How technological advancements impacted on the 21st century music consumer- a study into the resurgance of the vinyl lp

Executive Summary

The aim of this piece is to establish wether there is a connection between the rise in the availability of digital music services, and the rise in sales of vinyl records in the 21st century. Literature relevant to vinyl records and consumer attitudes will be explored, combined with data found through secondary research. Once a connection has been made, both the research and the literature will be used to investigate wether the music industry can use the results in order to better service their consumers.

Chapter 1- Introduction

For the first time in history, 2014 saw recorded music revenues fall below $15 billion to $14.97 billion, thanks to a global drop in both physical (8.1%) and download (8.0%) sales. Despite this overall decline in worldwide revenues, one type of product is showing a significant upturn in sales, the vinyl LP. The sales of vinyl rose by 54.7% in 2014 and although it is still only a niche product, accounting for around 2% of international recorded music revenues, this spike in sales is an area of intrigue throughout the music industry (IFPI, 2015).

2014 also saw independent rock act Jack White’s solo album Lazaretto, break Nielsen Soundscan records, becoming the fastest selling vinyl LP since records began in 1991 (McIntyre, 2014), but what  exactly is causing a resurgence in this format? Once perceived to be out of date by major record labels (Kozinn, 2013), the 21st century is full of alternative listening experiences; compact discs, digital downloads and streaming services like Spotify and Deezer taking up the vast share of the market (IFPI, 2015). So is the recent trend just an anomaly among a certain group of consumers, or is there something more to the upturn in sales?

Neil Young (2015) states that the current interest in vinyl records is “really nothing but a fashion statement” as he believes contemporary releases are mastered from digital CDs so they are nothing but CD quality music playing on the vinyl format. This may or may not be the case, but Carl Smithson (2015) of Truck Independent records, believes the interest in vinyl is a direct reaction to the digital world; “Streaming is great for ease, but people want to own something and be able to share that experience with their friends.”

The purpose of this report is to investigate the current trend towards purchasing music on vinyl, and to try and decipher what it may mean to the wider music industry. In order to do so, secondary research has been collected in an attempt to reach conclusions to the following:

What consumer groups are buying vinyl records in the 21st century and why?

Is there a relationship between the sales of vinyl records and the consumption of digital music?

Can the music industry serve consumers better by understanding the link (if any) between digital music formats and vinyl records.

This piece will address the aforementioned issues by using the following structure: Chapter 2 will focus on critically analysing the already existing literature on what types of consumers buy vinyl records, and why they choose to do so. Chapter 3 will map and detail the possible ways of obtaining data relevant to consumer attitudes on vinyl records, using secondary research, and the philosophy attached to this methodology. Chapter 4 will present the findings of the research of both the quantitative and qualitative data sets found. Chapter 5 will then critically analyse the findings of the research, relating those findings back to the pre-existing literature, in order to asses the relationship between consumers and vinyl records. It will also look to how the music industry can use this data in the future to serve consumers most effectively. Finally, Chapter 6 will conclude the project.

Chapter 2- Review of the literature

This literature review will look into the pre-existing literature on people’s attitudes towards physical & digital music formats and the rise and decline of the vinyl record over time, in order to assess potential gaps for further research on the topic.

A qualitative study conducted by McIntyre (2009) in relation to the decline of record shops, found that virtually every one of his interviewees eulogized about the smell, feel and magical properties of a vinyl LP. He also concluded that compact discs (CDs) were a form of mass market consumption, the middle ground between the vinyl LP and the process of digital downloading. Furthermore, having a library of thousands of individual tracks was generally seen as a negative trait, as the music consumers questioned favoured listening to music in depth rather than breadth.

This is further echoed by Hayes (2006) in his study of teenage music fans who lamented the days where artists such as The Beatles or Bob Dylan recorded albums that made statements, and were supposedly more powerful than the recording labels they were signed to. These fans were obsessed by collecting and hunting down second-hand vinyl records, cleaning and archiving them in collections and discussing these experiences with like-minded peers. This, and the listening experience offered by the vinyl LP, lead them to rejecting contemporary music of the time.

Among fans of contemporary music though, there are distinctions clearly made between the physical and digital realms. Most commonly, according to (Giles, et al., 2007) digital music is used as a research tool used to discover new music that is then purchased on a physical format if particularly desired by the consumer. Their study also found that “the traditional aspects of music collecting still mean there is a felt need for material recordings”. The study also referred to the music itself being placed on display in tower racks and in dedicated items of furniture. Though their piece did not focus on vinyl records specifically, they suggest further research into young consumers, whose first music purchase was in the digital realm, and their relationship with physical music formats.

Further research is also required in the contemporary music market and how consumer behaviour has reacted to technological change (Warr, et all., 2011). It is also suggested in their report, that the values offered by physical music formats need to be assessed comparatively to the values that customers attribute to digital music. They believe that understanding these consumer values could be the way forward for the music industry.

In their study of music consumption, (Nuttall, et al., 2011) go some way into looking into this and found that in some cases, ownership of music is still important but that it has partially transferred into the digital world. Music is purchased online instead of on the high street, then stored as digital files on MP3 players and Laptops, as opposed to physical formats stored on shelves. It was also found though, that some participants attached a symbolic nature to physical copies of recordings. Part of this was through a level of superiority felt by the consumers themselves who believed they were a bigger fan of someone’s music if they bought and owned an artist’s CD. This was also linked to the satisfaction felt by owning a large collection of physical music to show off to others, though these sentiments were all from male respondents. This particular study related to CD purchases, but it could be used as a template for a similar study on vinyl records in today’s market.

It is also argued that when consumers are highly reliant on their portable music devices, their preferences towards owning a tangible copy of the music they are listening to is reduced says Styvén (2010). This high usage is explained by the desire for portability and large amounts of music on the go, something that tangible music formats cannot offer. The study goes on to say that one of the ways the internet has changed the consumption of music is to allow fans to just buy the singles they wish to own and not have to buy the whole of an artist’s album. Both these points reinforce Styven’s (2010) argument that tangible formats are seen as more valuable by certain groups of consumers and could indicate a need for a study into what format is perceived as more valuable, the CD or the Vinyl LP?

A lot of the value attributed to the vinyl LP in the 21st century is through its change from being used as a functional item to its usage as an aesthetic form of expression (Nokelainen, et all., 2015).  One of the reasons for this is that the modern record buyer is more interested in the technology itself, rather than the music or art contained within or on it. They propose that contemporary vinyl consumers aren’t buying into the format for its conventional uses but to take part in the tweaking and modification involved in using the technology itself. This is an interesting discovery, but given that the results are taken singularly from a vinyl enthusiast’s web forum, the results may not be the same if the same amount of people (190,000) were surveyed under different circumstances.

This does show that the digitisation of music has not rendered physical formats obsolete and this case is also put forward by Magaudda (2011). His study states that that the desire for material goods has not been eradicated, but reconfigured and reinvigorated through obsolete objects. He goes onto say that the subjects he interviewed use digital and physical music in ways that complement each other, and shows that they do not have to be mutually exclusive.

The credibility associated with vinyl records brought forward by Hayes (2006) is also further reinforced by the fact the formats relevance extends further than the rock/pop recorded up until the 1990s. It is suggested that the reliance on the format by dance, hip hop and electronic music listening cultures, is a large factor in the resurgence of vinyl in the contemporary marketplace (Bartmanski, et all., 2013).

