-worth of CDs were sold in China last year—about the same as in Hungary. In such countries it makes sense to give away music, surrounding and interspersing it with advertisements. Websites like Top100.cn and Google are doing that. Record labels have also licensed music to Nokia, which bundles it into the price of its mobile phones.
The music industry is finding other ways in which to make money
The proliferation of FM radio and multichannel television in emerging markets is also driving revenues from copyrights. At the same time, restaurants and clubs are being strong-armed into paying for the music they play. CISAC, an umbrella organisation for collection societies, has reported steady or rising receipts in the past decade (see chart 2). But there is still a long way to go before collections reach European levels in emerging markets or elsewhere in the rich world. In America, for example, radio stations do not pay performance rights, although there have been legislative efforts to change that.
Rising income from live performance, merchandising, sponsorship, publishing, online streaming and emerging markets has come to counterbalance losses from declining CD sales. As a result, some musicians are singing a different tune. Last year a new group, the Featured Artists Coalition, objected to government plans to punish file-sharers by suspending their broadband connections. Its leaders, including established artists such as Billy Bragg and Annie Lennox, argue that file-sharing is a useful form of promotion. But not everybody agrees.
The sharpest rebuke came from Lily Allen, a songwriter and pop singer who was then 24 years old. File-sharing was fine for long-in-the-tooth bands that “do sell-out arena tours and have the biggest Ferrari collections in the world”, she noted. But for new acts it is a calamity. As revenues dry up, record companies are becoming unwilling to invest in young artists, apart from those who have built an audience by winning talent shows on television.
Ms Allen’s intervention went down badly with the digital libertarians who dominate discussion of file-sharing on the internet. She was nonetheless right—and she could have gone further. Music piracy is fundamentally a generational issue. Polls have consistently shown that teenagers and young adults are the most likely to acquire music online illegally. They naturally prefer music made by people of their own age (such as Ms Allen), who write about the sort of things they experience. So the young steal from the young, while middle-aged fans continue to buy CDs put out by middle-aged musicians.
The music industry is finding other ways in which to make money
In a sense, the recorded-music market is not so much dying as greying. In 2002 people aged 12 to 19 accounted for 16.4% of all spending on albums in Britain, according to TNS Worldpanel. That was almost double the share of people aged 60 or over (8.8%). The two groups have now switched positions. By 2008 teenagers accounted for just 12% of spending on albums, whether digital or physical. By contrast, the older fans’ share had gone up to 13.8%. The over-60s do not just spend more on music albums than teenagers. They spend more on pop-music albums.
The consequences can be seen in the pop charts. America’s bestselling album since 2000 is “1”, a collection of Beatles hits from the 1960s. At one point last year four of the top ten albums in Britain were Beatles recordings and the number-one album was a collection of songs by Vera Lynn, who was then 92 years old. The bestselling album worldwide last year was “I Dreamed a Dream” by Susan Boyle, a middle-aged Scot. Universal Music’s bestselling album in Japan in the first half of this year was “Vocalist 4” by Hideaki Tokunaga, Japan’s answer to Harry Connick Jr. If most of your fans are middle-aged, CD sales are holding up well.
The ageing of the recorded-music market has been accelerated by trends in retailing. As independent record shops and specialist media stores like Zavvi (formerly Virgin) have closed, supermarkets have emerged as leading outlets for music. Britain’s four big supermarkets—Tesco, Asda, Sainsbury’s and Morrisons—accounted for 24% of all music sales in the country last year. By comparison, Amazon.com had 13% of the market and iTunes only 11%.
Supermarkets are patronised disproportionately by the middle-aged and the old (see chart 3). People aged 40 and over account for 62% of spending on music in Tesco, according to Kantar, a research firm. Partly because of their clientele, partly because supermarkets are mass-market enterprises, they tend to stock mainstream fare. “People who are shopping for Midlake or The National won’t find them in a supermarket,” says Geoff Taylor of the BPI, referring to two American indie bands. “But I bet Kylie Minogue’s album is there.”
