Pro Audio Files

VLOG #6: Streaming Royalties, Music Marketing, Budgets & More

Transcript
Hey folks, Matthew Weiss, and welcome to the Friday show. We’re going to kick this off with a little bit of news. There was an article put out by Engadget that is pointing out the discrepancy between the amount of music income based on streaming revenue and music income based on other sources.

Last year, 2016 notably marked the first year in which streaming revenue surpassed all other forms of revenue coming into the music business, including digital downloads, CD purchases, vinyl purchases, cassettes, etcetera, etcetera.

Now we’re seeing that trend continue, and the discrepancy is growing further apart, with the streaming revenue increasing 17%, while the digital downloads have actually decreased by 24%.

But there’s something more interesting in this article. Engadget is pointing out that subscriber based revenue to streaming services is hitting 1.7 billion, but the ad supported free services are only hitting 273 million, which is way, way less. So what does this mean exactly?

Well, it means that the way streaming services are distributing their revenue is changing, and in general, artists are actually starting to get paid more based on streaming services, and there’s been a lot of controversy around these services in the past, and still to this day of course, and we’re going to start with Spotify.

So Spotify claims that they pay 0.6 cents to 0.8 cents per stream. However, a lot of research has shown that those numbers have been closer to maybe about 0.4 cents per stream, and where that discrepancy comes from, I don’t really know, I don’t even really want to get into it. The bottom line is that now, because there is more operation going on, even if the actual percent of the streaming value is low, the total payout is getting higher and higher because there are more users.

Now let’s compare that number really quickly with Terrestrial Radio. Terrestrial Radio has paid out two cents per play, which is five times more, but I’d like to point out a couple of things that are very important to consider when looking at these numbers, and I’m going to actually kind of stick up for Spotify a little bit here, which I don’t traditionally do, but when Terrestrial Radio came out, the pay per play was based on the station itself. So every station was paying two cents.

However, streaming, it comes from the other direction, it’s per listen. So while radio stations are paying two cents for every time it hits the play button, Spotify is paying 0.4 cents for every time someone else does, which means a much larger group of people clicking that button. The other thing to consider is that Terrestrial Radio demands that you have a Terrestrial Radio receiver, which is traditionally found within a handheld radio device or a car. There were limited positions in which you could actually play Terrestrial Radio, whereas with the streaming service, you can literally play it on any device almost anywhere.

You could be jogging, you could be at home, you could be in the car, you could basically be wherever, and you could still be generating those streams. So I’m going to say that while I don’t absolutely love the 0.4 cent number, I don’t hate it either. I think that it’s good. I think it could be a little bit better and still be fair to the company, but I think that we’re in the right ballpark.

Now, of course, not all companies are created equal. Let’s take a look at another common streaming platform, SoundCloud. SoundCloud pays out nothing. I cannot imagine why anyone puts their music on SoundCloud. Anything that I produce, I stipulate very strictly in the contract, if I have control over the situation, that the music is not to go on SoundCloud. Why?

It does not pay anything. Does SoundCloud have a way of monetizing? Yes, it has a premier partnership program, which means major labels are able to cash in and that’s it.

So if you’re on a major label, congratulations, you’ll make money off of SoundCloud. How much? I don’t know. I couldn’t find any information on it. I saw a few estimates that said something like 0.25 cents. Something like that. But even that, I don’t really know how accurate that is.

Of course, people will argue that SoundCloud is good for brand building. Personally, I don’t see it. Maybe there’s something that I don’t know, but first of all, the sound quality itself is so bad, it actually interferes with the enjoyment of the song to my opinion, and I’m really not precious about that stuff, even though I’m a mix engineer. Also there’s no component for visuals. There’s really very limited space where you can put up any kind of artwork or any kind of visual media. I don’t think you can put video at all, which is a good segue to talk about YouTube.

