Berklee today is the official alumni publication of Berklee College of Music in Boston, Massachusetts. It is a forum for contemporary music and musicians.
Issue link: http://berkleetoday.epubxp.com/i/106074
For Christie Byun, a professor of economics at Wabash College who specializes in the music industry, the world of royalties has become convoluted, as artists now have to keep track of an ever-growing number of revenue streams. "It can be complicated, since the music industry is an evolving business, especially in light of the immense technological change that we have seen in terms of digital music creation and file sharing," Byun says. "Not only that, but artists' songs can be licensed for new uses, like ringtones and video games. All in all, the legal agreements can be pretty byzantine." However, despite the headache, Byun adds that artists are in a strong position with the additional legal protections available to them in the digital age that has produced these different royalty streams. "Basically, there were rules outlined for all these new types of goods and services that specified what percentage of royalties music publishers could get. And remember that the royalty that the publisher gets is split with the artist. So it benefits artists to receive royalties on these new products for which their creative work is being used." The Future of Music Coalition conducted a project called Artist Revenue Streams, which looks at the financial side of the music world and where money owed to musicians comes from. For the most part, sound recordings play a small role in the overall financial picture for musicians. After interviewing 5,371 musicians, the Coalition found that sound recordings make up only 6 percent of a musician's aggregate revenue. In fact, 66 percent of the musicians interviewed said that they didn't receive anything from sound recordings. The Coalition delved even deeper into this issue, analyzing how, over the past five years, musicians' revenue from sound recordings has changed. Out of those surveyed, 22 percent saw a decrease in revenue, compared with 18 percent who remained stagnant and 16 percent who saw an increase. It's safe to say that most musicians rely on many different revenue streams to make ends meet. To illustrate all the methods that musicians use these days to make money, the Coalition published a list of 42 different possible revenue streams for musicians, from label settlements to merchandise sales and, of course, mechanical royalties. Pick Your Platform With the advent of digital music, a new dilemma has arisen for musicians. Is it more beneficial to release music on a digital platform, or is a traditional release still preferable? Peter DiCola, an associate professor at Northwestern University School of Law and member of the board of directors for the Future of Music Coalition, says that the answer differs for each artist. "Sometimes people try to generalize, because there's been so much growth in digital in terms of revenue," says DiCola. "But I don't think this question can be answered in general, because there's so much diversity among musicians. 20 Berklee today It will depend on several variables, including the artist's particular genre and the different roles the artist plays in the industry." DiCola adds that making money through digital platforms is a lot trickier than simply reaping the benefits of having your music online. In fact, for an artist to have any type of financial gain from digital downloads, there's a bit of work that needs to be done." "The choice for musicians is a little more complex than digital versus tangible. That asks only about offering downloads versus selling CDs and vinyl. But artists also have to decide whether to participate in on-demand streaming services like Spotify, Rhapsody, Mog, and Rdio, which offer a different dimension. Moreover, artists need to sign up to get their performance royalties for Internet radio by joining ASCAP, BMI, or SESAC and by joining SoundExchange." But ultimately, it all comes down to the bottom line, DiCola says. "Artists should be thinking about profit, not just revenue. And the profit margin on CD sales at shows can be really high, depending on the artist's label deal. So a musician who tours a lot might do well with a physical release. Moreover, physical releases offer the opportunity for upselling—for instance, charging $20 for high-quality vinyl, which offers a good profit margin." From the artist's perspective—particularly one who is just starting out on the professional level—the digital age is a blessing. For many, the profit margins are razor thin, particularly as they try to build an audience for their work. However, despite the lack of a cash windfall from digital releases, there's still an imperative for using them. Matt Tompkins '09, who fronts the Boston-based band Mighty Tiny, says that artists owe a debt of gratitude to the digital platform. Though it can be difficult to generate a huge profit, the value of getting your name out is priceless. "We as musicians have Bandcamp, Soundcloud, Spotify, Last.fm, CD Baby, Myspace, and so on and so on and so on," Tompkins says. "And, with the brilliance of folks like CD Baby, independent musicians can now easily have an online presence on sites like iTunes and Spotify, for a pretty minimal fee. Suddenly, I can have fans in Australia that I've never met, and who have never even seen my band live. Yes, live performance is still, in my mind, the best way to convert fans, because you'll never be able to encapsulate that in any medium other than a venue setting—flesh and blood, in person. But this amount of widespread media saturation gets as close as it can." In fact, Tompkins says that when it comes to the digital versus physical argument, there's one aspect about digital release that makes it far more preferable than its predecessor: cost. "Music in general is expensive," Tompkins says. "And the resell value is pretty sad. Printing only 500 copies of an album can easily put your investment at over $1,200. Think about graphic design costs, packaging, registering for a UPC code, copyright costs—the list goes on. Plus, once you're at that point, you've probably spent at least triple those costs on studio time."