Category Archives: music

Record Label Demands on Music Streaming Services

New and potentially disruptive music streaming services are having a hard time breaking into the market, with many analysts blaming their business models and others blaming the contractual demands from labels for the troubles encountered. There are also complaints about the royalties paid to artists and poor revenues of existing services.

Michael Robertson–founder of MP3Tunes and–attempts to lift the veil on the industry by looking at some of the (you could safely say “unreasonable”) contractual demands placed on music streaming services by record labels:

General deal structure: Pay the largest of A) Pro-rata share of minimum of $X per subscriber, B) Per-play costs at $Y per play, C) Z percent of total company revenue, regardless of other business areas.

Labels receive equity stake: Not only do labels get to set the price on the service, they also get partial ownership of the company.

Up front (and/or minimum) payments: Means large amounts of cash are necessary to even get into the game. […] This further stifles innovation in services and business models.

Detailed reporting, including monthly play counts: Providing additional reports unrelated to payment, including overall market share of sales in various categories. […] The labels effectively offload their business analysis (and the cost of such analysis) onto the music services.

Data normalization: Without standard naming conventions and canonical methods for referencing artist, tracks and albums, the services are left to try and match artist, track, album names provided by one label with those of another. It’s incredibly inefficient, as each service must undergo this process separately.

Publishing deals: Once you’ve signed deals with the labels, you then need to cut deals with the publishers. […] Although you may have the rights to stream from labels, you sometime can’t get the rights to stream from the publisher, or worse, even find the publisher.

Most favored nation: This is a deal term demanded by every major label that ensures the best terms provided to another label are available to it as well. This greatly constricts the ability to work out unique contractual terms and further limits business models.

Non-disclosure: This is the main reason music services, not the labels, have been getting heat from the artist community. Music services can’t defend against accusations about low artist payments because they pay the labels who don’t disclose what they’re paying to the artists.

It’s worth noting that while Michael Robertson is a trustworthy writer and likely to have access to people who know this information (if this isn’t first-hand information anyway), he’s also likely to harbour some resentment toward record labels from his business ventures. Still, even without a solid reference I felt that this was too interesting to just pass up.

Want to be a millionaire pop star? You’re better off buying £64 of lottery tickets than entering the X-Factor.

Let’s assume that if you had a few million pounds, you could probably buy yourself some hit songs from a songwriter, some studio and musician time, plenty of marketing, and almost certainly get yourself a pop career.

The question is; is it easier to get yourself into this position (a millionaire pop star) via pure luck (by entering the lottery) or by entering a competition like the X-Factor?

We don’t know how many people apply for the X-Factor, but based on 10,000 people at a single London audition, we could conservatively estimate 40,000.

Although the X-Factor markets itself on the winner receiving a “£1 million recording deal”, recent information about the contract has surfaced that shows “the victor may only receive £1 million after at least four albums” (note the ‘may’ and ‘at least’; we’ll ignore these for now and assume they will after four albums).

If we look at the number of albums released by winners of this type of show (X-Factor, Popstars, Pop Idol), we find that less than one in five winners (to date) have released four or more albums.

18% chance of releasing four albums

And we can’t even expect this to improve; plotting all the chart positions (for singles and albums) for all of these winners, over time, shows a distinct downward trend:


So, 1 in 40,000 application odds combined with 1 in 5.5 “four albums” odds gives total odds – of entering the X-Factor, winning and becoming a millionaire because of it – of about 1 in 220,000.

The chances of winning the lottery (with average jackpot winnings of £2,053,984) is 1 in 13,983,816. You would therefore need to buy £64 of tickets for a slightly better chance of winning the jackpot than becoming a millionaire through winning the X-Factor. £64 may seem like a lot, but probably doesn’t compare to the cost of travelling to/from the auditions, taking a day off work to spend a full day there (with food and drink), etc.

Of course, if you funded your own career, you’d also get a much higher percentage of earnings, wouldn’t be locked into a lengthy contract, and wouldn’t suffer from the stigma of being a reality star winner. So you’d probably even have a longer career than these winners, as plotted below (each bar represents a different winner from one of these reality shows). As a winner, you have a 55% chance of having a pop career of less than one year, and a 36% chance of less than six months.