Helpful websites for research on Convergence
http://www.facebook.com/UniversalMusicGroup - they like ‘Glee’ (see in the likes panel). Universal music’s facebook page is used to promote itself, but also its associated products.
http://www.spotify.com/int/about/press/2008-10-07-spotify-announces-licensing-deals-and-upcoming-launch/ Spotify on Universal: Good quotes from universal about ‘subscription services being the future.
http://www.slideshare.net/guest52ec5f7/universal-music-group-4067653
http://www.slideshare.net/craigwinch/synergy-and-convergence
http://fixed-mobile-convergence.tmcnet.com/topics/mobile-communications/articles/43697-universal-music-group-playphone-team-mobile-music-offerings.htm universal convergence case study
http://www.spotify.com/int/about/press/2008-10-07-spotify-announces-licensing-deals-and-upcoming-launch/ Spotify on Universal: Good quotes from universal about ‘subscription services being the future.
http://www.slideshare.net/guest52ec5f7/universal-music-group-4067653
http://www.slideshare.net/craigwinch/synergy-and-convergence
http://fixed-mobile-convergence.tmcnet.com/topics/mobile-communications/articles/43697-universal-music-group-playphone-team-mobile-music-offerings.htm universal convergence case study
'Glee' Is A 'Goldmine' For The Music Industry, Experts Say
Last month, when "Glee" packed an entire episode with Britney Spears songs (and one Paramore tune), the show not only posted record-setting ratings, but placed a rather formidable stranglehold on the iTunes songs chart too. The following week, they decided to work a selection from the hallowed Lennon/McCartney songbook — "I Want to Hold Your Hand" — into things, a move that was equal parts cross-generational marketing masterstroke and, well, fist-thrusting victory lap.
Because, over the course of two-and-a-quarter seasons, "Glee" has transformed itself from a cult curiosity into to a bona fide sensation. It has spawned sold-out tours and chart-topping albums, but now, it's become something else entirely: the kind of show that can feature songs by the greatest pop star of the past decade one week and the greatest band of all time the next. It's a genuine, market-driving, industry-rejuvenating hit. And how did all this happen? Well, because certain folks realized that there was money to be made in partnering with the show.
"The industry has definitely started paying attention. If you're a songwriter or music publisher, you're definitely promoting your songs to the show," said Jeff Brabec, vice president of business affairs for music publisher Chrysalis, which has landed songs by the likes of Billy Idol and Paul Anka on "Glee." "It's truly something different, because, of course, there are downloads, and the albums, which have been phenomenally successful, especially for TV soundtracks, but ... there are so many other opportunities [the show] presents. For a songwriter or a music publisher, 'Glee' is a goldmine. It touches almost every single source of income that's possible."
"A show like 'Glee' only comes along once in a blue moon, and it's just such a great platform for our copyrights," added Wende Crowley, vice president of film and TV music for publisher Sony/ATV, which controls not only the bulk of the Lennon/McCartney songbook, but also the songs of Bruce Springsteen, Taylor Swift and Lady Gaga, to name just a few. "It's not only embraced artists like Gaga, who are so huge in the collective consciousness, but it's breathed life into older songs too. It's been an amazing opportunity to work with them, and you wish more shows like it would come out each year. 'Glee' is a total game changer."
And while that may be the case, behind the scenes, the "Glee" machine runs on decidedly old-school fuel — namely, music licensing: a dicey, downright confusing (and supremely profitable) area that the casual Britney fan probably can't even begin to comprehend. But, suffice it to say, when the "Glee" producers decided to use " ... Baby One More Time," they had to pay a lot. And before a single note of the song can be re-recorded, those payments begin with a synchronization license.
"Every time a song is put into a TV show, the producer has to sign a synchronization license to get permission to use [it], and it's a purely negotiated license," explained Brabec, who, along with his brother Todd, wrote an entire book on this very subject, "Music, Money and Success." "[The producers] send you a request that lists the use of the song and, in this case, the scene description, and they give you a number of options, with respect to how they want to distribute the show, and all have various price points. The publisher fills in the blank lines next to the dollar signs. ... You can make a substantial amount of money just in the synchronization fee alone. And that's just step one."
