People 25 June 2018
Recently, Rolling Stone gave Spotify a pat on the back for its new resolve to give away more free music in a scheme that promises to convert listeners into buyers. With fleeting objectivity, the magazine recognized the concerns of skeptical artists and record labels, then quickly rerouted readers by crediting Spotify—which became a public company in early April 2018—for kick-starting the stalled industry and initiating the recovery process.
"Thanks to the boom of streaming in recent years, music is finally coming out of its two-decade slump. The United States posted music revenue of $8.7 billion last year–a 17 percent year-over-year increase that took the industry back up to its 2008 levels." -Rolling Stone, April 24, 2018
"Finally coming out of its two-decade slump" may be a bit overstated. According to the latest report from the International Federation of the Phonographic Industry (IFPI), 2017's total global revenue of $17.3 billion represented only 68.4 percent of the industry's peak in 1999 when worldwide revenue topped out at approximately $27 billion, with the U.S. staking claim to $14.6 billion. Attributing the great decline of illegal free music downloading, the IFPI fought long and hard for measures to sanction unlicensed music services, so it begs the question: if more music is distributed for free (and free is free whether legal or not), can the music industry sustain its tenuous growth? The majority of artists and record labels say "no."
Admittedly, streaming music platforms—now the largest revenue source—have pushed the needle, accounting for nearly two-thirds of the U.S. market, but when it comes to how artists are paid, there is a wide chasm between what the top platforms are earning and the royalties they are paying to the artists. A January 2018 report from Digital Music News provides an overview of the leading platforms' pay-per-play rates, underscoring why artists and labels have every reason to believe Spotify's bold move coupled with its existing royalty structure will continue to hinder the industry's recovery:
- Napster: Listed as Rhapsody, Napster paid $0.01682 per play in 2017, with a 1.75 percent U.S. market share.
- Apple Music: As a subscription-only service with no free tier, Apple now offers a pay-per-play rate of $0.00783, with a U.S. market share of 22.29 percent.
- Amazon: Though facts on artist payouts for Amazon Prime Music and Music Unlimited are guarded, The Trichordist (Artists for an Ethical and Sustainable Internet) reports a pay-per-play rate of $0.0074, with a 3.8 percent U.S. market share.
- Spotify: Spotify, with the highest number of paid subscribers, pays a paltry $0.00397 per stream, commanding more than half (51 percent) of the U.S. market share, with top executives reportedly earning seven-figure salaries.
To add insult to injury, Digital Music News reports that 99 percent of 2017's 377 billion streams were from the top 10 percent of available songs—which were dominated by male artists. What's worse, the current royalty structures continue to hold artists hostage even under the best circumstances. Independent labels, for example, may offer artists half of the profits (that's at wholesale—not retail), but the typical split with big record labels is significantly smaller—between 10 and 16 percent in favor of the label.
Equal Pay for Equal Play
Satisfying consumers at the expense of the artists they promote, the current leading streaming platforms being credited for resuscitating the music industry inarguably benefit only top-tier musicians—and least of all women. A new study by the USC Annenberg Inclusion Initiative reveals these harsh realities for female artists, who continue to find themselves at the bottom of the multi-billion-dollar industry:
- Just 22 percent of releases on the Billboard Hot 100 Chart between 2012 and 2017 were from women artists.
- Only 12 percent of releases on the Billboard Hot 100 Chart between 2012 and 2017 were penned by female songwriters.
- In the previous six years of Grammy nominations in five categories, less than 10 percent of all nominees were female.
- Since 2013, no women have been nominated for Producer of the Year.
- Females traditionally represent less than 10 percent of nominees for Record or Album of the Year.
- Slightly more than one third of the female nominees at the previous six Grammy Awards were women from underrepresented racial/ethnic groups.
- In 2017, of the total 1,239 artists attached to the 600 top songs, only 16.8 percent were women, reflecting a six‐year low for female artists in popular content.
- In the recording studio, male producers outnumber female producers 49 to one.