Now, YouTube also pays out notoriously badly. Not zero, but something about 0.1 cent per stream? The thing about YouTube is that while it does not pay well, you can put up a music video, which does supply a good branding opportunity, and I can get on board with that to a certain extent as well.

Also, it might be worth noting that branding opportunity that you get from YouTube does not necessarily cannibalize streams from a platform like Spotify or Pandora, because you would not be watching a music video in the same context in which you would be listening to a stream off of Spotify. Maybe some overlap, but probably not a lot.

So now let’s talk marketing and forming a comprehensive business strategy. One of the fallouts of the streaming revolution has been that it’s a pretty open platform for any artist trying to make money, whether they’re on a major label, whether they’re on an indie, whether they’re completely independent. Basically, a view is a view is a view, and that’s what these companies are trying to get. That interaction.

So if you can get it, you can get it.

Now, what does that mean in terms of marketing? Well, let’s take YouTube for example. The estimates that I’ve heard for getting a million organic views on YouTube is about $10,000. Now, we’ve already talked about the payout on that, what you’re going to get back is somewhere between about $1,000 to 3,000, so congratulations, you’ve just lost at best, about $7,000 if you’re going only for the marketing.

So the first part of comprehensive business strategy is having something that people actually like. Do not half-ass the beginning of this, and I know I am biased, because I am somebody who works in the production field of music, but a good song is really, really fundamental, and marketing alone can not get it. If marketing was not a non-zero sum game, then the price of it would simply increase until the demand just leveled it out.

But that means if you could guarantee that you would get more money in views by investing more money in to begin with, then everyone would literally just do that, and then the cost of views would start going up until it was no longer so favorable.

So you need to have something that’s going to perpetuate itself to a certain degree. That million views or whatever you might go for needs to lead to other sources of interaction, so whether it’s a digital download, whether it is a Spotify link, whether it’s — whatever it might be, it needs to be a secondary source from which you can garner income, and we want to perpetuate this as much as possible, so we start with a great product. We start with a wonderful song with amazing visuals to go with it, and we go from there.

From that, we want to make sure that we’re capitalizing off of every possible thing that we can, so we want to try and create a coordinated plan, meaning the release of the video corresponds time-wise with the release on Spotify and the release on iTunes, as well as preferably with a tour that’s lined up. There’s a reason why these things almost always go hand-in-hand.

Then we setup a couple of physical copies, or perhaps USB drives, or maybe like little download cards that we can sell at the shows as well. This way, we’re making sure that every dollar that we put in to the marketing side of things is being fully maximized, because yes, we can probably capitalize off of just strictly, you know, garnering a number of views off of YouTube, and then having links to iTunes and Spotify, and calling it a day, but if you really maximize your presence on social media on your own as well as hitting those tours and everything like that, then you can really start going in on it.

Then we also think about the long term plan. The long term plan does not involve just strictly the sales, it doesn’t even involve just strictly the sales and touring, although at this point, we’ve already made quite a bit. Now we want to talk about synchronization. We want to make sure we are visualizing where our music could go in terms of advertisements, in terms of television and films and movies, because we want to make sure that we are exhausting every possible revenue stream that is available to us as musicians.

Now we’re going to play a little game. This is going to be a hypothetical product launch here with an artist, and that means the production of the song, as well as the marketing, and in this hypothetical, I’m going to have $10,000, which I know, immediately, off the top of your head, you might be thinking, “Boy, that’s a lot of money.”

Well, yeah, it is, but I’m trying to be realistic. So first of all, I’m budgeting about $2,500 to the creation of the product, which I wish it could be bigger to be quite honest, but the reality is if we want to promote it, we’re probably going to need to dedicate about 75% to the promotion, 25% to the actual production.

Well, that means that it’s really going to be up to the creativity of the people involved to make that money really stretch, so that’s going to include all of the production of the music, as well as the production of the music video, which believe me, could get eaten up very, very fast, but we’re going to do it on a budget, we’re going to figure out creative approaches, we’re going to do a lot of it ourselves, we’re going to bring in the experts where we need it, and make sure that we have a great product that’s hinged on creativity, because ultimately, creativity is what people are really looking out for.

