Music business has lost billions

[John F]

This is hardly at all about classical music, whose market share is tiny compared with sales of rock and other pop musics. But it has an impact on classical music nonetheless. In the rich old days, big labels financed some classical projects with the profits from pop megasales, projects that were sure-fire money losers in their own right. Those marginal recordings are no longer being made; the market for esoteric classical repertoire has been ceded to minor labels, mostly foreign, and non-celebrity artists. And of course, anything that hurts the "music business" (what used to be called the record industry) hurts us.


In Shift to Streaming, Music Business Has Lost Billions
By BEN SISARIO and KARL RUSSELL
MARCH 24, 2016

There is plenty of good news in the music industry’s latest sales report released this week. Streaming is up. Vinyl has continued its unlikely renaissance. And did we mention that streaming is up? But a closer look shows that the big sales numbers that have sustained the recorded music business for years are way down, and it is hard to see how they could ever return to where they were even a decade ago.

Revenue from music sales in the United States has hovered around $7 billion since 2010, according to the Recording Industry Association of America. For 2015, the number was $7.02 billion, up slightly less than 1 percent from 2014. Within that steady total, however, have been drastic shifts in listener behavior. CDs and downloads have been gradually abandoned as streaming has become the platform of choice.

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

Streaming — whether through paid subscriptions to Spotify or Rhapsody; Internet radio from Pandora; or even videos on YouTube — now makes up 34.3 percent of sales, edging out digital downloads as the industry’s biggest source of revenue. In 2015, the year that Apple Music arrived and Tidal was reintroduced by Jay Z, paid subscription services generated $1.2 billion in sales in the United States. After adding in free streaming platforms and Internet radio, the total for streaming is

Getting people to subscribe en masse to streaming services has been a priority for record labels and the streaming companies alike, who have often claimed that by building robust subscriber ranks, they would eventually return the industry to its former glory. But so far streaming has not saved the music business, and deep worries persist about the model.

Many artists are suspicious of the deals that their record companies have cut with technology companies, and they want to know how much money is trickling down to them. In a rough analysis of the recording industry association’s numbers, Billboard magazine estimated that the average amount of money generated each time a song is streamed fell last year by about 24 percent, to 0.506 cent. (The fine print: That number, a retail sales figure, covers so-called on-demand streams, excluding Internet radio.)

What gets lost in the battles over fractions of pennies, however, is just how much money has vanished from the music business as consumers have abandoned its most profitable product: the CD. In 2006 — years after Napster, and well into the iTunes era — record labels still reaped $9.4 billion from CD sales in the United States, more than the total sales revenue of the business today. Last year, CD sales stood at just $1.5 billion, a drop of 84 percent in a decade. And downloads, also once viewed as the industry’s savior, have now been falling for three consecutive years with no sign of recovery.

In a note accompanying the recording industry’s report, Cary Sherman, the group’s chief executive, criticized sites like YouTube — characterized in the report as “on-demand ad-supported” — for what he described as paltry payouts compared to their enormous popularity online. Last year, YouTube and sites like it generated $385 million in royalties. In comparison, vinyl records — a niche if there ever was one — brought in $416 million. “Reforms are necessary to level the playing field and ensure that the entire music community derives the full and fair value of our work,” Mr. Sherman wrote. (In response, Google, which owns YouTube, objected to its comparison alongside audio-only platforms, referring to it as “apples to oranges.”)

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

http://www.nytimes.com/2016/03/25/busin ... cline.html

[BWV 1080]

Once we needed the recording industry because making and distributing quality recordings was an industrial process. Now anyone can cheaply make and distribute a quality recording, the challenge is marketing in a crowded marketplace. For a brief period with the CD the music industry got the best of both worlds - old industrial prices with digital scale and costs, but it was doomed, like any other enterprise with high margins, to get disrupted by competition.

[John F]

Once we needed the recording industry because making and distributing quality recordings was an industrial process. Now anyone can cheaply make and distribute a quality recording, the challenge is marketing in a crowded marketplace. For a brief period with the CD the music industry got the best of both worlds - old industrial prices with digital scale and costs, but it was doomed, like any other enterprise with high margins, to get disrupted by competition.

Or, in this case, by radical technological innovation that changed the basic rules of the game. When people were able to buy individual songs instead of whole albums (talking about rock & pop), I believe it made little difference in the classical market, whose customers don't buy their music in 5-minute "songs," but all the difference in the world in the pop market.

I dispute that "anyone can cheaply make ... a quality recording." Quality recordings are made with quality artists and they don't come cheap, and shouldn't. Of course passable recordings can be made the Naxos way, with off-the-map orchestras and conductors, and there's an honorable history of doing this back to the budget LPs of the '50s and the majors' cheap reissues on labels like Camden and Entré. But nobody then considered these to be qualitatively on the same level as new recordings by the likes of Toscanini and Bernstein, since their audio quality was generally poor.

