Bob Dylan is an established artist who has worked alongside Apple and Starbucks to promote his music. This has resulted in a boost to both his public profile and record sales. Apple has benefited from his endorsement of their product by promoting new technology to an older audience. Starbucks have been able to increase sales inside their stores by being the only distributor of a one off Dylan album recorded especially for them.
The audience relies on the media for information and this removes audiences from creative ‘street level’ or original music
• Audiences can only access what the media offers them and they do not have access to all musical choices that are available
• The industry only invests in the types of music that audiences are familiar with and, therefore, only offer what has been proven to be
successful in the past
• This reduces music into formulaic and predictable formats means past successes are replicated often
o For audiences this means they can only access more of the same
o For the record companies there is less financial risk and more potential profit
o Ultimately, this means less choice for consumers
The internet is used for:
• The sale of traditional physical formats
• The marketing of music recordings
• Netcasts and live performances
• The sale of music downloads
• The management of official websites of recording artists and
record companies
Apple Music costs $9.99 per month, or $14.99 per month for a family subscription for up to six people (which requires iCloud Family Sharing). Students also get a steep discount, with a student tier offering the service for just $4.99. Best of all, there’s a 3-month free trial.
There is not free and ad-supported version. Some aspects will be available to anyone who logs in with an Apple ID—namely, Beats 1, the ability to follow artists on Connect, and the ability to listen to Apple Music radio stations with a limited number of skips—but a paid subscription is required to access Apple Music’s entire library.
Apple Music is available in more than 100 countries worldwide, including the U.S., Canada, the U.K., Australia, Japan, Brazil, and India.
Apple Music has a library of roughly 30 million songs. iTunes on the other hand - its store sells 43 million songs worldwide.
Unsigned artists can sell their music on iTunes, have it streamed on Spotify or Soundcloud and produce their own videos for YouTube.
One way it is doing this is through saturating the market with what
Mulligan calls ‘The Superstar Economy.’ The Internet was meant to
weaken the dominance of superstar artists in the music industry
and enrich the smaller, niche music creators. But new research
suggests that this “long tail” theory is wrong: superstars are capturing the vast majority of music revenues and their share is increasing – not decreasing – because of the rise of digital services like iTunes and Spotify. The top 1 per cent of artists the likes of Rihanna and Adele accounted for 77 per cent of recorded music income in 2013. Most digital music services have catalogues of more than 20m tracks are not listened to. In this illusion of choice consumers are overwhelmingly listening to the ‘hits’.
Synergy is another way in which record companies generate income
via advertising and marketing their artists in association with other
brands or products. Synergy occurs when one branch of a company
(e.g. Sony Music) uses another part of the company (the gaming division) to promote each other. In this example, synergy occurs when the gaming division uses an artist’s music on a game soundtrack. Synergy can occur between divisions of entertainment companies (music, film, television, gaming, books, magazines etc.) and also between the music industry and businesses outside entertainment. Two unrelated brands such as The Black Eyed Peas and Pepsi worked together to target a broader audience and this collaboration benefited both the band and the soft drink The fact that the primary function of the music industry is to generate profit is argued by some theorists to create a conflict as music is seen to be a creative art or an expression of ideas, unlike, for example advertising which is solely focused on meeting its economic function of persuading the audience to purchase goods. Consider how music videos, posters, interviews in the music press and personal appearances all act as adverts for the products being sold by the music industry. Some theorists have identified this financial motivation as being detrimental to artistic development and creativity.
A vanity label receives funding from the record label it operates
under and this money helps fund their distribution and marketing.
Record companies support vanity labels for a variety of reasons:
1. The label creates status for the famous artist by allowing them
creative control to discover new talent and produce music that
is more independent from the ideals of the record company.
2. Vanity labels have the potential to create high volume sales
figures for the record company. Vanity labels need little promotion
because the artists existing fans are attracted to the new artists
signed on the label due to their affiliation with the famous artist ‘responsible’ for the label.
Drake has shifted completely over from SoundCloud to Apple Music, according to The Verge. As part of the integration of Beats 1, Apple Music's 300 million streams of "More Life" is half of the worldwide total, despite having one fifth the members of Spotify. Drake released a series of Apple Music-exclusive songs in 2015, on OVO Sound Radio. The show airs every two weeks on Saturdays and focuses on new releases. Apple continues to decline requests for specific listenership data or demographics for Beats 1.
