FINAL THESIS "Submitted in part fulfilment of the degree of Master of Science in International Management". Academic year 2016 / 2017 Title: The Music Industry’s “Cold Call” How independent musicians can make an impact in today’s music industry. NAME: Alexi Musnitsky Major: International Management Thesis Supervisor: Phillip Cartwright Date of Submission: November 21 st , 2017 Approximate number of word: 15 250
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FINALTHESIS
"SubmittedinpartfulfilmentofthedegreeofMasterofScienceinInternationalManagement".
Academicyear2016/2017
Title:
TheMusicIndustry’s“ColdCall”
Howindependentmusicianscanmakeanimpactintoday’smusicindustry.
NAME: AlexiMusnitskyMajor: InternationalManagementThesisSupervisor: PhillipCartwright
DateofSubmission:November21st,2017Approximatenumberofword:15250
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Tableofcontents1.0 Overview 3
2.0 MusicalEntrepreneurship 63.0 Prerequisites 7
3.1 ExitStrategy 83.2 MarketIdentification 8
4.0 BusinessPlan 9
4.1 Whatproblemareyousolving? 104.2 Howareyousolvingtheproblem? 11
4.2.1 Songwriter,performerorboth? 114.2.2 Strategicpartnerships 134.2.3 Accesstomarket 144.2.4 Marketingplan 164.2.5 Intellectualproperty 18
4.3 WhatistheBusinessModel? 214.3.1 RecordLabel’sDeal 25
5.0 Thechancesofsuccess 27
5.1 Measurementsandpredictors 345.2 Reasonsforfailure 34
5.2.1 Lackoftransparency 345.2.2 Intellectualproperty 345.2.3 Scalable&Paid 355.2.4 KeyperformanceIndicators 355.2.5 ShortRunway 365.2.6 Understandingcompetition 36
6.0 SuccessFactors–Calculator 37
6.1 Technicalsuccessfactors 376.2 Commercialsuccessfactors 386.3 Financialsuccessfactors 39
7.0 Conclusion 40
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1.0Overview
Amusicianrequiresthreebasicthingstobesuccessfulenoughtoearnalivingintheindustry:
• Talent• Technology(equipment,studioandexpertisetorecordbroadcastqualitymusic)• Accesstomarket(marketing&distribution)
Eachofthesethreeareasarechangingdramaticallyinthecurrentmarketandwillcontinuetoevolveinwaysthatmakeithardtoplanapathorpredictafutureinthebusiness.Yet,thisalsopresentscertainopportunitiesfortheindependentartisttosucceedwheretheyoncecouldn’tiftheyexploitcertainopeningscreatedbyculturalshifts,technologyandnewbusinessmodels.TalentWhatistalent,whereitcomesfromandhowitisdefinedhaschangedinwaysthatareshockingthesystem.MarketsliketheUS,UK,Netherlands,IrelandandSwedenhaveadaptedfarbetterthan more traditional and rigidly structured markets. Traditionally, talent came from theestablished educational track with musicians coming from renowned Conservatories, beingrecognizedasaccomplishedplayersofotherpeople’smusic(especiallyclassical)andexpertinsight reading, solfegeandcomposition. Thesemusiciansare chosenby theirwin recordandplacementinnationalandinternationalmusiccompetitions.Fromthispoint,theyareevaluatedbyprofessionalreviewerswhocaninstantlymakeorbreakacareer.Ontheotherhand,BarbaraStreisand,LionelRichie,MicahelJackson,EricClapton,ElvisPresley,Eddie vanHalen, JimiHendrix, DaveGrohl, The Beatles andmanymore of theworld’smostsuccessfulmusicianscan’treadorwritemusic.1 Certaincountriesconsistently introducenewandunknowntalentstotheworldstagewithouttherigorsofthetraditionalmusicpath.JohnnyLong(Ireland)wasself-taughtandapprenticedasanelectrician.Hebecametheonlymusicianto win the Eurovision contest three times. Ireland won a record 7 times, Sweden and theNetherlands4times.Sweden’sABBAisthemostsuccessfulwinner.2TV shows like Britain’sGot Talent, The X-Factor and TheVoice have also created venues forunknownartiststobeconsideredastalentedoutsideofthetraditionalsystem.Providingevenmore impactare theonlineplatforms suchasSoundCloud,Spotifyand self-promotingcrowdfundingsitesthatpermitartiststodemonstratetheirtalentoutsideofthetraditionalsystem.
1http://screenertv.com/celebs/lionel-richie-dave-grohl-the-beatles-13-artists-who-cant-read-music-and-why-thats-okay/2http://www.bbc.co.uk/corporate2/mediacentre/mediapacks/eurovision/facts
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Thesesites,venuesandplatformshavechangedthepeoplewhodecidewhatistalentandwhereitcancomefrom.Nolongerisamusicaleducationrequiredandexpertsinthefieldwieldfarlesspowerasthevoteofthegeneralpublic.TechnologyOneofthestrangleholdstheBig3havehadovermusicians in the past is the access to,and cost of, producing a broadcast qualityrecording.Stilltodayanartistcannotreleasea low-endhome recordingandbeacceptedby the listening public. Studio qualityrecordings require proper acoustics,professional recording equipment, mixingandmastering.Thisoncerequiredgoingtoaprofessionalrecordingstudiowithengineeredsoundroomsandrecordingequipmentthatcouldonly be afforded by the large budgets of professional studios or record labels. Mixing andmasteringwastherealmofa limitednumberofexperts inthefieldandtheywere invariablyemployedbythestudiosandrecordlabels.However,newtechnologyhasbroughtthiscapabilitytotheaffordablemasses.Stillwithacost,butwellwithinthemeansofanindependentartist,today’smusicianscancreateanappropriatesoundenvironmentintheirhomeandusedigitalrecordingequipmentandprofessionaleditingsoftwaresuchasLogicProtocreatequalitysoundstracks.Thissolutionmaystillnotcomparetoprofessional recording andmastering but it is sufficient to present and streammusic to thepublic.AccesstoMarketThe music industry has been traditionallycontrolledbythelargerecordlabelssuchastoday’sBig 3: Sony, Universal and Warner. The recentconsolidation of the Big 3 down from the Big 6(acquisitionsofEMI,BMGandPolygram)isasignthat themarket is changing and that the recordlabelshaveastrategytomaintaintheirprominenceintheindustry.Concurrently,weallknowthattherevenuemodelintheindustryhasundergonean“Uber-like”game-change. CDsalesin2016beingtheworstyear since tracking began in 1991 with about 100million album sales (physical and digital),
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representinganannualdeclineof14%.Atthesametime,streamingmusicincreasedbyover59%with209billionsongs(139millionalbumunits)streamedin2016versus58.6billionin2015.3IfpeoplenolongerbuyCD’s,thentheplayingfieldhasmovedtotheInternetandtheconcerthall.Gettingknownbecomesasignificantmarketingchallenge.Ononehand,itrequiresdigitalmarketingskillsalongwiththelucktobecomeviral.Ontheotherhand,itrequirestraditionalpromotiontoget“gigs”orarrangeconcertsandtours.Asanindependentartist,themarketmaybemoreopento listentoyourmusicand judgeforthemselvesbuttherecord labelsholdanenormousandunsurmountableadvantageinmarketingbudgettoadvertiseandpromotetheirartists.Intheend,thisisthemusicbusiness,andeveryoneintheloopfromthestreamingsitetotheconcertvenuewantstomakemoney.Thisisdonebyguaranteeingattendanceandonlineplayswithknownandwellpromotedartists.Somehow,theindependentartistsmuststillattracttheattentionofreviewers,playlistcreatorsandthedemandofthepublictobothstreamandfillseatsataconcert.Infact,thesearetheonlypotentialsourcesofrevenueforanartist.NolongercantheyrecordaCDandwaitforthesales royalties. Artists must constantly perform for pay and hope the public will stream inexchangeforminisculeroyaltiesperplayfromstreamingsiteslikeSpotify.Thefinancialmodelhaschangedsignificantlyandtheartistmustinvestwiththeunderstandingthat they are in it the for the long haul. One-hitwonders can only be created through themarketingpowerofthemajorlabels,whotakethemajorityoftheprofitsinexchangefortheirinvestment.Anindependentartistmustcommittoself-promotionthroughconcerts,newmusicproductionandconsistentqualitythatattractslistenersoverthelongterm.Itcantakeyears(5yearsormore)foranindependentartisttoestablishalargeenoughfollowing.However,oncethatisdone,therewardisinresidualincomefromstreamingforaverylongtime.Whereas,aCDpurchasewasone-time,streamingasong isa repeatbusinessandgenerates royalties fordecades.IfIboughtTheBeatlesRedAlbum(songsfrom1962to1966)in1973,thentheartistswouldhavereceivedaone-timeroyaltyfromthepurchase.However,ifIstreamthatalbumorthosesongstoday,theywillbegeneratingincomefrommusictheyrecorded55yearsago!So,perhaps it’sagoodthingthatCDsalesarenull. Iwouldratherhaveaminisculeshareofmillionsofstreamsover50yearsthanaPlatinumrecord(1millionsales).Ifwebegintolookatthesecriteriaassuccessfactorsandevaluatewhichstrategiesgeneraterevenue,thenbeingasuccessfulindependentartiststartstoappearmorelikeentrepreneurshipthanmusicorart.Ifso,thenwecanapplythebasicprinciplesofnewbusinessdevelopment,start-ups, high tech, Silicon Valley “kickstarts” and today’s entrepreneurship to independentmusicandsimplysubstitute“product”or“servicewith“song”or“composition.”3http://www.spin.com/2016/07/2016-album-sales-data-billboard-nielsen-music-worst-year-since-last-year/
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2.0MusicalentrepreneurshipMusicianstendtoseethemselvesasartistsandforgetthattheyarepartofthemusicbusiness.Greatart,music,inventionsandbusinessideasremainunknownorleftontheshelvesbecausetheir founders and creatorsmake criticalmistakes on the business side. Great art does notensuresuccess.Thisthesiswillexplorethedevelopmentofanindependentmusicartist,theirstrategyandtheirpotentialforsuccessthroughtheprismandmindsetofanentrepreneurwhomustbuildacomprehensiveBusinessPlanandFinancialModelinordertosecurethefunding,strategicpartnershipsandaccesstomarkettobesuccessfulandreturnaworthwhileprofittothefoundersandinvestors(i.e.“stakeholders”).Whetheranentrepreneurialventureisintheformofanewcompanyornewmusicalartist,theabovementionedthreecriteriaarerequired:
•Talent Somecapabilitythatcanbeputtousetosolveaproblemorneed
•Technology Someuniquecompetitiveadvantagethatcanoffersomethingnotcurrentlyinthe
marketorbetterthanwhatiscurrentlyinthemarket.
•AccesstoMarket Anabilitytodeliveragoodorservicetocustomerswhocanpay
Inaddition,wecanaddonemore: •FinancialModel Anabilitytogenerateprofitandincreaseshareholdervalue(inasustainableway)Ifyoucanproveyouhavethesefourelements,thenyoucanattractinvestorswhowillfundyousince you cannotpractice your talent, exploit your advantagesor reachanaudiencewithoutmoney.Youmustbewell-fundedtosucceed!
Inmostcases,successispredeterminedandinvestorscanoftenandaccuratelypredictsuccess.Ofcourse,thatisaboldclaimthatmayormaynotbetrueforanyindividualcase,butwhatisimportantisthattheinvestorsbelievetheycanpredictsuccessandreplyupontheirReturnonInvestment(ROI)recordasevidence.Thekeypointbeingthattheywillmaketheirinvestmentdecisionbasedonthisinsightandexperience.ThetoolinvestorsusetopredictsuccessistheBusinessPlan.ByreadingabusinessplanandseeingaFoundermakea15-minutepresentation(“elevator-pitch”)isenoughfortheinvestortowalkawayortomoveforwardtowardsprovidingallthemoneyyouneedtobecomeasuccess.Astheoldsayinggoes:“lendme$500andyouaremycreditorbutlendme$500,000andyouaremypartner.”Sincewecan’tdoitalone,wemust
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buildpartnershipsandattractpeopleandorganizationsthatareinvestedinourfutureandwhoaremotivatedtocontinuallyinvestinusfortheirownself-interestandlong-termprofit.Thereisonemoremissingbulletthatisoftenthe“trump”cardofadeal: •ThePerson
Who are you (the Founder/Musician)? At the end of the day, an investor orstrategic partner is investing theirmoney and resources into you, the person.Regardlessofyourtalentandtheuniquenessorbeautyofyourmusic,itisuptoyoutodeliver,tocomposeandtoperform.Canyoubetrusted,doyouhaveatrackrecord,education,experience,characterreferencesordoyoutendtospendyourmoneyondrugsandfindithardtomanageyourdailylife?Therearefartoomanystoriesofwonderfulbusinessplansthatcrashedandburnedbecausethepersonentrustedtoexecutetheplanwasincapable,unreliable,irresponsibleoralloftheabove.And,tragically,thisseemstobemoretherulethantheexceptioninthemusicindustry.
