Digital Media Digest

July 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. .

A new music streaming subscription service called Primephonic has launched, which is committed to specifically serving the needs and interests of classical music listeners. According to Netherlands-based co-founder and executive director Simon Eder, Primephonic's metadata infrastructure is what makes the major difference. Rather than just basically presenting users with as much music as possible organized by very basic criteria (artist, song title, album and popularity) as the leading streaming services do, Primephonic has focused on the criteria that matters most to classic music listeners, such as composer, sub-genre, era, performer and chronology. Primephonic is launching in the United States and United Kingdom with a $14.99 monthly subscription model offering full access to CD-quality streams, beginning with a free 30-day trial period that does not require any credit card information. (Source: Billboard)
The BBC is joining up with the UK’s four arts councils to “excite the nation about arts” and increase opportunities for emerging and diverse talent. It will create opportunities for arts organizations of all sizes to show their work on the BBC via a £4m ($5.2M) fund, ‘Artists First’, that will commission artists and organizations to make new works for broadcast and online. The new Culture UK partnership, with Arts Council England (ACE), the Arts Council of Northern Ireland, the Arts Council of Wales and Creative Scotland, will also see the development of three major broadcast and live event festivals each year.(Source: Arts Professional)

How the music industry is putting itself out of business
There was once a time when mid-level bands with a modest following could make a pretty decent living playing music. They’d put out a record, sell a couple hundred thousand copies and then go on tour to promote it. Times, however, have changed. Besides a handful of superstars, it’s impossible for bands and musicians to generate significant revenue taking this approach. And the reason is simple: Consumers won’t pay much for music. Napster jump-started this trend back in the 90s, pirating content and making it available online, producing a generation of listeners who didn't value music because they were able to download it for free. Then, streaming services basically continued the practice.  The likes of Pandora and Spotify don’t steal content, but they still offer it for free with the support of ads. Others such as Apple Music and Amazon Music obviously aren’t stealing either and do charge users, but it’s a nominal fee. Both models result in most artists getting the shaft, receiving, in most instances, less than a penny per stream. As music shifted from a product-based business (CDs and individual downloads) to a service-based business (streaming), no one was able to create a model to support that transition adequately. At roughly $10 a month these companies have been giving away music at a loss, and until that price point rises, perhaps as high as 100%, there’s no reason to expect any of them to achieve profitability. (Source: Forbes)

There are no second chances for the National Symphony Orchestra in London as they make their latest album. It is a "direct cut" recording, straight to vinyl, which is a bit of a nerve-wracking experience for the musicians, producers and engineers at Air Studios in London. (Source: BBC)

The Fraunhofer Institute for Integrated Circuits, a division of the state-funded German research institution that bankrolled the MP3's development in the late '80s, recently announced that its "licensing program for certain MP3 related patents and software of Technicolor and Fraunhofer IIS has been terminated."  According to Bernhard Grill, director of that Fraunhofer division and one of the principals in the development of the MP3, another audio format, AAC—or "Advanced Audio Coding," which his organization also helped create—is now the "de facto standard for music download and videos on mobile phones." He said AAC is "more efficient than MP3 and offers a lot more functionality." (Source: NPR)

The Philadelphia Orchestra is returning to national radio after a long absence—but this time on satellite rather than traditional radio. Three times per week for at least the next year, concerts recorded in Verizon Hall will be carried on SiriusXM radio, a paid service with a monthly fee, to listeners across the U.S. and Canada. Twenty-six programs will be repeated throughout the year-long term of the contract, after which the orchestra hopes the deal would be renewed. (Source: Philadelphia Inquirer)

The St. Louis Symphony has launched an innovative storytelling project that provides unique insight into the Symphony and its community and education programs. Stories from Backstage includes articles, pictures, interviews, and videos that bring audiences behind the scenes. The online project offers narrative-driven content told from the perspective of a former television reporter. Symphony Public Relations Manager Anthony Kiekow creates the content. Before joining the Symphony, Kiekow was a television reporter at KMOV and FOX 2 in St. Louis, MO. (Source: The Vital Voice)

From kitchen composer to Spotify star - Dutch pianist hits big time 
A Dutch amateur musician has given up his day job after seeing his self-released recordings streamed online more than 85 million times. Composer and pianist Joep Beving, 41, who lives in Amsterdam, performed and recorded his “mood music” album, Solipsism, for the enjoyment of his family. Then, partly for fun, he made it available on music-streaming service Spotify. He never imagined that the contemplative, atmospheric piano tunes would draw such a vast audience worldwide. But such was the popularity of Solipsism that four record companies were soon fighting over him, and he has now been signed by Deutsche Grammophon (DG). (Source: The Guardian)