Chance the Rapper has been looked to as a pioneer in the music industry for maintaining his independence by not tying himself to a major label and going the free mixtape route instead of charging for a studio album. That’s why recent news suggesting the rapper might sell his next album became particularly noteworthy. Now, in an extended Twitter commentary, the Grammy winner has revealed that Apple Music paid him $500,000 for exclusive streaming rights to Coloring Book.
- 77 percent of iOS users are aware of Apple Music
- 11 percent are currently using Apple Music. That figure is consistent among users who purchase downloads from iTunes, or use iTunes to manage their music library.
- 18 percent of iTunes Radio users are now listening to Apple Music. iTunes Radio was Apple’s previous streaming product that was rolled into Apple Music and rebranded to include Beats 1 and other genre stations.
- 52 percent of users who have tried Apple Music are still tuning in. That means that over half are still hooked on the service almost two months after it first launched. (Update: Apple is contesting this figure, telling The Verge that 79 percent of Apple Music users have actually stuck around and are currently using the service).
- 28 percent of Spotify paid subscribers also use Apple Music. These can be considered the die-hard streaming fans who try and compare different platforms to see which one most deserves their $10 every month.
- 11 percent of free Spotify users and 6 percent of free Pandora users are on Apple Music. The low figures here indicate that for most users using free, ad-supported streaming services are satisfied and not willing to pay $10 for anything else—even with Apple Music’s tempting three-month trial.
- 64 percent of current Apple Music users claim they are very likely to pay to subscribe after their free trials end.
- 61 percent of current Apple Music users have already turned off the auto-renewal. Perhaps they just want to subscribe on their own terms.
- 30 percent listen to Beats 1.
- 27 percent use Connect.
- 33 percent of current Apple Music users were encouraged to start purchasing or purchase more downloads from iTunes. Apple Music users could be turning to iTunes purchases to get access to music that isn’t available to stream on Apple Music.
- 40 percent of iOS users are still purchasing downloads from iTunes.
After Drake's self-proclaimed "playlist" "More Life" was released on Saturday, it amassed 89.9 million streams on Apple Music and 61.3 million streams on Spotify in the first day alone, according to official numbers confirmed to Fader.
These streams may be a moneymaker for artists like the champagne papi, but they're also a big deal for streaming companies, which last year displaced digital music sales to become the no. 1 way people listen to digital music (if you're curious, R&B and hip-hop are the top genres).
This may be part of the reason that Apple paid $500,000 for Chance the Rapper's "Coloring Book" mixtape to be an Apple exclusive for two weeks. After that, the mixtape appeared for free on Soundcloud and went on to win a Grammy.
Last year Apple Music surpassed 20 million subscribers, while Spotify recently reached 50 million. The more listeners these services gain, the more money the streaming companies and artists make.
BPI figures show that the total income generated by the UK music industry rose 5 per cent last year, from £881m to £925m, as the revenue from streaming services shot up by 60 per cent, the FT reports.
Subscriptions to Spotify, Apple and other services such as Deezer accounted for 87 per cent of the £273m overall streaming revenues.
However, despite popular opinion that physical sales are dying, the total income from non-digital formats still made up 32 per cent of the British market in 2016 - only dipping by 2 per cent.
All of the massive numbers connected to proper streaming services are great, but they don’t hold a candle to YouTube, which is still how the world listens to music...a fact that isn’t exactly making the music industry happy. In fact, while countries like the United States are leading the incredible gains made by firms like Spotify and Apple Music, it’s the rest of the world that seems content to stick with the video platform everybody is already familiar with.
According to data provided by the company itself exclusively to FORBES, an estimated 80% of all views on YouTube come from outside the U.S. The largest and most popular video site on the planet has never had a difficult time pulling in views, but even as those play counts rise, where they are coming from has shifted over the past few years.