Foramusician,thisprocessisnodifferent.Infact,itisprobablysignificantlyharderthanstartinga companyas thenumberof competitors is higher, availablemarkets smaller, room fornewentrants smaller and access to market being dominated by massive enterprises due toconsolidation in the industry. Music is being commoditizedwhichmeans profitmargins areshrinking. To compensate for smaller profits an artist must reach a larger audience whichrequiresglobalreachandsignificantlylargermarketingbudgets.InvestorsfollowthesamerulesasaboveastheyseektofindaBusinessPlanthatoffersanewanduniquemusicianwithglobalappealwhocanbeproducedandsoldprofitablyandiseasytoworkwithinalong-termrelationship.TheBusinessPlanisa“One-Sheet”(thetermusedfortheartist’sresume)anda2-minuteelevatorpitchintheformofamusicsample.Theworldissmallandmostinvestorswithinthestart-upcommunitiesofaparticularindustryknoweachother.Someoneturneddownbyoneinvestmentgroupwillbeknownthroughouttheinvestorcommunityandhaveafarsmallerchanceofwinningoveranotherinvestor. Thesameistrueinthemusicworld.Ifturneddownbyamajorrecordlabel,anartistwillstruggletofindthesupportofanyotherlabelorindependentinvestorsthatwouldfundamaverick.3.0PrerequisitesBeforestarting,thereareacoupleofkeyelementstoconsider.Areyouplayinginaworldthathasmoneytospendanddoyouhaveanexitstrategy?Sinceweintendtomakealiving,thentheremustbeenoughpeoplewithmoneytospendonourproductinthemarketwechoose.Wemust also have an idea how we and our investors will exit in terms of converting theirshareholdingsintocashorprofit.
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3.1ExitStrategyBeforestartinganybusiness,itisimportanttounderstandhowyouwillexit.Inotherwords,howwillyouconvertyourcapitalintocashinyourpocket.Thiscanbeintheformofa)buildingacash cow that generates huge profits that are distributed to you and your shareholders(investors);b)goingpublicsuchasan InitialPublicOffering(IPO)whereshareholderscanselltheirstockontheopenmarketor;c)becomingatargetofacquisitionandbeingboughtoutbyalargercompany.Sinceinvestorsandhopefullytheartiststhemselvesaretryingtodothisforaliving(henceprofit),thenitisessentialtoknowwhatdirectionyouareheadingbeforeyouevenbegin.Oneofthefirstquestionsaninvestorwillask(andanartistshouldaskthemselves)ishowtheywillmakemoneyandoneoftheabovechoicestheymakewillaffecttheirplan,themusictheyplayandthepartnershipstheyseek.PerhapscreatingacashcowsonglikeHappyBirthdayorsellingyourmusicrightsliketheBeatlescatalogownedbytoday’sSony/ATVisamoreobviousapproachinthemusicbusiness.However,wemustfullyunderstandtheindustryandthestrategiesofthebigplayersifwearetoknowhowourownlittlepartcontributestotheirgranderschemesandvaluecreations. Considerthatamusician’sabilitytosucceedinthestreamingworldandtheirpresenceinsocialmediamayhavemoreimportancetothesharevalueofalargemediagroup.Forexample,TencentMusicEntertainmentGroup,controlledbyChina’sbiggestsocialnetworkoperator(ownerofWeChat),isseekingnewfundingata$10billionvaluationaheadofaninitialpublicoffering.TheoperatorofkaraokeandSpotify-likestreamingappsplanstosellabout3percentofitssharestostrategicpartners,includingrecordlabels.Byforginganequitylinkwithrecordlabels,TencentMusicwouldbesecuringitsrighttoholdontovitalstreamingrightsinChina’sincreasinglyheateddomesticstreamingmarketforecastedtoreach$664millioninsubscriptionrevenueby2018.TencentMusichasdealsinplacetodistributesongsfromartistsincludingBeyonceandTaylorSwiftaftersigningupwithsomeoftheworld’slargestrecordlabels,includingUniversalMusicGroup,WarnerMusicGroupandSonyMusic.4
3.2MarketIdentification:Don'tchasemoney,Followit!Agoodbusinessplanwillseektoentermarketswheremoneyisflowing.Inotherwords,theywillnotenterpoorlyfundedmarketsorareaswherecustomersdonothavethemoneyorthewillingness to spend. A company (orperson) shouldnotdoanything formoney, rather theyshouldemploytheirexpertiseinmarketswheremoneyisbeingspent.Forexample,aclassicalmusicianshouldnotplayRapmusicconcertsjustbecausetheypay.Iftheirheartisnotinitandtheyarejusttryingtomakemoneyintheshortterm,thenthiswillnotbeasustainablebusinessmodel.Also,aCelticbagpipemusicianwouldfindahardtimesellingtheirmusicinNashville,theheartofCountry&Westernmusic.4https://www.bloomberg.com/news/articles/2017-09-01/tencent-music-is-said-to-seek-pre-ipo-funds-at-10-billion-value
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InternationalInvestors5It isnosurprisethat themajorityof theworld investorsareconcentratedinafewregions,specifically,theUSandEuropealongwiththeriseofChinaandthesuccessofAustralia.Thismayalsobeagoodindicatorformusic.ItisfairlyobviousthattheUSandEuropearethebestmusicmarketsbutifonecanfindanicheinAsiaorAustralia,thenthereisagoodchancethey will find both investors and a paying market. It alsobecomes clear that spending too much energy chasingsupposedmarketsinAfrica,theMiddleEastormostofSouthAmericamaynotbefruitful.Another interesting chart is that of theworld’smillionaires.Again,thedominanceoftheUSisevidentaswellasthevalueofasAsiannichesuchasJapanandtheopportunitiesacrosstheadvancedEuropeancountries.4.0BusinessPlanAninvestorwillaskthefollowingsixquestionswhichformthecoreofyourbusinessplan.Eachofthesecanbeadaptedtothemusician.5www.vgate.com/international_investors.htm
World’smillionaires
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4.1Whatproblemareyousolving?Theremustbeaproblemoraneedinthemarket.Thisisusuallyanicheinthemarketthatiseitherunderservedorbeingservedpoorly.Forexample,children’smusic,meditationmusic,newmusicforacertainagegroup,musicforspecificusesuchasdance(hip-hop,tango,line,ballroom,etc.).Ingeneral,artistsknowthegenreandcategoryinwhichtheyfit.Theyarefurtherencouragedtofit intoaspecificcategorysincethepublictendstogrouptheir likesanddislikesbycategory,radio stations play music within defined categories, Spotify and streaming services createplaylists based on music categories and industry recognition through Awards such as theIndependentMusic Awards and the Grammy’s honormusicians bymusical category. Theseinclude:
IndependentMusicAwardCategories6 AdultContemporary Alt.Country AmericanaBluegrass Blues Children’smusicConcept ContemporaryChristian ContemporaryClassicalCountry Dance/Electronica ElectricFolk/Singer-Songwriter Funk/Fusion/Jam Indie/Alt.RockInstrumental JazzInstrumental JazzwithVocalsLatin Metal/Hardcore NewAgePop R&B/Soul Rap/Hip-HopRock/HardRock Spokenword WorldBeatWorldTraditional ACappella AcousticHowever,thistraditionalcategorizationofmusicmaynolongerholdtrueinthemarkettoday.Musicforthenewgenerationsisnotaboutreflectingtheiruniquepersonasasoftenidentifybyagenre,butamirroroftheactivityheorsheisperforming.Musicwasonceaquestionofloyaltyandidentity.Todayit’sagoodconsumedaccordingtomoments.So,themusicalpreferencesoftheselistenersaremuchmoreflexibleandnolongerthereflectionoftheiridentities.7
6http://independentmusicawards.com/faqs/7https://medium.com/music-x-tech-x-future/our-changing-relationship-with-music-and-its-new-practical-function-32bd0e56eac
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4.2HowareyouSolvingtheProblem?Thisiswhereacompanywoulddescribetheirtechnicalapproachandhowtheywouldcreate,develop,buildanddelivertheirproduct/service.Thesameconceptscanapplytothemusician.Isthemusicianthecomposerandtheperformer?Dotheycomposeonlyforthemselvesordotheycomposeforothers?Dotheyperformsolooraretheypartofagrouporincludeotherperformers?Mostimportantly,whatisuniqueabouttheiroffering?AmyWinehouse8isagoodexample.Shewasyoung,activeinherearlytomid20’sinaprimarilyjazzgenreknownformuchmorematureperformers.Shehadanextremelyuniqueandexpressivecontraltovoiceandfoundthatshecouldexploititmostlyinjazz.However,shealsofoundauniquewaytomixsoul(andsomeblues)intoherstyle.Thismadeherstandoutfromalltheotherfemalejazzsingersandtoattractabroadrangeoffanscoveringseveralgenerations.Herappearancewasradicallyyoung,tattooedandsexualwhilehervoicewasmaturebeyondheryears.HeralbumBacktoBlackmadeherthefirstBritishwomantowin5Grammyawards.Heryouth,uniquevoiceandnichewithinajazzworldmadeheraperfectinvestmentforalongcareer.Unfortunately,shealsoservesasanexampleofagreatbusinessplancollapsingbecauseoftheperson.Amywastroubledbeyonddescriptionwithahusbandinjailandfamilyproblemshardtodescribe.Shewasuncontrollableandmusthavebeenextremelydifficulttoworkwithforapromoterorproducer.Shewasinthetabloidsallthetimeandusuallywithanewscandalordrug/alcoholproblem.Intheend,shediedat27fromalcoholintoxication.Inmusic,theproductisyourmusicandyourperformanceintheformofacompositionorarecording.
4.2.1Songwriter,Performerorboth9Therearetwo(2)separatecopyrights:
1. thecomposition(song)and2. thesoundrecording(master).
Therearefour(4)typesofincomeparticipants:
a) songwriterandpublisherforsongs(wecallthis“writer’sshare”)andb) artistsandrecordcompanies(“publisher’sshare”)formasters.
8https://en.wikipedia.org/wiki/Amy_Winehouse#Controversy9https://daeboganmusic.com/2017/02/28/a-primer-on-music-publishing-rights-splits-and-royalties-for-confused-artist-managers/
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Intheeventawriterisnotsignedtoapublisher,he/sheownsthepublishershareofincome.Intheeventanartistisnotsignedtoarecordlabel,he/sheownswhatwouldbetherecordcompanyshareofincome.COMPOSITION:Thesongwriterandpublishersplitis50-50.AmericanSocietyofComposers,Authors&Publishers(ASCAP),BroadcastMusic,Inc.(BMI),SESAC,andGlobalMusicRights(GMR)collectandpayoutperformanceroyaltiestosongwritersandpublishers.HarryFoxAgencyandMusicReports,Inc.collectandpayoutmechanicalroyaltiestopublishers.Synchronization(placingmusicinfilm&TV)isalicensethatisnegotiatedbetweencontentproducerandpublisher.Thecontentproducerpaysanupfrontsynchfeeandthentheperformancegeneratesperformanceroyaltiesonthebackendonceithasbeendistributedorbroadcast,unlessit’samovieinU.S.movietheatersorDVDssincetheU.S.doesnothaveaperformancerightformusicperformedinmovietheaters.MASTER:Theartistandrecordcompanysplitincomebasedonthetermsofarecordingcontract.Theexceptionisneighboringrights,hometapping/privatecopy,andDARTroyalties.Alloftheseroyaltiesarecollectedandpaidoutbyagenciesdirectlytotheartistandrecordcompany.SoundExchangepaysoutdigitalperformanceroyaltiesfornon-interactiveInternetservices(i.e.Pandora),satellite(SiriusXM),cable(MusicChoice)andover2,500otherwebcasters(iHeartRadioandSlacker).SoundExchangeistheonlyversionof“neighboringrights”intheU.S.SoundExchangepays45%totheartist,50%totherecordcompany,and5%tobackgroundvocalistsandsessionmusicians.“Ifwe'renotsongwriters,andnothugelysuccessfulcommercially(asinplatinum-plus),we[recordingartists]don'tmakeadimeoffourrecordings.”
–JanisIan,singer/songwriter.
Thereisahugedifferencebetweenroyaltiestotheperformingartistversusthesongwriter.RecordingartistsearnroyaltiesfromthesaleoftheirrecordingsonCDs,cassettetapesandvinyl.Recordingartistsdon'tearnroyaltiesonpublicperformances(whentheirmusicisplayedontheradio,onTV,orinbarsandrestaurants).Songwritersandpublishers,however,doearnroyaltiesinthesecases,aswellasaportionoftherecordingsales.
Theonlycurrentinstanceinwhichartistsearnroyaltiesfor"publicperformances"iswhenthesongisplayedinadigitalarena(likeinaWebcastoronsatelliteradio),isnon-interactive(meaningthelistenerdoesn'tpickandchoosesongstohear),andthelistenerisasubscribertotheservice.ThiscameaboutwiththeDigitalPerformanceRightsinSoundRecordingsActof
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1995.Thisactgaveperformersofmusictheirfirstperformanceroyalties.10
Oncethesonghasbeenrecordedandpubliclydistributed,however,compulsorylicensingkicksinandeveryonewhowantstorecordthesongcandosowithoutyourspecificpermission.Theyarerequiredbylawtopayyouastatutoryroyaltyrate,however,aswellasnotifyyouthatthey'regoingtoreleaseit,andsendyoumonthlyroyaltystatements.TheyareNOTallowedtomakeanychangestothewordsormelodyorchangethe"fundamentalcharacterofthesong"withoutthecopyrightowner'sapproval.Ifthesongischanged,itisconsidereda"derivativework."Recordcompaniesrarelyusecompulsorylicensingbecausetheydon'twanttohavetoprovidemonthlyroyaltystatements.Instead,theygotothecopyrightownerandgetadirectlicensesotheycannegotiatethetermsmorefreely.
