Despite Massive Streaming Revenue Gains, RIAA Still Lying & Crying

from the give-'em-an-inch dept

The legacy recording industry just has a way with attacking any new technology service that helps it adapt, doesn't it? Whether it's ringtones or video games or YouTube or iTunes, the industry always takes the same basic approach: denounce the new offering as evil. Threaten and/or sue. Maybe take some equity as a way to "settle" the legal threats/suits. And then squeeze the companies for more and more money until they're dead. It's happened over and over again, and we're now witnessing the same thing again in streaming music -- even as it's turning into a major cash cow. For whatever reason, to make this work, the industry wants to turn this cash cow into an enemy.

And a strange enemy at that, as none of my enemies are paying me $2.4 billion a year in revenue. But that's what the RIAA's own data shows came in to its coffers for 2015, representing an enormous upward trend in streaming revenue for the music industry.
In its earnings statement, the RIAA noted that when all types of streaming are combined (subscription, ad-supported on-demand and SoundExchange), it constitutes $2.4 billion in revenue for 2015—a rise of 29 percent over the previous year.
Yet it took exactly no time at all for RIAA CEO Cary Sherman to laugh that revenue off as wholly insufficient.
While today’s data is encouraging, the challenges facing us are significant. The consumption of music is skyrocketing, but revenues for creators have not kept pace. In 2015, fans listened to hundreds of billions of audio and video music streams through on-demand ad-supported digital services like YouTube, but revenues from such services have been meager — far less than other kinds of music services.
So, revenue from streaming services is growing at a one-third clip over previous years, but that's just not enough. And this statement is made even as the RIAA and some of its member artists do everything possible to hamper, block, and outright shut down the streaming services that are producing this revenue for them.

And then there's this bit of pure bullshit:
Need further proof that some fundamental market distortions are at play? Last year, 17 million vinyl albums, a legacy format enjoying a bit of a resurgence, generated more revenues than billions and billions of on-demand free streams: $416 million compared to $385 million for on-demand free streams.
Want to talk about "market distortions," Cary? How about the fact that you're being blatantly dishonest in presenting these numbers, taking the gross "retail value" on vinyl, but for free streams talking about the wholesale net value to you. You're leaving out a ton of relevant details: First, retail value isn't actual revenue, as it ignores the reality of discounts and other pricing differences. Second, and more importantly, you're leaving out the fact that much of the money from retail value doesn't go to the labels, but to the retailers, distributors and to cover production costs of the actual records. Third, with free streaming, you have none of those costs, and the contracts you have with streaming companies mean a much greater percentage of the revenue actually goes to the labels. Fourth, free streaming does two useful things that you ignore: (1) moves people away from infringement, where you earn nothing and (2) moves many people up the chain to paid streaming.

But, I guess if someone is going to be familiar with "market distortions" and how to misrepresent reality, it would be the RIAA.

Beyond that, the claim here is that artists aren't making as much as was made in the old vinyl and CD eras. First, I don't even know if that's true, but even if we accept that claim...so what? Streaming, by the RIAA's own data, is now the majority revenue producer in the music industry. In other words, that's the direction the market is going. But there is nothing promised in business and if the new model means revenues aren't equal to the old model, that doesn't mean there something wrong with the model. It may certainly mean that there's something wrong with the RIAA's model, but not the one so heavily in demand by consumers and generating the majority of RIAA revenue.

And there is certainly nothing in this to suggest that streaming is harming music as an art form. Far from it, actually. As Cary Sherman notes, music consumption is up, up, up. Does Sherman really mean to suggest either that streaming services aren't contributing to that rise, or that wider music consumption isn't ripe to be monetized by any number of forward thinking business models?

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  • icon
    rw (profile), 24 Mar 2016 @ 7:02am

    So, of the 2.4 billion the RIAA gets how many thousands are going to artists?

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 24 Mar 2016 @ 9:12am

      Re:

      lets just say... at little as possible!

      They regularly cheat the artists and sadly... I do not feel sorry for the Artists. If you sell your soul to the devil you are just asking to be the pooch that get screwed!

      reply to this | link to this | view in chronology ]

    • icon
      That One Guy (profile), 24 Mar 2016 @ 12:02pm

      Re:

      Well now that depends, how many of the saps signed with an *AA affiliated label have managed to recoup by making the label several times over the amount they 'invested' in the band?

      Given I imagine the majority of artists do not fall into that privileged category I'm guessing the numbers are minuscule at best.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 24 Mar 2016 @ 12:15pm

      Re:

      'Bout three fiddy.

      reply to this | link to this | view in chronology ]

    • identicon
      RIAA, 28 Mar 2016 @ 4:52pm

      Re:

      What artists?!

      reply to this | link to this | view in chronology ]

  • icon
    That One Guy (profile), 24 Mar 2016 @ 7:28am

    Once more, with feeling...

    Anyone who expects streaming to give the same level of profits as sales either needs their head checked or donated to science, because they are clearly not using it. One is an individual temporary transaction, and as such is going to be much smaller, the other is a permanent transaction that only happens once, but also costs significantly more as a result.