Looking at the top 100 videos on the platform during any given week, it is clear that it's not just American-made pop stars that are bringing in the eyeballs. For example, during the last tracking frame in March, the top 100 list contained songs in English, Spanish, Hindi, Korean, Russian and even Thai, with other languages popping into the popular ranking from time to time as well. The most-viewed music video of all time remains Psy's K-pop blockbuster "Gangnam Style," and new releases from megastars in large markets like India and Korea can attract more people than even some of the most intensely marketed names in markets like America.
A representative for the video hosting platform revealed that 40% of views on YouTube in the second half of 2016 came from Latin America alone, and that only 20% of all views across the site originate in English-speaking countries. That number may continue to drop as Americans, Canadians and those in Western Europe switch to streaming sites which are better suited for mobile listening. Services like Spotify and Apple Music may not be as large as YouTube, but they beat the Google-owned site to the punch when it came to features like offline listening, playlisting and curation, which millions are now coveting.
YouTube, which is still entirely free to use and which contains a catalog of tens, if not hundreds of millions of songs, has almost everything a listener could want at absolutely no cost and with no need to download something new and learn how it works. Those benefits far outweigh the perks of a premium account for millions in developing nations, and even if some wanted to subscribe, some of the biggest players in streaming are still working on launching in every nation.
It might not be on the good side of industry bigwigs which have been wringing their hands and shaking their fists over miniscule payout rates and insufficient piracy blockers for years, but YouTube is still how millions of people all around the world listen to their favorite artists and the hits everybody just can’t get enough of, and that is unlikely to change in the foreseeable future.
Apple Music, Apple Inc.'s (AAPL) media streaming service, was launched June 2015. In a short span of 20 months, it crossed the 20 million paying subscriber milestone (December 2016), closing the gap with segment leader Spotify, which reached 50 million paying subscribers in March 2017. Both streaming services have captured a major portion of the U.S. market and continue to grow.
According to a recent report by Amit Daryanani of RBC Capital Markets, Apple Music is only installed by 3% of Apple device users. Though not every iOS user will be happy to start paying for Apple Music, a low single-digit number suggests there are still plenty of customers the company can bring to its music streaming service.
Apple Music is already available in more than 100 countries around the world, but there is more room for growth as Apple Music is not even two years old. Senior Vice President of Apple Services Eddy Cue told The Verge the company is hoping for faster growth.
Streaming platforms in the US market are now generating more annual cash from music than digital download services like iTunes ever did.
Streaming vs music downloads:
According to RIAA data analyzed by Music Business Worldwide, the peak of download retail sales in the US market (inclusive of ringtones, music videos, ‘kiosk’ and other digital sales) came in 2012, when they topped $3bn at $3.02bn.
As previously reported, streaming platforms generated significantly more than this ($3.93bn) in 2016, thanks to a 68% year-on-year rise in revenues.
It’s important to note that this $3.93bn figure includes $884m of payouts from SoundExchange, for streaming plays of records on ‘lean-back’ digital radio services such as Pandora and SiriusXM.
Even without SoundExchange, US music subscription streaming revenues reached $2.48bn in 2016 (including $220m from ‘limited tier’ services like Amazon Prime Music and Pandora’s $4.99-a-month Plus platform).
In addition, ad-funded streaming platforms such as YouTube, Vevo and Spotify’s free tier generated $469m in the US last year – resulting in total an on-demand streaming tally (ie. not including SoundExchange) of $2.95bn.
That’s actually bigger than the total revenues from albums and singles sales on the likes of iTunes in 2012 – the year of download’s apex – which jointly reached $2.83bn.
(That year’s total official ‘download’ figure of $3.02bn was boosted by $166.9m in ringtone sales, as well as other niche digital formats.)
It would take a brave analyst to forecast that subscription platforms alone won’t top this $2.83bn mark in 2017.
Mr Masuch said that BMG now pays its artists 75 per cent of streaming royalties, but major labels still pay out much lower ratios, because of higher legacy expenses such as the cost of warehouses, logistics and breakage.
He argued that the big music companies spent, on average, 19 per cent of their revenues on artist royalties. With 60 per cent of music revenues now derived from streaming, a push by artists to renegotiate royalty deals towards a 50 per cent level or higher could steer returns-on-sales rates into negative territory, according to the BMG boss.