Ifyouwritethelyricstoasongandyourbuddywritesthemusic,thenyoueachown50%ofthesong.Youdon'townallofthelyricsandyourbuddydoesn'townallofthemusic--youeachown50%ofthetotalsong,music,lyricsandall.Thismeansyoucan'tgivesomeoneexclusiverightstothesongonyourownifyouhaveafightwithyourbuddy.And,ifyoumakeanymoneyonthesong,halfofthatmoneymustgotoyourpartner.
4.2.2StrategicPartnershipsThisiskeyasyoucan’tdoeverythingyourselfdespitetheApplepublicitythatanyonewithaMacandGarageBandcanwinaGrammy.Thetruthisthatyouhavetothinkofeverythingbutyoucan'tthinkofeverything.Evenwhenyouhirealltheprofessionalswhoknoweverything,theytoomisssomethingandMurphy’srulewillalwaysapply(anythingthatcangowrong,will).Therearemanyelementsthatmakeupasongproduction,promotion,stream,performanceandsaleandthemusicianmustdemonstratetheabilitytocoveralltheseelementsthemselvesorwithacloselytiedstrategicpartner:
• Music:Composing,writing,arrangingandlyrics• Playing:Supportingartistsotherinstruments• Recording:Studio,equipment,soundengineering• Mastering• Production• Promotion:Radio&Digital• ProfessionalReviews• Marketing• StreamingandPlaylists(Spotify)• Website&downloads• Salesoutlets(iTunes,Spotify,SoundCloud,Amazon,Pandora,CDBaby)• Legal(copyrights,licensing,contracts),BMI&SoundExchangeregistration• Concertsandperformances• Funding
10HowMusicRoyaltiesWorkbyLeeAnnObringer
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IfIusemyselfasanexample,thenIamveryfortunatetohaveWillAckermanasaStrategicPartner.WillisaGrammywinnerandfounderofWindhamHillRecords,thelargestrecordlabelatthetimeintheNewAgecategory(soldtoSonyMusic).WillisaproducerandfounderofImaginaryRoadstudiosintheUS.TherecordingstudioisworldclassandTomEaton,thestudioEngineerandMasteringexpertisoneofthebestinthebusinesswithaZMRMusicAwardforhiswork.Theteamalsoincludessupportingmusiciansincluding4-timeGrammywinnerEugeneFriesen.LazzPromotionintheUSprovidesmewiththeleadingNewAgePromotionalteaminthecountrythatresultedinplaysonover135radiostationsandhittingtopoftheZMRandOneWorldMusicCharts.Ihavebeenprofessionallyreviewedbyatleast8criticsspecializinginthismusicwithinternationalexposureandIhavebeennominatedfortwoZMRMusicAwardsandEPR’sMusicAwardforAlbumoftheYear.IamlistedonSpotify,Amazon,iTunes,CDBaby,PandoraandhavemyownwebsitewithbothCDandstreamingavailable.IamregisteredonBMIandSoundExchangeandhavealawyerontheteam.ProductioncostsarecoveredbyF&F(friends&family)funding.Therefore,therearealotofkeypeoplethathavehelpedmecheckofftheblueitemsabove.Yet,Istillneedmorepartnerstocoverthereditemsthat,ifnotcovered,willsignificantlyhindermylong-termsuccess.Thelessonisthatalotofpeopleareneededtohelpandtheyhavetobethebestpeopleintheirfieldandyoustillhavemissingitemsthatcanpreventsuccess.Attheendoftheday,“businessispeople”andthismeansateamwhereeveryoneinvolvedismotivatedtowardthesamegoal.
4.2.3AccesstoMarketUsingmyselfasanexamplehelpstohighlightoneofthebiggestbusinesschallenges.Thereditemsareaboutgainingaccesstothemarketandhavingadistributionsystemtoreachcustomers,deliverthemusicandcollectthemoney.Mostmusiciansunderstandtheimportanceofawell-knownrecordlabelsuchasSony,UniversalandWarner(the“big3”).TheseBig3controlover70%oftheworldmusicmarketand80%oftheUSmarket.11Thesecompanieshavethefinancialpowerandmarketpresencetopromoteanartistorsongandmakeitbig.Ofcourse,theytendtohavethesamemindsetasVentureCapitalists(knownas“VultureCapitalist”)astheyseekonlythemostcommerciallyviablemusicthatcanselltothemassmarketandtheyusetheirfinancialandlegalstrengthtohordemost,ifnotall,oftheroyaltyincome.BeingabletosignwithamajorrecordlabelchangesthegameintheBusinessPlanonboththeAccesstoMarketandtheFinancialModel.Basically,themusicianispayingapremium,ifnotthemajorityoftheirpotentialincome,totherecordlabelinexchangefortheiraccesstothemarket.Atypicallicensingdealwouldsignoverexclusiverightstoalltheirmusicfor15%ofthe11https://en.wikipedia.org/wiki/Record_label
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royaltyincome.Therecordlabelwillofferanup-frontpayment(advance).Thisprovidescashtoausually“starvingartist”buttheseamountsarealwaysdeductedfromfutureroyaltypayments(morecoveredundertheFinancialModel).ForIndependentartists,accesstomarketbecomesthebiggesthurdle.Forexample,atthelatestRoundTableofIndependentArtistsintheEPRMusicassociation,thefollowingweretheitemsofmostinterest.ReachingthemarketthroughthestreamingchannelsSpotify,YouTubeandPandorawerethreeofthetopfivequestions(withlegalissuesbeingtheothertwo).
RoundTableofIndependentArtistsEnlightenedPianoRadio(EPR)Awards
Nashville,TN23September2017
Topic/Category Questions/TalkingPoints
Spotify BestwaytomakeincomefromSpotify?
ShouldmymusicbestreamingonSpotify?
WhatdoesitmeantobeaSpotifyartist?
HowdoIsetupaSpotifyWebPlayer?
HowdoIgrowmylistenersofSpotify?
HowdoIgetmymusiconSpotifyplaylists?
ShouldIusesocialmediaorgoogleadversitingtoincreasespotifylisteners?
YouTube HowdoImakeincomefromyoutube?
HowdoImakeprofessionalqualityvideosforyoutube?
Licensing Whatareallthedifferenttypesoflicensingtomakemoneyfrommymusic?
WhatisSynchLicensing?
Anyonehavesuccesswithgettingtheirmusicplacedforsynchlicensing?
Copyright HowdoInavigatecopyrightwithcoversongs?
HowdoIcopyrightmymusic?
IfaCDcontainsbothoriginalmaterialandarrangementsofpublicdomain…
canIcopyrightinonesubmissiontheentiresoundrecording,
AnybenefittoregisteringeachtrackonaCDseparatelywithLibraryofCongressforcopyright?
Pandora ShouldmymusicbestreamingonPandora?
NewPandoraformat;Bestwaytoutilizethenewformat?
HowtopromoteonPandorawithAMPCastandwhatisit?
IgotmynewagemusicacceptedonPandorabutnotmyJazzalbums.Whatgives?
HowdoIgrowmymonthlylistenersonPandora?
ShouldIusesocialmediaorgoogleadstopromotetoincreasemyPandoralisteners?
RadioStations/Promotion Whatareallthenewagestationsthatplaynewagemusic?
Doyourecommendradiopromotion?
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Whodoyourecommendforradiopromotion?Orcanyoudoityourself?
PROAffiliation WhatisaPRO,whatdotheydo?
WhatisCDBABYPRO?Isitbesttogowiththemorhavemyownpublishing?Whatisthecostbenefit?
BMIVSASCAP?Whichisbetteranddoesitmatterwhichoneyouregisterwith?
SinglesVSAlbums Besttoreleasesinglesvsalbums?
Benefitsvspitfallsofdigitalonlyreleases?FutureofMusicPlatforms
Whatisthefutureofmusicplatforms?Where'sallthisgoinginthenext5-10years?
SocialMedia HowisInstagramhelpfultomusicians?
Cansocialmediahelpincreaselistenersanddrivethemtolistentomymusic?Concerts/BookingShows HowdoIbookmoreconcerts?
Haveyouusedabookingagentormanagerandwhataretheirstrongpoints/benefits?
Isamangeroragentworthitfordistribution?
Yourwebsite HowdoIdrivemorebusinesstomywebsite?
WhoshouldIuseforwebhosting?
RoyaltiesWhatareallthedifferentroyaltytypesandhowdowemakethebestuseofthem?
Misc Whatisthebestuseofmytime?
IsitbesttokeepputtingnewcontentoutthereormarketthesongsI'vealreadywritten?
Arethereanycontestsyou'veenteredthatarebeneficialtoyourmusic?
Isstreaminggoodorbadandwhichplatformsarethebest?
Whatispassiveincomeandhowdoyouearnitwithouttouring?
Whatareallthebestorganizationstobeinvolvedwith?
4.2.4MarketingPlanTheMarketingplanneedstobecomprehensiveandcoverDigitalPresence,Marketing&SocialMedia.Anartisttodaymustcoverallthebasesandbegoodonlineaswellasonstage.Theyneedanimageandbranddevelopment,tobepresentinhardcopy,posters,physicallocationsaswellasthefullspectrumofthedigitalworldincluding,websites,Instagram,Facebook,SnapChat,blogs,Twitterandalltypesofsocialmedia.Theybasicallyhavetobebothpresentandengaged,communicatingwithpotentiallistenersandfans.Therearethestandarddigitalmarketingstrategiesbuttheymustbecombinedwithartistinvolvement,concerts,tours,gigs,charity,associations,etc.
