Digital revenue streams for sound recordings

Kristin Thomson, Future of Music Coalition @kristinthomson

Musicians’ earnings from digital platforms

money.futureofmusic.org/about-the-project/

How have these changes impacted musicians’ ability to generate revenue based on their creative work?

Source: RIAA via Future of the Music Business

Research questionWhat percentage of musicians’ income comes from each possible revenue source?

money.futureofmusic.org/research-questions/

42 revenue streams

Mechanical royaltiesStreaming mechanicalsMechanicals for cloud storage, lockersCommissionsComposing original works for broadcastSheet musicLyric displayLabel advancesLabel supportRetail salesSales at showsDigital downloadsCloud storage paymentsDigital performance royaltiesInteractive service paymentsYouTube partner programMaster use synchsPerformancesSalaried workSession work in studioSesson work liveMerchandisePersona licensingFan fundingYouTube/video partnership programSponsorshipsGrantsTeachingMaster classes

money.futureofmusic.org/40-revenue-streams/

Composition income Sound recording incomeMechanical royalties

Public performance royaltiesSynch licenses

Jingle writing/composing for hire/commissions

Prior to 1998

Physical retail salesPhysical mailorder

Selling music at showsMaster use synchs






Digital download salesDigital performance royaltiesInteractive stream payments

Cloud storage paymentsYouTube partner program

++

Streaming mechanical royaltiesMechanicals for cloud storage

Lyric display royaltiesYouTube partner program

42 Revenue StreamsServed as the genesis of the project, a framework for the research, and lives on as an outcome.

money.futureofmusic.org/40-revenue-streams/

Revenue Streams:Existing, Expanded and New

money.futureofmusic.org/revenue-streams-existing-expanded-new/

• 80 in-person interviews• six financial case studies• over 5,300 completed surveys

Qualitative and quantitative data collectedfrom US-based musicians and composers via:

money.futureofmusic.org/findings/

Collected between 2010 and the end of 2011.






++

Streaming mechanical royaltiesMechanicals for cloud storage

Lyric display royaltiesYouTube partner program

Digital download salesDigital performance royaltiesInteractive stream payments

Cloud storage paymentsYouTube partner program

Q12: Survey respondents asked to allocate money among these categories:

Composition income/being a composerSound recording income/being a recording artistPerformance income from guarantees/percent of doorSalaried performerSession player (live and in studio)Brand-related incomeKnowledge of craft/teaching

money.futureofmusic.org/revenue-types/

6% of income in past 12 months derived from sound recordings

Aggregate revenue pie for all survey respondents

N = 5371

Range of revenue derived from sound recordings for all survey respondents

3552

1183

237 144 53 73 20 7 27 16 9 44 0

500

1000

1500

2000

2500

3000

3500

4000

0% 1 to 10% 11 to 20%

21 to 30%

31 to 40%

41 to 50%

51 to 60%

61 to 70%

71 to 80%

81 to 90%

91 to 99%

100%

Percent of music-related income derived from sound recordings in past 12 months. N=5371

66% reported 0% of income from sound recordings

Num

ber o

f sur

vey

resp

onde

nts

22% reported 1% - 10% of income from sound recordings

1%

4%

6%

12%

14%

6%

0% 5% 10% 15% 20%

Classical (N=1863)

Jazz (N=872)

Country (N=262)

Hip hop (N=93)

Rock (N=569)

All (N=5371)

Percent of music-related income in past 12 months

Income from sound recordings, by primary genre

Revenue derived from sound recordings in past 12 months, by primary genre

16% 18% 22% 3% 41%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

N=4447

Changes in revenue from sound recordings over past five years

Increased Stayed the same Decreased I don't know Not applicable

Perceived changes in revenue from sound recordings over prior five years

6% more report a decrease in revenue than an increase

Percent of survey respondents. N = 4447

41% say changes in revenue from SR is “not applicable"

“The thing that’s decreased—this won’t surprise you—is the income from recording. By that I mean the royalties, the advances, all of the income streams that go along with the recordings. It’s all decreased significantly over the last 10 years.”

