Digital Media Digest

August 2017

With the accelerating pace of technological change, the League posts a monthly digest of relevant news and information regarding changes, trends, and developments that may affect the digital media activities that orchestras use to achieve their institutional missions. For each monthly digest, the League's digital media consultants, Michael Bronson and Joe Kluger, draw from a variety of websites and publications to provide excerpts or summaries of articles. (These do not necessarily represent the views of the League.)  

As a service of the League, members with questions about the information in this digest or about other digital media topics – e.g., planning, strategy, and production – may contact Michael Bronson at This email address is being protected from spambots. You need JavaScript enabled to view it. or Joe Kluger at This email address is being protected from spambots. You need JavaScript enabled to view it. .

Nielsen released its latest annual midyear music report, and thus far in 2017, on-demand audio streams topped 184 billion, up 62.4% over the same time period last year. When video streams are added to the equation, the total soars to 284 billion streams, an increase of 36.4% versus the first half of 2016. The gains in streaming have been more than enough to offset the continued decline of physical and digital sales: overall audio consumption has grown 8.9% despite a 17% dip in the former and a 19.9% drop in the latter. Of course, the bulk of most artists’ income still comes from touring. "We live in a world where artists don't really make the money off the music like we did in the Golden Age," The Weeknd told Forbes. "It's not really coming in until you hit the stage."  (Source: Forbes)

At the half-point of 2017, BuzzAngle has released a new report detailing music sales across the industry. As expected, audio streams continue to drive major sales. Subscriptions streams have also continued their meteoric ascent. And as previously reported by major labels, physical sales have decreased substantially. (Source: Digital Music News)

Spotify, the streaming music leader, just hired Francios Pachet, a French professor and artificial intelligence researcher focused on teaching computers to create their own music. Officially, Pachet will head up Spotify’s new Creator Technology Research Lab in Paris. The lab “will focus on making tools to help artists in their creative process,” according to a blog post from Spotify. (Source: Fast Company)

With the money from CDs and digital downloads disappearing, the music industry has pinned its hope for the future on online song streaming. But the biggest player isn’t one of the names most associated with streaming — Spotify, Amazon, Pandora or Apple. It’s YouTube, which accounts for 25 percent of all music streamed worldwide, far more than any other site. Now, YouTube is locked in an increasingly bitter battle with music labels over how much it pays to stream their songs. Music labels accuse YouTube of using a legal loophole to pay less for songs than traditional music-streaming sites. But YouTube is not backing down, stressing the benefits to musicians of promotion on one of the Web’s most popular sites. (Source: Washington Post)

In an opinion piece in Billboard, Michael Huppe, CEO of SoundExchange, says his organization has “been working with the entire music industry, service providers and lawmakers on both sides of the aisle to reform public policy and fix antiquated laws that harm America’s music creators.”  He highlights several proposed legislative initiatives, including: 
  • H.R. 3301, the Compensating Legacy Artists for their Songs, Service, and Important Contributions to Society Act (the CLASSICS Act) closes a loophole in current law. It requires digital radio services to compensate legacy (pre-1972) artists who gave the world jazz, motown and rock 'n roll. Current law allows many platforms to take this music while paying nothing to artists. The CLASSICS Act fixes that;   
  • The Performance Royalty Owners of Music Opportunity To Earn Act of 2017 (PROMOTE Act), H.R. 1914 would stop broadcast radio from taking the products of hard-working creators without securing permission to use their music; and
  • The AMP Act would give music producers the statutory right to receive compensation for the recordings they produce through the letter of direction process. The legislation would put in place a consistent process to allow producers to collect the royalties they are due – a process that SoundExchange already honors voluntarily. (Source: Billboard)
Last year, for the first time ever, the majority of the music industry's revenue was generated by streaming services, according to the Recording Industry Association of America, showing just how vital streaming has become to the industry. The digital marketplace is still evolving, however, as demonstrated by reports that SoundCloud may be running out of money or heading toward an acquisition. Meanwhile, the two giants snatching most of the market share — Apple Music and Spotify — continue to move forward in a position of strength. Streaming subscriptions as a whole doubled last year, bringing in $7.7 billion in revenue — an 11.4 percent gain from 2015. Even still, revenue from 2016 was just half of what it was in 1999, according to RIAA, accounting for the collapse of the CD market and the shift away from downloads. (Source: NBC News)

The music business is moving toward the streaming model, despite all sorts of protestations — from performers and songwriters, who worry about their bottom lines; from fans, who worry about ease of use and unfettered access to their favorite songs; and increasingly, from streaming services themselves, who spend investors’ money more rapidly than they can rake in revenue. (Source: New York Times)

While some cry ‘fake,’ Spotify sees no need to apologize
The music industry has been buzzing over the accusation that Spotify’s playlists are dotted with hundreds of supposedly “fake” artists, who are racking up tens of millions of streams yet have no public profile. Spotify has also been accused of secretly controlling the rights to these songs — atmospheric, wordless tracks on mood-focused playlists — an arrangement that, if true, would allow the company to reduce the amount of money it pays in royalties to record labels and “real” artists. The reality, however, may be more complicated. Spotify denies that it owns the rights to the music under question, although the company may well pay lower royalty rates for these tracks than it does for more standard pop fare. And the pseudonymous creators of the tracks — real composers and producers, whose work appears under numerous made-up names — do not want to be called fake. (Source: New York Times)

Depending on who you talk to, Spotify pays upwards of 75% of its revenues to the major labels. Factor in juicy, upfront advertising inventory allocations and other perks, and maybe that percentage crawls towards 80%. The result is always a monstrous and variable licensing cost. Netflix started making their own content. And voilà! The business started transforming. So why isn’t Spotify starting a fourth major label, developing its own music, and lowering its average cost of music content? According to the New York Times, it turns out the reason Spotify can’t move into controlling content is because their contracts “forbid Spotify from owning content or deliberately driving customers to lower-cost songs.” (Source: Digital Music News)

Several months ago, Spotify secured long-term licensing deals with Universal Music Group and the Merlin Network. Now, after locking down similar deals with Sony Music and Warner Music Group, Spotify will likely roll-out exclusive, paid-only content this fall. Last April, the company landed a juicy deal with UMG. In exchange for lower royalty payments (reportedly from 55% to 52%), UMG would restrict certain Universal albums for two weeks to premium-only subscribers. Under the deal terms, free users would only have access to designated singles. After several weeks, users would then be able to listen to the albums through the streamer’s ad-supported service. (Source: Digital Music News)

Pandora reported a bigger loss and falling listener hours, but the quarterly results announced were apparently better than Wall Street anticipated, so the stock jumped 4 percent after the closing bell. Unfortunately, the gain wasn't enough to offset a 5 percent loss during the regular session that was the result of the digital music company saying it would be shutting down in Australia and New Zealand, which will leave it operating only in the U.S. The company said it ended the second quarter with 76 million active listeners who accounted for 5.22 billion listening hours in the quarter, down from 5.66 billion hours in the year-ago quarter. (Source: Hollywood Reporter)

Information is Beautiful has released a new infograph showing how much major streaming services actually pay. It reflects their best efforts to amass per-stream data into one diagram. (Source: Digital Music News)