Those who follow the music industry trade magazines know that for many years now, CD sales have been on the decline. That’s old news, actually. Only a musician with his/her head in the sand, would not see this. I mean, let’s get real. How many of us are buying CDs these days? Chances are, if you’re reading this blog, you spend a lot of time online. And if you spend a lot of time online, then you have probably been downloading your music purchases for the past several years. The real question is… Are you still purchasing downloads to get your new music, or have you moved on ahead to streaming?
The 2013 numbers came out earlier this year and they not only show that physical music product sales continue to decline, but they also show, now for the first time, that digital downloads are also experiencing a decline! But it doesn’t really take an official report to figure that movement toward streaming is cannibalizing sales of both physical music products (i.e. CDs) AND digital downloads. If a music consumer can listen to absolutely anything in the world he/she wants to, at any time, for free… (or even for a small monthly fee), then why would he/she buy music, right?! Even if the cost of buying or streaming were exactly the same, who wants to waste precious hard drive space with thousands of music files, when it’s no longer necessary?
We’re on a very fast-train moving away from a music ownership model (i.e. you buy and own the CD or mp3s), to a music access model (i.e. access to listen to music online). Basically, there are two types of internet streams – interactive streams (on-demand) and non-interactive streams. With interactive streaming, the listener can choose exactly what he/she wants to hear “on-demand” (i.e. can specify the artist, the song, the album, etc.), whereas with non-interactive streaming, the listener has a somewhat limited choice – selecting a genre of music, or music that is like a certain artist or song, rather than the specific artist or song. For example, with non-interactive streaming I might choose Chris Tomlin, and the music that streams would be a mix of songs by Chris Tomlin as well as songs by artists similar to Chris Tomlin.
Depending on the internet site/app/company offering the streaming music, both interactive streaming and non-interactive streaming are often free to the user and supported supported by ads (like terrestrial radio). However, if the user does not want to listen to ads, then most providers will also offer a premium service (i.e. without ads and possibly with a few extra bells and whistles) for a nominal monthly fee. This is the future of music listening!
For at least the last 5 years, we’ve been hearing that YouTube.com has been the #1 music discovery tool, particularly for Millennials (a young generation that can’t comprehend or even imagine a world without wifi). YouTube.com was one of the first places free streaming music could be found. Thankfully, copyright owners and artists are being paid today by Google/YouTube for these streams. However, we missed out on several years of collections as we struggled to figure out how to apply copyright law and negotiate royalty fees in this ever changing technology environment.
As the world moves from sales of music to streaming of music, our types of royalty income as songwriters and artists change. Although many complain now that streaming income is low, the truth is that the whole streaming concept is in it’s infant stage. Many consumers don’t even know about streaming yet. Others who know about it, may not have the hardware to actually do it. When hardware for wireless streaming music becomes commonplace in cars, homes, offices, etc., and the user base grows exponentially because of that, royalty checks will increase. The hope is that streaming revenue for the writer and artist will replace and even surpass the royalties we’ve seen from traditional sales.
Collecting these royalties is currently complex for the indie songwriter, but there is help available. As a songwriter, make sure you affiliate with a PRO (ASCAP, BMI or SESAC), and if you’re an artist make sure you also sign-up with SoundExchange. These organizations will collect your performance royalties related to streaming. If you have songs being streamed and you don’t sign up with these organizations then you’re missing out on royalties due you. Also, if you distribute your music through TuneCore, CDBaby and other similar companies, most of them have programs that can help you collect other related royalties due you for those streams.