Digital Media Digest

May 2018

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. .

Everyone knows that modern artists, compared to the pre-mp3 era, earn less from recorded music. A study from 2015 found that a signed US-based artist would have to accrue 1,117,021 streams per month on Spotify before they earned the US minimum wage. To blame these poor economics on the music industry alone, however, is misjudged.  According to the annual Global Music Report from last year, whilst industry revenues were up 5.5 percent year on year, they're still a third below the 1999 peak and halved, when adjusted for inflation.
  • Other factors that have affected the economics of recorded music include:
  • Everyone is fighting for a share of a smaller pie;
  • The collapse in the cost to make recorded music; and
  • “Democratized access to creation and distribution tools," which drives down prices; 
  • When Spotify says that artists reservations have been addressed, it can do so knowing that streaming is the only show in town. 
(Source: Financial Times – free subscription required)

In yet another sign of streaming media's growing dominance in the entertainment industry, the majority of U.S. households now subscribe to at least one digital video streaming service such as Netflix, Amazon Prime, and Hulu. According to Deloitte's 12th annual digital media trends survey, in less than a decade, the percentage of U.S. households subscribing to a paid streaming video service surged 450% — from just 10% in 2009 to 55% in 2017. (Source: Los Angeles Times)

Digital downloads had a short run as the top-selling format in the music industry. It took until 2011, a decade after the original iPod came out, for their sales to surpass those of CDs and vinyl records, and they were overtaken by music streaming services just a few years later. Now, digital downloads are once again being outsold by CDs and vinyl, according to the Recording Industry Association of America, which released its 2017 year-end revenue report, showing that revenue from digital downloads plummeted 25 percent to $1.3 billion over the previous year. Revenue from physical products, by contrast, fell 4 percent to $1.5 billion.  (Source: Washington Post)

In a New Yorker article about violinist Augustin Hadelich, Alex Ross references the Detroit Symphony Orchestra’s free webcasts, as a key strategy in the DSO’s mission to be the “most accessible orchestra on the planet.” Ross says, they are “an initiative that seems obvious but that few other orchestras have tried. (The Berlin Philharmonic has its Digital Concert Hall service, but access costs a hundred and forty-nine euros a year.)” He also quotes Anne Parsons, the Detroit’s president and C.E.O., who said, “We’ve gone from three thousand viewers on average to around seventy-five hundred—in one case, thirty-five thousand. It’s brought great young musicians to us—they can see what we’re doing. I was sure that, by now, everyone else would be doing it. I’ve stopped wondering and haven’t looked back.” (Source: New Yorker)

On its first day of trading on the New York Stock Exchange, the music streaming service Spotify finished with a valuation of $26.5 billion. The share price closed at $149.01, giving it a market value similar to that of companies like M&T Bank and General Mills. For the music business, Spotify’s listing on the Big Board symbolized the ascent of streaming as the new dominant format. It also represented some rare good news for an industry deeply affected by technological change. Buoyed by subscriptions from services like Spotify and Apple Music, record labels have begun to have significant revenue growth for the first time in nearly two decades, drawing attention from investors. (Source: New York Times)

An article by Digital Music News Editor Paul Resnikoff on the eve of Spotify’s debut as a public company laments the economic structure of the music streaming behemoth, which he says will likely benefit Spotify executives, investors and major labels, but not likely artists, including big names such as Taylor Swift and Jay-Z. (Source: Digital Music News)

Spotify—which has more than seventy million paid subscribers and more than a hundred and fifty million users, and now claims to be the most popular streaming service in the world—will begin selling shares on the New York Stock Exchange. The company’s prospectus includes lofty goals: “Our mission is to unlock the potential of human creativity by giving a million creative artists the opportunity to live off their art and billions of fans the opportunity to enjoy and be inspired by these creators.” Of course, Spotify did not invent creation—nor the idea of making a living as an artist (if anything, it’s merely complicated artistic existence), nor the activity of listening to music and feeling inspired—but, since its launch, in 2008, it has changed the way we think about all of those things. The inherent optimism of Spotify lies in its founding belief that “music is universal and that streaming is a more robust and seamless access model that benefits both artists and music fans.” (Source: New Yorker)