On-demand music streams rose 76% in 2016 in the U.S., while digital track sales fell 25%, digital album sales sank 20% and CD album sales slipped 16%, according to Nielsen.
The Recording Industry Association of America expects to release full-year 2016 statistics in March. But for the first half of 2016, streaming accounted for 47% of U.S. recorded music sales, followed by permanent downloads (31%) and physical media (20%), RIAA said.
It's still early days for the streaming music business, with many more consumers left to convert. Predicting which companies will end up on top has become a parlor game for industry analysts.
Spotify and Apple's (AAPL) Apple Music are leading the charge now in subscription streaming music services, though in Apple's case the streaming business is cannibalizing some of its iTunes download sales.
Meanwhile, Tidal, Deezer, Napster, SoundCloud and others are fighting for table scraps. Tidal, the service run by music mogul Jay Z, received a financial lifeline when Sprint (S) on Jan. 23 announced that it was buying a 33% stake in the company for an undisclosed sum reportedly around $200 million.
Music subscription services passed the 100 million subscriber milestone on a global basis in December, Midia Research reports.
Midia, a music industry blog, estimates that Spotify ended the year with 43 million subscribers, to 20.8 million for Apple Music. Deezer, a 10-year-old company based in Paris, came in third place with 6.9 million subscribers, followed by Napster (4.5 million) and Tidal (1 million). Amazon and Google, at this point, don't make the top five, though it's possible they'll give this market more attention at some point.
MusicWatch estimates that Apple iTunes has about 75% of the music download business in the U.S., which totaled about $2.13 billion last year. So Apple's gross sales in digital downloads were about $1.6 billion in 2016, Crupnick said.
MusicWatch also estimates that Apple Music has about 9 million U.S. subscribers out of 25 million streaming music subscribers in the country. With average revenue per user of about $100 per year, that translates to a $900 million annual run rate in the U.S. alone.
Further profits from streaming music:
At the beginning of December, one of the world’s biggest labels, Warner Music, announced revenues of $3.25bn (£2.66bn) this year – its highest in eight years. More significantly, $1bn of that was from streaming, more than double its download revenue and more than $100m more than its physical revenue.
The surge in profits is being seen across all the major labels. In the first half of 2016, streaming revenue in the US grew by 57% to $1.6bn, and worldwide digital revenues overtook those from physical sales for the first time in music industry history, mainly because of streaming. This year’s most-streamed artist was Drake, with 4.2bn streams. There are 90 million people signed up to streaming services worldwide and the shift, and the aggressive speed at which it has taken place, is having the greatest impact on music since digital downloads were introduced. It makes boycotts by artists such as Taylor Swift, who condemned Spotify for only paying between $0.006 and $0.0084 each time someone listens to a song, seem redundant.
The U.S. industry is on pace to expand for the second straight year -- the first time that’s happened since the CD sales peaked in 1998 and 1999. Retail spending on recorded music grew 8.1 percent to $3.4 billion in the first half of 2016, according to a midyear report from the Recording Industry Association of America that was obtained by Bloomberg News.
The credit goes to streaming -- Internet services that give listeners commercial-free access to millions of songs for a monthly fee -- or for free if they’re willing to hear ads. U.S. streaming revenue grew 57 percent to $1.6 billion in the first half of 2016 and accounted for almost half of industry sales.
While sales from ad-supported, on-demand streaming grew 24 percent to $195 million in the first half of 2016, according to the RIAA report, those services aren’t doing enough to convince people to pay for music and and don’t make enough money off their free users, RIAA Chairman Cary Sherman said in a blog post.
The growth in streaming is being seen worldwide, including previously small markets and others decimated by piracy.
South Korea has emerged as one of the 10 largest music markets in the world, with sales totaling $265.8 million in 2014, according to data from the International Federation of the Phonographic Industries. A decade ago, that market was half the size and not one of the 25 largest.
Unlike Korea, China was once a major market, contributing $212 million in sales back in 2004. Yet with the explosion of piracy it shrank to just $23 million in 2010. The world’s most populous country was the 38th largest music market.
By 2014, the market in China surpassed $100 million for the first time in almost a decade, with streaming a major source of the recovery there.
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