In a comparative study of two Norwegian record shops Kjus (2015) found that one of the important factors of purchasing vinyl records in the 21st century was the detachment felt by listening through digital alternatives. One shop, Big Dipper, used this thought process as a marketing tool to launch an attack on the digital listening experience, and to promote itself as a provider of a service that had more value. Kjus (2015) further stated that, for the shops employees, vinyl “was a bridge to a (romanticised) past, when vinyl was a primary recording medium for artists and everything was different (better), a point made repeatedly on vinyl album reprints to this day.”

This section has thoroughly detailed and critiqued the available literature on consumer attitudes towards vinyl records. It has led to a belief that an under researched area in this field is the relationship consumers have with contemporary releases on the vinyl format. Hopefully research into people interested in vinyl will help identify what type of people are choosing to buy new music on this format today and why. This topic of research would be valuable to music producers of all shapes and sizes, from major to independent labels and artists, to help them produce content relevant to music consumers in the 21st century.

Chapter 3- Research Methods

This section will address the philosophy of research and look at the differences between social constructivism and positivism. It will define the attributes of both quantitive and qualitative data sets and state the methodology chosen by this paper, mentioning it’s strengths and limitations.

When conducting research, it is important to select a paradigm as a framework to the research. The theory of Positivism is one example of a research paradigm, and states that reality is independent of the researcher and it’s goal is discovery of theories. Because of this, positivists assume the act of research has no effect on the social reality it is conducting its research within. Positivist theories provide the basis of explanation, and predict the occurrence of social phenomena. It’s belief is that these phenomena can be measured, so positivism is associated with methods of quantitive analysis (Collis & Hussey, 2009).

The approach to answering a research question using Quantitative analysis means using predominantly numerical data from experiments, closed survey questions and published data sets. The advantage of using Quantitative data is that the researcher is able to draw data on a much wider scale of responses, answers are usually more precise because of a more articulated approach to questioning, and the breadth of the research allows conclusions to be made with a reasonable degree of validity. However, the data gained can be at risk of not understanding a phenomenon properly, as not all aspects are measurable, and there is a risk of obtaining bland results that are strictly numerical (Cottrell, 2014).

Social Constructionism, on the other hand, is the theory that social phenomena is instead created from the actions of social subjects. Because of this, social reality is in a constant state of flux and so it is necessary to understand the situation that the subjects are in, in order to understand what drives their decisions to act. The use of the social constructionist philosophy requires a more in depth view of subjects opinions and thought processes, this is why it is better to use a Qualitative data collection approach within this framework (Saunders et al., 2012)

Qualitative data instead uses open-ended survey questions, unstructured interviews or focus groups to gain a better understanding of human behaviour, opinions and thought processes. Because of this more open ended approach, the data provided can allow a greater set of responses to emerge from individual people that give insights into their opinions and feelings. The downside is that it can create large, cumbersome pieces of data in the form of long quotes from interviews or focus groups (Bryman & Bell, 2007).

The financial, accessibility and time limitations imposed on this piece, meant that the most effective way to research for this project was through the use of secondary data, predominantly within the social constructionism paradigm. Secondary data includes both raw and published data already collected for other purposes. The benefits of this are that the research is more permanent and more open to public scrutiny, the resource requirements are lower and it is unobtrusive. The downside is that it may generate results that are not directly relevant to the research question, there is no control of the quality of the data and the initial purpose of the researcher may affect how the data is presented (Saunders et al., 2012).

Because of the nature of the secondary data approach, both quantitive and qualities data sets will be analysed. To necessitate this approach requires the process of triangulation. “Triangulation is the use of multiple sources of data, different research methods and/or more than one researcher to investigate the same phenomena” (Collis & Hussey, 2009). Using triangulation leads to greater reliability of the research. Reliability is concerned with how consistent the research findings are, and if the results would be the same if the same procedures were used by different researchers. Triangulation also improves the validity of results, which is more concerned with wether the results designed to test a particular concept, really directly measure that concept (Bryman & Bell, 2007).

In order to explore the pre-existing literature, Google scholar was used to find articles relevant to vinyl records. The terms ‘vinyl’ ‘records’ and ‘consumer attitudes’ were used in the search engine. Then, in order to drill down further into more relevant papers, the terms ‘music industry’ ‘teenagers’ and ‘analogue technology’ were entered to produce more tailored results.

In order to then find data on the more contemporary interest in vinyl records, trade publications such as Music Week and Billboard were read, as were quality national newspapers. The databases of trade specific researchers like the IFPI and ICM were also searched for figures relating to the sales of vinyl records.

This chapter has clearly explained the different research paradigms relevant to this project, the differences between qualitative and quantitive data, as well as the positive and negative aspects of secondary research. It has also stated why knowledge of these philosophical theories are an integral part of creating an effective, reliable and valid research project.

Chapter 4- Presentation of the findings

The renewed level of interest in vinyl records has been well documented in various different press outlets and trade publications. The purpose of this section is to present the most relevant findings to the research question that were discovered through secondary research.

According to a 2013 investigation in the UK by Independent Communications and Marketing Unlimited (ICM), the driving force behind the vinyl sales resurgence was 18-24 year olds with 14% buying vinyl in the month prior to being questioned (ICM, 2013). However, in the same study the following year, it was found that the largest group purchasing vinyl records had shifted to those in the 25-34 year old category, accounting for 26% of vinyl sales, which was 17% more than that categories results from the previous year (ICM, 2014). This shows that the main age demographic of vinyl consumers in the UK are those under 34.

In the USA, young people represent an even larger share of the market. According to the National Purchase Diary (NPD, cited by Ringen, 2015, pp 38-39) consumers aged 35 and under represent 44% of the overall US music economy but account for 72% of all vinyl sales.

One of the key themes that arose during the research into why these consumers favoured vinyl was  the importance of the sound quality over the other formats available in the 21st century. One anonymous interviewee from the 18-24 category told the ICM (2013) in the qualitative part of their study;

I love the way vinyl sounds so raw. Other formats sound like an annoying frequency if listened to repeatedly, whereas I feel vinyl has a much fuller organic sound.”

In an interview with LA Weekly, the creator of the CD Kees A. Schouhamer Immink (2015) said; “As long as you can measure the difference, the CD will be better than the vinyl, absolutely”. He goes on to state that:

“If you say the whole experience — just like smoking cigars with friends — [is better], well, do it. Enjoy smoking cigars with friends, and drink beer and brandy and enjoy listening to an old-fashioned record player. But don’t say the sound is better. You may say it sounds better to you. That’s OK. That’s a subjective matter.” (Immink, 2015)

Paul Stephenson (2015), managing director of audio manufacturer ‘Naim’ acknowledges the functionality of the MP3 format, but sides with audiophiles who want more from their listening experience in a Guardian interview;

You will always get the bare essentials [from MP3], but in terms of changing your life and getting what the composer intended, you are never going to get that from MP3.” (Stephenson 2015)

Paul Rigby (2015) co-owner of Australian based record shop, Zenith Records believes this is only part of the reason why a younger market is starting to reject the MP3 and place more significance on owning a piece of recorded music on the vinyl format. He told the Guardian:

“With the younger folks, the vinyl has become a merchandise item. They’ll buy the T-shirt, they’ll buy the record. They’re collector’s pieces – not strictly a music storage medium. They represent more than that to the younger market,” (Rigby, 2015)

This theory is further cemented by the ICM’s findings in their 2013 report that 27% of all vinyl consumers purchase records without ever intending to play them. When interviewed on this subject, the respondents gave answers like; “It allows me to display the cover in my frame and leave the CD in the rack to play.” And “You can own what is essentially a piece of art in a size where artwork can be appreciated (unlike most CD covers).” (ICM, 2013)

This love for the aesthetics of the vinyl packaging is further echoed by General Manager of Ameoba Records, Rik Sanchez (2015) who told Billboard; “Having a record in your hand is just way cooler than having a file in your iPod”.

