YouTube Revenues Explained…

YT3YouTube monetization is complex but well worth understanding in a music economy where every revenue stream counts.

Attorney Chris Castle recently participated in a SXSW panel and posted an excellent guide to YouTube monetization on his MusicTechSolutions blog.

A Billboard chart explains revenue splits for compositions, recordings, and videos, and Castle touches on the opacity of CPMs and the impact Multichannel networks (MCN) can have on creator’s revenues.

The article explains the difference between “Official” or “Premium” videos and user generated content (USG).

Castle delves into the mysteries of YouTube’s ContentID and Content Management Systems (CMS) and shed light on the reality of what it takes to become a YouTube celebrity.

“We often hear about “YouTube stars” with elite channels (1 million plus subscribers) who are very well compensated. The source of this high level of compensation is rarely limited to advertising revenue. Most of the time, their ad revenue is salted with a high number of payments for what are essentially sponsorships, endorsements or product placements, often called “brand integrations“.

This is a good read for all musicians that can help them decide how best to distribute their marketing assets.

Rosanne Cash responds to Hypebot’s Bruce Houghton

Musicians Are Natural Entrepreneurs

Berkle article clip imageBerklee Today, the journal for alumni of Berklee College of Music, recently gave me the opportunity to explore the relationship between musical training and the skills of entrepreneurs. I interviewed several Berklee alumni who have gone on to create groundbreaking music technology companies serving independent artists.

Each of these companies provides tools that help musicians distribute music, raise funds and market themselves, but what struck me was the similarity between direct-to-fan and lean startup practices. Direct-to-fan platforms give artists a strong connection with their super-fans, providing valuable feedback and ongoing engagement. In particular, early-stage pre-release platforms like PledgeMusic show artists what their fans value and how they want to be engaged. By the time the funding cycle is complete the artist knows their customer and has had the opportunity to tweak their offerings. Each person I interviewed described their musical training as fundamental preparation for working in a startup environment.

You can read the full issue of Berklee Today here or download a pdf of the article. Please check out each of these inspiring entrepreneurs and their companies. You will be amazed!

Back office efficiencies in the digital music supply chain

In this Music Ally blog post from October 2010, Martin Redington of Microgen, discusses the state of data management and back-end systems in the digital music supply chain.

Identifying and paying the multiple rights holders for each download or stream requires managing vast amounts of data in multiple formats. The lack of a uniform standard for identifying artists, tracks, and recordings presents a major roadblock. This complex process is labor intensive and prone to error.

The current state of affairs causes delayed payment to artists, and if standards are not introduced to increase efficiency, the entire digital music distribution chain is at risk.

Redington calls for:

  • The creation of a standardized universal database and the business model to support its development.
  • Agreement as to how this database will be populated. Stakeholders currently have no clearly defined financial incentive to share their data with competitors.
  • Standards for exchanging information.
  • Streamlined back-office processes that will serve the future growth of the digital music industry.

You can read the full post here.

Tom Crawford, Sr. VP of Microgen, will be speaking at the NARM convention in Los Angeles, May 12, 2011 about the challenges and business opportunities presented by digital media distribution.

Are music consumers stepping on us?

From today’s Digital Music News:

Are Music Consumers Stepping On Us?

That was the question posed on Thursday by NPD analyst Russ Crupnick at Digital Music Forum East in Manhattan.

“Consumers are flipping us the bird,” Crupnick declared while trotting through slide-after-slide of distressing data. Exhibit A? Crupnick listed a litany of concessions and pro-consumer offers from this industry over the past ten years – all of which have produced few substantive revenue returns.  These include: 

  • ubiquity
  • disaggregation
  • fragmentation
  • liberal licensing
  • disabled DRM
  • disinflation

“These are great things we’ve done for consumers, but what have they done for us?” Crupnick posed.  Well, the answer is very little, and Crupnick’s stats proved it.  Over the past 5 years alone, Crupnick noted that the population of buying music fans declined by 20 million, and per-capita spending has dropped by 40 percent.  Meanwhile, just 5 percent of US consumers are using subscription services, including free trials.  “We’re being too liberal,” the analyst continued.  “We need to demand more from consumers.”

But there’s a funny twist: among the buyers that remain, a majority are only buying CDs.  In fact, Crupnick noted that 55% of paying music fans are solely purchasing CDs, down from 80% percent in 2006.  Just last week at New Music Seminar in Los Angeles, Tommy Silverman reported that two-thirds of all album purchases are physical.

And what about the superfan, won’t that save us?  Well, Crupnick popped that balloon quickly by noting that superfans are also buying less.  But, their percentage of overall purchases is increasing as more casual fans leave the building.  “Fewer and fewer people are buying music, so the percentage of buying by uberfans increases,” Crupnick noted.
My comment:

“I can’t comprehend the logic of “demanding more from consumers.” Show me a good product manager who agrees with that reasoning.

It is hard to compete with free but that’s the reality today for any media business. Consumers have unprecedented choice and an enormous sense of entitlement. If you want to succeed in the marketplace you have to get real about that.

Also, the recording industry was a ridiculous bubble economy for over 20 years. Now it is leveling out and that is painful. The industry will be smaller in the future, more personalized, and consumer driven. 

Things will continue to shake out for awhile.

Join the discussion here

Is Apple Killing the Golden Subscription Goose?