– Contemporary Chamber Ensemble

17%

13%

35%

62%

79%

74%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Synchronizations

Digital performance royalties

Interactive streaming services

Digital downloads

Sales at shows

Physical sales

Percent of long-path respondents who are participating

“Have you ever earned any income from....”

Physical sales

Sales at shows

Digital sales

Synchs

Interactive streamingservices

Digital performanceroyalties

all long-path respondents

19%

16%

37%

66%

79%

76%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Synchronizations



Digital downloads

Sales at shows

Physical sales


“Have you ever earned any income from....”full-time musicians

Physical sales

Sales at shows

Digital sales

Synchs



31%

16%

36%

72%

83%

74%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Synchronizations



Digital downloads

Sales at shows

Physical sales


“Have you ever earned any income from....”primary genre: rock

Physical sales

Sales at shows

Digital sales

Synchs



Digital download sales

“iTunes is a specific technological development that’s been helpful to revenue…”

– Jazz manager

Digital download sales

“Digital sales have boosted and that’s one thing instance where we’ve been lucky. Whoever those people are who buy iTunes singles seem to like us. So we have that going for us in that we sell a shit ton of those.” – Guitarist in platinum selling rock band

Sales at shows

“What puts the money in our pockets from record sales is concerts.”

- Contemporary chamber ensemble

Interactive service royalties

“Yeah, it’s still small, it’s still not a lot of revenue but every month it gets better…or every quarter, whenever we get our statements, it’s better.”

- Rock band manager


“...the royalties that are collected for featured artists for digital broadcast by SoundExchange has become a real source of income…”

- Jazz publisher

39%

45%

50%

58%

33%

26%

24%

30%

28%

20%

31%

20%

34%

14%

11%

17%

33%

49%

4%

11%

11%

5%

2%

4%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Synchs (N=312)

Digital performance royalties (N=140)

Interactive streaming services (N=362)

Digital sales (N=646)

Sales at shows (N=818)

Physical sales (N=772)

Percent of long-path respondents

Changes in revenue from sound recordings over past five years Increased Stayed the same Decreased I don't know Decline to answer

23% more report decrease

even split

41% morereport increase


31% more report increase


Perceived changes in revenue from sound recordings over prior five years, by category

Physical sales

Sales at shows

Digital sales

Synchs



Technology has had a significant impact – both good and bad – on the sound recording landscape.

money.futureofmusic.org/sound-recording-income/

Sound recordings are part of a bigger revenue picture.


Live Performance

77.8%

Grants and Awards 7.5%

Record Label Advance

5.0%

Commission 2.6% Sideman

1.8% Record Sales 1.7%

PRO Royalties 0.8%

Other 2.8%

Salary: orchestra

64.8%

Freelance: live 27.3%

Knowledge of Craft 3.1%

Freelance: studio 1.9% Prize Money

1.8%

Recording Income 0.8%

Radio Royalties

0.3%

Sideman: Performance

32.4%

Live Performance 15.0%

Administrator 14.9%

Grant 11.6%

Teaching 10.5% Sideman:

Performance + Organizer

8.0%

Sideman: Recording

4.3%

PRO Royalties 2.1%

Recording 0.9%

CD Sales on the Road

0.4%

Live Performance

30.5%

Salary 29.8%

CD Sales on the Road

12.1%

Publishing Royalties

9.4% PRO

Royalties 6.2%

Publishing Advance

5.6%

Record Sales 3.5%

Session Musician

1.5%

Producer 0.7%

TV Royalties

0.4%

money.futureofmusic.org/case-studies/

Jazz bandleader Chamber music group Professional orchestra member

Jazz sideman Indie rock composer/performer Background vocalist

Future(s) for musicians.


money.futureofmusic.org/findings/

Data memos and financial case studies

Kristin Thomson | Future of Music Coalition@future_of_music@kristinthomson

Data & Analytics

Digital revenue streams for sound recordings