Rough Trade Director Steven Godfrey (2014) further supports this idea behind young people purchasing vinyl records:

“I think we are moving into a post-digital age where people do value something that is real – there is a value in its ownership, it is not just a piece of binary code on a mobile phone.”

A nineteen year old east London record shop employee told the BBC of the love for having ownership of a vinyl record, and how he got something out of the experience of owning a physical piece of music: 

“The thing about playing a CD is you put it in, press the button and it plays. This sounds a bit corny but the artist has put so much effort in with vinyl you have to get it out of its sleeve, put the needle on and I think it’s respectful.” (Alex, 2013)

Another example of this respect for the music and artist are the Classic Album Sunday listening parties organised by DJ Cosmo or Colleen Murphy. Murphy (2015) told the Independent;

“We provide a space where people can immerse themselves in an album, played on vinyl in it’s entirety, in a cosy setting with other people and on a world-class audiophile sound system so that people can hear new things and experience it in a way they never have before.”

Nielsen’s study of 4000 music consumers found that there is a significant number of people that would like to experience music in more ways that the industry is currently offering them. Nielsen’s Chief Analytics Officer stated “Fans want more, there is an unmet need there.” (Cited by Peoples, 2013) Their findings also said that even the group Nielsen called “Ambivalent Consumers” (the 22% that spent the lowest amount, $73 on music annually) would buy exclusive content if given the opportunity. The study also found that the potential revenue gap not currently being addressed by the industry was worth between $450 million and $2.6 Billion (Nielsen, 2013).

[Nielsen (2013) Turn It Up: Music Fans Could Be Spending up to $2.6 billion more annually. Available at: http://www.nielsen.com/in/en/insights/news/2013/turn-it-up–music-fans-could-spend-up-to–2-6b-more-annually.html (Accessed: 30/04/15).]

From looking at the knowledge gained through this research, it is clear that consumers aged 35 and under hold an emotional attachment to music that is contained within the format of the vinyl LP.  Both this, and the community aspect of the listening experience offered by this format suggest areas that could be used to better service 21st century music consumers.

Chapter 5- Analysis of the Findings

Having looked at the pre-existing literature on vinyl records and then researching deeper into the role they play as a consumer product in the 21st century, it is clear that there is a relationship between the rise in digital music sales and the desire for a more tangible consumer experience. This section will now discuss the objectives of the research question through these findings.

A clear theme that emerged during the research was that consumers made a specific choice to buy music on the format of a vinyl LP, even though it is considerably more expensive than other physical (CDs) or digital alternatives (Winkie, 2014). An explanation for this is the way value is placed on the format itself, over and above the content contained placed on or within it. This links in with the (Nokelainen, et all., 2015) theory that purchasing music on the vinyl format is used as a form of expression/statement for the consumer. Brian Solis’s theory of the value of context is synonymous with this behaviour. He states that “we must invest in the calibre of our relationships as well as the calibre of the content we consume, create and share. The answer to what consumers value lies in context” (Solis, 2011). By realising that the vinyl LP is a context in which content is placed, music producers can seek to add value to this context and add value to their business.

A good example of this in action would be the success of the Lazaretto LP, by independent rock act, Jack White. The vinyl edition of the album was christened the “Ultra LP”, and was pressed with various unique traits, such as a floating hologram, reverse playing sides and under label grooves (OfficialTMR, 2014). This added value in the context resulted in 86,700 copies sold in 2014, 28,000 more than it’s nearest vinyl LP competitor, the standard vinyl pressing of AM by The Arctic Monkeys (Nielsen Music, cited by Jonathan, 2015) 

This value of context is again brought forward with the idea that vinyl records are “collector’s pieces – not strictly a music storage medium” (Rigby, 2015) and can explain why people aged under 35 are buying them. Hayes (2006) discovered this was true of young collectors purchasing secondhand records, but it would also appear to be true of the consumer of contemporary releases on the format. This would go some distance to explain the phenomenon of independent record store day, that has become a global event since it’s inception in 2007. Intended to support independent record shops, artists and labels are encouraged to put out limited edition vinyl records that are available in selected shops on that day only (Williamson, 2015). It’s success has sparked involvement from major record labels that have started creating special edition releases for record store day. This has left some consumers feeling alienated by deluxe vinyl versions by huge acts like U2 (Cramp, 2015). This is a counterpoint to Solis’s (2011) “Context is King” theory, as although playing vinyl is seen as a way to “respect” the artists work (Alex, 2013), it would seem a connection must exist first with the music, not the format. This suggests the format that the consumer chooses to purchase the music on is more of a reflection on the consumer, not the artist, and that by purchasing an artists work on a physical format, the consumer feels a deeper connection with the artists work (Nuttall et all., 2011) .

This should be recognised by music producers, especially when taking into account Nielsens findings that, combined, the Aficionado and Big Box Music fans (those most likely to purchase vinyl records) were worth an estimated 48% of all spending on music in the USA in YEAR (Nielsen, 2013). These consumers are the types that would already purchase vinyl, but perhaps the key area for creators to recognise is the Ambivalent consumer, who would spend a lot more on exclusive content if given the chance (People, 2013). One way they are given this chance to spend more is on record store day, so the appeal of the limited edition and tactile attributes of the vinyl LP can potentially stretch to people that do not necessarily regard themselves as fans. The 27% of vinyl consumers that do not own a turntable are further proof of this groups existence, and who place as much value on being able to “own what is essentially a piece of art in a size where artwork can be appreciated” as they do on a listening experience (ICM, 2013).

The use of digital music as a research tool rather than a consumer experience is prevalent among buyers of physical music (Giles, et al., 2007) and sound quality was one of the main reasons why certain consumer purchasing vinyl records over digital files. Stephenson (2015) states: “in terms of changing your life and getting what the composer intended, you are never going to get that from MP3.” This further cements Magaudda’s (2011) findings that digital and physical music are not mutually exclusive for young consumers but the idea among young people that vinyl has a superior and “much fuller organic sound” (ICM, 2013) than other formats available appears to be linked to a psychological and nostalgic thought process. This thought process shows that young people wish to have the ability to listen to digital music, but also want to invest in the artists work on vinyl because “They [Vinyl Lps] represent more than [a music storage medium] to the younger market,” (Rigby 2015).

Kjus (2015) found that young employees felt vinyl “was a bridge to a (romanticised) past, when vinyl was a primary recording medium for artists and everything was different (better)” so this nostalgia is prevelant among vinyl enthusuasts under 35 but the idea of vinyl sounding “better” is refuted by Kees A. Schouhamer Immink. Young consumers feel that the experience of CD’s that “you put it in, press the button and it plays” (ICM, 2013) is not enough but when it comes to the actual sound, Immink (2015) states; “You may say it sounds better to you. That’s OK. That’s a subjective matter”

The physical experience of playing a vinyl record that is tactile and real seems to be the prevailing theme as to why young consumers are turning to vinyl records. Classic Album Sundays where people “can immerse themselves in an album, played on vinyl” through the use of a “world-class audiophile system” won’t necessarily make the sound of the vinyl record more accurate than a CD or Digital File, but the “cosy setting with other people” again suggests the importance of context over content in the 21st century (Murphy, 2015).

Although the secondary research on this topic brought up many interesting theories on why young consumers choose to buy vinyl records, not doing primary research has led to relying on how others have been quoted. This means that the study is not a direct analysis of young consumers and their interest in the vinyl format. A deeper study into how digital consumption affects physical consumption is necessary (Giles, et al., 2007) and although this was one issue addressed in this piece, neither the funds or resources were available to mount a significant primary research project specifically in this area.