I have been using Apple’s products since the 512K Macintosh. I have immense respect for the company’s user-focused product management and business models. However, once in awhile they go too far and do something stupid. Apple’s new subscription licensing policy could seriously impact subscription music services,  an important developing market. The same is true with the continued market leadership of the iPad. If media companies part ways with Apple on this, everyone loses. Maybe my next phone will be an Android after all…

Apple’s New Subscription Model Is EvilGizmodo

Rhapsody CEO Blasts Applehypebot

New Apple App Rules Could Kill Subscription Music hypebot

Rethinking Music Pts. 1 and 2 – Creativity, Commerce and Policy

Check out these two excellent podcasts in preparation for the upcoming Rethink Music conference coming up this April in Boston.

Radio Berkman #168 Rethinking Music Pt. 1
Radio Berkman #173 Rethinking Music Pt. 2 – The Portrait of the Self-Published Artist

California Copyright Conference: The Future of the Latin Music Market

On February 8, 2011 The California Copyright Conference hosted a panel discussing the current state and future possibilities of the Latin music market, organized and co-moderated by Eric Palmquest – Director, Disney Music Publishing and Marissa Lopez, Associate Director, Latin Writer/Publisher Relations at BMI.

The panel featured:

Richard Bull – President of The Sixth House, a management company with touring, label, licensing, publishing, and corporate marketing arms.
Tomas Cookman – CEO, Nacional Records & Cookman International, and founder of the Latin Alternative Music Conference.
Yvonne Drazan – Creative Director, peermusic
Nir Seroussi – VP, Marketing and A&R, Sony Music Latin
Kike Santander – Multi Grammy Award winning songwriter and producer, Chairman of the Latin Academy of Recording Arts and Sciences (LARAS) and CEO of Santander Records.

Marissa Lopez (whose career began as a Latin radio DJ) kicked off the festivities with a mix of regional and Latin music styles. Although the topic of the panel was the decline in Latin music sales, particularly in digital, the panelist were uniformly upbeat and excited about the wide open future for Latin music.

Richard Bull and Tomas Cookman have had strong successes with synch licensing and developing strategic partnerships with other companies both inside and outside of the music industry. The Sixth House’s partnership with peermusic has been particularly rewarding for both parties. A common theme was the need to exchange services and develop diverse partnerships. Each situation is unique in today’s marketplace. Cookman: “There is no right or wrong answer. If it works for you, it works for you.”

Panelists agreed on the need to control master recordings to simplify the process of clearing masters and publishing rights in one shot. Tomas Cookman described his strong relationships with music supervisors as being build on his ability to clear tracks for synch within a few hours.

Technology has created easy access to a global marketplace which raises the bar for music quality…the best music wins. Kike Santander passionately described how his commitment to music drove the decision to start a label at a time when others a running in the other direction.

Except for younger fans who follow edgier, alternative artists, the general Latin market has not been as quick to accept digital downloads. However, this market skews much higher on the use of mobile devices according to Richard Bull.

When asked how to encourage fans to engage in the digital download market, Nir Seroussi stated that the concept of music ownership is going away. Fans want music anytime, anywhere, and labels must think of themselves as service businesses. The future lies in building strong artist brands and alliances with a broad range of business partners.

Global Music Registry Meets Consumer Consumption Model

A thought provoking post from the Rethink Music blog. The barriers to creating a global music licensing registry are substantial in and of themselves. As consumer behavior shifts away from ownership to an “anytime, anywhere” access model, accurate, streamlined licensing will be key to a great music experience for the public as well as solid monetization for creators.

What do you think?
Rethink Music

Don’t Go For The Masses, Go Direct-To-Fan

Reblog from

Don’t Go For The Masses, Go Direct-To-Fan

Author: Kyle Bylin –
Major labels are mass marketing power giants; it’s what they do. Before the advent of the social web, they  were the only way to reach the masses. Due to their influence on commercial radio stations, big-box retail outlets, and television, much of this remains to be true. If an artist wants the general public to become familiar with their music and know the all words to their songs at the next show, then having the financial support of a major label will help them achieve this feat. 

What’s interesting though, is that despite decades of experience in breaking new artists, major labels still have no idea whether or not their mass marketing is working until the end. Online analytics, small boosts in sales, viral YouTube videos, and conversations—these all serve as little cues that something is starting to happen, but there’s no way to tell when the point of reaching critical mass been achieved.  That is, until it actually occurs. The blockbuster album.

Now, contrast this with the experience of a direct-to-fan marketing manager and an indie artist they represent. Through its easy for both parties to default into thinking like a major label, to try and reach the masses and put off the moment of understanding how successful their marketing has been until the campaign is over—that’s just not how going direct-to-fan works. From the very beginning, the direct-fan-marketer knows if their promotional efforts are working. Why? Because they must get it right in the small. An email can be sent to 100 fans and if it gets a great response rate, only then can it be mailed off to several thousands more. 
Get it right for ten people before you rush around scaling up to a thousand,”writes marketer and author Seth Godin.  “It’s far less romantic than spending money at the start, but it’s the reliable, proven way to get to scale if you care enough to do the work.” In other words, artists need to remind themselves not to go for the masses, when they can go direct, one fan at a time, slowly scaling up, until their message and their music is truly ready to be hard. After all, a failed marketing campaign is much easier to fix early on. If an artist is trying to reach the masses, then like a major label, they won’t know if they’ve failed till the end.