[maestrob]

10-12 years ago I was invited by one of my singers to conduct and record an album of arias with the Minsk Symphony: she would pay the cost (roughly $10,000.00) and provide unlimited rehearsal. Because of health issues, I declined. Here in the West, the same album with, say, the London Symphony, would cost $150,000.00. Now it's probably much more. There was recently a pianist who mortgaged her house to record the Rachmaninoff Concerti with the London Symphony (a you-tube sensation), who now has a burgeoning international career.

Making a recording is cheap enough: marketing and distribution are the keys to success, and streaming is all part of that. I was shocked to see that CD sales have dropped so far: Is this truly the end.....?

I've noticed that BBC Magazine now reviews only 100 new releases/mo., when they used to review 150 just a couple of years ago.

[lennygoran]

This is hardly at all about classical music, whose market share is tiny compared with sales of rock and other pop musics.

In Shift to Streaming, Music Business Has Lost Billions
By BEN SISARIO and KARL RUSSELL
MARCH 24, 2016


Streaming — whether through paid subscriptions to Spotify or Rhapsody; Internet radio from Pandora; or even videos on YouTube — now makes up 34.3 percent of sales, edging out digital downloads as the industry’s biggest source of revenue. In 2015, the year that Apple Music arrived and Tidal was reintroduced by Jay Z, paid subscription services generated $1.2 billion in sales in the United States. After adding in free streaming platforms and Internet radio, the total for streaming is<

Yesterday I was having my monthly lunch with my friend where we solve all the world's problems and he mentioned WKCR-he likes them but I never ever heard of them-anyway doing some googling today I found this article:

NY Times on WKCR:


Columbia’s WKCR Goes Silent Online

By ANDREW R. CHOW and BEN SISARIOJAN. 7, 2016

Streaming audio is more essential to the music industry than ever before, but last week WKCR-FM (89.9), the radio station of Columbia University, abruptly shut its online simulcast, cutting off the eclectic station from listeners outside the reach of its broadcast signal.

“It’s a devastating setback,” said Phil Schaap, the host and jazz historian who has been a fixture on WKCR for 46 years.

The station said it was working on restoring its online service, but it is unclear why it pulled the plug. A note announcing the suspension of the online feed was posted on the station’s website at the end of December, and over the last week, complaints have poured in from inside and outside of the organization. One sore spot: the lack of a stream for Mr. Schaap’s memorial for the pianist Paul Bley on Jan. 5. (“We have some excellent stations for classical and jazz in NoCal, but nothing as good as ’KCR,” one Facebook commenter wrote.)

A Columbia representative said that the problem was not the cost of royalties but contractual terms with the station’s “provider” and that negotiations were underway.

To use sound recordings online, most radio stations deal with SoundExchange, a nonprofit agency that handles licensing on behalf of record companies and processes payments from the stations. Under federal copyright law, online stations face stricter terms than their broadcast counterparts when it comes to programming. Online stations face limits of how many songs by any particular artist — or even from a single album — can be played in a given period of time.

Mr. Schaap, whose shows often involve lengthy surveys of a particular artist’s work, said he believed this restriction may be part of the problem for WKCR.

“It’s not just a financial burden,” Mr. Schaap said. “It’s the encumberment of the creative process.”

On Wednesday, Philip Masciantonio, WKCR’s director of broadcasting and operations, released a short statement, saying, “We are currently reassessing our approach to streaming audio.”

The suspension of WKCR’s streams appear to be one sign of confusion in the radio and streaming world since a ruling last month by the Copyright Royalty Board, a panel of federal judges who set licensing rates for Internet radio and other types of services. Some online stations have expressed concerns about the effect of the new rates on small stations.

But the decision by the copyright board was for commercial webcasters like Pandora, Live365 and iHeartMedia, said David Oxenford, a lawyer who represents broadcasters and has covered the royalty board hearings extensively on his Broadcast Law Blog.

“There have not been changes in the rules that govern the types of performances for noncommercial webcasters,” Mr. Oxenford said in an email.

Adding to the tumult at WKCR are technical difficulties — Mr. Schaap was unable to broadcast much of his Bley memorial program — and a brand-new student board that took over at the end of December.

Many students and alumni have been outspoken about the university’s apparent lack of support for the station, which was recently in the news over the release of a documentary celebrating Stretch Armstrong and Bobbito, who hosted an influential hip-hop show there for eight years.

“To Columbia, KCR is more a nuisance than the bearer of a great cultural legacy,” said Eric Ingram, a current D.J. and former program director.

Regards, Len

[John F]

Of course that has zero to do with the current state of the "music business," aka the record industry. But since you mention it:

A Columbia representative said that the problem was not the cost of royalties but contractual terms with the station’s “provider” and that negotiations were underway.