ComponentsofDigitalMarketing
• SEO:SearchEngineOptimization• UserExperience(sitebehavioranddwelltime)• Paidsearchads• Displayadvertising
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• SponsoredSocialposts• E-mailmarketing• Nativeadvertising
Thesinglemostimportantthingthatwillcontinuetopopupinthisthesisisanartist’sabilitytogetonaSpotifyPlaylist.WhenwelookattheBusinessModel(Section4.3below)weseethatstreamingrepresentstoday’smarketplace(aspeopledon’tbuyCD’sanymore).Spotifyisthede-factokingofstreamingandamusicianwillneedmillionsofplaystomakemoney.Withover100millionSpotifyusers,moststilldonotpayfortheserviceandfewspecificallyhuntfortheirchosensongsorcreatetheirownpersonalplaylist.Rather,asdescribedinSection4.1,musicisagoodconsumedaccordingtomomentsandpeopletendtochooseaPlaylistforsuchmomentslike“Romanticdinner,”“Workout,”“Study,”“DanceParty,”etc.TheseplaylistsareconstructedbySpotify,specificallybytheCuratorofaplaylist.Ifyouarefeaturedinatopplaylistthenyouwillgetmillionsofplays.Therefore,CuratorsarethenewGatekeeperstosuccess.Forexample,Spotify'stophip-hopplaylistisRapCaviar,withmorethan7millionlisteners.It'scuratedbyTumaBasa,aformerprogrammeratMTVandBET,whobecametheservice'sheadofhip-hopin2015.TogetonRapCaviar,managersemployconsultantstomeetwithexecs,presentdataandmaketheircase."Hopefully,you'reseeingabunchofgoodplaycountsandsaveratios,"saysZackGershen,executivevicepresidentofmtheory."ThenyougobacktoSpotifyandsay,'Havewegottentoapointyetwherewe'veearnedaspotinaplaylist?'12BignameslikeEdSheeranarealmostguaranteedspaceonprominentplaylists.Forsmallernames,thejourneytakeslonger.Electro-popsingerLauv,whocurrentlyhasaSpotifysmashwithhissingle"TheOther,"firstreleasedthesongtwoyearsago.Attheendof2016,Spotifyaddedittoalower-tierdanceplaylist.ItdidsowellthatthetrackeventuallymadeitswaytoToday'sTopHits."Isawthesonggofrom8millionstreamstoover100millionstreams,"saysLauv."It'sinsane."ThebuzzallowedtheDJtolaunchhisfirstheadliningtour.13Forrecordcompanies,it'sallaboutknowingtherightmomenttolobbyforaplaylistadd:"Ifweaskforittooquickly,it'sgoingtolandwithathud,"saysGershen."It'slikecatchingawavewithsurfing."Marketnichesareideal.Ifyoutrulyunderstandyournicheandcanaccessthatcommunity,thenyouhavethebasisforasolidbusinessmodel.Spotify'smostpopularplaylistsincludePeacefulPianoandDeepFocus–ambientmusicpeoplerelaxto.Thosesongsrackuptensofmillionsofstreams,whichmeansbigpaydaysfortheircopyrightowners.Forexample,StarleyHopethoughtshefailedwithhersong“CallonMe.”Twomonthsafteritsrelease,aSpotifyeditoraddedittotheDanishversionoftheNewMusicFridayplaylist.12http://www.rollingstone.com/music/news/inside-spotifys-playlists-curators-and-fake-artists-w49770213http://www.rollingstone.com/music/news/inside-spotifys-playlists-curators-and-fake-artists-w497702
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Listenerstooktoit,accordingtoSpotify'sanalyticsthattrackhowoftenpeopleplayasong,howmuchofthatsongtheylistentoo,whethertheyaddittotheirownplaylists,andmore.EditorsgavethesongalittlemoreexposureattheendofSeptemberwhentheyaddedittotheWeeklyBuzzandPopRisingplaylists,whichcount1.1millionfollowersbetweenthem.Whenthesongkeptgettingtensofthousandsofstreamsdaily,Spotifystartedpepperingitintopopularplaylistsworldwide,astrategyitcalls"playlisting."Thenumberskeptlookinggood.OnOctober14,whennearlyamillionpeoplewerelisteningtothebouncyballadeachday,Spotify'seditorsaddedittotheToday'sTopHitsplaylistandits14.4millionfollowers.InNovember,thetrackwasgettingtwomilliondailyplays;itpeakedinearlyFebruaryat2.6million."CallonMe"currentlysitsatNo.80ontheBillboardHot100.IthitnumberoneontheSwedishcharts,andwentgoldorplatinuminninecountries.14
4.2.5IntellectualPropertyTherearemanychallengesformusiciansasthedevelopmentofmusicisnolongerastraightforwardapproachofamusicianwithhisorherguitarintheirlivingroomwritingsongswithpenandpaperorabandintheirgaragebangingouttunes.Manymusiciansareusingsophisticatedsoftwareandcomputeraidedprogrammingtocreatesounds,embedmusicalfeaturesfromvarioussources(includingsamplingofotherartists’work)andrecordthesoundsofsynthesizedinstruments.Insomeways,thiscreatesuniquenessinsoundandcompositionbutalsosomethingthatismoredigitallycreatedthanfromahumantouch.Thelesshumaninvolvementcanmeanthelessuniquenessandmorereadilydigitallyduplicated.Thisleadsustooneofthecorebusinesselementsofanyventure,IntellectualProperty.IntellectualPropertyinthemusicindustryispredominantlyintheformofacopyright.Theonlythingamusiciancanselliswhattheyownandownershipisdeterminedbythecopyrightstheyholdfortheiroriginalworkortheirperformancerights.Asweknow,nearlyallworkisborrowedorinfluencedfromothersandsometimesthelinebetweenoriginalandborrowedworkisverythin.Becauseartistsareindividualswhohappentolistentomusicformostoftheirlivesandbecomeinfluencedbywhattheyhear,thentheamountoftheftishardtoknowbutyoucanassumeitispervasiveandextensiveanditseemstheonlyregulationintheindustryisbasedonwhetherornotyouarecaughtandsued.Nowonderitissohardfortheindustrytodiscovernewanduniquetalentthattheybelieveisone-of-a-kindandthattheyarewillingtoriskmillionsoverpotentialcopyrightinfringementlawsuits.Italsoseemsthatsuccessisnomeasureofanartist’sreluctancetosteal.Someofthebest-knownmusicianshavebeencaught.Asthesemaketheheadlines,thereareprobablythousandswhogounnoticedornoticedbynotsued(duetotherelativeexpenseofsuingversusthepotentialmonetarygain).In2013RobinThicke’ssong“BlurredLines”toppedtheHot100chartsfor12consecutiveweeksuntilthefamilyofMarvinGayeheardthesongthatsoundedalotlikeMarvin’s197714https://www.wired.com/2017/05/secret-hit-making-power-spotify-playlist/
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song“GottoGiveItUp.”Aftertwoyearsincourt,theBlurredLineswasfoundasininfringementofGaye’scopyrightandthefamilywasawarded$7.4million.15
BillBoard™TopHitsthatwereStolen/Plagiarized
HitSong HitArtist OriginalWork OriginalArtistBlurredLines RobinThicke Gottogiveitup MarvinGayeVivalaVida ColdPlay IfIcouldFly JoeSatarianiIceIceBaby VanillaIce UnderPressure DavidBowe&Queen
WhoyougonnacallThemetoGhostbusters
RayParkerJr Iwantanewdrug HueyLewis
DoyouthinkI’msexy RodStewart TajMahal JorgeBenMysweetLord GeorgeHarrison He’ssofine RonaldMackCometogether TheBeetles Youcan’tcatchme ChuckBerry
Folsomprisonblues JohnnyCash Crescentcityblues GordonJenkins
Assumingthemusicianhascomeupwithatrulyoriginalandunpublishedworkofmusicand/orlyrics,thentheymustcopyrighttheirwork.ThiswouldfallundertheWorkofthePerformingArtscategory(intheUS).16
Copyrightlawprotectsamusician’sworkfromthetimeitiscreatedinafixedform.Thatmeansthemomentitissetinprintorelectronicmanuscript,asoundrecording,acomputersoftwareprogram,orothersuchconcretemedium,thecopyrightbecomesthepropertyoftheauthorwhocreatedit.Onlytheauthororthosederivingrightsfromtheauthorcanrightfullyclaimcopyright.Thereis,however,anexceptiontothisprinciple:“worksmadeforhire(describedbelow).”
Eachworkmustidentifythetitles,authors,claimants,individualsororganizationsthatcreatedorcontributedtothecreationandidentifyifthiswas“workmadeforhire.”Alsonotethatauthorshipandperformanceareseparateandroyaltiescanbesplitbetweentheauthorandtheperformer(thoughtheycanalsobethesameperson).
Workmadeforhireisaspecifictermthatmeanstheartistwaspaidtocreateorproducethework.Ifaworkismadeforhire,anemployerisconsideredtheauthorevenifanemployeeactuallycreatedthework.Theemployercanbeafirm,anorganization,oranindividual.Infact,itdoesnothavetobeastrictemployer-employeerelationship.Itcanbeaworkpreparedbyanemployeewithinthescopeofhisorheremploymentoraworkspeciallyorderedorcommissionedbyapersonororganizationtoanindependentmusician17.
15http://www.billboard.com/articles/news/list/6501950/songs-accused-plagiarism-no-1-hot-100-blurred-lines16UnitedStatesCopyrightOffice17https://www.copyright.gov/circs/circ09.pdf
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UnderstandingIntellectualPropertyisakeytothelong-termsuccessofamusicianandafundamentalelementintheBusinessPlanandanychanceofsustainableandlong-termsuccess.Quickly,thispartofthebusinessseparatesaperformerfromacreator.Aperformerwhoplaysotherpeople’ssongswillnothaveanylegalprotectionfortheircraftastheydonotownthecontent.Theyareentitledtobepaidfortheirperformancesandforroyaltiestoanyoftheirperformancesthatareaired,playedpublicallyorsoldbuttheyhavenorightsforthesamemusicbeingperformedbyothers.Contrarily,theauthorandcopyrightholderisentitledtorevenuefromtheirmusicwheneverandbywhomeveritisperformed,aired,playedpublicallyorsold.Aperformer’sbusinesscanlastaslongastheperformerisingoodhealthandform,willingtoplayandhasapayingaudience.AsidefromSinatra,StreisandandTomJones,itbecomesquitehardtonameperformersthatwereindemandfordecades.Yet,PaulAnka18hasbeenonthetoptenchartsinthe1950’s,1960’s,1970’s,1980’s,1990’sandinto2000’s.HewroteTomJone’sbiggesthit“She’saLady”aswellastheEnglishlyricsforSinatra’s“MyWay.”Helaterco-wrote“ThisisIt”withMichaelJacksonincludinganothersong“LoveNeverFeltSoGood”releasedin2014.HisthemefortheTonightShowstarringJohnnyCarsonhasbeenplayedeverynightsince1962!MaxMartin19isnotawell-knownnameinthepublicbutasidefromPaulMcCartneyhehaswrittenthemostnumber1singlesinmusic(22Billboardnumberonehits),includingsongsperformedbytheBackstreetBoys,BritneySpears,NSYNC,KatyPerry,Maroon5andTaylorSwift.WealsotendtotalkaboutpopularartistsandthePopchartssincetheyseemtobefrontandcenterinthenewsandmedia.Butthisisnotnecessarilywheretheprofitis.Topmoney-makinghitsofalltime20include:
• SantaClausIsComingTownbyHavenGillespieandFredJ.Coots(1954)• TheChristmasSongbyMelTorme(1944)• WhiteChristmasbyIrvingBerlin(1940)
Andthenumber1moneymakingsonofalltime:
• HappyBirthdaybytheHillSisters(1893)
Theownershipofthesonghaschangedhandsafewtimes.In1990,WarnerChappell,amusicholdingcompany,boughttherightstothesongfor$15million.Today,HappyBirthdaybringsinareported$5,000adayor$2millionayearinroyalties.Thecostofusingthesonginamovie
18https://en.wikipedia.org/wiki/Paul_Anka19https://en.wikipedia.org/wiki/Max_Martin20https://www.therichest.com/rich-list/the-biggest/12-highest-earning-songs-of-all-time/
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oronTVis$25,000.ItisactuallyagainstthelawtosingHappyBirthdayinalargegroupofunrelatedpeoplesuchasatanofficeparty.Thesonghasbroughtinanestimated$50million.
4.3WhatistheBusinessModel?AlthoughthissectionistuckedawayinthemiddleofbuildingaBusinessPlan,itisthebeatingheartoftheplan.Literally,thisisthepartthatpumpstheblood(ormoney)intothewholeplanandthesinglemostimportantpartforbothmusicianandinvestor.Thisiswherewemustclearlyidentifyhowwemakemoney,towhomwesellourmusic,howmuchtheypayandthecoststomarketitanddeliverit.Weneedtounderstandhowmanyplayswecangetandtherevenueitgenerates,lessthecoststogetthereandiftheresult(revenue-cost)isapositivenumber.Infact,thisentirePlancanbesummedupinonechart:
InternetRoyalties21
ThischarttellsusseveralimportantthingsthatallseemtoconcludethatyoubettergetonthetopplaylistsofSpotify.Spotifyhasbecomethede-factochampionofmusicdeliverywithover140millionlisteners(Pandorahaving84millionandApplemusic27million).Anartistneeds380,000playsonSpotifytoearnminimumwageof$1,472permonthsinceSpotifypaysamere$0.0038perplay(lessthanhalfacent).Nowweseetherealchallengetomakemoneyasamusician.Thatisaverychallenginggoaltoreach380,000playsjusttoearnminimumwage.
Alsonotethat43%ofSpotifyusersarepaidsubscribers(57%freelisteners).Thisratioaffects
21http://www.informationisbeautiful.net/visualizations/spotify-apple-music-tidal-music-streaming-services-royalty-rates-compared/
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theirabilitytopayartists.Infact,mostofSpotify’srevenuegoestopayartists.Withallservices,wecanseetheeffectofthisratio.YouTubecertainlyhasmoreuserswithover1billionbut99.9%don’tpaysoyouneed2.4millionplaystomakethesamemoneyas380,000playsonSpotify.
Streamingservicespaymostoftheirmoneytoartistswhocanbarelymakealivingiftheyaregoodenoughtoreachhundredsofthousandsofplays.Despitethemeagerhalfacentperpayplay,allofthesestreamingservicesarelosingmoney.Spotifylossesnearlydoubledin2016to€556milliononrevenueof€2.9billion.Revenueincrease52%andlosses47%.22Theyhavecontinuallyraisedmorecapitalofover$1.5billionfrominvestorsuchasGoldmanSachs,PeterThiel’sFoundersFund,AccelPartners,HorizonPartnersandothers.23YouTubedoesnotfairbetter,losing$174millionperyearforacompanyboughtbyGooglefor$1.65billion.24Conqueringtheworldisnotaprofitableventure.
Itmakesuswonderaboutthelong-termsustainabilityofalose-losebusinessmodelwherethecontentprovidersandthecontentsellersbothlosemoneyyetstrivetoaddmorecustomers.It’slikethejokethat“Ilosemoneyoneverysalebutmakeituponvolume.”MusicisnottheonlyexampleaswealsoseethismodelwithAmazon,Uber,SkypeandTwitter.
Thisisthesituationwithstreamingandsincepeopledon’tbuyCD’sanymore,anartistisgoingtohavetofigureoutquicklyhowtheyaregoingtogetthemarketingandexposuretoreachtheSpotify,beincludedonkeyPlaylistsandcombinethiswithafairlyaggressiveconcertschedule(sellingCD’saftertheshow)andintegratingotherpromotional,salesandco-brandingstrategies.
Outsideofstreaming,therearetraditionalCDsalesandRadioplay.Forradioplay,thepayrateissetbylegislation,calledthestatutoryrate.Currently,thestatutoryrateis$.08forsongsfiveminutesorlessinlengthor$.0155perminuteforsongsthatarelonger.
Artistsarepaidroyaltiesusuallysomewherebetween8%and25%ofthesuggestedretailpriceoftherecording.Exactlywhereitfallsdependsonthecloutoftheartist(anewartistmightreceivelessthanawell-knownartist).Fromthispercentage,a25%deductionforpackagingistakenout(eventhoughpackagingrarelycosts25%ofthetotalpriceoftheCDorcassette).
Let'ssayaCDsellsfor$15.Rightawaywededuct25%fromthatforpackaging,whichmakestheroyaltybase$11.25.Nowlet'ssayourartisthasa10%royaltyrateandthattheirCDsellsonemillioncopies.Theartistwouldearn$1,125,000.Thenwedeductcosts.
