Music Like Water

"Re-building the music industry is going to have to center around really understanding what the fans want and finding an infrastructure that will solidly support artists’ rights" - Trent Reznor

I just read an article about an interview that the CEO of TuneCore Jeff Price did recently with Nine Inch Nails frontman Trent Reznor. He talked about how he was focusing more on scoring films but what really caught my attention was when he began to talk about the future of the music business.

The quote at the beginning of this blog is something that we have been discussing in some of my classes at the Academy of Contemporary Music. I personally believe that in order to survive this new digital age, the music industry is gonna have to find a new structure for paying artist royalties.

The next statement made by Reznor is also an interesting one.

"What I consider, from a consumer point of view, the next good business model, the next thing that makes sense, is if there were mass adoption of music subscription services, like Spotify."

I am reading a book right now called "The Future of Music" by David Kusek and Gerd Leonhard. The authors titled the first chapter, Music Like Water. It is the idea that music will become a utility, like your water and electricity. You will pay a subscription fee once a month and have unlimited access to your music.

Now this book was the first time that I had seriously thought about the true possibility of this type of service. With programs like Spotify become highly popular, people are using these subscription services more and more. Does this mean that digital and physical sales are doomed? I personally don't think so, but you can't rule out the possibility.

I say all of this to make a point. If the industry is going to a more digital avenue for sales and such, we must restructure the way artists are paid. With the current system, artists are not making much off their digital sales. Most of the money is still coming from physical sales. Let me throw some numbers at you to put it into perspective with how artists are paid with an average major label contract.

When an artist has their music on ITunes, an average song costs anywhere from .99 cents to $1.29. For the sake of the argument, and for my lack of math skills, We will say the label has priced your music .99 per song. Apple has an agreement with all who sell their music on ITunes that says they will receive 30% of the revenue. So in this case Apple receives .30 cents per song sold individually. That leaves .70 cents for the label and artist. In most contracts, the label and artists split the digital revenue of the song. That means the artist themselves only make .35 cents per song off ITunes.

Let's say the label gave the band an $100,000 advance to produce the record. They will not see a dime of revenue from the sales until they pay back the advance. If my math is correct, that means the artist must sell 285,714 songs on ITunes before they ever see a dime.

With CD sales, the artist usually sees 10% of the revenue from each sale. In 1995, the average CD cost around $18.95 so the artist received 1.89. The average CD now cost around $10, so the artist receives $1 per sale. As the price of CDs continue to drop, the artists will continue to make less and less.

These are just a few of my thoughts and hopefully they will make you wonder about the direction the industry is currently taking. Leave comments and let me know what YOU think.

As always

Keep The Music Alive, and Straighten Your Tie.