Admittedly, that's a pretty simplified explanation — we glossed over stuff like "five-year, all-TV licenses" and "out-of-context trailer licenses" — but after the sync license is signed, the ball is put in motion. Once an episode of "Glee" airs, the next step of the process begins, because now, a songwriter and publisher are reaping the rewards of not only iTunes downloads and album sales, but international re-airings of the show too. As you can imagine, this is where the real money starts to roll in — and it's all guaranteed under a mechanical license.
"Immediately, you've got the download situation. Under that situation, the songwriters and music publisher, for every single download, will get 9.1 cents. So if a song is downloaded 100,000 times in the first couple of days — and that's not unusual at all — the music publisher will get $9,100 and the publisher will share that with the songwriter," Brabec said. "And then, extend that to the physical albums. If you've got one song on the 'Glee' album, and that album sold 1 million units, that would be $91,000 in songwriter and music-publisher royalty.
"And that's all backend. These things go on and on, years after your initial downloads. ... If a song is sung by the 'Glee' cast, you're probably looking at $900 to $1,100 for one performance on the Fox network. And that's U.S. only. This show is broadcast or repeated worldwide; you collect on that too," Brabec added. "And then you've got the ringtone market. If the 'Glee' version is on a ringtone, the songwriter and music publisher will get 24 cents for each ring tone distributed — and then you've got sheet music, etc. Believe me, for years and years and years into the future, songwriters and music publishers will be making money on this."
So the bottom line is, if you're someone like Max Martin, and you wrote " ... Baby One More Time," well, chances are, you're loving life even more these days (and for the foreseeable future too). But the beauty of "Glee" is, you don't have to be a certified hitmaker (or even the Beatles) to benefit. Business is booming, and it doesn't show signs of slowing down anytime soon.
"When you have a song that appears on 'Glee,' the next day, it's on iTunes, and the number of downloads is astronomical, and it really reawakens people's interest in songs," said Kristin Durie, vice president of film and TV at EMI Music Publishing. "I think hearing these songs — both old and new — from 'Over the Rainbow' to 'Empire State of Mind,' is breathing new life into people's songs."
October 13th 2010 MTV News
Tasks:
Find 5 reasons why Glee has a positive impact on the record industry
Find 3 examples of artists who have benefited from The TV programme ‘Glee’ and explain how it has helped them.
Because, over the course of two-and-a-quarter seasons, "Glee" has transformed itself from a cult curiosity into to a bona fide sensation. It has spawned sold-out tours and chart-topping albums, but now, it's become something else entirely: the kind of show that can feature songs by the greatest pop star of the past decade one week and the greatest band of all time the next. It's a genuine, market-driving, industry-rejuvenating hit. And how did all this happen? Well, because certain folks realized that there was money to be made in partnering with the show.
"The industry has definitely started paying attention. If you're a songwriter or music publisher, you're definitely promoting your songs to the show," said Jeff Brabec, vice president of business affairs for music publisher Chrysalis, which has landed songs by the likes of Billy Idol and Paul Anka on "Glee." "It's truly something different, because, of course, there are downloads, and the albums, which have been phenomenally successful, especially for TV soundtracks, but ... there are so many other opportunities [the show] presents. For a songwriter or a music publisher, 'Glee' is a goldmine. It touches almost every single source of income that's possible."
"A show like 'Glee' only comes along once in a blue moon, and it's just such a great platform for our copyrights," added Wende Crowley, vice president of film and TV music for publisher Sony/ATV, which controls not only the bulk of the Lennon/McCartney songbook, but also the songs of Bruce Springsteen, Taylor Swift and Lady Gaga, to name just a few. "It's not only embraced artists like Gaga, who are so huge in the collective consciousness, but it's breathed life into older songs too. It's been an amazing opportunity to work with them, and you wish more shows like it would come out each year. 'Glee' is a total game changer."
And while that may be the case, behind the scenes, the "Glee" machine runs on decidedly old-school fuel — namely, music licensing: a dicey, downright confusing (and supremely profitable) area that the casual Britney fan probably can't even begin to comprehend. But, suffice it to say, when the "Glee" producers decided to use " ... Baby One More Time," they had to pay a lot. And before a single note of the song can be re-recorded, those payments begin with a synchronization license.