This section has critically analysed the findings of the secondary research and related them to the pre-existing literature in an attempt to answer the research questions. The research in this report has lead to the belief that consumers under the age of 35 are main people purchasing vinyl records in the 21st century and do so for a variety of different reasons, with different consumers placing different levels of importance on their favoured features of the format. Though the prevailing theme above all else is the need for an experience that is more tangible than that offered by digital music formats.

Chapter 6- Conclusion

In conclusion, the results of this paper make it apparent that the resurgence in the sales of vinyl records is a direct reaction to the rise in digital music services in the 21st century. Even though it is only among a certain group of consumers, the fact that the upturn in sales is driven by those under 35 would signify that it is a trend that will continue and grow in the future (ICM, 2013). The physical attributes and limited edition releases also seem to be a driving factor in the formats resurgence, especially when consumers are given more value through special edition releases like the Lazaretto LP (Nielsen Music, cited by Jonathan, 2015).

In a world where almost the entire catalogue of recorded music is available to most people through streaming services on their computer or even mobile phones, the desire for certain consumers to have something less disposable is to be expected. Technology has allowed the 21st century music buyer a wealth of choices when it comes to how they choose to purchase the material that they enjoy. This is why Solis’s (2011) theory of “context is king” is a key element to ensure that music fans are given the freedom to purchase music how they want to, not just be told how they will by the industry gatekeepers. The value gap in today’s industry discovered by (Nielsen, 2013) can be addressed through creative releases on all available formats, not just vinyl records, in order to cater for all different types of music consumers in the future.

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Peoples, G. (2013) ‘Nielsen Study: Music Industry Could add $450 Million to $2.6 Billion in incremental revenue with premium content.’ Available at: http://www.billboard.com/biz/articles/news/digital-and-mobile/1551730/nielsen-study-music-industry-could-add-450-million-to (Accessed: 29/04/15)

Rigby, P. (2015) ‘Breaking records: it’s a new generation drinv record store day, not nostalgia.’ Interview with Paul Rigby. Interview by Shuck-Wah-Chung for The Guardian, 17th April. Available at: http://www.theguardian.com/music/2015/apr/17/breaking-records-its-a-new-generation-driving-record-store-day-not-nostalgia (Accessed: 29/04/15)

Sanchez, R. (2015) ‘Who’s buying LPs? The Kids’ Interview with Rik Sanchez. Interview by Jonathan, R. for Billboard 15 March. pp. 38-39

Saunders, M., Lewis, P. and Thornhill, A. (2012) Research methods for business students. Harlow, England: Financial Times Prentice Hall

Smithson, C. (2014) ‘Sales of music on vinyl hit 18 year high’. Interview with Carl Smithson. Interview by Alexandra Topping for The Guardian, 17th November. Available at: http://www.theguardian.com/music/2014/nov/27/sales-music-vinyl-18-year-high (Accessed: 29/04/15)

Solis, B. (2011) The end of business as usual: rewire the way you work to succeed in the consumer revolution. 1st edn. United States: Wiley, John & Sons.

Stephenson, P. (2015) ‘Naim Audio Rides of Hi-Fi fans searcing for better sound’. Interview Paul Stephenson. Interview by Karl West for The Guardian, 6th March. Available at: http://www.theguardian.com/technology/2015/mar/06/naim-audio-rides-wave-of-hi-fi-fans-searching-for-better-sound (Accessed: 29/04/15)

Styvén, M. E. (2010). The need to touch: Exploring the link between music involvement and tangibility preference. Journal of Business Research63(9), pp. 1088-1094.

Warr, R., & Goode, M. M. (2011). Is the music industry stuck between rock and a hard place? The role of the Internet and three possible scenarios. Journal of Retailing and Consumer Services18(2), pp. 126-131.

Williamson, C (2015) ‘Record Store Day reveals 592 exclusive releases’ Available at: http://www.musicweek.com/news/read/record-store-day-reveals-592-exclusive-products/061117 (Accessed: 30/04/15)

Winkie, L. (2014) ‘The Price You Pay: At what cost does the vinyl revolution come,’ Available at: http://www.austinchronicle.com/music/2014-01-10/the-price-you-pay/ (Accessed: 30/04/15)

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Bandcamp; how the online world has changed how music is released in the 21st century

Introduction

2008 was the year that saw the iTunes store become the largest music retailer in the USA, selling over four billion recordings, to fifty million customers, from a library of over six million songs (Apple, 2015). Although this success has helped claw back some of the revenue lost through illegal file-sharing, it has rendered many of the older business models favoured by major record labels redundant. In 2015, outside developers like iTunes and Amazon dictate the price points of recorded music sales in the on-line world, and the hangover of piracy now means there is a difficulty in getting people to pay for music at all (Harrison, 2014, p. 184).

One way that artists are taking matters back into their own hands is through “direct to fan” services that cut-out traditional record label deals, and allow artists to sell music direct to their fan base. The artist can dictate the price-points themselves and then make digital music and/or physical products/merchandise available online on specific websites. The most prominent of these platforms is Bandcamp according to Wiksteed Reports (2015); “Consider the service offered by Bandcamp as a benchmark for feature-rich DIY/self-serve platforms.”

This report will look into the various positive and negative aspects of the direct to fan business model, using Bandcamp as the main focus, and suggest what ways it could improve its services to both creators and consumers of music. It will also look to assess the viability of this business model in an attempt to decipher its place in the contemporary music market.

A Brief History & Bandcamp Today

Bandcamp was started in January of the same year that iTunes became the biggest music retailer in the USA, as part of a solution to the problem for new and unsigned artists creating their own website. Online music streaming players were hard to include on websites in 2008 and Bandcamp founder Joe Holt decided that this was a problem that needed solving. Holt’s (2008) goal was to “Try to let musicians explore new business models themselves” so that artists could have the ability to sell their music online independently, but hosted through Bandcamp’s servers.

Bandcamp (2015) has the tools for artists to sell recorded music, merchandise, physical releases on any format and just about anything else the artist can think of at the price they choose. Because of this level of freedom, the site has gone from strength to strength and has been highly praised by Emily White (2014) “what Bandcamp is doing makes the most sense for fans, artists and the industry at large with regard to modern music releases“.

The successes of the site can be seen clearly when Burton (2015) stated that in 7 years of business, Bandcamp has paid out over $100m to artists, averages 16,000 album sales every day and pays the vast majority of their $3.5m monthly revenue straight back to the musicians hosting content on their site.The site itself takes a 15% commission on each sale which drops down to a 10% commission once an account has hit $5,000 in overall sales. The site is mainly for niche and independent artists though small labels have set-up pages for their acts as well. This is because the site and orders are fulfilled by the artists/labels themselves, which gives the service a community feel, but this may not be viable for larger artists or labels according to Wiksteed Reports (2015).

Along with a recently introduced mobile phone application for fans, the next stage of development for Bandcamp is to offer artist specific streaming services. Consumers will be able to subscribe to an act and be given access to their back-catalogue of content, merchandise discounts and exclusive unreleased material. All of this will be at the artist’s discretion because, as Bandcamp CEO Ethan Diamond (2014) stated; “We want Bandcamp to be an important part of how any artist develops a sustainable career, and subscriptions can be a big part of that.”