    That streaming profits came even remotely close to any form of purchases shows just how big of a source of income it's grown to, and it will likely grow even larger unless the *AA's of the world manage to kill it off in their overwhelming greed.

    reply to this | link to this | view in chronology ]

    • icon
      Rabbit80 (profile), 24 Mar 2016 @ 9:02am

      Re: Once more, with feeling...

      "One is an individual temporary transaction, and as such is going to be much smaller, the other is a permanent transaction that only happens once, but also costs significantly more as a result."

      Right, because going to the cinema costs less than buying a DVD? /s

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 24 Mar 2016 @ 9:43am

        Re: Re: Once more, with feeling...

        If you weren't so eager to shit over someone who made a good point you'd understand your analogy is so far from fitting it's disgusting.

        Going to the theater is equivalent to seeing a live musical performance. DvD is equivalent to buying an album. Streaming a movie from your cable provider or Netflix is the equivalent to streaming music.

        But please, keep enlightening us all with your sharp, quick witted, humor.

        reply to this | link to this | view in chronology ]

    • icon
      DannyB (profile), 24 Mar 2016 @ 9:02am

      Re: Once more, with feeling...

      This seems to ignore how streaming SHOULD work. Why, oh why, can't the music business work like it did 50 years ago?

      What to fix:
      It's simple: Pay full price $10.00 for the entire album each time you want to listen to any one song on it. So you might as well listen to all of them since you paid for them.

      How it fits the RIAA business model:
      This payment model would make music work more like it should: you buy the album and then after each time you listen to it, some RIAA goons come and break your record so you have to buy it again next time.

      What to fix:
      Why can't streaming eliminate this idea that music should be downloadable onto filthy pirate devices? Why not stream the music from the cloud each and every time you listen to it? Not online at the moment, tough. That's how it worked 50 years ago. (But don't hum the tune or think of it in your head because that is copyright infringement.)

      How it fits the RIAA business model:
      That would make it work more like radio. Someone (but not the artists) get paid for every airplay. And if you don't have a radio signal, tough.

      What to fix:
      The RIAA needs to earn much more from each streaming play than from each radio airplay.

      How it fits the RIAA business model:
      Yachts, being hand spoon fed Caviar, blow, hookers, and lighting cigars with rolled up federal reserve notes are all expensive. Making matters worse, greedy artists want a pittance of the RIAA's money right out of the RIAA's pocket!

      50 years ago, artists didn't make any money because they were properly exploited. And the RIAA didn't complain about artists not making money. But today the RIAA does complain about artists not making money because the RIAA needs more money.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 24 Mar 2016 @ 8:40am

    The consumption of music is skyrocketing, but revenues for creators have not kept pace.

    Translation, some creators are making money without letting us take 99% of the profits from them.

    reply to this | link to this | view in chronology ]

  • icon
    MadAsASnake (profile), 24 Mar 2016 @ 8:42am

    However, like the MPAA, the RIAA has hitched its very existence on and unwinnable "war" on piracy, and is working as hard as possible not to win it.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 24 Mar 2016 @ 9:15am

    These people are just hopelessly addicted to money and power worse than any drug out there. They will do anything and everything to get more and more of it and it's never enough. The longer they go down this path the more common sense goes out the window and they do more to hurt their ability to make money than actually having basic business sense and adapting and profiting. Right now it's streaming and places like Spotify and Pandora could be paying them 100X more than all the money those services bring in each year and they still wouldn't think it even comes close to the amount they should be making from it.

    reply to this | link to this | view in chronology ]

  • icon
    beltorak (profile), 24 Mar 2016 @ 9:28am

    straight from the horse's mouth

    > > While today’s data is encouraging, the challenges facing us are significant. The consumption of music is skyrocketing, but revenues for creators have not kept pace.

    There you have it. They want you to pay every time you hear a piece of music. If the technology existed that would let them constantly monitor your brain and extract a fee from your account every time your auditory cortex registered a covered work, they would fight tirelessly to subject every person to it.

    reply to this | link to this | view in chronology ]

    • identicon
      Sunhawk, 24 Mar 2016 @ 1:40pm

      Re: straight from the horse's mouth

      "Your stored mind contains sections from one hundred and twenty-four thousand, five hundred and sixty four copyrighted works. In order to continue remembering those works, a licensing fee of eighteen thousand dollars a month is required.

      Would you like to continue remembering these works?"

      https://www.youtube.com/watch?v=IFe9wiDfb0E

      reply to this | link to this | view in chronology ]

  • icon
    Ryunosuke (profile), 24 Mar 2016 @ 9:54am

    The consumption of music is skyrocketing, but revenues for creators have not kept pace.


    that sounds like a problem on YOUR end RIAA, not ours. Seems like YOU should be paying the creators more instead of pocketing it. Just saying.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 24 Mar 2016 @ 10:19am

      Re:

      "The consumption of music is skyrocketing, but revenues for creators have not kept pace."