"Every time a song is put into a TV show, the producer has to sign a synchronization license to get permission to use [it], and it's a purely negotiated license," explained Brabec, who, along with his brother Todd, wrote an entire book on this very subject, "Music, Money and Success." "[The producers] send you a request that lists the use of the song and, in this case, the scene description, and they give you a number of options, with respect to how they want to distribute the show, and all have various price points. The publisher fills in the blank lines next to the dollar signs. ... You can make a substantial amount of money just in the synchronization fee alone. And that's just step one."
Admittedly, that's a pretty simplified explanation — we glossed over stuff like "five-year, all-TV licenses" and "out-of-context trailer licenses" — but after the sync license is signed, the ball is put in motion. Once an episode of "Glee" airs, the next step of the process begins, because now, a songwriter and publisher are reaping the rewards of not only iTunes downloads and album sales, but international re-airings of the show too. As you can imagine, this is where the real money starts to roll in — and it's all guaranteed under a mechanical license.
"Immediately, you've got the download situation. Under that situation, the songwriters and music publisher, for every single download, will get 9.1 cents. So if a song is downloaded 100,000 times in the first couple of days — and that's not unusual at all — the music publisher will get $9,100 and the publisher will share that with the songwriter," Brabec said. "And then, extend that to the physical albums. If you've got one song on the 'Glee' album, and that album sold 1 million units, that would be $91,000 in songwriter and music-publisher royalty.
"And that's all backend. These things go on and on, years after your initial downloads. ... If a song is sung by the 'Glee' cast, you're probably looking at $900 to $1,100 for one performance on the Fox network. And that's U.S. only. This show is broadcast or repeated worldwide; you collect on that too," Brabec added. "And then you've got the ringtone market. If the 'Glee' version is on a ringtone, the songwriter and music publisher will get 24 cents for each ring tone distributed — and then you've got sheet music, etc. Believe me, for years and years and years into the future, songwriters and music publishers will be making money on this."
So the bottom line is, if you're someone like Max Martin, and you wrote " ... Baby One More Time," well, chances are, you're loving life even more these days (and for the foreseeable future too). But the beauty of "Glee" is, you don't have to be a certified hitmaker (or even the Beatles) to benefit. Business is booming, and it doesn't show signs of slowing down anytime soon.
"When you have a song that appears on 'Glee,' the next day, it's on iTunes, and the number of downloads is astronomical, and it really reawakens people's interest in songs," said Kristin Durie, vice president of film and TV at EMI Music Publishing. "I think hearing these songs — both old and new — from 'Over the Rainbow' to 'Empire State of Mind,' is breathing new life into people's songs."
October 13th 2010 MTV News
Tasks:
Find 5 reasons why Glee has a positive impact on the record industry
Find 3 examples of artists who have benefited from The TV programme ‘Glee’ and explain how it has helped them.
Convergence
Definition:
The coming together of two previous separate media technologies to form one.
The coming together of two previous separate media technologies to form one.
Technological Convergence
Example: THE IPHONE /IPAD
There is no need to leave the house to buy music any more as your home computer also functions as your CD collection and online shop (iTunes).
Risk or benefit?
Media theorists agree that convergence enriches and expands our experience and usage of the media.
For example the internet = an example of converging technology
BUT although it has several benefits, what are the disadvantages of this converging technology?
Benefits of convergence
Risks/disadvantages of convergence
How can convergence affect institutions?
Positive benefits: The internet serves more than one function: Not only can audiences listen to and purchase music, labels can distribute music on the internet and it can be used to market music:
Youtube: unsigned artists are putting their music videos on websites where their music can be spotted by scouts from Record Labels.
Negative risks: Napster in 1999 saw the start of music sharing on the internet. At its peak in 2001, there were as many as 1.5 million people simultaneously sharing files worldwide by using Napster’s software.
Music was bought from the internet due to technologies converging and resulting in one device (the home computer/the internet) being used for a variety of purposes including buying and making music.
Universal Music Group
Universal’s revenue streams now include money gained from cross-promotional marketing (synergy) with programmes such as Glee and The X factor produced by Syco Music.
Domino Records
Domino uses its website as an effort to exploit the opportunities provided by the internet: http://www.dominorecordco.com/.