The direct to fan market place

One of the other significant players in the direct to fan market place is Music Glue, another site set-up as a reaction to the post-Napster era music industry, though their philosophy on recorded music revenue did differ somewhat to Bandcamp’s when it started. Mark Meharry (2009), Music Glue’s founder, stated that “music is moving away from being a retail product – to what we refer to as ‘content’. And content is not necessarily something you sell”. This philosophy has since been adapted though as they now offer digital music to be sold on their site in the same way as Bandcamp does. Music Glue’s (2015) service is also slightly less expensive than Bandcamp’s, as they only ever take 10% of any sale. Bandcamp takes (2015) 15% of every sale until an artist hits $5,000 in overall revenues, then they then decrease their cut to 10% of further sales.

Music Glue has been endorsed by acts the size of Mumford & Sons, who have used the service to sell concert tickets. This was to bypass the secondary ticketing market that is damaging the live music industry and sell direct to fans, in order to avoid tickets being resold by third parties at overly inflated prices on a non-regulated free market (Reynolds, 2012, p.132)

Another alternative to Bandcamp is a service called Topspin (2015) that has worked with Pixies, Tyler the Creator and Interpol in their campaigns. The service provided by Topspin is subscription based with no free tier and a minimum commitment of $9.99 a month going up to $49.99 depending on requirements. Because of this, the platform is more suited to established artists where bespoke sales, marketing and ticketing can be collated together in an interface that is tailored to specific artists.

It is easy to see why more established acts are choosing to go down the route of direct to fan services to interact with their fan-bases when looking at the potential to be made from CD sales through this platform. A CD sold direct to a fan through a bands website, Bandcamp/Music Glue page, or Topspin bespoke sales solution could earn up to ten times more than one sold under a traditional label deal (Riches, 2012, p 193).

The premise of direct to fan services has come under criticism though, as some believe that it is only the artists that already have a significant following will be able to use the technology to its full potential. Berger (2013) believes that “without a very consistent fanbase, a serious work team and a strong marketing and media broadcasting basis, things won’t get very far.” Perhaps the main goal for direct to fan services is to bridge this gap and develop effective tools to further an artists reach, not just enable them to shout louder to those already listening.

Aggregators and Streaming services

One of the downsides to the direct to fan approach is that it ignores the need to have music available for purchase/streaming on the sites of major retailers like Amazon, iTunes and Spotify. For independent artists to place music on sites like these, they need to go through a third party service called an aggregator. CD Baby for example, communicates with the retailers on the artist’s behalf and accounts to them in exchange for a fee for their services. The service it provides has been touted as “the grandfather of all online toolsets for music artists” (Baskerville and Baskerville, 2013, p. 411).

CD Baby (2015) also offers the ability to press artist’s CDs for them and the options are there to add customisable store fronts on web pages and social media sites. CD Baby then accounts to the artist weekly as items are sold/streamed through every site they are available on. This could be seen as an advantage over Bandcamp’s services as all the revenue is kept in one place and physical items can be manufactured and distributed through this service.

The cut CD Baby takes is far less than a record label and the music is distributed to all of the same places. On the other hand, figures show that an unsigned artist has the potential to earn more through Bandcamp’s platform than CD Baby, as the 33% royalty cut CD Baby takes is double that of Bandcamp’s initial 15% cut of an acts sales up to $5,000. Bandcamp then reduces their cut to 10% after an act hits $5,000 in revenue, which means CD Baby’s services end up costing over three times the amount of Bandcamps. (Information is Beautiful, 2015).

All of these services offer alternatives to musicians that would rather not or have not been offered the chance to sign a record deal, but just because they are alternatives, does not necessarily mean that they are the way forward. Industry mogul Simon Napier Bell (2014) told Music Week “The thing is [independents] do need the marketing corporations… if you look at the Top 20 charts on both sides of the Atlantic, it’s all major record companies. They’re not dying.”

This is further backed up by the IFPI (2015) report on digital music which found that the 10 largest selling acts of 2014 were signed to labels owned by one of the three major record labels; Sony, Warner or Universal. The IFPI (2014) also found in their investing in music report that it costs between $500,000-$2,000,000 to break a new act in a major market and that more than $20billion was spent by record labels on A&R and marketing artists between 2009 and 2013. If this is the true cost of global success, it is no wonder that major labels have a firm grip on the upper echelons of the industry. An independent artist is unlikely to have huge funding to kick-start their early career and this is why the direct to fan model has not resulted in a paradigm shift, where every independent artist can become instantly successful (Spitz, 2013).

Crowdfunding

One of the ways a new or established artist can bridge this funding gap in the run up to a new release campaign is by approaching a crowdfunding site like Kickstarter or Pledge Music. Pledge Music identified a revenue gap that was also highlighted in a Nielsen Soundscan report. The report found that there were 6 different types of music consumer and that the industry was losing up to $2.6billion by not servicing the most passionate of those consumers (Peoples 2013). Pledge Music allows fans to be involved in the process of making an album, by funding it before it is released, and are then given access to exclusive content in return. Pledge Music’s CEO Benji Rogers (2013) believes it empowers fans to “have your super fan experience here [Pledge Music]” and that it goes someway to meet the demand not met by the industry. The service allows fans to pledge however much they want and provides the tools for artists to monetise anything from a private party with fans, limited edition merchandise or just simply a digital pre-order of the new release (Rogers, 2013).

Pledge Music’s services are specific to the music industry and are therefore tailored to suit musicians but Kickstarter’s services vary slightly and are open to film and tech companies as well. One of Kickstarter’s music success stories was Amanda Palmer, who used the service to fund the release of a solo album and reached $1.2million (Lindvall, 2012). On the other hand, there is also Bjork’s failure using Kickstarter to try and convert her innovative Biophillia application album for Android and Windows platforms. The project aimed for £375K in 30 days but was taken down from the site after just £15.4k was raised in 10 days, only 4.1% of the goal (Dredge, 2013).

The Bjork story is particularly interesting as one of the main criticisms that has been levelled by Berger (2013) at the direct to fan platform is that it will only work with established artists that already have a fan base, which Bjork certainly is. The money was for a conversion of an already existing product to another format for educational purposes and so is a process that may have less fan interaction than the making of an entirely new album. This example instead suggests that it is artists that use the platforms in a relevant way that engages fans or potential fans on a personal level that will get the most out of the direct to fan area. This idea echoes Wikstrom’s theory of creativity as consumption that suggests artists need to be more able to respond to their fans creative desires. By doing this, artists can turn “the fans creativity into their own consumer proposition… build a business with low churn and high average revenue per user” (Wikstrom, 2013, p.179). The tools that direct to fan services offer allow this creative consumption method to flourish, and is something that could be embraced by acts of all sizes in the future.

Where is there room to improve at Bandcamp?

Brian Solis puts forward the idea that it is no longer content that is king but it is instead the context that we consume it in. He states that “we must invest in the calibre of our relationships as well as the calibre of the content we consume, create and share. The answer to what consumers value lies in context” (Solis, 2011, p.35). Although this is true of the general public, the services that direct to fan sites provide mean that it is the artist that is defined as the consumer, as they are the ones giving a percentage away to the platform.

This is why the context part of Solis’s ideology is so important, because all the direct to fan providers are giving artists is the “context” in which the artist can sell and distribute their “content” to fans. If Bandcamp can ensure that the window they give into an artist’s world is more transparent than any other service then it will thrive. Ethan Diamond (2014) told the Guardian; “We’re trying to create a channel for artists and their biggest fans where they aren’t having to compete with the other things”. By becoming the best way for fans to interact with artists, by making sure the relationships between the two are strongest on Bandcamp’s platforms, it can ensure that the artist is getting the best available platform to display their content.