      Net income for the majority of the population of the US have not kept pace. RIAA executives must feel like they aren't going to make it into the new aristocracy of the United States and continuing are to bleed dry one of their best sources of income in the future.

      reply to this | link to this | view in chronology ]

  • This comment has been flagged by the community. Click here to show it
    identicon
    Anonymous Coward, 24 Mar 2016 @ 10:18am

    Not enough truth-twisting and hiding from reality here, Techdirt. Douche harder.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 24 Mar 2016 @ 10:26am

    What about numbers?

    So streaming revenue eclipsed download revenue. Any data regarding the number of people downloading vs number of people streaming? I wonder if the number of people streaming equals or exceeds downloading; I think it's the opposite. Why? Folks like me buy downloads whenever we feel like it and can go months without. However, every streaming service I've looked at requires automatic monthly payments whether you use the service or not. It's akin to cable tv where you have to pay so much for too many channels you never watch.

    reply to this | link to this | view in chronology ]

  • icon
    Evil Timmy (profile), 24 Mar 2016 @ 10:33am

    Their numbers are even further skewed by the nature of many vinyl purchases. They're like the collector's edition Blu-Ray boxed set of the music world: much more expensive per unit, purchased almost exclusively by the most dedicated and wealthiest fans (often as a second purchase of the content), and meant more for collection than consumption. They're also scarce (large, fragile) physical goods, which are always going to come at a huge premium compared to the fraction-of-a-fraction-of-a-penny cost of sending out a stream, but they're comparing apples and kale.

    This is the equivalent of Toyota complaining that people who fly in their helicopters aren't spending enough on Camrys. Sure, in a reductio ad absurdum way they're the same thing (music/transport), but they're trying to conflate two tangentially related segments of a market that are used in very different ways by different people.

    reply to this | link to this | view in chronology ]

  • icon
    surfer (profile), 24 Mar 2016 @ 12:06pm

    or, if you think..

    like Cary;

    'The consumption of music is skyrocketing, but revenues for creators have not kept pace. '

    consumption;
    ----------------------------------->

    our profit;
    ------------>

    our EXPECTED profit;
    ------------>+----------------------------------->

    'More people are listening, therefore more people need to be paying! It's another form of piracy I say!'
    -Cary


    of course the amount they skim off the top that goes to the artists will not be affected even if their profits go up, that will remain the same, as little as possible.
    I can imagine that if it was even $24 Billion, with a B, they would be singing the same tune.

    reply to this | link to this | view in chronology ]

  • icon
    That One Guy (profile), 24 Mar 2016 @ 12:34pm

    Meanwhile...

    Ice-salesmen are complaining that despite the consumption of ice being at records highs their profits have not seen a matching increase, and are claiming that this demonstrates that the market is not working properly.

    Traditional newspapers are complaining that despite the increased 'consumption' of news, their profits have not seen a matching increase, and they are using this fact to claim that the market is not working properly.

    Rickshaw operators are complaining that despite the massive increase in personal transportation their profits have not seen a matching rise, and in fact seem to be on the decline, and they are using this startling information as proof that the market is not working properly.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 24 Mar 2016 @ 1:01pm

    Is is illegal for Cary Sherman to lie? Doesnt this affect stocks, etc? Well, I really just wanted to post Cary Sherman is a liar. :)

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 24 Mar 2016 @ 1:09pm

    The RIAA's financial data does not include music publishing royalties or income from lucrative "360 degree" contracts (essentially an income tax paid to the record label) that force artists to give up a big chunk of their earnings from touring, merchandising and other income sources for the duration of their contracts.

    Although sales of recorded music continue to decline, the recording industry has finally turned around financially and is now reaping ever-increasing profits by exploiting additional revenue streams.

    The industry will downplay this, of course, and continue to complain, as loud and hard as ever, that "piracy" is killing the music business.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 24 Mar 2016 @ 2:29pm

    Until they have it all they will never stop demanding more

    reply to this | link to this | view in chronology ]

  • icon
    Derek Kerton (profile), 24 Mar 2016 @ 2:40pm

    You Let Him Off The Hook

    Tim, you let Cary Sherman off the hook for the most blatant feint in his article. He compares, IN HIS OWN WORDS,

    vinyl album REVENUES against on-demand FREE music streams.

    In a comparison of a retail priced service against a free service, the one with the price > 0 can usually be shown to have generated more direct revenue.

    "Last year, 17 million vinyl albums, a legacy format enjoying a bit of a resurgence, generated more revenues than billions and billions of on-demand free streams: $416 million compared to $385 million for on-demand free streams."

    What's truly amazing in that quote is that so-called "Free" services were able to generate such substantial revenue, which as Tim points out also substitute for pirated music, and lead to upsells.

    reply to this | link to this | view in chronology ]

  • icon
    Kevin (profile), 26 Mar 2016 @ 3:44am

    RIAA Lies

    When will artists wake up to the fact that the RIAA exists only for the interest of the major records companies and their profits. Like back in the earlier days of movies when actors formed their own production company, United artists,maybe musicians short tell the RIAA and other royalty collectors to go to hell and form your own Independent Musicians and work out a deal that gives everyone a fair deal. Time to kill multi national corporations and their power.

    reply to this | link to this | view in chronology ]


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