Supposetherecordingcostswere$300,000(100%recoupable),promotioncostswere
22http://www.billboard.com/articles/business/7833686/spotify-2016-losses-financial-results-revenue23https://www.investopedia.com/articles/investing/120314/spotify-makes-internet-music-make-money.asp24https://www.itproportal.com/2015/02/26/youtube-still-loss-leader-google/
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$200,000(100%recoupable),tourcostswere$200,000(50%recoupable),andamusicvideocost$400,000(50%recoupable).Thatcomesoutto:
$300,000+$200,000+$100,000+$200,000=$800,000
Nowtheartistismaking$212,500.Butdon'tforgetthereisalsoamanagertobepaid(usually20%),aswellasaproducerandpossiblyseveralbandmembers.Theartistwon'tseeanyroyaltymoneyuntilalloftheseexpensesarepaid.
Thelicensee(radiostation,TVstation,etc.)isweightedbasedonitslicensingfee,whichinturnisbasedonthelicensee'smarketsandnumberofstationscarryingitsbroadcastsignal.Thereisaweightappliedtothetimeofdaythemusicisperformed(particularlyintelevision).Musicplayedduringpeakview/listenertimesreceivesmoreweight.
ASCAP(themonitoringandcollectionassociation)alsousesa“followthedollar”factor,whichmeansthatsongwritersandpublishersarepaidbasedonthemediumfromwhichthemoneycame.Forexample,moneypaidoutfromradiostationsispaidforradioperformances.AgenerallicensingallocationisfiguredforfeesthatASCAPcollectsfrombars,hotelsandothernon-broadcastlicensees.ThesefeesaredistributedtosongwritersandpublishersbasedonsimilarradioandTVbroadcastsoftheindividualsongs.Inotherwords,theyestimatethatrestaurantsandbarsareplayingthesongsatasimilarrateasthelocalradioandTVstations.
HereisanexampleofthecalculationthatASCAPusestodeterminethenumberofcreditsasongtitlehas:
UseweightxLicenseeweightx"Followthedollar"weightx"Timeofday"weightx"Generallicensingallocation"+anyradiofeaturepremiumcredits(bonuscreditsfortopplayedsongs)=Totalnumberofcredits.
Thetotalnumberofcreditsismultipliedbythesharesforthesong(howtheroyaltiesaresplitbetweenwritersandpublishers).Thisnumberismultipliedbythecreditvalueforthesong.Thevalueofonecreditiscalculatedbydividingthetotalnumberofcreditsforallwritersandpublishersbythetotalamountofmoneyavailablefordistributionforthatquarter.Forexample,ifthereareatotalof10millioncreditsforaquarter,andtherehavebeen35milliondollarscollectedfordistributionthatquarter,thenthevalueofonecreditforthatquarteris$3.50.
Thefinalnumberistheroyaltypayment:
4,000Creditsx50%(.5)Sharex$3.50CreditValue=$7,000Royaltypayment
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Nodifferentthanatechstart-up,amusicianmustbepreparedtooperateintheredfromthetimetheywritethemusic,recordit,demoit,burnitthroughtheinitialsales.Notuntilsalesreachacertainvolumewilltheybecomeprofitableandtheywillrequirefundingtosurviveuntilthathappens.
Tomakeacasestudyforthisthesis,let’strytoestimateanindependentartist’sROIonanalbum.Wewillassumea44-minutealbumof12songswithanaverageof3.6minutespersongthatincludessupportingmusicians.Itcouldtake3weekstocomposeeachsong,sothefirst9monthsaresongwritingand“sweatequity.”Wealsoassumethemusicianhasanotherjobtofeedthemselvesduringthistime.Wethenassumethattheycanrecord2songsperdayforthebasetracksandanother5daysforoverdubstotaling29recordingdays.Thenmasteringandprintingofaminimum1,000CD’s.Following,themusiciancanstartapromotionalcampaignforradioanddigitalmarketing.Wewillassumethattheartistremainsindependentanddoesnotsignwitharecordlabelbutstillmanagestobecomeastreamingsuccesswith100,000playsperweek(400,000permonth)onSpotifybytheendofthefirstyeargrowingtenfoldto1millionplaysperweekbyyear3.
SampleFinancialAnalysis CDPrinted Year1 Year2 Year3
Month 1 2 3 4 5 6 7 8 9 10 11 12 TOTAL 400K/month 4M/month
Spotifylisteners 140M 140M 140M 140M 140M 140M 140M 140M 140M 140M 140M 140M140Million 140million 140million
PercentageCaptured 0 0 0.0007% 0.0107% 0.0250% 0.0429% 0.0643% 0.0714% 0.1000% 0.1571% 0.2143% 0.2857% 0.97% 3.43% 34.29%
Numberofplays 0 0 1,000 15,000 35,000 60,000 90,000
100,000
140,000
220,000 300,000 400,000
1,361,000 4,800,000
48,000,000
Priceperplay:Spotify 0.0038 0.0038 0.0038 0.0038 0.0038 0.0038 0.0038 0.0038 0.0038 0.0038 0.0038 0.0038 0.0038 0.0038 0.0038
RevenuefromSpotify - - 3.80 57.00 133.00 228.00 342.00 380.00 532.00 836.00
1,140.00
1,520.00 5,171.80 18,240.00
182,400.00
CostofGoodsSold
Recordingstudio 40,000 Musicians/supportingartists 35,000
Mastering 15,000
CDprinting 5,000
TotalCOGS 95,000 95,000 - -
Expenses: -
General&Accounting -
Overhead -
Management -
Legal&IP 5,000 5,000
Travel&perdiem 2,000 2,000 2,000 2,000 8,000
MARKETING -
RadioPromotion 5,000 5,000 5,000 5,000 20,000
DigitalPromotion 10,000 15,000 20,000 25,000 70,000
-25
-20
-15
-10
-5
0
5
10
Model Proto Demo Product Sales
0
25
Other 2,000 3,000 5,000 5,000 15,000
TOTALExpenses 24,000 - - - 25,000 - - - 32,000 - - 37,000 118,000
TotalCosts 119,000 - - - 25,000 - - - 32,000 - - 37,000 213,000 - -
EBIT
(119,000) - 4 57
(24,867) 228 342 380
(31,468) 836 1,140
(35,480) (207,828) 18,240 182,400
Reaching1millionplaysperweekwillgenerateanannualEBITof$182,400ofpassiveincome.Theartistinvestedabout$200,000andthreeyearstoreachthispoint.Byyear3,theyareinapositiontocollect$182,000peryearwithoutcost.Therefore,thepassiveincomemodelrequireslargeup-frontcosts(andloss)inexchangeforhighprofitabilitywithlittleongoingcosts,freeingtheartisttocreateadditionalsourcesofincome.However,thisEBITtotheArtistisassumingthattheyreachedthekeySpotifyplayliststoachieve4millionplayspermonthwithoutthehelpofrecordlabeldeal.Itstillservesasagoodguideline,sinceiftheysignwithaBig3,thentheartist’srevenuewilldropto25%ofthetotalbuttherecordlabelwilldriveplaysabout4timesto4millionperweek.Hereinliesboththechallengeandthedilemma.Gettingto1millionplaysperweekonyourownisahugechallengeandrequiresaveryeffectiveandsuccessfuldigitalmarketingcampaignthatrequiresskillsusuallybeyondmostartists,aswellasthecostsinvolved.Remember,ingeneral,themusiclisteningpublicisstilllookingfortheirmusicrecommendationsfrommusicindustrysourcesandprofessionalreviews,Spotifyplaylists&“recommendedforyou”musicgeneratedbySpotify,Shazam,SoundHoundanddigitalstationssuchasiHeartRadio,ClassicFM,RadyoVoyage,andothers.Eventhoughtechnologynowoffersindependentartistsahostofnewabilitiestorecordanddisseminatetheirmusic,accesstotheSpotifycurators,radiostationprogrammersandprofessionalreviewersremainswithinthenearlyexclusiveterritoryoftheBig3.Thesecorporationshaveresourcesindigitalmarketing,advertising,imagemanagement,concertmanagementandaccesstotheprofessionalsintheindustryincludingtheSpotifyplaylistcurators.Theirrevenue,budgets,costsandoverheadsarebig.Forexample,SonyMusic’s2016revenuewasabout$3.6billionwith$1.3billioninstreamingrevenue.Therefore,iftheyaregoingtosignanartist,thentheyaremostprobablylookingforlargenumbersinlisteners,streamsandrevenuegeneration.Anindependentartistmaystruggletoget1millionplaysperweekbutaSonyartistshouldeasilyreach1millionplaysperday(30millionpermonth).Thatrepresents$114,000permonthinSpotifyroyalties($1.37millionperyear).Anartist’25%isabout$342,000peryearor46%moreincomewithalabelbasedonSpotifyroyaltiesalone.However,beingsignedwithalabelthatendsupnotpromotingtheartistornotpromotingthemeffectivelycouldmean25%ofnothing,whilethelabelholdsthemusicrightspreventingtheartistfromanyotherincomesource.
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4.3.1RecordLabel’sDeal25Ifanartistfulfillstheirdreamofsigningwitharecordlabel,thentheybelievethatthelabelwithpromotedthemwellenoughtogetmillionsofstreamsandthatthelabelwillbepayingthem15%to25%ofthatrevenue.Beforewebelievethis,weneedtounderstandhowarecordlabelmakesmoneyfromSpotify.Spotifymaybethede-factodeliveryserviceformusicbuttheydon'townthemusicortherightstomusicsotheyneedtopurchasethiscontent.Sincetheyaretryingtoconquertheworld,theycan’treallygotoindividualorindependentartiststoscalelargeenoughwithapopularenoughlibraryofmusic.ThismeanstheyneedtopaylicensefeesforlargemusiccatalogstotherightsholderandthatisinvariabletheBig3.JustbeforeSpotifylaunchedin2011,theysignedatwo-yeardealwithSonyMusic(withanoptionforathirdyear).ThedealisincrediblycomplicatedandincludesadvancestoSonyandsubscribertargetsthatSpotifymustachieve.SpotifypaidSony$42.5millioninadvances($25millionforthefirst2yearsas$9and$16millionrespectivelyand$17.5millionforthethird-yearoption).Itfurtherincludesa“mostfavoredprovider”clausethatguaranteesSonygetsthesameadvancesasanyotherlabelthatSpotifysignswith.ThismeansthatifanotherlabellikeUniversalgetsabetterdealfromSpotify,thenSonygetstobepaidthedifferencetomakethemequal.Thecalculationis:(totalrecoupableadvance)/(percentofstreamscontrolledbytherecordlabel)=onepoint(orthedollaramountof1%ofthelabel’smarketshare).Forexample,Sony’searns$600,000permarketshareandSpotifypaysUniversal$1millionpermarketshare.Spotifymustpaythe$400,000differencetoSonyforthatyear.TheSpotifydealisgoodforSonybutunfortunatelydoesnotstipulatewhatSonycandowiththoseadvances.DoesitgototheartistsinSony’scatalogordotheykeepit?WecanguessthattheykeepitandthisiswhatisdrivingallthepressfromartistslikeTaylorSwiftwhocomplainaboutnotmakinganymoneythroughstreamingserviceslikeSpotify(eventhoughsomeofthefaultmayliewiththerecordlabels).Thedevilisinthedetailsandtherearesomanyhiddendetailsthatanartisthasnochanceofknowingthesituationletalonefightingagainstthesystem.Anexampleofdevilishdetailsiswiththedefinitionof“revenue.”Spotifyissupposedtogive70%ofitsgrossrevenuetotherecordlabels(withsomehopefullytricklingdowntotheartist),however,thecontractsaysthatgrossrevenuecanincludeadeductionforthirdpartyadvertisingcommissionsofupto15%.Thismeansthat15%ofSpotify’srevenueissimplynotcountedasrevenue.In2014,Spotify’sadvertisingrevenuewasover$110million.25https://www.theverge.com/2015/5/19/8621581/sony-music-spotify-contract
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Anotherexample,isthatSpotifyprovidesSonywithabout$9millionfreeadvertisingspace($2.5millioninyear1,$3millioninyear2and$3.5millioninsubsequentyears).Sonyhastherighttore-sellthoseadvertisingspaceswhichbecomesrevenuetoSonynotsubjecttosharingwithartists.Inaddition,Spotifymakesavailable$15millionofadvertisingspaceatheavilydiscountedpricesaswellasgivingaportionoftheirunsoldinventorytoSonyforfree.Thecorebusinessistosellmusicandthatisdoneperstream.Stream’saremeasuredbyad-supportedfreeserviceandSpotify’spremiumpaidservice.Basically,inoursamplecase,Sonywouldget60%ofSpotify’s“grossrevenue”(seeearlierdiscussionaboutthedefinitionofrevenue)multipliedbySony’spercentageofoverallstreams.IfSpotify’sgrossrevenuewas$100million,thenlabelswouldget$60million.IfSony’smusicmadeup20%ofthestreams,thentheywouldget$12millionforthemonth).Butthereareusagebasedminimumsandsubscriberminimumsandiftheroyaltiesfromthesearehigherthantherevenueshare,thenSonygetsthehigherpayoutinstead.Usagebasedminimum: ($0.00225perstream)Subscriberbasedminimum: Sony’slabelusage%xnumberofPremiumsubscribersx$6.00Whateventuallymakesistotheartistisunknown.Thehistoricmodelisthatanartistgets15-20%oftheirstreamingrevenuesbutwehavealreadydeterminedthatthedefinitionof“streaming”&“revenue”areopentodebate.Infact,Spotifyhasbeenpayingoutcloserto80%oftheiroverallrevenueyetartistsareasfrustratedasTaylorSwiftwhopulledhermusicfromtheserviceonlytoreturntoit,thoughnotplacedonanyplaylists.265.0TheChancesofSuccessTobecomeabreakoutstarinmusicisequivalenttobeinga“Unicorn”intheentrepreneurialworld.Unicornsarecompaniesvaluedover$1billion.Investorsgetreturnsfromsuchafewofthesebreakoutsuccesses.Sinceinvestmentfundshavegrowninsize,largerandlargerexistsarerequired.Forexample,afundof$400millionneeds20%oftwo[$1B]Unicornsor20%ofone$2BUnicorn.Inthe10-yearperiodfrom2003to2013therewere60,000companiesfundedwith39unicorncompanies,representing0.07%ofVentureCapital(VC)backedcompanies.Itiseasiertogethitbylightning.FourUnicornsareborneachyearandonly1to3SuperUnicorns(valuedover$100billion)areborninadecade,suchasFacebook.Keypointstonoticeare:
• ConsumerOriented
ConsumerorientedcompaniesaremoreplentifulyetEnterpriseorientedcompaniesareworthmorewithlesscapital,therebyreturninghigherROI.