In includes Downloads, Dominocast (monthly podcast), Domino Mart (fans can buy music on vinyl, CD or MP3), Domino Player, Video and promotional content, Mailing list and is regularly updated with news on releases, tour dates and new artists.
Alternative Revenue Streams
Vevo
Universal Music Group co-developed Vevo, a site designed for music videos inspired by Hulu.com, which similarly, will allow for free, ad-supported streaming of music videos and other music content. The music videos are shown in better quality than the original ones on Youtube.
Vevo, stylized as VEVO, is a music video website. It is a joint venture between Sony Music Entertainment, Universal Music Group, and Abu Dhabi Media with EMI licensing its content to the group without taking an ownership stake. The service was launched officially on 8 December 2009. The videos on VEVO are syndicated across the web, with Google and VEVO sharing the advertising revenue.
VEVO offers music videos from three of the 'big four' major record labels: Universal Music Group, Sony Music Entertainment, and EMI. Warner Music Group was initially reported to be considering hosting its content on VEVO[7], but subsequently formed a rival alliance with MTV Networks. There are currently around 23,000 videos available on VEVO.
Imeem.com
In December 2007 UMG announced a deal with Imeem which allows users of the social network to listen to any track from Universal's catalogue for free with a portion of the advertising generated by the music being shared with the record label.
In the end this deal was unsuccessful and Imeem is now a defunct website that diverts traffic to MySpace. On December 8, 2009, imeem was bought out by MySpace Music in a firesale for an undisclosed amount.
The online service imeem was a social media Web site where users interacted with each other by streaming, uploading and sharing music and music videos.
The company was founded in 2003 by Dalton Caldwell (formerly of VA Linux) and Jan Jannink (formerly of Napster), and many of its core engineering team came from the original Napster file-sharing service.[1] The company takes its name from "meme", a term coined by biologist Richard Dawkins to describe the ideas and cultural phenomena that spread as if they had a life of their own.
Helping to pioneer the free, advertising-supported model for online music, imeem permitted consumers to legally upload, stream and share music and music playlists for free with the costs supported by advertising. In 2007, imeem became the first-ever online music site to secure licenses from all four U.S. major music labels to offer their music catalogs for free streaming and sharing on the web.[2]
The company also created the web's first embeddable music and video playlists. People could use imeem's widgets to embed songs and playlists from imeem virtually anywhere on the web, including on their MySpace and Facebook profiles or on their personal blogs.
YouTube
In May 2007, UMG was accused of abusing the Digital Millennium Copyright Act in order to squelch criticism, by forcing YouTube to remove a Michelle Malkin video critical of singer Akon. Eventually, UMG backed off its claims after being challenged by the Electronic Frontier Foundation. In the same year, UMG was accused of using the Digital Millennium Copyright Act to indiscriminately remove content related to the artist Prince, most notably a twenty-nine second home video in which children danced to one of Prince's songs.
YouTube is also used for A&R scouts of major labels such as (UMG) scout artist to sign. There has been criticism and labels have come under fire in regards to labels using YouTube to scout Talent. This can start label wars when different labels are pitching for the same artist or band.
Universal's Music Group channel was the first to get 1 billion views. It also got 1 million subscribers, the 4th channel to receive that number.
In certain countries (like Germany), UMG forbids YouTube to deliver videos containing works from its artists.
Spotify
is a music streaming service offering unlimited streaming of selected music from a range of major and independent record labels including Sony, EMI, Warner Music Group and Universal with virtually no buffering delay. The system is currently accessible using Microsoft Windows, Mac OS X, Linux and mobile devices such as the iPhone and those running Android, Symbian, Windows Mobile or Palm's HP web OS.
Music can be browsed by artist, album, record label, genre or playlist as well as by direct searches. On desktop clients a link allows the listener to purchase selected material via partner retailers. Launched in October 2008 by Swedish startup "Spotify AB", the service has approximately ten million users as of September 15, 2010; about 650,000 of these are paying members.
Users can register either for free accounts supported by visual and radio-style advertising or for paid subscriptions without ads and with a range of extra features such as higher bitrate streams and offline access to music. A "Premium" account is required to use Spotify on mobile devices.