Whatever.

The story later says, "Online stations face limits of how many songs by any particular artist — or even from a single album — can be played in a given period of time. Mr. Schaap, whose shows often involve lengthy surveys of a particular artist’s work, said he believed this restriction may be part of the problem for WKCR." I don't know about WKCR's programming, but my alma mater, WHRB in Cambridge, MA, which streams its broadcast on the web, broadcasts such surveys twice a year - during the university's exam periods - and apparently hasn't run into any such limits.

[lennygoran]

Of course that has zero to do with the current state of the "music business," aka the record industry. But since you mention it:

I had mentioned it because your article starting the thread says:

"Streaming — whether through paid subscriptions to Spotify or Rhapsody; Internet radio from Pandora; or even videos on YouTube — now makes up 34.3 percent of sales, edging out digital downloads as the industry’s biggest source of revenue. In 2015, the year that Apple Music arrived and Tidal was reintroduced by Jay Z, paid subscription services generated $1.2 billion in sales in the United States. After adding in free streaming platforms and Internet radio, the total for streaming is

Getting people to subscribe en masse to streaming services has been a priority for record labels and the streaming companies alike, who have often claimed that by building robust subscriber ranks, they would eventually return the industry to its former glory. But so far streaming has not saved the music business, and deep worries persist about the model. "

Regards, Len

[John F]

OK, I see. But Pandora Internet Radio is a misnomer. It isn't radio but an on-demand site that streams a mix of recordings based on what the user says he likes. In effect, it's like a prefabricated iPod playlist. Pandora calls such a mix a "station" and itself "radio," but this is only metaphorical; a real radio station, like WKCR, does its own programming for an audience of many listeners, not customized to one listener's stated likes and dislikes. That's why they call a radio station a broadcaster.

[lennygoran]

a real radio station, like WKCR, does its own programming for an audience of many listeners, not customized to one listener's stated likes and dislikes. That's why they call a radio station a broadcaster.

Thanks for the explanation-I had never even heard of WKCR. Regards, Len

[John F]

WKCR goes back a long way. When I was a college student working at WHRB, we and WKCR were members of the Ivy Network. Both stations go back to before I was born - WHRB first went on the air in 1940, WKCR in 1941. Both stations did a lot of classical music programming, but neither reached very far into their cities until they went FM in the 1950s. And that early, I believe you didn't care much about classical music, so you wouldn't have had a reason to listen to WKCR.

[lennygoran]

And that early, I believe you didn't care much about classical music, so you wouldn't have had a reason to listen to WKCR.

That's right-with Frankie Lyman and the teenagers around there was no need for classical music although my father got a webcor hifi after a while-I grew up relatively poor in a tenement--anyway he played those Rossini overtures over and over-too bad he never gave Donizetti a shot! Regards, Len [out the door]

[Lance]

Looking back over that last half century versus NOW, I think we, who love great music, have seen the very best in music from (even 78s) to tape and the LP mono and stereo days, and now digital and into compact discs. I have watched fine record stores close from Boston to Florida, concert halls with more grey heads than ever and fewer young people, and indeed less people in the audience over all. Music teachers say they are seeing a decline in how many students are interested in pursuing serious (classical) music careers. Piano teachers—since I see many of them—have noted a steady decline. I am glad I have lived through this marvelous time in what was once a booming music business from instruments to teaching to concerts and recordings. As we know, time changes everything. •

[maestrob]

OTOH, there's a boom going on in China, Korea (South) and Japan. I don't have any statistics to support this, just hearsay, but the Asian artists appearing on the scene today (we all know who they are) are playing to very full if not sold-out houses. Who would have thought that the Seoul Philharmonic would record an excellent Mahler IX, but there it is. Just because America is declining in its appreciation of great music, doesn't mean that the rest of the world is following suit.

[John F]

Maybe so, though we'd need actual numbers to know how the "music business" is doing over there. And of course it's no consolation at all to those of us over here.

[Lance]

Much of the great music we listen to was born in Europe, the great Baroque, Classical period and Romantic composers. Those several hundred years are the base of great music and in Europe, it still seems to be strong, especially since many families give their children the culture to pursue these interests throughout their lifetimes.

It may not be fair to say this, but most Americans, given the choice of buying a Mahler symphony with the Seoul orchestra (and a fine conductor) versus the Boston Symphony or any other great American orchestra - at least on recordings - will ultimately buy the that recording over the Seoul's. Naturally, that would also apply to other great and recognized orchestras of the world: the Vienna and Berlin Philharmonics, the London group, and myriad other top-flight orchestra would also be a choice for most of the world's best known classical music.

