Insights: After Music’s Massive Week, Can People Finally Make Money From It Again?

By 02/05/2018
Insights: After Music’s Massive Week, Can People Finally Make Money From It Again?

Insights is a weekly series featuring entertainment industry veteran David Bloom. It represents an experiment of sorts in digital-age journalism and audience engagement with a focus on the intersection of entertainment and technology, an area that David has written about and thought about and been part of in various career incarnations for much of the past 25 years. David welcomes your thoughts, perspectives, calumnies, and kudos at david@tubefilter.com, or on Twitter @DavidBloom.


From coast to coast, the last week of January was all about music.

In California, 115,000 people and nearly 2,000 exhibitors (showing 7,000 brands) jammed NAMM, the mammoth convention of makers of musical gear, including everything from recording software to tubas to DJ decks to amps.

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Prowling the endless exhibition floors of the Anaheim Convention Center on Saturday, I spotted luminaries such as Alice Cooper and George Clinton doing meet & greets. In another booth, 10-time Grammy-winning producer Rod Chiarelli gave a master class on recording techniques. Those massive crowds (even though admission was supposedly restricted to “the trades”) and phalanxes of exhibitors suggested that a lot of people really like making music, and others are making money selling them the equipment they need.

Across the continent, the Grammys returned to New York for the first time in 15 years. The show trotted out a string of politically minded skits and bits that surely melted drifts worth of conservative snowflakes, while delivering awards to a mostly male winners list that certainly annoyed a very different audience (especially after Recording Academy President Neil Portnow did a #StepDown into tone-deaf idiocy).

Myself, I’m ever so slightly bitter that the sublime and thoughtful Kendrick Lamar, who still picked up five statues, again didn’t win the biggest ones (though I like Bruno Mars too). As a side note, you have to love Lamar nominating East Coast rival and rap kingpin Jay-Z for president in his acceptance speech, even as he blanked Jay in category after category.

Perhaps all those annoyances contributed to Grammy ratings that were the lowest in nearly a decade. Even more worrisome, ratings in “the key demo,” the 18- to 49-year-olds that advertisers covet, were the worst ever.

Despite the crummy ratings, Variety noted rightly that the Grammys remain one of the year’s most watched broadcasts. As with all kinds of live TV events – including NFL games, reality competitions and other awards shows – ratings continue to slump in the cord-cutting/cord-never era as fewer people are connected through traditional suppliers.

And, happily for CBS, ad revenues for the show remained stable, while sign-ups for the CBS All Access digital service that day were second-highest since the service debuted last year. Among the millions of people who still watch live TV, some people are still making money around live TV about music.

The still-large audience is why brands stuffed the broadcast with their ads, including two by Apple featuring music from Childish Gambino and Migos turned into trippy lip-synced karaoke videos using the Animoji function on its iPhone X. Such Animoji karaoke (Animoke?) has officially become a Thing on the Interwebz (O, Musical.ly, where art thou now?), and is possibly the most amusing reason to spend $1,000 to acquire the X.

Again, though, someone is making money from music, this time at the World’s Most Valuable Company, whose Apple Music service has 30 million paying subscribers ($10/month x 12 months x 30 million = $3.6 billion).

So, lots of bi-coastal musically minded hullabaloo during the week, and lots of people making money from it all. But the really big (if much less entertaining) noise around the music business last week was actually being made in courtrooms and legislative chambers.

First, the Copyright Royalty Board handed songwriters a huge win, bumping upward their share of music royalties a whopping 43%, to a minimum 15.1% of payments for performances of their products. And for the first time, companies that are slow in making those royalty payments face a credit-card-worthy late fee of 18%.

It’s welcome news for the battered bottom lines of songwriters, whose populations in such traditional habitats as Nashville and Austin are reaching near-extinction levels (indeed, an Austin city study found that 70% of songwriters there make less than $10,000 a year, a third are on food stamps, and few can afford the gentrifying music mecca’s increasingly pricey neighborhoods).

Even bigger help might be on the way with Music Bus, three federal bills designed to fix giant holes in the way musicians, songwriters, and producers get paid in our digital era, where Spotify can claim a $19 billion valuation from its 70 million paying subscribers (and 130 million total, who also bring in substantial ad and sponsorship revenue).

Spotify is about to cash in by going public, admittedly in a risky and unique fashion, complicated by its high valuation and holes in its balance sheet (don’t buy that stock when it debuts, kids). Yet again, people at Spotify and its backers certainly believe money can be made in the music business.

To help actual music creators make money, however, the Music Bus bills include:

1. The Music Modernization Act, which fixes how songwriters get paid for digital streams and downloads. It creates a central clearinghouse to administer those payments, moves to a more market-based approach in setting rates and makes it simpler for songwriters to get their money, while easing licensing headaches and legal liabilities for streaming companies.

2. The Fair Play, Fair Pay bill creates, for the first time, the right for performers to get paid when traditional radio plays their music (only songwriters and publishers get royalties now). It also gives producers a share of those payments. It’s a long-overdue fix of an indefensible exception that dates back decades.

3. The Classics Act fixes another huge, long-time loophole in music royalty payments affecting songs from before 1972. It could provide some relief to aging musicians who’ve seen too little return from even hit songs they created decades ago.

Traditional radio broadcasters are opposing the Fair Play bill, which will cost them a fair penny, but it’s a penny they’ve avoided paying since the 1920s. It’s difficult to feel too sympathetic to their plight, even amidst a totally transformed business with more competition than ever.

More happily, the Music Modernization Act has been backed by the Internet Association, whose members include Spotify, Pandora, Google, and Facebook. Though it will mean higher costs for association members, they will be able to avoid pricey lawsuits and endless headaches with songwriters. It also puts the onus on the new clearinghouse for figuring out which creators get paid what. The National Association of Broadcasters, another possible roadblock, also has dropped opposition.

It’s way overdue. At a panel I attended last month, Exene Cervenka, lead singer of seminal L.A. punk/roots band X, told me that the streaming music business may have been great for Spotify and Apple but has been disastrous for her and her bandmates.

Cervenka said she makes just $400 in royalty payments for every million times one of her songs is streamed online. The economics are so bad that the band decided it wouldn’t record any new music. “It’s just not worth it,” Cervenka said.

With luck, the Music Bus measures will pass, and the business of making music will become a) a little more fair to the people at its heart who actually create the songs so many of us love, and b) update the money flows that undergird our music-creation and -delivery systems for this digital era in a rational way.

Perhaps then national treasures such as X will return to recording with the possibility of receiving a reasonable payment for good new work. That would be something to sing about.

Photo of Subway busker by Indigo Skies Photography

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