On-Hold Music and Time Perception

With the correct choice of music and by giving the perception of progress customers on-hold in a telephone queue underestimate the time they have been kept waiting and will stay on the line longer before hanging up.

Newsweek summarises a number of research studies that have looked at the psychology behind telephone queues and on-hold music, noting the different reactions customers have when confronted with hold music, recorded apologies or estimated wait times.

Though it hardly seems possible that the Muzak (the term is often used generically, but Muzak Holdings LLC is a real company) pumped into malls could actually influence shoppers, the truth is, alas, that it does. James Kellaris, a marketing professor at the University of Cincinnati, says that music can have an impact on a wide array of customers’ behaviors, changing their perception of time, conditioning them to associate a song with a brand, or limiting their ability to critically analyze a potential purchase due to musical distraction. “When shoppers are exposed to music in a store, sales resistance decreases,” he says via e-mail. Our brains have a finite bandwidth for taking in and processing information, and clogging that bandwidth with music is sometimes enough to prevent us from making rational purchasing decisions, or worrying about the time.

The article also notes how we have the rather excellent Erik Satie to thank for the muzak phenomenon:

[Satie] developed a very cynical attitude toward the listener. Satie was so obsessed with the idea that music could no longer communicate to the audience, he concluded that music in the 20th century was destined to be a vacuous, comfortable apparatus best used as a background for other activities, much like a favorite chair.

via Mind Hacks

Busking in the London Underground

Walking through the London Underground I usually don’t give much thought to the designated busking areas. However, the scheme, started by Transport for London in 2003, is surprisingly involved, as I discovered after reading this profile of Mike Muttel, an Underground busker.

Muttel’s official busking license, good for one year, hangs visibly from a lanyard around his neck. It took six months of rigmarole to obtain that license, in which time he applied, auditioned for a panel of four or five London Underground staff members and agreed to a mandatory police background check. The process didn’t cost anything, but took talent, patience and a little luck (audition judges are not required to have backgrounds in music). Still, of the 400 buskers that audition each year, 80% pass. Now that he’s in the system, Muttel is not required to re-audition; he just re-applies for his permit every year. He has been busking for almost three years. […]

Of the 28 or so total pitches at 21 Tube stops throughout central London, some argue there are really only half a dozen ideal spots: two at Green Park, two at Tottenham Court Road, one at Piccadilly Circus and one at Leicester Square. If a busker shows up late for a spot, the previous busker is entitled to stay for the next two-hour time slot. Unsurprisingly, this can get messy.

The Anatomy of a Hit Song

Two great articles on current research into how artists and songs become hits:

Group Think looks at research predicting musical hits using “geo-aware query strings” from file-sharing networks such as Gnutella.

The geographic location of an emerging artist is the key to predicting their success […]. “If an artist has the potential to be successful, people will first start noticing them in the small geographical area where they live and perform.” In fact, a potential pop star will typically enjoy thousands of downloads a day on a local level, while remaining relatively unheard of on a national level. A large divergence between local and global popularity, called the Kullback-Leiber divergence, is a strong indicator of star potential. The algorithm measures the K-L divergence to produce a short list of potentials, of which 15 to 30 percent will go on to reach national popularity within weeks.

Taking a different approach, The Anatomy of a Hit Song shows that what makes many of us like a certain song isn’t its sound; it’s the ‘outside influence’ of our peers liking the song.

While [the researcher] could predict which songs would be popular after an initial round of feedback, he said it’s initially difficult to guess which songs will become popular and which will be despised strictly on their own merits. He cites the performance of the song “Lockdown” by 52metro, which ranked right in the middle among the 48 available tracks by listeners who had no social context. However, in two samples subjected to outside influence, it came in first place in one trial and 40th in the other.

As the article states, these findings aren’t strictly confined to music; the theory likely applies just as much to books, movies and TV shows.