Spotify is currently available only in certain parts of Europe, with paid subscriptions restricted to people with credit/debit cards or PayPal accounts registered in particular countries.
Glee
Glee is a musical comedy-drama television series that airs on Fox in the United States. It focuses on the high school glee club New Directions competing on the show choir competition circuit, while its members deal with relationships, sexuality and social issues.
Songwriters and music publisher, for every single download, will get 9.1 cents. So if a song is downloaded 100,000 times in the first couple of days — and that's not unusual at all — the music publisher will get $9,100 and the publisher will share that with the songwriter," Brabec said. "And then, extend that to the physical albums. If you've got one song on the 'Glee' album, and that album sold 1 million units, that would be $91,000 in songwriter and music-publisher royalty.
"And that's all backend. These things go on and on, years after your initial downloads. ... If a song is sung by the 'Glee' cast, you're probably looking at $900 to $1,100 for one performance on the Fox network. And that's U.S. only. This show is broadcast or repeated worldwide; you collect on that too," Brabec added. "And then you've got the ringtone market. If the 'Glee' version is on a ringtone, the songwriter and music publisher will get 24 cents for each ring tone distributed — and then you've got sheet music, etc. Believe me, for years and years and years into the future, songwriters and music publishers will be making money on this."
Universal Music Group co-developed Vevo, a site designed for music videos inspired by Hulu.com, which similarly, will allow for free, ad-supported streaming of music videos and other music content. The music videos are shown in better quality than the original ones on Youtube.
Vevo, stylized as VEVO, is a music video website. It is a joint venture between Sony Music Entertainment, Universal Music Group, and Abu Dhabi Media with EMI licensing its content to the group without taking an ownership stake. The service was launched officially on 8 December 2009. The videos on VEVO are syndicated across the web, with Google and VEVO sharing the advertising revenue.
VEVO offers music videos from three of the 'big four' major record labels: Universal Music Group, Sony Music Entertainment, and EMI. Warner Music Group was initially reported to be considering hosting its content on VEVO[7], but subsequently formed a rival alliance with MTV Networks. There are currently around 23,000 videos available on VEVO.
Imeem.com
In December 2007 UMG announced a deal with Imeem which allows users of the social network to listen to any track from Universal's catalogue for free with a portion of the advertising generated by the music being shared with the record label.
In the end this deal was unsuccessful and Imeem is now a defunct website that diverts traffic to MySpace. On December 8, 2009, imeem was bought out by MySpace Music in a firesale for an undisclosed amount.
The online service imeem was a social media Web site where users interacted with each other by streaming, uploading and sharing music and music videos.
The company was founded in 2003 by Dalton Caldwell (formerly of VA Linux) and Jan Jannink (formerly of Napster), and many of its core engineering team came from the original Napster file-sharing service.[1] The company takes its name from "meme", a term coined by biologist Richard Dawkins to describe the ideas and cultural phenomena that spread as if they had a life of their own.
Helping to pioneer the free, advertising-supported model for online music, imeem permitted consumers to legally upload, stream and share music and music playlists for free with the costs supported by advertising. In 2007, imeem became the first-ever online music site to secure licenses from all four U.S. major music labels to offer their music catalogs for free streaming and sharing on the web.[2]
The company also created the web's first embeddable music and video playlists. People could use imeem's widgets to embed songs and playlists from imeem virtually anywhere on the web, including on their MySpace and Facebook profiles or on their personal blogs.
YouTube
In May 2007, UMG was accused of abusing the Digital Millennium Copyright Act in order to squelch criticism, by forcing YouTube to remove a Michelle Malkin video critical of singer Akon. Eventually, UMG backed off its claims after being challenged by the Electronic Frontier Foundation. In the same year, UMG was accused of using the Digital Millennium Copyright Act to indiscriminately remove content related to the artist Prince, most notably a twenty-nine second home video in which children danced to one of Prince's songs.
YouTube is also used for A&R scouts of major labels such as (UMG) scout artist to sign. There has been criticism and labels have come under fire in regards to labels using YouTube to scout Talent. This can start label wars when different labels are pitching for the same artist or band.