While UK funders and policy-makers continue determinedly promoting the democratising benefits of making “the digital dimension…a place in itself” (The Cultural White Paper, 2016), concerns about the displacement effect of recorded content remain. In the 2015 Digital Culture research, NESTA reported a marked drop-off in organizations choosing to screen their performances, especially at the mid-scale.  We must hope that this trend has been halted as new evidence in AEA’s Live to Screen report (for Arts Council England, UK Theatre and SOLT) offers a definitive answer to the question: Is screening cannibalizing live audiences?  The AEA research referenced a wide range of other studies and crucially included a survey of actual audiences with a robust sample size. The research says no: “Theatregoers are neither more nor less likely to attend live theatre if they experience it digitally.”  Instead of the cannibalization question, what we should perhaps be asking is: How do we use the new channels and platforms available to us to increase the reach of our work? (Source: Arts Professional)

Jukedeck is one of several companies that create and sell computer-generated music for use in the creation of videos for site such as YouTube and Vimeo. Jukedeck charges as little as 99 cents a track for a small business and $21.99 for a large business. Jukedeck is a program that enables users to choose the length of a piece of music, its style, the instruments featured and even climactic moments to heighten emotion. It is often difficult to tell the difference between a real composer and a computer imitation. Despite the successes of companies like Jukebox, there's been limited investment, says David Cope, one of the pioneers of computer composition, because audiences and producers are uncomfortable with it. Cope says he thinks eventually the public will get over its bias and that composers who write soundtracks and jingles may need to look for another job. (Source: NPR)

As Spotify's paid subscriber numbers continue to grow (they already reached 50 million in March), so has its dominance of the music industry: Spotify now comprises 20% of global music industry revenues, up from nothing in 2008. And according to Mary Meeker, a venture capitalist with Kleiner Perkins Caufield & Byers, Spotify is actually helping the music industry, which saw revenue rise 11% in 2016 after seeing a 4% decline in annual average growth for the 16 previous years. About 52% of those revenues now come from subscription and streaming services, while physical sales (i.e. LP/EPs, vinyls, etc.) account for significantly less than that. Apple Music is likely Spotify's closest rival, with the service already reaching "well past" 20 million paid subscribers.  As a result of the head-to-head competition, streaming services have been trying to woo users through personalization, large content libraries, exclusive artist content and, in the case of Spotify, building sophisticated algorithms. Spotify is speculated to be planning to go public either later this year or in early 2018, possibly as a direct listing, instead of the traditional initial public offering. (Source: The Street)

Earlier this year, Spotify faced a resounding rejection when attempting to list their IPO. The reason was a real no-brainer. Despite a reported $8 billion valuation, the Swedish streamer had yet to secure long-term licensing deals with major labels. Furthermore, the company hadn’t presented a clear financial plan. After ten years on the market, they had yet to post a single profitable financial report. Spotify finally secured the first of many long-term licensing deal, when it signed an agreement with UMG that included lower royalty rates. But there was a catch. Universal Music Group would limit some content to Premium subscribers for two week spans, which will serve as a template for negotiations with Sony Music and Warner. The negotiations come at a key moment for the Swedish company. According to Reuters, Spotify will aim for a direct listing on the New York Stock Exchange when it goes public. It was also recently valued at $13 billion. The company is expected to go public late this year or early next year. (Source: Digital Music News)

Top-line revenues at Spotify are surging ahead, thanks to a flood of new subscribers. Yet strangely, Spotify’s per-stream royalties across both recordings and publishing appear to be sinking. According to Audiam, a reproduction rights organization recently purchased by Canadian rights group SOCAN, as Spotify’s value and revenues go up, artists and publishers are making less. In February 2017, a single ad-supported stream generated $0.00014123 on the streaming service. This means an artist would earn $100 in mechanical royalties after 703,581 streams. Although this number represents a 1.1% increase from January, in December 2016, the number was at $0.00022288. For the premium tier during the same month, Spotify paid out $0.00066481 per stream in mechanicals. In this scenario, artists would earn $100 after 150,419 streams. This number is up 5.2% from January. Sounds great, until you see the year-over-year trend. Another key thing to notice is the following discrepancies. In December 2016, to earn $100 from ad-supported streams, a song would need be played 448,672 times. Spotify paid out $0.00022288. Yet, just one month later, the number dropped down to $0.00013508. To earn $100 from ad-supporter streams, a song would have to be played 740,302 times. Note that this didn’t apply to premium streams. (Source: Digital Music News)

