I open my own royalty statement to show how Apple’s Beats Streaming will shell the ruins of an already demolished music business
Apple’s shareholders are excited about the coming BEATS streaming service, set up to compete with Pandora and others. Unfortunately, Apple’s playbook of squeezing every cent out of content creators - truly, there’s no other company quite as determined (and successful) at this - will suck the last few dew drops from the dried plant we call the music business. Apple’s service is set to debut at either $5.99./mo or 6.99/mo - the lower figure almost 50% lower than Pandora’s price. To show the effect, I’ll use my own recent royalty statement to illustrate. This isn’t sour grapes; I’ve moved on professionally already. But, it will show how utterly absurd the system has become. Now, before we start, please remember a few things:
The music business is not Taylor Swift. It’s thousands of people who never get on stage. It’s producers and engineers and session musicians. It’s publishers and administrators and graphic artists and video producers and editors. It’s assistants who work incredible hours and love the hell out of music. Talking about touring income for these people is like talking about a fantasy. With that - or rather them - in mind:
Here’s my 4th quarter royalty statement from a label group. It’s lots of pages long . . .
Looks good, right? Each page of the above book-length tome is lined with entries, and each entry is a stream of income moving from people who consumed music I’ve produced for this label to me. This, in short, is the legal part of the music business. Most estimates state the illegal music business to be an order of magnitude larger than this, but this is the money stream. But nearly all of these entries are streaming entries. Let’s look at a typical page to see.
Each line is a transaction. A “unit” is a single stream or sale; the “Unit rate” is how much the service paid; 3.346 is my royalty rate for this project. Some math brings you to the far right, which is the magic number: how much money I made!
If you look at the Total 1/3 down, you see 3798 transactions (most were on the preceding page), netting me $1.20. The total for this page is $1.90. But wait! See that.89c. on the far right? That’s half the total for the page. It’s also 38 people buying a download. Fewer people do that all the time, because streaming makes much better sense for a consumer. Apple wants to slice this 1.90 page in half. Be my guest, because I stopped giving a shit at 1.90. But for people who still make a living in music, Apple’s deal will make already abysmal situation worse.
Still - there are lots pages, and the streams add up, right?
Let’s take a look.
These are the global streams and sales for a song I produced. During the 4th quarter of ‘14, it streamed/sold 213,443 times. These numbers - not Taylor Swift numbers - are the real music industry. In short, not huge, but also very far from the SoundCloud/BandCamp quagmire of tens or hundreds. Of the 65 bucks, about half was a couple of hundred sales; the rest was the more than 200,000 streams. Apple’s price will likely cut that in half, more or less a few pennies. So, what’s the effect of all this?
People are getting the hell out - in droves.
I know there are jillions of people getting in - but almost none make a living. The professional music industry is vanishing. This is no joke. I recently sat next to a friend at a concert who described plowing through a 400 page Pandora statement for an artist. All this stuff has to be calculated, and though there’s lots of automation, some of it has to be seen by humans. After 20+ years in the business, she’s moving on - and taking her heart with her, because she’s eaten, slept and dreamed music her entire life. The 400 page statement took an entire day of skilled analysis, for which she made less than minimum wage.
There are lots more leaving. A brilliant engineer I know recently confided he had driven a truck over Christmas to make rent. And a look around LinkedIn will reveal lots of quality producers - individuals with immense skills, some who’ve made famous records - looking for “what’s next”. The effect is real: ever notice why so much music sounds alike these days? All those baleful singer-songwriters with a guitar? It’s because that music is cheap to make. Some of them are fine that way. But some of them would be making entirely different records - records that stretched and soared and even broke new ground - with the help of a gifted producer and even a modest budget.
Apple’s Tim Cook claims, “Beats Music was built with deep respect for both artists and fans.” It’s great PR, and maybe he believes it. But when their lawyers sit down with the labels to negotiate a price, they’ll be nothing but a corporation, no different than GE or Shell. They’ll drive value to shareholders, and that money has to come from somewhere.