The issue that this does not address however, is the problem of direct to fan favouring larger artists with already existing fanbases gained through traditional marketing approaches. Rapper Ryan Leslie (2014) is in the process of creating what he calls “the first direct-to-consumer record label” which aims to solve this problem. Leslie was signed to Motown in 2008 but the royalties from 180,000 album sales didn’t cover his $100,000 advance, yet his self-released album sold 12,000 copies and brought in $160,000 in revenue. This is why he hopes to create a label that would provide small marketing advances for independent musicians with an app filled with massive amounts of data-collection and interpretation tools, in return for a 20% stake in their revenue (Holmes, 2014).

Leslie’s story proves the theory put forward by Passman (2012) idea that ”For a record deal to make sense, the record company has to generate more money for you (after they take their piece) than you would get by selling less product on your own” and although it is not a final solution, it is an interesting premise. This could be used as inspiration for Bandcamp to partner up directly with a music marketing specialist like Essential Music Marketing who work with labels such as Innovative Leisure, Cooking Vinyl and Fatcat Records (Essential-Music, 2015). This way Bandcamp could offer a premium service for acts (similar to Topspin’s services) and could seek to break acts into larger markets whilst letting artists retain all of their rights. As a way to help artists with upfront cost of this service, the marketing choices would be as tailored to the artist as the website platform they provide. Acts would be able to choose how they paid for the marketing costs; it could be as an advance against future earnings, as a higher royalty percentage taken on sales for a given period of time, or even as a reward for significant sales figures if a particular artist is utilising the tools given to them effectively.

Conclusion

Global recorded music industry revenues fell to under $15billion for the first time in history in 2014 as a result of a decline in both physical and digital sales (IFPI, 2015). This fact makes the findings of the Nielsen Soundscan report that there is up to $2.6billion being lost by not servicing music consumers in the most effective ways even more relevant (Peoples 2013). Direct-to-Fan services allow artists to adapt their pricing strategies in ways tailor-made for their fan base. Arguably, this is a service that labels cannot offer, as they are effectively a middle man between the artist and the consumer. The way that services like Bandcamp and Music Glue are breaking down the barriers put up by record companies is an area of much debate and one that still needs much exploration. This is because major record labels investing in marketing campaigns from deep pockets is still currently the way to grow acts on a large scale to a mainstream audience. However, if the services that direct-to-fan platforms provide can find a way to turn their artist’s revenue generation into marketing spend, or partner with people that can do it for them, then the shift in paradigm that was initially promised by the music press may yet happen (Berger, 2013).

Reference List

Apple (2015) iTunes store top music retailer in the US. Available at: http://www.apple.com/pr/library/2008/04/03iTunes-Store-Top-Music-Retailer-in-the-US.html (Accessed: 15/04/15).

Bandcamp (2015) Bandcamp for Artists. Available at: http://bandcamp.com/artists (Accessed: 15/04/15).

Baskerville, D. and Baskerville, T. (2013) Music business handbook and career guide. 10th edn. Thousand Oaks, CA: SAGE Publications.

Berger, V. (2013) ‘Direct to fan holds much promise, Many problems. Interview with Vinnie Berger. Interview by Kyle Bylin for Hypebot.com, March. Available at: http://www.hypebot.com/hypebot/2013/04/the-promise-of-direct-to-fan.html (Accessed: 15/04/15).

CD Baby (2015) Sell Your Music. Available at: http://members.cdbaby.com/sell-music (Accessed: 16/04/15).

Diamond, E. (2014) ‘Bandcamp to Help musicians launch their own streaming services’. Interview with Ethan Diamond. Interview by Stuart Dredge for The Guardian, 11th November. Available at: http://www.theguardian.com/technology/2014/nov/11/bandcamp-musicians-subscription-services (Accessed: 14/04/15).

Dredge, S. (2013) ‘Bjork cancels Kickstarter for Biophillia Android and Windows 8 App Available at: http://www.theguardian.com/music/appsblog/2013/feb/08/bjork-cancels-biophilia-kickstarter (Accessed: 15/04/15)

Essential-Music (2015) Labels. Available at: http://www.essential-music.com/(Accessed: 16/04/15).White, E. (2014) Why (Not) Bandcamp?. Available at: http://hypebot.com/hypebot/2014/11/why-not-bandcamp.html (Accessed: 14/04/15).

Harrison, A. (2014) Music: the Business: Fully Revised and Updated, Including the Latest Changes to Copyright Law. United Kingdom: Virgin Books.

Holmes, D. (2014) ‘With the help of Ben Horowitz rapper Ryan Leslie wants to reinvent the record label for the new music economy’ Available at: http://pando.com/2014/11/20/with-the-help-of-ben-horowitz-rapper-ryan-leslie-wants-to-reinvent-the-record-label-for-the-new-music-economy/ (Accessed: 15/04/15).

 

Holt, J. (2008) ‘A piping hot cup of Joe Holt’. Interview with Joe Holt. Interview by Sam Clearman for HTMLTimes, 1st October. Available at: http://htmltimes.com/band-camp.php (Accessed: 14/04/15).

IFPI (2015) ‘IFPI Digital Music Report 2015”. Available at: http://www.ifpi.com/downloads/Digital-Music-Report-2015.pdf (Accessed: 14/04/15).

 

IFPI (2014) ‘Investing In Music’. Available at: http://www.ifpi.com/downloads/Digital-Music-Report-2015.pdf (Accessed: 14/04/15).

   

Information Is Beautiful (2015) Selling Out How Much Do Music Artists Earn Online. Available at: http://www.informationisbeautiful.net/visualizations/how-much-do-music-artists-earn-online-2015-remix/ (Accessed: 16/04/15).

Leslie, R. (2014) ‘With the help of Ben Horowitz rapper Ryan Leslie wants to reinvent the record label for the new music economu’. Interview with Ryan Leslie. Interview by David Holmes for Pandodaily, 20th November. Available at: http://pando.com/2014/11/20/with-the-help-of-ben-horowitz-rapper-ryan-leslie-wants-to-reinvent-the-record-label-for-the-new-music-economy/ (Accessed: 15/04/15).

Lindvall, H. (2012) Amanda Palmer raised $1.2m, but is she really the future of music Available at: http://www.theguardian.com/media/2012/sep/26/amanda-palmer-future-of-music (Accessed: 15/04/15).

MacIntyre, H. (2015) Direct-to-fan platform Bandcamp has now paid artists $100 million. Available at: http://www.forbes.com/sites/hughmcintyre/2015/03/10/direct-to-fan-platform-bandcamp-has-now-paid-artists-100-million/ (Accessed: 14/04/15).

Meharry, M. (2009) ‘Mark Meharry from Music Glue’. Interview with Mark Meharry. Interview by Tom Robinson for The BBC, 7th April. Available at: http://freshonthenet.co.uk/2009/04/mark-meharry-from-music-glue/ (Accessed: 14/04/15).

Music Glue (2015) Music Glue Pricing. Available at: http://www.musicglue.com/pricing/#revenue (Accessed: 15/04/15).

Napier-Bell, S. (2014) ‘The Big Interview Simon Napier-Bell’. Interview with Simon Napier-Bell. Interview by Tom Pakinkis for Musicweek, September 2014, Available at: http://www.simonnapierbell.com/mweekFB.htm (Accessed: 23/03/2015).

Passman, S. D (2012) All You Need to Know About the Music Business: Eighth Edition. 8th edn. New York: Simon & Schuster.

Peoples, G. (2013) ‘Nielsen Study: Music Industry could add $450 million to $2.6 billion in Incremental Revenue with premium content’. Available at: http://www.billboard.com/biz/articles/news/digital-and-mobile/1551730/nielsen-study-music-industry-could-add-450-million-to (Accessed: 15/04/15).