Universal's Music Group channel was the first to get 1 billion views. It also got 1 million subscribers, the 4th channel to receive that number.
In certain countries (like Germany), UMG forbids YouTube to deliver videos containing works from its artists.
Spotify
is a music streaming service offering unlimited streaming of selected music from a range of major and independent record labels including Sony, EMI, Warner Music Group and Universal with virtually no buffering delay. The system is currently accessible using Microsoft Windows, Mac OS X, Linux and mobile devices such as the iPhone and those running Android, Symbian, Windows Mobile or Palm's HP web OS.
Music can be browsed by artist, album, record label, genre or playlist as well as by direct searches. On desktop clients a link allows the listener to purchase selected material via partner retailers. Launched in October 2008 by Swedish startup "Spotify AB", the service has approximately ten million users as of September 15, 2010; about 650,000 of these are paying members.
Users can register either for free accounts supported by visual and radio-style advertising or for paid subscriptions without ads and with a range of extra features such as higher bitrate streams and offline access to music. A "Premium" account is required to use Spotify on mobile devices.
Spotify is currently available only in certain parts of Europe, with paid subscriptions restricted to people with credit/debit cards or PayPal accounts registered in particular countries.
Glee
Glee is a musical comedy-drama television series that airs on Fox in the United States. It focuses on the high school glee club New Directions competing on the show choir competition circuit, while its members deal with relationships, sexuality and social issues.
Songwriters and music publisher, for every single download, will get 9.1 cents. So if a song is downloaded 100,000 times in the first couple of days — and that's not unusual at all — the music publisher will get $9,100 and the publisher will share that with the songwriter," Brabec said. "And then, extend that to the physical albums. If you've got one song on the 'Glee' album, and that album sold 1 million units, that would be $91,000 in songwriter and music-publisher royalty.
"And that's all backend. These things go on and on, years after your initial downloads. ... If a song is sung by the 'Glee' cast, you're probably looking at $900 to $1,100 for one performance on the Fox network. And that's U.S. only. This show is broadcast or repeated worldwide; you collect on that too," Brabec added. "And then you've got the ringtone market. If the 'Glee' version is on a ringtone, the songwriter and music publisher will get 24 cents for each ring tone distributed — and then you've got sheet music, etc. Believe me, for years and years and years into the future, songwriters and music publishers will be making money on this."
Convergence and alternative revenue streams
Universal Music Group
Universal’s revenue streams now include money gained from cross-promotional marketing (synergy) with programmes such as Glee and The X factor produced by Syco Music.
How is this an example of converging industries?
Domino Records
Domino uses its website as an effort to exploit the opportunities provided by the internet: http://www.dominorecordco.com/.
In includes Downloads, Dominocast (monthly podcast), Domino Mart (fans can buy music on vinyl, CD or MP3), Domino Player, Video and promotional content, Mailing list and is regularly updated with news on releases, tour dates and new artists.
How is this an example of online convergence?
The Glee Effect
How might this be an example of converging industries?
What are the benefits for the music industry of a TV show like Glee?
Find 5 reasons why Glee has a positive impact on the record industry
Find 3 examples of artists who have benefited from The TV programme ‘Glee’ and explain how it has helped them.
Alternative Revenue Streams
VEVO
UTUBE
IMEEM.COM
SPOTIFY
Universal’s revenue streams now include money gained from cross-promotional marketing (synergy) with programmes such as Glee and The X factor produced by Syco Music.
How is this an example of converging industries?
Domino Records
Domino uses its website as an effort to exploit the opportunities provided by the internet: http://www.dominorecordco.com/.
In includes Downloads, Dominocast (monthly podcast), Domino Mart (fans can buy music on vinyl, CD or MP3), Domino Player, Video and promotional content, Mailing list and is regularly updated with news on releases, tour dates and new artists.
How is this an example of online convergence?
The Glee Effect
How might this be an example of converging industries?
What are the benefits for the music industry of a TV show like Glee?
Find 5 reasons why Glee has a positive impact on the record industry
Find 3 examples of artists who have benefited from The TV programme ‘Glee’ and explain how it has helped them.
Alternative Revenue Streams
VEVO
UTUBE
IMEEM.COM
SPOTIFY
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