Music-streaming service Spotify has announced upgrades to its free tier of service and that it would start giving free users the ability to listen to certain playlists on demand. Previously, Spotify's free tier mainly allowed users to listen on shuffle mode to playlists they created on their desktop computers. The new mobile app will allow users to listen on-demand to 15 playlists. Spotify's research-and-development chief Gustav Söderström said that the free tier is important for Spotify, as 60% of premium users once started as free users, though he also said that Spotify's goal with its new service wasn't to create "pain" for free users so they'd start paying up. (Source: MarketWatch)

Following Spotify’s debut on the New York Stock Exchange, Tencent Holdings—the Chinese counterpart to Spotify—has now started preparing to launch its own IPO, at a potential valuation of $25 billion. (Source: Digital Music News)

According to the Wall Street Journal, this summer, Apple Music, not Spotify, will become the top US streaming music service, potentially unnerving Spotify’s investors. Although Apple has about half of the number of global subscribers as Spotify (which reached slightly over 70 million subscribers two months ago), Apple ranks higher in other measures of success.  With a 23% monthly reach, Apple’s music streaming service had 49.5 million monthly unique users, most of them paying subscribers. Spotify landed in second with a 22% reach, having 47.7 million users.) (Source: Digital Music News)

People have been claiming that "vinyl sounds better" than mp3s and other forms of digital music for years. That argument usually comes down to a matter of taste, but an Australian startup is now working on technology that actually improves the quality of vinyl records. Rebeat Innovation is creating "HD vinyl" that the company claims will have "30 percent more playing time, 30 percent more amplitude, and overall more faithful sound reproduction." (Source: Pigeons and Planes)

A producer and former performer will lead the launch of a new streaming network devoted to theater and theater-related content this summer, bowing a free version before a subscription tier that comes online in the fall. (Source: Variety)

The Music Modernization Act (MMA) passed the House, paving the way for improved royalty payments to songwriters, artists and creatives in the digital era. The bill, HR 5477, passed unanimously with 415 votes. The Bill call for improvements in four specific areas:
  • Improve a dysfunctional mechanical licensing system “that seems to generate more paperwork and attorneys’ fees than royalties.”
  • Ensure royalty protection for pre-1972 performances
  • Provide a statutory right to recognition for adjunct creators, including producers, sound engineers, and mixers
  • Lack of a unified rate standard for music royalties
The MMA combines four separate legislative initiatives into a single bill that will update how music rates are set and how songwriters and artists are paid. The MMA action now heads to the Senate, which will tackle its version of the package next month.  (Source: Variety)

The Music Modernization Act (MMA), which recently passed the House unanimously, closes the door to all litigation against Spotify related to unpaid mechanical licenses, representing billions of dollars in potential damages that publishers will not be able to sue Spotify to recover. Even more advantageous to Spotify: the cut-off date for lawsuits is actually in the past: January 1st, 2018. That explains why Wixen Music Publishing launched a lawsuit for $1.6 billion against Spotify—right after Christmas of 2017. Wixen realized that when the MMA passes both chambers and becomes law, their claim to past infringements become null and void. (Source: Digital Music News)

Pandora learns the cost of ads, and of subscriptions
A new study by internet radio service Pandora shows that too many ads can motivate users to pay for an ad-free version, but push many more to listen less or abandon the service. The study found that the additional subscription revenue does not make up for the lost ad revenue from those who listen less or leave the service. (Source: Wired)

Online streaming giant Pandora recently shifted from a compulsory license to a direct license with record labels. The result was a giant slap to SoundExchange’s revenue and distributions. According to SoundExchange, distributions dropped $225 million last year to $652 million, a stark 26.2% plunge. This move provides Pandora the ability to pay 50 major and independent label partners directly. However, Pandora says they’re still paying SoundExchange for artist royalties—but only the artist’s share (50%) of its ad-supported radio tier. (Source: Digital Music News)

An Apple executive says iTunes music downloads will be shut down
Exiting Apple Music executive Jimmy Iovine has confirmed that a shutdown of iTunes music downloads is indeed on the way. In an interview with the BBC, Iovine said there is no concrete timescale, but, “If I’m honest, it’s when people stop buying. It’s very simple.” (Source: Digital Music News)