Some of this we can blame on ourselves. Costs of doing business in America - producing recordings - has grown so costly that many are going to Europe and lesser-known orchestra to commit their music to discs there. Given the way technology has broadened exponentially. good quality recordings can now be made with digital recordings and condenser microphones that are no larger than a pack of cigarettes. And one can use mixers and multiple microphones going into these devices. (I do this all the time and the recordings turn out stunningly.) No question, however, the big studios have the best microphones and equipment to capture music by engineers who understand acoustics - and they also record in the best venues adapted to recording.

When CDs first came out in the mid-1980s, I said I would NEVER go that route. Well, upon hearing a demonstration of digital transfers of recordings by Benny Goodman (transferred from 78s), not even a classical piece of music, I was shaken enough to say I was wrong. There are still people, of course, who say the LP sound is better than CDs, but in A/B comparisons I have made, I would not concur. The result that I became a big customer for compact discs and haven't stopped (though by now, I should).

For collectors who truly love music, the world is ours with Naxos, CPO, Divine Art, and countless others who make material available that would otherwise be unrecorded by the big commercial labels. And while those artists/conductors/ensembles may not be the greatest names as performers, most are certainly outstanding.

The problem as I see it is downloading from the internet. Making sheet music available from the internet (often at no cost); CDs that have all of Schumann's or Schubert's works ... lieder, piano music, etc., and you can print as many copies as you want. (I have many of these CDs myself.) So, it affects recording companies, music publishers, and most everything else connected with music.

In the end, however, I have promised myself NOT to go the route of downloading music. This time, I am 100% certain it will not happen. If it means the demise of the CD down the road, then I have enough of them to make me happy for as long as I can enjoy music.

[maestrob]

Downloading music (say, via Amazon mp3's or other sources) doesn't satisfy me at all. I want a physical product with notes and pictures. I've never heard a medium with better sound quality than a CD, and I firmly believe that CDs, while facing an uncertain future, will continue to be available to collectors if only in limited quantities such as the mega-box sets.

Vinyl is, to me, a protest movement, signifying that the public wants a physical, collectible product. Sound quality of LPs is inferior to CDs, no doubt, but the urge to collect overcomes that limitation.

Hardback books are still with us, as are movies, both of which were supposed to be replaced by television and paperback novels.

I'm proud of my limited library of CDs, most of which remain available today. I just don't think the classical CD is going to suddenly disappear.

[Chalkperson]

You certainly can make cheap high quality recordings, John F.

Maybe not symphonic ones of course, but many of my friends who are professional musicians 'roll their own' on an iPad or iMac.

Microphones are now really inexpensive, mixing board programs are very cheap to buy, and sound quality is excellent.

Garageband, which comes free with any Apple product would amaze you in what it's capable of.

In short, modern digital techniques bring the opportunity to make recordings to the common man.

So if the music biz is losing billions then that's tough, but, they made billions in the past. Nothing lasts forever.

Steaming is an advance in the way we listen to music and watch movies, it's not a conspiracy, it's progress.

[John F]

Downloading music (say, via Amazon mp3's or other sources) doesn't satisfy me at all. I want a physical product with notes and pictures.

You and me both, and I suspect this is true of many or most classical music collectors. But we are a minority, and those whose physical musical project is an iPod probably outnumber us by far. As for streaming, that's how we listen to YouTube clips, and I'm glad we can.

Sound quality of LPs is inferior to CDs, no doubt

Sound quality is in the ear of the listener, and you'll get an argument about the virtues of analog vs. digital sound. I couldn't care less about the difference, and while CDs do not share the deficiencies of vinyl LPs - clicks and ticks and sticks - and need less shelf space, I've never been the slightest bit tempted to replace my LPs with CDs or anything else.

[John F]

You certainly can make cheap high quality recordings, John F. Maybe not symphonic ones of course, but many of my friends who are professional musicians 'roll their own' on an iPad or iMac. Microphones are now really inexpensive, mixing board programs are very cheap to buy, and sound quality is excellent.

We obviously don't mean the same thing by "high quality." I mean high musical quality, with the top musicians. No disrespect to your friends, whoever you're referring to, but it never was nor ever could be cheap to record the likes of Horowitz, Heifetz, Toscanini, and Pavarotti. Of course the same music can be recorded by anybody capable of playing or singing it, and such recordings serve a useful purpose; the first LPs I bought with my own money were on bargain labels with competent but ordinary performances. But I was never under the illusion that they were any better than they were.

[John F]

On the other hand, this from a BBC Radio newscast: "Revenues from music sales around the world have increased for the first time in nearly two decades. Last year's sales in digital formats overtook those on CD and vinyl." By "music" is meant the whole range, of which classical music records are a small fraction, so it says nothing about the health of that part of the music business that matters most of us. But it does provide statistical support for maestrob's comment that there's a boom going on in the rest of the world - though not much of one if this is the first time in nearly 20 years that the total has gone up.