26https://www.theverge.com/2017/6/9/15766804/taylor-swift-spotify-streaming-umg-catalog
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• NoPivots
Pivotingtonewideasornewbusinessmodelsisrareand90%ofthecompaniesareworkingontheiroriginalconcept.
• NetworkEffect
HalfofthecompanieshaveaNetworkEffecttoscalelargeandcheap.
• AMarathon
It’samarathonas24ofthe39companiestook7yearstoexit,14arestillprivateandonlyYouTubeandInstagramhadexitsin2years.
• Inexperienceisrare.Facebookisthesoleexceptionwithafounderinhistwenties.Well
educatedco-foundersintheirthirtieswithapartnerintheirfiftiesandahistoryofworkingtogetheristhenorm.90%ofsuccessfulventureshaveatechnicaldegreeandamajoritycomefroma“top10”school.
• NoLoners
Lonersdon'texist.Theexpression“ittakesavillage”isveryapt.Noonepersoncanknoweverythingordoeverythingthatisneededthroughoutallthevariouselementsofcreation,development,production,technicalexpertise,marketexpertise,finance,banking,government,accounting,legal,tax,humanresources,etc.Ittakesawell-oiledteam,experience,partnersandpartnershipsandrelationships.90%ofsuccessfulventureshaveco-founders.60%workedtogetherbeforehandand46%schooledtogether.Itwasnottheirfirsttimeattherodeo.
Imagineifa34-yearoldformerPayPalengineerwithadegreefromStanfordwhofoundedasoftwarecompanyinjuniorhighshowedupwithanewventurewithsomeofhispartners.Investorswouldsignbeforetheyevenlistentotheidea.
• Location,Location,Location
Whereyouare(geographically)counts.TheSanFranciscoBayareaisthehomeoftheUnicorn.27ofthe39unicornsareintheBayareawith3isNewYork,2inSeattleand2inAustin(noneinternational).
• Therearegenerationaltrends:
o 1960’sIntelandthesemiconductor
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o 1970’sApple,OracleandMicrosoftandthePersonalComputero 1980’sCiscoandtheNetworkedworldo 1990sGoogleandAmazonandtheModernInterneto 2000FacebookandSocialNetworks
IfwetranslatethistotheMusicindustry,thestorydoesnotchange.Breakoutmusicstarsarerareandtheinvestmentsinadvertisingandpromotionhaveescalated,requiringinvestors(recordlabels,producers,promoters,etc.)togethigherreturnsfromfewerartists.Overthepast11years,Britain’sGotTalenthashad11winnerswithatopprizeof£250,000(hardlyenoughtoretireon).Therewere9albumsproducedandonlyonealbumbroke1millioninsales.Ofthe11winners,only2areknowntohaveearnedinthemillionsofdollars;PaulPottsandGeorgeSampson.SusanBoyle27,whodidn’twin,isthemostsuccessfulofallbeingtheonlyotherpersontoearnoveramilliondollars(£6milliononherfirstalbum“IDreamedaDream”)withtwoGrammynominations,thoughsheonlyperformsotherpeople’swork.Consideringthetensofthousandsofapplicantsandthethousandsofauditions,itiseasiertobehitbylightning.
• Consumerfocus
Ascompaniesfocusonconsumers,musiciansfocusonPopmusicyetthehalf-lifeofapopsong(orpopartist)isshort,thecostsarehighandROIislow.Commercialmusic(andfilm)havealongershelflifeandlowercostformarketingandpromotion,thereforeamuchhigherROI.
• NoPivots
Ifpivotingisrareforbusinessitshouldbejustasrareformusicianswhoareknownforonegenreofmusicandtheabilitytocross-overtoothergenresisdifficultatbest.
• NetworkEffect
AllmusiciansneedaNetworkEffecttoscaletoalargeraudienceandhaveanyhopeofenoughplaystogenerateasignificantroyaltystream.
• Marathon
“One-HitWonders”and“flashinthepan”donotearnenoughmoneytomakeacareer.Thisisalonggameandmusiciansneedtoproducecontinuallyandformanyyears.Itcaneasilytake5yearsforadebutalbumtoreachenoughpeopletogetthemusicianknown.Onceknown,thensubsequentalbumswillstarttosell.Inmanycases,royalties
27https://en.wikipedia.org/wiki/Susan_Boyle
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fromearlyalbumsdone7to10yearspriorcanrepresentthelargestrevenuegenerators.
In1995,therewasthereleaseofthe"BeatlesAnthology"documentary,alongwiththebookandCD.AcompilationofNo.1hitsinglesfromtheU.S.andU.K.wasreleasedasanalbumin2000—andwenttothetopofthecharts.Itbecamethebest-sellingalbumfrom2000to2010.
Otherdealsincludethe"BeatlesRockBand"musicvideogame,releasedin2009—withmultimillionsales—aswellastheongoingshow"Love,"whichfeaturesBeatlesmusicandperformancesbyCirqueduSoleilinLasVegas.
TheTVshow"MadMen"paidabout$250,000fortherightstousetheLennon-McCartneysong"TomorrowNeverKnows"inanepisodein2012.28
Allthisforagroupthatstoppedrecordingin1970!
• Experiencerequired
So-called“Mavericks”thatcomefromnowhereandmakeitbigarerare.EventhemajorityofthecontestantsonBritain’sGotTalenthaveexperience.Theyhavebeenplaying/singingandperformingformostoftheirlife.TheyhavepassedseveralauditionsthroughinitialscreeningtoAssistantProducertoProducerauditionsbeforetheymakeittotheShow’saudition(beingnarroweddownfromthousandstonomorethan500foraseason).Despitetheirbeingpresentedasregularpeoplewhosingintheshower,thetruthistheyhavebeenworkingontheirmusicformostoftheirlifeandthesuccesseshavestudiedandperformedforyears.
Asidefromthevenueofatalentshow,theabilitytogetinfrontofmusicproducersandrecordlabelsorperformataconcerthallorseriousvenuerequiresproventalentcomingfromamusicaleducationandanetworkofcontactscomingfromearlierperformancesordemonstrationsoftalent.
EventheInternetandvenueslikeYouTubeorSoundCloudarenotgoingtogetmanyunprovenartiststheaudiencetheyneedtobesuccessful.Thegeneralpublicstillreliesonprofessionalandpeerreviewsandgetsinformationonmusiciansthroughsocialmediacampaignsthatareprofessionallymanaged.
28https://www.cnbc.com/2014/01/24/beatles-business-still-making-money-50-years-on.html
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• NoLoners
Theideathatamusiciancansitaloneathomewithaninstrument,microphone,MacBookandtheGarageBandAppandproduceabroadcastqualityalbumispurehype.ItonlyseemstoworkinanApplecommercial.Therearemanyelementsthatmakeupasuccessfulsongormusicalscoreandnoonepersoncanmasterthemall.Ittakesalotoftalentedsupportaswellasfinancialsupport(notcountingemotionalsupport).Thebasisforagoodsonginclude:
o Melodyo Chordprogressiono Beat&Rhythmo Genre&Styleo Concept(story)o Hooko Lyricso Sectionso Arrangemento Length
Agreatmusiciancanoftennailthefirstfour,butifyoudon’thaveallofthem,thenyoudon’thaveasuccess.Arrangementandlyricsareprofessionsoftheirown.Thereareoftenotherinstrumentsinvolvedandthatmeansothermusiciansandaverycomplicatedrecordingprocessinvolvingdubs,trackoverlays,equipment,studio,microphonesandphysicallayouts(acoustics),engineeringandmastering.Everyonemighthaveagarageorabedroombutthetrulyhigh-endprofessionalstudios,expertengineersandmasteringarefew,hardtofindandveryexpensive.ThenifyouhaveanyhopeofbeingplayedontheradioorbeingprofessionallyreviewedorairedbyahighfidelitystreamingservicelikeSpotify,thenyouwillneedhighendrecordingsuchasMastered320Mp3,wavorFLACfilesandpressedCDtodelivertoradioandpromoters.ThismeansaprofessionallydesignedCDcoverandjacketwithprofessionalphotosandahighqualitypressedCD.
• Locationcounts
Justasthereisamapofventurecapital,thereisamapofcountriesthatembracetheentrepreneurshipofmusic,wherenewtalentsaremoreoftendiscoveredandwhereamusicianhasanychanceofrisingfromthebottomoutsidetheformalsystemofmusicschools,conservatories,internationalcompetitionsandtheformalstructureofatightlycontrolledmarket.Wedon'treallyneedtothinkhardordrawamaptoknowitistheUS,theUK,Ireland,SwedenandAustralia.Thefirstcriteria,ofcourse,isthatasongwithlyricsmustbeinEnglishifitisgoingtogoglobal.Thinkingofalmostanygenreofmusicfrompoptonewage,rap,classicalandfilmscoresandyouthinktheUSandthe
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UK,nothingmore.Inthepopworld,wehaveotherEnglish-speakingcountriessuchasAustraliaandIreland(theworldrecordholderofEurovisioncontestwinnerswith7).OtherEuropeancountrieswhereEnglishisasecondlanguagesuchasLuxembourg(5Eurovisionwins),theNetherlands(4)andperhapsthebestknownofall,Sweden(4),thehomeofABBA.
LocationcanevenbemorelocalandspecializedsuchascountrymusicandtheNashvillesound,NewOrlean’sJazz,St.LouisBluesandsuchlocalflavorcanevenapplytoclassicalmusicsuchasthePhiladelphiaSound,theBostonpopularclassics,ViennawaltzandtheOperaoftheMetropolitanorLaScala.
• Trends&FadsCertainly,eachgenerationrelatestothemusicoftheirtimeandsomethingsworkwhentheyfitthemood,energy,philosophy,culture(ourcounter-culture)ofthetime.Beingwithinthetrendsorfadshelpsamusicianreachareadyaudience.Sometimesbeingcounterthetrend,undergroundor“indie”canalsohelpdevelopadedicatedfollowingorniche,butbeingtoofaraheadofyourtimeortoonostalgiccankillacareer.LikethemovieBacktotheFuture,transformingChubbyCheckerintohardrockwouldn’tworkinthe1950’sandonlythebravestofmusicianstodaywouldtrytoemulateFrankSinatraortheRatPack.Rapmusicfounditsnichewithinaveryspecificageandculturalgroupthatwouldnothaveworkedatanyothertime.