In just two years, Apple Music has reached 27 million paid subscriptions
In just two years, Apple Music has hit 27 million paying subscribers. It took Spotify more than 7 years to reach the same mark. (Source: Digital Music New)

In a strong push towards their long-planned IPO, Spotify recently signed two massive multi-year deals. In exchange for a two-week album delay option on certain albums, UMG and Merlin would trim their royalty rates. Now, Apple also wants to reduce royalty payments owed to labels. (Source: Digital Music News)

When Dance Magazine heard that L.A. Dance Project's series of livestreams over Memorial Day weekend reached more than 500,000 views total, with its most popular stream hitting 211,300 views, it got thinking. How does that sort of viewership affect a small troupe like LADP? And how does it feel for the dancers to perform for the equivalent of the entire population of Salt Lake City? One obvious benefit of this success: People everywhere from Russia to South America could get a glimpse of the troupe's residency at The Chinati Foundation without having to schelp to Marfa, Texas. Several comments on the stream showed that for many, this was clearly their first exposure to contemporary dance. Director Benjamin Millepied has made it clear that he wants LADP to be as active online as it is in theaters, so congrats to him on hitting this one out of the ball park. In just over an hour's worth of livestreaming, the audience far surpassed what the troupe could have reached even in a month of performances at one of the world's largest opera houses. What's interesting is that this livestream wasn't what we're typically used to: It was more of a live dance film happening in real time than an intimate peek in on rehearsal. It was highly curated, with a cinematic feel; more of a final product than a look behind the scenes. (Source: Dance Magazine)

Inside The Weeknd's $92 million year—and the new streaming economy behind it
Sometimes profound change happens quickly. Streaming is now the dominant platform for music consumption, and it's growing rapidly—up 76% year-over-year, according to Nielsen. YouTube has birthed a whole new breed of celebrity: the YouTube star. And Netflix plans to spend hundreds of millions annually on original content.  "It's not just about music--it's about every form of entertainment," Nielsen's David Bakula says. "You don't really have to own anything anymore, because for $10 a month you can do this: You can have everything." For musicians, the going rate of a little less than a penny per on-demand stream may not sound like a lot, but it adds up for the 14 performers on our list who topped 1 billion spins over the past year. The indirect spoils of streaming can be even greater, by creating an excellent product, making it widely available (through streaming) and flipping the monetization switch (from other ventures) when the timing is right. (Source: Forbes)

Nielsen's mid-year music report confirms streaming has become a gusher
Today comes further confirmation of streaming's dominance in the music world. 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. (Source: Forbes)

Evolution, revolution, smevolution: The future of classical music
If anyone should be anxious about the future of classical music, it’s Graham Parker. Last July he was appointed president of the U.S. division of Universal Music Classics, which includes such fabled classical record labels as Deutsche Grammophon and Decca. The classical market has long been expected to die on the vine. Classical buyers still want CDs but can’t readily find them. To top the charts, a new classical release once needed to sell tens of thousands. Now a few hundred units makes for a coveted bestseller. But that doesn’t mean the classical music baby need be thrown out with the CD bathwater. A cheerfully upbeat Parker ended the [Classical Evolution/Revolution] conference raising eyebrows with the claim that in any given month an extraordinary 30% of the U.S. population listens to classical music on some device. Of course, how you best reach these millions is another matter. Technology is ever the elephant in the room. The history of sharks out to cheat musicians is long and dishonorable. Today it’s Silicon Valley’s ability to redirect profits from the creators and producers to the likes of Apple, Amazon and Spotify. (Source: Los Angeles Times)

Get ready for a Universal Music Group IPO
In late April, investment banks wanted to persuade Vivendi to offer Universal Music Group for an IPO. According to Reuters, bankers told Vivendi that “selling 10 to percent of UMG would provide funds for other acquisitions.” They valued UMG at $22 billion. This isn’t the first time, however, that bankers and executives have tried to convince Vivendi to offer up UMG. UMG reportedly earns $4.5 million a day from streaming companies. As Universal Music Group continues posting record earnings, Vivendi still doesn’t have any intention to part with the company. It may now, however, consider selling a minority stake in the company. (Source: Digital Music News)