The Big Royalties Debate

Congratulations! You have recorded a kick-ass song and a major label wants to sign it and distribute it to a worldwide audience. The trouble is, just how much will you be rewarded for your years of hard work?

The fact is that people don’t buy singles on CD or Vinyl for £3.99 anymore – they pay £0.99 (if you are lucky) for a download, so the record companies have a lot less coming to them (read: a lot less to share with you). Sales have gone crazy with the advent of the digital revolution, but that is just the tip of the iceberg; there has been no set royalty rate agreed with music publishers and the RIAA. No wonder everything is such a mess!

Just a few weeks ago, all the major groups representing record companies, songwriters and digital music websites agreed a new deal for so-called “mechanical royalties” for interactive streaming music and limited music downloads. (The LA times gives a very good glossary of these terms and further details on the agreement.) The RIAA chief executive stated that “This agreement provides a flexible structure to support innovative business models in the digital music marketplace that will benefit music fans, creators and online services”.

It’s a step forward, but there are still some other issues to be resolved, and some rather large ones at that. The biggest grey area at the moment is Internet radio and the royalties that would be accrued from that. I’m sure we’ve all heard various stories about sites such as Pandora and the constraints placed upon them.

Streaming and internet radio is big business, and if you can find a (legitimate) way to make money in this markets then you can justify earning just a few pence per unit sold, or even giving your music away for free, as did Nine Inch Nails recently. Some big bands such as Guns’n’Roses can even swallow a major album leak, use the publicity to their advantage and turn it into promotion of the full album release. The market for online promotion of merchandise and live gigs is just as vast, and enough for a future blog post

The dwindling pot of money further declines because, as the big boys keep moaning left, right and centre, pirates are stealing billions of pounds of music every year. Yes PIRATES! Swashbuckling, downloading, free riding college kids are able to find, copy, distribute and burn illegal copies of your music for free in their sleep. The industry believes that the ratio of unlicensed tracks downloaded to legal tracks sold is about 20 to 1, which is a staggering figure. While the recent agreement is a step in the right direction, we’ve still a long way to go.

The short answer is that you will not earn very much directly from sales of one successful song. The days of retiring from one lucky “ooh ahh just a little bit” are long gone. But the thought of earning a new community fan base of affluent, stylish, generation-Y internet users that share and participate in the online world… well, that’s worth its weight in gold.

Lee.

All this new music at our fingertips and all these new ways of buying and selling it. Aren’t we all so lucky. I recently reported how Madonna’s album was available for mobile phone downloads prior to the physical CD release (We’ve also had Bryan Adams selling his album exclusively through Walmart and Sam’s Club stores in the US (not quite as Rock n Roll, but you gotta take what you’re offered, right Bry?)).

Yet, amongst the digital revolution and traditional record shop mass-exodus, us dance music fans still like to buy physical products. It sure is hard for the retailers to keep on making money, times have changed, and a few vinyl junkies aren’t enough to keep a business afloat, but it was a very pleasant surprise to read about the recent RISE in sales of vinyl (RIAA 2007 Year-End Shipment Statistics - PDF). I’m not saying it’s saved, or making a comeback (especially after one year’s rise compared to nine years decline), but i realised that my own buying habits have changed over the years. I still go hunting for the odd 2nd hand bargain, or an old release with a killer B-side that everyone looked over at the time. But, i’m afraid i feel it hard to pay more than 8 quid for a piece of wax. Unless…. it’s an LP.

After a saturation of big brand mixed compitlations and a handful of rather weak superstar DJ full-length ego-massaging CDs, exciting dance music producers are making a bit of a comeback with artist albums. Canada’s Deadmau5 is planning an album release around Halloween, supported with a Puma/Beatport sponsored 50-date tour. The UK’s Mike Monday has his ready to go with US dance giant OM Records, complete with music videos!

There’s something about albums that give you a warm fuzzy feeling (not just the value for money). Maybe the artwork, or the expectation of the full spectrum of music that will (hopefully) be on there, with all the thank you’s and shout outs written inside the cover. Maybe there’s free stickers! Everybody loves free stickers!

If either of the above mentioned will be made available on vinyl, i think they will be sure purchases for myself, and even if not, I hope i’ll be able to continue hunting out some great vinyl LPs for years to come… whilst downloading the odd promo single

Lee.

I’ve come across this great talk by a rather clever chap called Gerd Leonhard. Leonhard is a Media Futurist, which basically means he will tell you how sell your album / market your record company / become a top-earning publisher, whilst moving forward, and avoiding becoming extinct or viewed as untrustworthy by your consumers. He was filmed at this Google Tech Talk in London last month, covering topics such as the way that the internet is the biggest change to the music industry since radio, current and future predictions of social trends, and the way music may be sold online in the near future and how it will affect artists.

Anyone serious about the Music Industry really should watch this - It’s bang on the money, with his points regarding the UK Radio industry, the BPI, RIAA and many more. Plus, at just over 60 mins, it will fit nicely into your lunch break

The slideshow is also available here in a larger and clearer form, but i was focussing so much on his theories that i’d rather go out and buy his book