Reynolds, A. (2012) The tour book: how to get your music on the road. 2nd edn. Boston, MA: Delmar Cengage Learning.

Riches, N. (2012) The Music Management Bible: 2012. London: Music Sales.

Rogers, B. (2013) ‘Benji Rogers from Pledge Music @ Austin Tech Talk SXSW 2013’. Interview with Benji Rogers. Interview by David Hayes for Austin Tech Talk, 12th March. Available at: https://www.youtube.com/watch?v=JQUDDumyawM (Accessed: 15/04/15).

Sptiz, J. (2013) ‘Direct to fan holds much promise, Many problems. Interview with Jason Spitz. Interview by Kyle Bylin for Hypebot.com, March. Available at: http://www.hypebot.com/hypebot/2013/04/the-promise-of-direct-to-fan.html (Accessed: 15/04/15).

Topspin (2015) Topspin Platform. Available at: http://topspinmedia.com/products/topspinplatform/ (Accessed: 15/04/15).

White, E. (2014) Why (not) Bandcamp. Available at: http://hypebot.com/hypebot/2014/11/why-not-bandcamp.html (Accessed: 31/01/15).

Wicksteed Works (2015) ‘Direct To Fan: Which Platform?’. Available at: https://gallery.mailchimp.com/65795ff592380f020d84eeb79/files/Wicksteed_Works_Which_Platform_Excerpt.pdf (Accessed: 14/04/15).

Wikstrom, P. (2013) The Music Industry: Music in the Cloud. United Kingdom: Polity Press

Even The Graveyards Dead 7″ Single Recording – January 2015

Before heading out on the February 2015 tour,  I booked The Caezars in to record a new single to be released on 7” vinyl and digital download in time for the tour in February. This is so physical 7” single would be available to pre-order on The Caezars Bandcamp page and the digital audio track would be made available to listen to on the bands Soundcloud page. Soundcloud is where music is posted before it appears on Spotify or iTunes or anywhere else (Horn, 2014) because, as its CEO Erik Wahlforss (2014) told Gizmodo; “Soundcloud is where music culture happens on the web”.  The digital audio files would also be made available on iTunes and Spotify upon the release date via the aggregator service Zimbalam (2015), as iTunes and Spotify do not work directly with artists to receive works. This releasing strategy will help rectify the errors made on the last tour whilst still servicing fans in a way that is simple, efficient and appropriate. Vinyl sales grew by 54.7% in 2014 and although the format only accounts for 2% of global revenues, it has an appeal that matches the bands current demographic (IFPI 2015).

IMG_2291

The single was recorded live, all analogue, straight to tape in one day, with the session engineered by cult Rockabilly guitarist Darrel Higham. The record was also mixed and mastered by Darrel then the label design was designed by myself with collaborative input from the rest of the band to ensure it looked as authentic as possible. I monitored the whole process of the release, going through Neil Scott at Sounds That Swing and Damon’s pressing plant that they use. I set up the templates myself and ensured everything was ready for the pressing process that was funded by Clive Duffin at Ambassador records. The tracks were titles “Even The Graveyard’s Dead” on the A-Side and “Oh! Odette” on the B-Side and you can listen to them both below:

How the developments of new technology have changed the way Music Publishers generate income over the past 50 years

Introduction

Music Publishing is the area of the music world that controls the copyright contained within musical works. Publishing companies exist to collect the royalties generated by the use of the copyright contained within songs and act on behalf of songwriters to exploit these copyrights in order to generate revenue. [Avalon, 2009, pg 41]. For this to take place a deal is signed between the songwriter and the publisher to give control of the copyright contained in the works to the publisher and gives them permission to administer them. The income from the exploitation is then split in accordance to the deal (e.g. 60%/40% or 70%/30%) and depending on the deal, an advance may be paid to the songwriter that is then recouped by their future earnings [Passman, 2011, pg 230].

The three main areas of publishing income are split into royalty brackets; performance (live performance and broadcast) and mechanical income (reproduction of recordings and works) being primary sources and synchronization (sound recording placed with moving image) being a secondary source [Wikström, 2009, pg 57]. The way each of these revenue streams has earned money for publishers has changed over time thanks to developments in technology. The relationship between these technological advancements and how they have affected the income generated will be the main subject of this piece. 

History of Music Publishing

The music publishing industry as we know it today started with the production and sale of sheet music on Tin Pan Alley, which is where the term “Publishing” was, coined [Harrison 2011, pg 110]. The publishing offices on Tin Pan Alley (Denmark Street in the UK, West 28th Street, NY in USA) employed songwriters to write songs that were pitched to the popular singers of the time to be performed. This was the only way for the works to be heard, as there were few national radio platforms in the early 20th century and those that existed, did not cater for popular music. It was also regular practice for performers to not write their own songs and therefore relied on published songwriters to give them material. Unfortunately, this resulted in unpublished songwriters finding it very hard to exploit their music without the backing of a publisher [Passman, 2011, pg 232].

Because of the lack of recorded music at that time, people had to buy and perform sheet music in order to enjoy music in the home. This is the first time the commoditization of music yielded significant profit, with “School Days” performed by Gus Edwards selling over 3 million copies of sheet music in 1907 [Wikström 2009, pg 62] showing just how vast the secondary income market could be.                                                                                                                                                                        Performance Royalties

In terms of publishing, performance royalties are a primary source of income and not only limited to when a composition is performed live in by an artist, it is whenever that particular work is broadcast publicly, whether that be on the radio, in a place of work, the internet, a shop or on television [Wikström, 2009, pg 57]. The money generated by broadcast/performance is then collected by collection societies, the main UK collection society being the Performing Rights Society (PRS), and then distributed back to its members. In short, each publisher assigns the performing right contained within all of the songs in their catalogue over to the PRS to be licensed on their behalf [Nichols, 2013]. Once this deal is completed, the PRS then go to every user and ensure that they have the correct license in order to broadcast the music publicly. The users pay a license fee to the PRS that covers their particular song usage and the funds generated (minus the PRS’s operating costs) are paid to the publisher and then, in turn, the songwriter [Passman 2011, pg 251]. It is also possible (and encouraged) for unpublished songwriters to join the PRS so that their royalties are collected and distributed to them, as some songwriters choose to publisher their own work and get paid directly, or have not yet signed with a publisher [PRS, 2013].  

Technological innovation has played a huge role in the way that performance royalties have been generated over time. Tin Pan Alley had songwriters creating works for singers to perform live in public, but this evolved with the invention of recording technology and development of radio equipment. These advances meant the songs could be broadcast as recordings and earn significant royalties without the need of a performer [Wibberly 2013]

The earning potential of recorded songs being broadcast developed further as technology opened up further avenues of secondary income. Songs started to become used in motion pictures and broadcast to cinema audiences where performance royalties are earned, although US cinemas are exempt from this. Works also started to be used in television advertising campaigns where broadcast royalties are due after every airing. As the number of television channels has increased, so has the possibility of earning public performance royalties [Passman, 2011, pg 253]

However, the largest shift in performance royalties has come in the digital age with income being generated through plays on YouTube, digital download services such as iTunes and streaming services such as Spotify. As of 2012, the royalties generated through online usage have eclipsed radio broadcast and live performance. This is an indication of the radical change the music industry has been through over time [PRS, 2013]. 

