So I'm doing this amazing music business course (on Coursera) from Vanderbilt University, titled 'Understanding the music business - what is music worth?' It's a great course that I highly recommend for anyone attempting to enter the music business, or just interested in the past, present and future trends of the biz.
As part of the course, there is an assignment - 'Thinking Critically about Music Industry News'
I have chosen option 2, which asks the following questions:
Originally, a recording was worth a decent amount. As Steve Albini mentioned, "In the 70s and 80s most bands went through their entire life-cycle without so much as a note of their music recorded. But recording was a rare and expensive enterprise, so it wasn't common. Even your demo tape required considerable investment".
The amount of effort it took to get music from the studio to our ears warranted an expensive price for Vinyl, CD's etc. Other than the effort required to compose a song, people were needed to help record, produce, market, promote and publicise the album. Back in 2000, total US album sales, peaked at 785 million. But now with advent of online streaming, these sales have plummeted to 257 million in 2015, according to Forbes. However, online streaming has not been able to account for those losses to the music industry. Although it has been growing, on-demand online streaming services have had a slower rate of increase, from 49% in 2012-13 to only a 29% growth in 2013-14. The royalties paid to songwriters and musicians from such services is a meagre amount. As Van Dyke Parks wrote in the Daily Beast "Forty years ago, co-writing a song with Ringo Starr would have provided me a house and a pool. Now, estimating 100,000 plays on Spotify, we guessed we’d split about $80. When I got home, on closer study, I found out we were way too optimistic. Spotify (on par with other streamers) pays only .00065 cents per play." Internet Radio services such as Pandora also have equally harsh royalty rates. Kevin Kadish, who co-wrote "All About That Bass," only got paid $5,679 for 178 million plays.
Further, with the ease of self-published music in the internet and DAW era, there is a hyper-availability of music that surrounds the consumer. The amount of investment going from the recording studio to our ears, is much lesser. This, along with the advent of ad-supported, free online streaming services such as Youtube, Vevo and Spotify, the worth of a recording/song seems to be declining, in the public's eye. Why would anyone pay for music, when they could easily listen to it for free on Youtube?
On top of this, with deals like the Pandora-Merlin deal, music is not being fairly distributed by streaming services. According to Laura Sydell from NPR.org, "The Internet service will recommend Merlin artists over those not affiliated with the consortium in exchange for paying Merlin's musicians a lower royalty rate".
The main source of revenue for musicians seems to be from concerts. Concert tickets can be very expensive, and the venues are laden with band merchandise, CDs, etc. which is the main source of revenue for most artists. A large percentage of the tickets are also not reserved for the general public, according to the Washington Post, thus driving the prices up. Ticketbots and other illegal software also buy tickets just when they're out, and sell them at exuberant prices.
Although a lot of this revenue does go the artist/performers (10-20% goes to labels that have 360 deals with the artists), very little goes to songwriters and composers. The worth of a recording has greatly decreased, but the worth of a song even more.
The root of the problem lies in two main factors, in my opinion:
1. Organisations profiting from the use of music are not sharing all their profits with the artists and songwriters. Sony Music is set to be paid up to $42.5 million by Spotify, but according to Rich Bengloff, president of the American Association of Independent Music, "I’ve worked at the major labels, and I’ve worked at the indies, so I’ve seen both sides of the business. A lot of the time, money that is paid outside of the direct usage doesn't end up getting shared." (theverge.com)
Another issue is how terrestrial radio stations don't pay performance royalties to musicians. This is an issue within the US (The only other countries that follow such laws are North Korea, China and Iran).
2. People don't want to spend money on music. Since Napster and the ease of sharing music online, the amount of spending on music has declined greatly. According to MusicWatch's Russ Crupnick, in 2013 only 45% of the 190 million Internet users in the U.S. bought music in any form, spending an average $55.45 per year.
I feel that online streaming could account for the losses in CD album sales, or even MP3 sales from services like iTunes. However, a culture of spending on music needs to be brought back to society, as well as an education on copyright law and infringement.
Thanks for reading my response to this question!