The Music Industry and How Technology has Affected it

1. The Music Industry and How Technology has Affected it By: John Paul 10:30

2. How Technology has Improved the Industry • Easier to record yourself • Easier to promote yourself through services such as youtube, soundcloud, twitter etc… • Exciting time for up-and-comers (no longer need label to get name out there)

3. Recording DAWs • Protools is the industry standard for recording • Logic is Apple’s product. It is quickly growing. • Ableton is a popular DAW for electronic producers • FL Studio and Reason are popular for making beats

4. How Technology has Hurt the Industry • Many recording studios are struggling to make ends meet due to competition with lower quality but more readily available recording • Royalties are becoming pitiful because record sales are down due to piracy • Royalties from services such as Rhapsody, Spotify, and Pandora are for the most part terrible

5. Examples of the Decline in the Industry • “As pretty much everyone knows, the music business has been struggling over the last decade. Music sales in the United States alone dropped 60% between 1999 and 2009, from $14.3 billion per year to $6.3 billion. ” • In 2001, Limp Bizkit sold six million copies of his album at $18 a piece. This added up to $108 million in revenue. In contrast, the Watch the Throne album by Jay-Z and Kanye west sold 4 million copies for $9.99 a piece – apples 30% cut. This ended up being $32 million (70 % Less than Limp Bizkit)

6. Examples of the Decline in the Industry contd. • "Galaxie 500's 'Tugboat' was played 7,800 times on Pandora in the first quarter of 2012, for which its three songwriters were paid a collective total of 21 cents, or seven cents each.“ • Damon Krukowski of Galaxie 500 said “"It would take songwriting royalties for roughly 312,000 plays on Pandora to earn us the profit of one —one — LP sale," • For the 5,960 times "Tugboat" was played there, Galaxie 500's songwriters went collectively into triple digits: $1.05 (35 cents each). • If you pay the $9.99 monthly fee this amounts to 680,462 annual plays of “Tugboat”

7. Here is Where it Gets Interesting • Pandora and Spotify are not earning any income for their services either…. Pandora had a net loss of $20 million dollars last year and Spotify reported a loss of $56 million • SO WHERE IS THE MONEY GOING? • Acts like the Internet Radio Fairness Act will reduce the royalties paid by internet radio stations like Pandora.

8. Revenue From Pandora (before taxes and roughly 50% label cut) • Lil Wayne – $3 million • Drake – $3 million • Coldplay – $1 million • Adele – $1 million • Wiz Khalifa – $1 million • Jason Aldean – $1 million • Rascal Flatts – $670 thousand • Ellie Goulding – $609 thousand • Zac Brown Band – $547 thousand • Iron & Wine – $173 thousand • French Montana – $138 thousand • Bon Iver – $135 thousand • GrupoBryndis – $115 thousand • Donnie McClurkin – $100 thousand • George Winston – $85 rhousand • The Four Tops – $65 thousand • Oscar Peterson – $50 thousand

9. Exercise: Rank These Methods of Purchasing Songs by Profitability • Rhapsody, Spotify, CD, Vinyl, Itunes, Ringtone • How much money would go to an indie artist per Spotify play? What about major label artist? • How much money per Pandora play? Itunes purchase? • Answer: http://www.huffingtonpost.com/2012/07/31/music-artists-online-earnings_n_1724997.html