So okay, we’ve got that. That leaves $7,500 left. Okay, how many views on YouTube do I think is going to represent good branding? I really like the half million mark. I think that there’s a 100 monkeys theory that comes into play after we start getting into that territory, meaning that once we get to a certain point, the ball will start to roll itself, and I think about half a million, any way you look at it, is going to get the numbers there. It cements well in the mind, so I’m going to think that’s going to cost roughly $5,000, $6,000, somewhere in there based off the estimates that I’ve heard. Those many not be completely correct, so again, this is a hypothetical, and that’s going to leave us with a little bit left over for a little bit of maximizing that.

So I’m going to have a link in the description of the music video, and in that link, there’s going to be the Spotify song, and there’s also going to be the iTunes download, and maybe the iTunes streaming as well, and I’m going to make sure with that bit of extra money that I’ve got left over that the curators of the popular playlists on Spotify are taking notice of our song here. So we need to get verified as artists, which means we need at least 250 followers on Spotify, we’ve got to build that up through some kind of social media management. I think that could be done simply off the merit of the half a million views, but it could also be done extraditionally using maybe like, $500 to use it using a social media manager, and then once we have that, then we want to try and get ahold of these playlist curators to say hey, we have this song, it’s popular on YouTube, we’d like it to be on your playlist as well. This way, we can get a little bit of a snowballing effect by getting people to notice what we’re doing.

By the way, in this hypothetical, I am talking about one single song. I am a humongous proponent of the bed of nails theory, and listen, my job is to take music, and to make it better, and I get hired on a per song basis. So if I’m saying that doing less songs is really better, trust me when I say, I mean that, because it actually kind of works against my own business to say that, but I also want people to succeed, and when musicians become successful, that is humongously helpful to my business, and that’s what’s really important here.

So bed of nails theory, if you have only $10,000 to support a song, it’s better to put that behind one song than it is to put it behind four, because even with four songs, we’ve already spread our money very thin. We can not really effectively promote the songs to where we can generate income fast enough to start to recoup and start to make a bigger catalog to really get it out there. Once we start actually seeing some money returned, then we can reinvest in the song, we can start putting together a tour, we can start reaching out to the music publishers and the music supervisors and editors in film and everything like that, we can start getting our contacts out to advertisement firms.

Whoever would possibly need music and be looking to purchase it, so we continue this process, but that’s how I would get it started. And of course, you know, I’m not a music marketer. I’m just getting into this side of things because I’m becoming more interested in it, so you know, comment down below, please. Let me know what you think in terms of what you would do. Do you think $10,000 is way overkill to get a song launched, or do you think that it’s really, you know, too bare bones to make a song happen?

Also, I’d invite you to play this game with me. So in the comments section below, let’s say you had $10,000 to spend on making and marketing a single. How would you put that together? What would your game plan be for both the production and for getting it out there? I would love to hear your thoughts on this, because I think it’s a fascinating topic that’s going to help a lot of people.

Now, if you’re digging what I’m doing, you know what to do. It’s time to hit that like button, the good old thumbs up, and if you want more really good information from this channel, you’re going to need to hit that subscribe button. I believe in you, I believe in me. Let’s do it.

The worst ending to a video ever!

Lastly, Mixing With Reverb, a full length tutorial on how to incorporate reverb into your productions and how reverb works is available, and the link to that is in the description. Don’t forget to check that out. Alright folks, until next time.

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Matthew Weiss

Matthew Weiss

Matthew Weiss is a Grammy nominated and Spellemann Award winning audio engineer from Philadelphia. Matthew has mixed songs for Snoop, Sonny Digital, Gorilla Zoe, Uri Caine, Dizzee Rascal, Arrested Development, 9th Wonder, !llmind & more. Get in touch: Weiss-Sound.com.

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