 Mechanical Royalites

Another form of copyright exploitation in the music industry is the reproduction and manufacturing of songs contained within sound recordings. Whether these are vinyl records, cassettes, CDs or even digital download files, a license needs to be applied for in order to reproduce the works in this way [Krasilovsky, Shemel, 2007 pg 161]. This license is called a mechanical license and in the UK is obtained through the Mechanical Copyright Protection Society (MCPS), which is paid on every physical release manufactured. The license fee on every physical copy produced is 8.5% of the published dealer price (PPD) but is a slightly different amount for online reproduction. These are the primary sources of mechanical publishing income. Mechanical license fees are also payable when copyrighted music features on computer games and DVDs that are being mass-produced and sold [Harrison, 2011 pg 121].

Initially, it was only vinyl records being sold that generated mechanical royalties and over time this has developed into many other forms of media using music also having to pay for it usage. Given the wealth of different formats carrying licensed songs in today’s market, it would be assumed that mechanical royalties would generate a significant portion of the music industries revenue. Unfortunately, because of the digital revolution, the amount of money generated through the mechanical reproduction of music has been in decline due to an overall decrease in the amount of physical releases sold [Rogers, 2013, pg 32].

This has not always been the case though, before the digital age, one of the music industry’s primary royalty generators was mechanical revenue. This is highlighted with the invention of the CD, as record companies were able to reissue their artists back catalogues. Avid fans would purchase their favourite acts recordings, repackaged on the new medium, which resulted in mechanical royalties coming in from records that were not only popular at the time, but also from those who had long since disappeared from the public eye [Wibberly, 2013].     

This could be seen as one of the music industry’s greatest ever marketing achievements, maximizing mechanical income. The public were promised that CDs had a cleaner sound of much higher quality, as well as being more portable and more hard wearing, enticing music enthusiasts to take up the new format [Harrison, 2011, pg 183]. However, the digital age has actually seen some music buyers revert back to purchasing vinyl; the format the industry proposed was out of date. Although still small in number, the resurgence of the vinyl format could indicate the extent of the music industry’s cunning, seeking to squeeze maximum amount of profit from the consumer [Dredge, 2013].

Synchronisation Royalties

Synchronisation in a publishing sense is the act of placing a recorded musical work to moving image and in order to do this, a synchronization license must be obtained. From films and TV programs to advertisements and computer games, wherever a musical work is used, it would have been paid for. These deals are often very lucrative for the songwriter with fees of £100,000 being relatively commonplace [Harrison, 2011, pg 123]. If a song is to be used in any film or motion picture then the producer of the film must go directly to the publisher to use the song in question, then to the record label to use the sound recording in question. This process also applies to get permission to use a work in a television advertisement or video game. The same also applies if a song is to be used on a television program in the USA. However, in the UK, the process is slightly different for television programs. The main channels such as SKY, BBC and ITV pay a “blanket license” to the PRS, which is a negotiated set fee, enabling them to use any song controlled by the PRS and any sound recording registered with the Phonographic Performance Limited (PPL) in their show [Passman, 2011, pg 261].  

The potential for royalties from secondary revenue sources can be explained when looking the soundtrack of the 1973 motion picture, American Graffiti. Music from the 1950’s and 1960’s was synced to the moving images in the film to recreate the feel of early 1960s America [Guardian, 2013]. Music from Buddy holly, Johnny Burnette and Bill Hailey [Amazon, 2013] among others, was included, which saw interest in those acts rekindled long after their recording careers had diminished or completely ceased. This meant that inclusion on the films official soundtrack provided mechanical income from the copies of the album manufactured, performance royalties were generated from the films cinema showings and synchronisation royalties were also paid for the songs inclusion in the film itself. Record labels also had the idea to stimulate primary income by re-releasing material from the featured artists back catalogue and so benefited from the profit of those sales, which in turn lead to the songwriters (or their estates) benefiting from mechanical copyright attached to production of the re-released work.

Publishing companies still didn’t realize just how productive the area of secondary income could be until Levi Jeans re-launched their brand with an innovative television advert featuring Marvin Gaye’s, “Heard it Through the Grapevine” which together married moving image and music to create a cool, authentic and original feel for their brand. Advertising agencies realized that music could be a way to help branding and sell products. This was an opportunity that could yield large amounts of money for publishers with both synchronization and performance royalties generated. Not to mention the mechanical royalties generated by the rejuvenated sales of a long since forgotten record. Virgin Publishing were the first act on this and set up a dedicated synchronization department to fully exploit this revenue stream which is now a cornerstone of every publishing company today [Marcel Visser, 2013]. 

Today, the synchronisation departments of publishing companies also have to change the way they generate revenue in the digital age. For example the act of synchronisation in a computer game should generate both synch and mechanical royalties. This is not the case and instead, a flat fee is paid to the publisher of the work in question in return for the songs use. [Passman, 2011, pg 262]. 

Another interesting sync case to look at in the digital age is Bjork’s release of a digital and interactive “App” in conjunction with an album. This is an innovative idea as music is synced to moving image in an interactive way, in a product will be copied every time the app is downloaded and therefore, generate both synchronization and mechanical royalites for publishers [Kiss, Needham 2013].  

Unfortunately for publishers, it seems that the increase in technology available could lead to difficulties when completing synchronisation deals in the future. Leading music supervisor PJ Bloom suggested that the potential exposure and revenue sales generated through a synchronisation deal are so important, that rights owners should be willing to pay for the right sync deal [Musicweek2013].

Conclusion

Labels and publishers paying for advertising space would indicate a complete shift from the current synchronisation paradigm, as advertisers would no longer be paying for the use of songs. Music Publishers would instead, pay for a works inclusion on an advert, in order to benefit from the exposure that would generate income through other revenue streams. Coupling this with how the digital age has seen mechanical royalties continue to decline, the publishing market looks to become even more challenging [Rogers, 2013, pg 32].

However, the copyright in a song will always be exploited, which means royalties will be generated, even if the money generated becomes spread thin over a number of different revenue streams. If the days of big mechanical royalties are over and synchronisation fees continue to decline, the future could be in song placement. Higher quantities of music in more places all together generating sufficient income could be the future of the publishing world in the 21st century [Musicweek, 2013].

Reference List:

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The Guardian. (2013) American Graffiti. Available at: http://www.theguardian.com/film/movie/36298/american-graffiti

(Accessed: 24th October 2013).

The Guardian. (2013) Daft Punk and David Bowie Have Helped UK Vinyl Sales Double in 2013. Available at: http://www.theguardian.com/music/2013/oct/17/uk-vinyl-sales-daft-punk-david-bowie

(Accessed: 24th October 2013).

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Moses, A. (2009) Confessions of a record producer. 4th Edition. Milwaukee: Backbeat Books.

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Passman, D. (2011) All You Need To Know About The Music Business. 7th Edition. London: Penguin Group.

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(Accessed: 24th October 2013).

PRS. (2013) PRS For Music 2012 Financial Results Briefing Paper. Available at:

http://www.prsformusic.com/aboutus/press/latestpressreleases/Documents/04%20April%202013%20-%20Financial%20results%20briefing%20paper.pdf

(Accessed: 24th October 2013).

PRS. (2013) Press Releases. Available at: http://www.prsformusic.com/creators/helpcentre/Pages/YouTubeDealHelp.aspx#5

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Rogers, Jim 2013, The Death and Life of the Music Industry in the Digital Age, e-book, accessed 24th October 2013, <http://uel.eblib.com/patron/FullRecord.aspx?p=1172529&gt;.

Marcel Visser (2007) Levi Commercial – Laundrette. Available at: http://www.youtube.com/watch?v=wT4DR_ae_4o

(Accessed: October 24th 2013).

Wikström, P. (2009) The Music Industry. Cambridge: Polity Press.