MusicMapoftheUS1
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o 1960’s29The60’swereinfluencedbythesexualrevolution,feminism,BlackPower,theColdWarandVietnamandinspiredasimilarwaveacrossEuropeandtheworld.Itincludedsinger-songwriterslikeBobDylan,JoanBaez,JamesTaylor,EltonJohn,CaroleKingandCatStevens.ItalsohadawaveofSoulmusicwithartistslikeMarvinGaye.ThentherewasacombiningoffolkandrockandaddingelementsofelectricinstrumentswiththeAnimals,TheMamasandthePapas,Crosby,StillsandNashandSimon&Garfunkel.The60’sthenmovedintomorerockgenressuchasPsychedelicrock(TheGratefulDead),SurfRock(TheBeachBoys),GarageRock(PaulRevereandtheRaiders),Bluesrock(AllmanBrothers),Rootsrock(CreedenceClearwaterRevival),Countryrock(LindaRonstadt)andProgressiverock(TheMoodyBlues).
o 1970’s30
The70’swastheriseofDisco(andEuroDisco)alongwithfunk,smoothjazz,jazzfusionandsoul.Othertrendsthatformedinthe70’sincludeglamrock,hardrock,punkrock,progressive,artrockandheavymetal.Hiphopandreggaeemergedaswellasexperimentalclassical,minimalisticclassicalandagrowingpopularityoffilmscoremusic.Theuseofsynthesizersandharmonizershelpedthedevelopmentofsynthpop,electroandelectronicdancemusic.Well-knownartistsofthedecadeincludeprogressiverocklikeFrankZappaandBloodSweatandTears,PoprocklikeBostonandForeigner,progressiverockofSupertrampandElectricLightOrchestra,NewWavestyleofTheCars,punkrockliketheRomantics,BluesrocklikeEricClapton,andthedominanceoftheSoftRockgenrewithtoomanytonamebutincludingPaulMcCartney,StevieWonder,RodStewart,BarryManilow,JohnDenver,theOsmonds,BillyJoel,FleetwoodMac,Chicago,America,JimCroce,PaulSimon,andtheJackson5.ThiswasalsothetimeofABBA,EltonJohnandtheentryofHeavyMetalwithLedZepplin,DeepPurpleandBlackSabbath,ProgressiverockwithPinkFloyd,GlamrockwithDavidBowieandPunkrockwiththeSexPistols.AustraliahotthescenewithAC/DCandtheBeeGees.
o 1980’s31The80’swastheheightofDiscoandalsosawagrowthofdance-pop,softrock,adultcontemporaryandsmoothjazz.MichaelJackson(Thriller),Madonna(LikeaVirgin)and
29https://en.wikipedia.org/wiki/Music_history_of_the_United_States_in_the_1960s30https://en.wikipedia.org/wiki/1970s_in_music31https://en.wikipedia.org/wiki/1980s_in_music
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WhitneyHoustonleadthecharts.LionelRichieandPrince(PurpleRain),ChakaKhan,SheenaEaston,SineadO’Connor,ThePolice,PhilCollinsandBruceSpringsteenallreachedpeaksinthisdecade.
o 1990’s32
The90’sbecamethegoldenageofHipHopwithDr.DreandSnoopDogandthepopularityofalternativerockwithNirvana,PearlJamandR.E.M.ItalsointroducedalternativemetalliketheRedHotChiliPeppersandgrunge.
Whatiscomingnextishardtopredict.Likefashion,oldideasseemtoberedesignedandcomebackagainafter30years.Generaltrendsinsocietyandideaspeoplerelatetopreviouserasarebroughtbackandmodifiedtoincludenewapproaches,newtechnology,newlanguageandnewbeatsorrhythms,oftenmixinginfluencesfromaroundtheworld.Sincetheworldkeepsgettingsmallerintermsofcommunicationandinformationsharing,thenmusiciansareexposedtoothercultures,ideas,instruments,techniquesandperspectivesandthisaffectstheircompositionsandplaying.Forexample,considerthegeneraltrendofayoungergenerationquestioningorrebellingagainsttheindustrialworldofa9to5job,institutionssuchasmarriageandpreviousdefinitionsofsexualorientation,equality,rolesandresponsibilitiesandfairness.Weseeariseofentrepreneurship,concernfortheenvironment,frustrationwithgovernment,mistrustofinstitutionsanddefinitetrendtowardsindividualcontrolandindependence.Thereisafightagainststressandthetrendsaretowardshealthyliving,mindfulnessandare-evaluationofpriorities.Ifwetakethesetrendsandgoback30yearstothemusicofthe70’s,thenwewouldexpectanewtypeofsoftrockandtheemergenceofamodern-dayJimCroceorCatStevens.Inotherwords,wewillhaveEdSheeran.Wewillseethemodernizationofmorerelaxingandsoothingmusictomatchtheyoga,pilatesandmeditationtrendsofthenewgeneration.So,NewAgefromthe80’swillbecomeNouveauClassical.
5.1MeasurementsandPredictorsTherearespecificparametersthatcanbemeasuredandanalyzedtopredictsuccess(orfailure).Thesecanbebothquantitativeandqualitativerelyingonkeyperformanceindicatorssuchasnumberofcopyrights,numberofsongs,numberofactivelisteners,followers,downloads,etc.Theycanalsobejudgementsbasedongenre,age,languageandotherfactors.Ibelievewecantakekeyevaluationfactorsforatechcompanyandapplythemtoamusicalventureanddevelopanumericalscorethatwillpredictthechancesofsuccess.32https://en.wikipedia.org/wiki/1990s_in_music
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5.2ReasonsforFailureBeforewelookatthespecificitemsweneedtosucceed,let’smakesureweavoidthefollowingmainreasonsforfailure.Thesearebasically“deathblows”thatcankilladealnomatterhowgooditlooks.
5.2.1LackofTransparencyAsmentionedearlier,investorsputtheirmoneyintopeople–themusician.Theyareriskingtheirmoney,brandimage,reputationandtimeintobusinessthatreliesupontheindividualsongwriter/performer.Theyaremakingtheirdecisionsbasedontheinformationtheyhaveatthetimeandmostoftenthatcomesfromthemusician.Didtheyreallycomposethemusicandnotplagiarize,dotheyperformasrecordedoraretheirhiddendigitalenhancements?Arethereundisclosedpersonalproblemssuchasdrugaddition,financialdebtsorlegalproblems?Basically,investorsneedtoknowthewholetruthandthemorebadnewstheyhave,thenthemoretheycanplantodealwithit,mitigatetheriskanddevelopcontingencies.Thisisinanefforttoprotectthemusicianaswellastheirinvestment.However,iftheybelievethemusicianisbasicallydishonestanduntrustworthy,thennorelationshipcanbebuiltandtheywillwalkawayfromthedeal.
5.2.2IntellectualPropertySometimesyoucanmakemoremoneyonthelawsuitwithpunitivedamagesagainstsomeonewhocopiesyourworkthanyoucanmakewiththeworkitself.Noinvestor,afterspendingmillionstopromoteanartist,wantstoholdtheriskofhavingtopotentiallypayoutmillionstoanotherpartybecausetheypromotedasongwrittenbyorcopiedfromsomeoneelse.TheonlythingamusiciancanselliseithertheirperformanceortheirIntellectualProperty–thecopyrightsontheirmusicandlyrics.Aperformanceisaone-timeeventorasinglerecordingbythatartistthatcanonlygenerateincomeeitherattheeventorfromsalesofthatspecificrecording.However,asongthatisplayedbyanyone,inanyversiongeneratesrevenueforever.Therefore,thevalueisinthecopyright.Ifasongisnotdefendablelegallyoriseasilyreplicatedsuchasdigitalsamplingorproductionhousemusic,thenthereisnovaluefortheinvestor.Copyrightsofferresidualincomeandthisisthemostattractive.Therightstoincomefromacopyrightbelongthecopyrightholder.Thisalsomeansthattherightsholdermaybedifferentfromthewriterorperformer.Forexample,workforhire(aspreviouslydiscussed)belongstothepartypayingthemusiciantocreatethemusic.So,amusicianwhotriestosignadealwithSonyRecordsformusichewrotebutwasactuallypaidbyacompanytowritethemusicwouldviolatebothLackofTransparencyandIntellectualPropertyevaluationcriteria.However,theownerofthecopyrightmayassignorselltheirrightstotherevenuefromthecopyright.Inthiscasethecopyrightholderandtherightsholdermaybedifferent.Infact,thisisexactlyhowmusiciansmakemoney.Theyselltherightstoaportionoftherevenuederivedfromtheircopyright.Acompany(likeSonyMusic)maybuytherightsto80%oftheincome
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generatedfromacopyright.Theycouldpayasinglelumpsumamountforthisright,therebygivingthemusiciancashinhand.Theycanalsoofferthepoweroftheirlabeltomarketandsellthemusic,givingthemusician20%oftherevenue.Forthemusician,20%ofasongpromotedbySonyisworthmorethan100%ofasongthatneversells.
5.2.3Scalable&PaidAninvestorwantstoinvestbigtowinbig.Arecordlabelisthesame.ThereisnomotivationtoinvestacouplethousanddollarstoselltenthousanddollarsofCD’sorstreaming.AtleastnottoacompanylikeSonyMusicwith$4.9Billioninannualrevenue.Therefore,theartist’smusicmustbeabletoreachlargemarketsormarketsegmentsthatcangeneratemillionsinrevenueperyearformanyyears.Inadditiontoprovingthatyourmusiccanreachlargenumbers,theartistmustalsoprove,insomeway,thatpeoplearewillingtopayforthemusic.ThismeansthattheymusthavesomedemonstratedsalessuchasiTunes,AmazonoranindependentsaleschannelsuchasCDBaby.Theymustalsohavebeeninvitedtoplayinconcert.Ifyoucan’tfityourmusicintoagenrethatsellsbigtime,nooneeverboughtyourmusicandyouneversoldaCDafteraconcert,thentheinvestorswillwalkaway.
5.2.4KeyPerformanceIndicators(KPI)DoyouknowyourKPI’sanddoyouunderstandthemetricsthataffectyourrevenueandprofitability?DoyouknowwhatthingsaffectyourKPI’sforbetterorworse?Forexample,whicharereallytheimportantmetrics: •numberofplays •numberofmonthlylisteners •numberofdiscreteIPplays •wherepeoplelistenfrom •numberoffollowers •trendinglinesoftheabovemetrics •Spotifyplaysversusotherstreamingservices •YouTubeplays •websitehits •SpotifyrevenueversusCDsales,concertsorradioplay •awardnominationsIfyoudon’tfullyunderstandthewayyoureachpotentialcustomers,convertplaysintorevenueandmeasuretheeffectsofyourstrategiesandpromotionalcampaigns,theninvestorswillwalkaway.
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5.2.5ShortRunwayThetimeittakestogofromasonginyourheadtorevenueinthebankisacriticalelement,takeslongerthanyoucanimagineandbetterbewithin12monthsortheinvestorwillwalkaway.Asongtakesalotmorethanjustatuneandwordsinyourhead.EvengettinginonpaperorrecordedonaniPhone/iPadisonlythestartofaprocessthatwilltakewellover12months.
• Asongcantakemonthstorehearseandreviseandrequirestheinputofaprofessionalproducerwhomustbescheduled4to6monthsinadvance.Thentimetomaketherecommendedchanges.
• Asongmustbeprofessionallyrecordedandmastered.Oftentimesthereareadditionaltracks,overlaysandotherinstrumentsormusicians.Recordingstudiosmustbereservedupto6monthsinadvanceandotherartiststhatareneededcantakeevenlongertoschedule.
• Fromrecordingtomasteringtoproducingprintablemasterscantake3to4months.• PrintingandshippingofCD’scantake3to4weeks.• Thenthepromotionalcampaignstogetaired,professionallyreviewedandknownisa
processthatcantakewellover6months.Schedulingapromotionalcampaignhasmanyfacetssuchastimeofyear,radioprogrammingschedules,musicreviewers’schedules,musicawardsdeadlines,competitionlaunchesorsimilarmusiccampaignsatthesametime.
• Bookingconcertsataprofessionallevelvenuemustbedoneatleast6monthsinadvanceandmostoftenoneyearormoreinadvance.
5.2.6UnderstandingCompetition(andyourCompetitiveAdvantage)
OneofthelessonswecanlearnfrompopularTVshowslikeBritain’sGotTalent,TheVoiceandtheXFactoristhatthereisalotofcompetitionoutthereanditisverydifficulttobeunique.Competitiveadvantagerequiresmorethanjustagreatvoice,soundorlyricsandinvolveslooks,stagepresence,ageandahostofotherthingsthatcanandcannotbelearned.Ifanartistdoesnottrulyunderstandtheircompetitionandhowtheyaregoingtostandout,theninvestorswillwalkaway.Nowthatweknowthekeythingsthatcancausefailure,let’slookatthekeyelementsthatmakeasuccess.InthissectionIwilltakeanevaluationcriteriafortechnologystart-upsandapplyittoamusician.Iwillfurthertakequalitativeassessmentsandquantifythembyputtingaweightedscore.Thefactorsaredividedintothreecategories,Technology,Commercial&Financialwhicharealsoweighted.Ifyouhonestlyscorethecriteriaforyourproject,thenthisanalysiswillgiveyoutheoverallprobabilityofsuccess.Consideringthefactthatitiseasiertogethitbylightningthantomakeitbiginmusic,thenascoreof50%ormorewouldbeagoodopportunityforamusicianandworthaninvestorspendingmoneyforthe“flipofacoin”chanceofsuccess.
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6.0SuccessFactors–CalculatorIwilltakeadetailedlookatthekeyelementsusedtomeasureatechstart-upinTechnological,CommercialandFinancialfactors,applythemtoamusiciananddevelopascoringsystemthatcanpredictthechancesofsuccess.
6.1TechnicalSuccessFactorsScoresarebasedonalowof0toahighof10.ThemaximumscoreunderTechnicalis70.Inthebelowcaseexample,IusedmyownpositionwiththereleaseoftheZiaalbumandasecondalbumcurrentlyin-process.SinceIamalsomeetingrecordlabelsas“potentialinvestors,”thismayserveasanappropriatetestcase.However,itshouldbenotedthatthequalityoftheanalysisisbasedonthe“honesty”orunprejudicedandobjectivescoringwhichishardtodoforoneselfandbestdonebyanunrelatedthirdparty.
TechnologySuccessFactorsTechstart-upfactor Musicianfactor Example ScoreNumberofApplications/Products:1MarketSector(Low)2+sectors(High)
Numberofsongsandcategories
7songs2genres
5
TechnicalinnovationSomeimprovementoftoday’s(L)Nextgenerationtech(H)
New&uniquesound/newgenreorsub-genre(Indie)
Emergingsub-genreNouveauClassical
7
TechDevelopmentPlansNowrittenplan(L)Completeplan(H)
MusicProductionPlan
1albumcompleted-newalbuminprocess&singlesreleaseplan
10
ManufacturingCapabilityNofacilities-labonly(L)Productionfacilitiesready(H)
CDprintingready-HDstreamready-Recordingstudio
5,000CD’sprinted7songsHDstreamFacilitiesavailable
10
StateoftheArtTechnologyConceptonly(L)Inmanufacturalform(H)
Musicinyourhead-Written,arranged,played&recorded
Songsrecorded,newsongsarranged&tracksrecorded
10
StatusofIntellectualPropertyConceptonly(L)Copyrightsgranted(H)
Musicwritten,dated&storedvs.Copyrightsgranted
7songscopyrightgranted+4filed,SoundExchange/BMIregistered
9
AccesstoTechnicalTalentInventor50%available(L)Inventor100%available(H)
Composer,artist&Supportingartistsavailable
Composer/Artist100%Supportingartists30%
8
SCORE 59Totalpossible 70%chanceofTechnicalsuccess 84%
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Inthiscase,theartistisscoringextremelywellduetothefactthattheyalreadyreleasedanalbum,holds7copyrights,hasregisteredwithmechanicalanddigitalrightsorganizationsforroyaltycollectionsandiscurrentlyrecordingasecondalbumdemonstratingthathehasthesupportingartists,recordingstudioandmasteringexpertisereadilyavailable.Thearearequiringimprovementisinthenumberofproducts,meaningtheartistneedstoproducemoresongsandfeedthepipelineforlongevity.
6.2CommercialSuccessFactors
Commercialsuccessfactorsarebasedonthepotentialmarketsize,thetimetomarketandthestrategicpartnershipsinplacetohaveaccesstodistribution.
CommercialSuccessFactorsTechstart-upfactor Musicianfactor Example ScoreMarketSize:SingleNicheorFad(Low)Multiplemarkets(High)
Fad/“1hitwonder”Multiplemarkets
3awardnominationsMultiplegenres&markets
7
MarketEntry&DistributionSomeexistingentry(L)Rapidentry&acceptance(H)
Independentartist&simplepostingvslabelbacked
TopofNewAgecharts,135radiostations,Spotify/Pandora/iTunes
6
CompetitionHighlyskilledcompetition(L)Nodominantplayer(H)
ManymusiciansingenreDominantplayers
FewNewAge/NouveauClassical/feweryoungNodominantplayers
7
Risks:Social/Political/RegulatorySubjecttoControls(L)Incentivesforuse(H)
Language/Agewarnings–counterculture
Instrumental-meditation-filmscore-ambient
9
StrategicAlliances/PartnershipsPartnersunknown(L)Partnershipsestablished(H)
ProducersPromotersLabels
GrammyProducer&Artists/PromoterLabelindiscussion
8
ManagementTeamSomesupport(L)Teaminplace(H)
Producer,Promoter,business&Legalsupport
Producer,Promoter&Legalinplace
8
PotentialCustomerInterestCustomerexpressesdesire(L)Productsalesdemonstrated(H)
Songswithsales&downloadhistoryConcerts
Spotify1,200monthlylisteners,labelinterest,smallconcerts
6
TimetoMarketIdeatoprototype12months(L)Prototypetomarketin12(H)
MusictoCD/Streamsalesin6months
1CDonmarket,secondwith4months
7
SCORE 58Totalpossible 80%chanceofTechnicalsuccess 72%TheartistscoredveryhighinCommercialsuccessfactorsmostlyduetothegenrebeingopentomanymarketsectors,noriskduetolanguageoragerestrictions,fewnewandyoungtalentinthegenreandalreadyhavinganexperiencedandimpressiveteamofGrammywinning
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Producer,GrammywinningsupportingArtistsandaPromoterintheNewAgeniche.TheareasneedingimprovementarewithalargerscaleofmarketentryandaccesstomarketsthroughlargedistributionnetworkssuchaskeySpotifyplaylists,largerconcertsandthe[marketing]supportofamajorrecordlabel.
6.3FinancialSuccessFactorsFinancialsuccessfactorsarebasedonthepotentialtoattractfinancialbacking,generaterevenue(sales)andmakeaprofit.
FinancialSuccessFactorsTechstart-upfactor Musicianfactor Example ScoreReturnonInvestment:<15%peryear(Low)>50%peryear(High)
Passiveincomevscosts
50%+ROIwith500Kplays/week
9
ExpectedSales&RevenueTimelineBreakevenin4years(L)Breakevenin1year(H)
Breakevenin2to3years
Onealbumgeneratingpassiveincome
6
PotentialProfitMargin5%peryear(L)>14%peryear(H)
Passiveincome Onealbumreleased 6
InterestedbyFundingSourcesFriends&Familyonly(L)Outsideinvestors(H)
InterestfromBig3recordlabel
DiscussionsinProcesswithBig3player
7
FinancialRisksFundingin6months(L)Fundinginplace(H)
RecordLabel/promoter
RecordLabelwith6months
6
PotentialSalesRevenue<$5millionperyear(L)>$10millionperyear(H)
W/outLabel=lowWithLabel–high
Nolabelexampleon$185k/year
1
SCORE 35Totalpossible 60%chanceofTechnicalsuccess 58%TheFinancialanalysisalsolooksverygoodmostlybecausetherevenueisbuiltonpassiveincome.Fortheoutyears,therevenueisnearlyallprofitsoROIandprofitmarginsareattractive.Thebusiness,however,requireslargeup-frontinvestmentandamajorstrategicpartner(recordlabel)toreachlargerevenueamounts.7.0Conclusion:Inconclusion,thisexamplehasscoredextremelywellwith84%chanceofCommercial,72%Technicaland58%Financialsuccess.Totalscoreforallcategoriesis152ofapossible210oranoverall72%chanceofsuccess.Thiswouldattractanyinvestoror,inthiscase,arecordlabel,
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especiallyconsideringthefactorsthatneedimprovementarethesameonesprovidedbyarecordlabel,suchasaccesstomarketandpromotionalexpertise.Theaimofthisthesiswastoemphasizetheneedofmusicianstofocusasmuchonthebusinessofmusicasontheart.ThethesisprovidesaguidelineonhowtobuildaviableBusinessPlaninthedynamicandrapidlychangingmusicindustrybyadoptingtheevaluationcriteriaofhightechstart-upplanningandfundraisinginasimilarlyrapidlychangingenvironmentbasedoncreativity,newness,accesstomarkets,highriskanditsassociatedpotentialforhighgain.Moreimportantly,wehavediscoveredtheimportanceofotherpeople(“noartistisanisland”),theneedforinvestorsintheformofrecordlabelsandwedevelopedaqualitativeandquantitativeanalysisofhowinvestorsthinkandhowwecanmoreaccuratelypredictoursuccess.
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References:ScreenerTV,April17,20161http://screenertv.com/celebs/lionel-richie-dave-grohl-the-beatles-13-artists-who-cant-read-music-and-why-thats-okay/Mediapacks,TheEurovisionSongContest-forBBC,20122http://www.bbc.co.uk/corporate2/mediacentre/mediapacks/eurovision/factsAlbumsales:2016theworstyearforAlbumSalessincethelastonebyAnnaGaca,July6,20163http://www.spin.com/2016/07/2016-album-sales-data-billboard-nielsen-music-worst-year-since-last-year/TencentMusicSeeksPre-IPOFundsat$10BillionValue– byLuluYilunChenSeptember1st,2017–forBloombergTechnology4https://www.bloomberg.com/news/articles/2017-09-01/tencent-music-is-said-to-seek-pre-ipo-funds-at-10-billion-valueMapofInternationalInvestors:5http://www.vcgate.com/International_investors.phpIndependentmusicawards,FAQS:6http://independentmusicawards.com/faqs/Ourchangingrelationshipwithmusicanditsnewpracticalfunction–byThiagoR.PintoAugust18,20167https://medium.com/music-x-tech-x-future/our-changing-relationship-with-music-and-its-new-practical-function-32bd0e56eacControversy–AmyWinehouseonWikipedia8https://en.wikipedia.org/wiki/Amy_Winehouse#ControversyAPrimerOnMusicPublishing,RightsSplits,AndRoyaltiesForConfusedArtistManagers–Daegobanmusic9https://daeboganmusic.com/2017/02/28/a-primer-on-music-publishing-rights-splits-and-royalties-for-confused-artist-managers/10HowMusicRoyaltiesWorkbyLeeAnnObringerhttps://entertainment.howstuffworks.com/music-royalties.htmRecordlabelhistory,creation,workWikipedia11https://en.wikipedia.org/wiki/Record_labelHowSpotifyPlaylistsCreateHits–bySteveKnopperAugust15,2017:
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12http://www.rollingstone.com/music/news/inside-spotifys-playlists-curators-and-fake-artists-w497702HowSpotifyPlaylistsCreateHits,Rollingstone–bySteveKnopper,August15,201713http://www.rollingstone.com/music/news/inside-spotifys-playlists-curators-and-fake-artists-w497702Thesecrethit-makingpoweroftheSpotifyplaylist–byDavidPierceMarch5th,201714https://www.wired.com/2017/05/secret-hit-making-power-spotify-playlist/8SongsAccusedofPlagiarismThatHitNo.1ontheBillboardHot100–byJoeLynchDecember3rd,2015:15http://www.billboard.com/articles/news/list/6501950/songs-accused-plagiarism-no-1-hot-100-blurred-lines16UnitedStatesCopyrightOfficePDFoftheUnitedStatesCopyrightOffice:17https://www.copyright.gov/circs/circ09.pdfPaulAnkainformationandresearchonWikipediaencyclopedia:18https://en.wikipedia.org/wiki/Paul_AnkaMaxMartininformationandresearchonWikipediaencyclopedia:19https://en.wikipedia.org/wiki/Max_Martin12OfTheHighestEarningSongsOfAllTime–byShondell,May11th,2015-Therichest20https://www.therichest.com/rich-list/the-biggest/12-highest-earning-songs-of-all-time/MoneyTootighttomention,majormusicstreamingservicescompared-chart21http://www.informationisbeautiful.net/visualizations/spoSpotify'sLossesMoreThanDoubleTo$581M,RevenuesRiseto$3B-byEdChristmanJune15th,201722http://www.billboard.com/articles/business/7833686/spotify-2016-losses-financial-results-revenueHowDoesSpotifyMakeMoney?(NFLX,AAPL)–byAdamHayes,CFAonMay12th,201723https://www.investopedia.com/articles/investing/120314/spotify-makes-internet-music-make-money.aspYouTubestillalossleaderforGoogle–byDavidCurryonFebruary26st,2015forITProPortal24https://www.itproportal.com/2015/02/26/youtube-still-loss-leader-google/
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ThiswasSonyMusic'scontractwithSpotify–byMicahSingletononMay19th,2015forTheVerge25https://www.theverge.com/2015/5/19/8621581/sony-music-spotify-contractThearmisticebetweenTaylorSwiftandSpotifyisgoodforeveryone-byMicahSingletononJun9th,2017forTheVerge26https://www.theverge.com/2017/6/9/15766804/taylor-swift-spotify-streaming-umg-catalogSusanBoyleinformationonWikipediaEncyclopedia27https://en.wikipedia.org/wiki/Susan_BoyleBeatlesbusiness:Stillmakingmoney,50yearson-byMarkKobaonJanuary24th,2014forCNBC28https://www.cnbc.com/2014/01/24/beatles-business-still-making-money-50-years-on.htmlThemusichistoryoftheUnitedStatesinthe1960’sWikipediaEncyclopediainformation29https://en.wikipedia.org/wiki/Music_history_of_the_United_States_in_the_1960s1970sinmusicWikipediaEncyclopediainformation30https://en.wikipedia.org/wiki/1970s_in_music1980sinmusicWikipediaEncyclopediainformation31https://en.wikipedia.org/wiki/1980s_in_music1990sinmusicWikipediaEncyclopediainformation32https://en.wikipedia.org/wiki/1990s_in_music
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PLAGIARISMDECLARATIONFORM
International MASTER of BUSINESS ADMINISTRATION
ACADEMIC YEAR 2016/2017
STUDENT’S NAME FIRST NAME MBA MAJOR in :
THESIS SUPERVISOR'S NAME …………………………………………… I / or We (team) undersigned M…........................................................................................... M…........................................................................................... declare that I / we have read the school policy on plagiarism and that I am / we are aware the disciplinary sanctions which will result from using source without acknowledgement.
Signature(s) & date withmention“read & approved”
Parison:…..... /.........../2017.
46
AUTHORIZATIONOFDIFFUSIONDECLARATION
International MASTER of BUSINESS ADMINISTRATION
ACADEMIC YEAR 2016/2017 I / or We (team) undersigned M…........................................................................................... M…........................................................................................... Declare that I / we have written the capstone project in the PSB IMBA program- ACADEMIC YEAR 2015/2016
FINAL THESIS TITLE …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………… And declare that I / we are aware of intellectual property laws and allow PSB Library to post electronically our written work for the school library and/or give school researchers and students the possibility to read our capstone project.
Signature(s) & date withmention“read &approved”
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