So, while it may have been a banner year for some, not all pieces of the music industry pie get divided equitably. With women so blatantly marginalized and underrepresented, it will take more than inclusion to bring them above water; it will take an entirely new platform that opens the access gates and a royalty structure that removes the handcuffs once and for all.
Addressing the Challenges of a Tone-Deaf Industry
Continuing to be the voice of change, calling for fair compensation as well as freedom from discrimination and sexual harassment in every sector, women are finding new inroads into the music industry while simultaneously impacting society on a larger scale. Consider Michele Anthony, Executive VP of Universal Music Group, who was named the 2017 UJA-Federation of New York Music "Visionary of the Year" for her commitment to philanthropy, and Nicki Farag, Senior VP of promotion at Def Jam Records, who pushed to the top of the charts—against all odds—the rapper Logic's controversial and heart-wrenching song "1-800-273-8255," which features Alessia Cara and Khalid and supports suicide prevention efforts. Yet, these women and others like them are just the tip of the iceberg. Recognizing the need for a level playing field in order for women—and the music industry—to not just survive, but thrive, record companies are pitching in and partnering with innovators and entrepreneurs to enrich and enhance the music experience and its potential to positively impact fans, labels, artists and charitable organizations alike. With new players pushing the boundaries and providing platforms that offer independent and established artists equality in access, exposure and earning strategies, a new dawn may be on the horizon.
We can hear it now, a music industry of the future, where female artists represent half of all award winners, songwriters, producers and top earners. Where full and fair compensation means a 90/10 split in the artist's favor. Where fans can engage with artists in new ways and where the transformational power of music is unleashed, appreciated, shared and benefitting to all.
Edge Music Network (EMN) is a music video streaming service providing live and on-demand content through a video syndication platform designed to enable a fair compensation structure ensuring artists get the royalties they deserve and fans get uninterrupted access to the music they love—anytime, anywhere. With powerful search tools for discovering and streaming on demand, users can watch the latest music videos, concerts and events of the highest quality. The EMN mobile app unlocks premium content, allowing users to easily create, manage and share custom playlists and enjoy channels with music videos curated by EMN experts. The Edge Music Network dedicates a percentage of profits to charitable causes that feed the hungry, aid victims of natural disasters and support homeless veterans. Supported by an advisory board of renowned musicians and industry professionals, and in partnership with leading content creators, independent artists and marquee music labels like Universal, Capitol Records, Def Jam and Geffen—Edge Music Network is on a mission to reinvent how music is heard, viewed and shared. Edge Music Network delivers an unlimited, unrestricted and unbelievable audio and video experience—and unites people with the transformative power of music.
"The Edge Music Network dedicates a percentage of profits to charitable causes that feed the hungry, aid victims of natural disasters and support homeless veterans"
3 Min Read
"How did you ever get into a business like that?" people ask me. They're confounded to hear that my product is industrial baler wire—a very unfeminine pursuit, especially in 1975 when I founded my company in the midst of a machismo man's world. It's a long story, but I'll try to shorten it.
I'd never been interested to enter the "man's" world of business, but when I discovered a lucrative opportunity to become my own boss, I couldn't pass it up—even if it involved a non-glamorous product. I'd been fired from my previous job working to become a ladies' clothing buyer and was told at my dismissal, "You just aren't management or corporate material." My primary goal then was to find a career in which nobody had the power to fire me and that provided a comfortable living for my two little girls and myself.
Over the years, I've learned quite a few tough lessons about how to successfully run a business. Below are five essential elements to keep in mind, as well as my story on how I learned them.
Find A Need And Fill It
I gradually became successful at selling various products, which unfortunately weren't profitable enough to get me off the ground, so I asked people what they needed that they couldn't seem to get. One man said, "Honey, I need baler wire. Even the farmers can't get it." I saw happy dollar signs as he talked on and dedicated myself to figuring out the baler wire industry.
I'd never been interested to enter the "man's" world of business, but when I discovered a lucrative opportunity to become my own boss, I couldn't pass it up.
Now forty-five years later, I'm proud to be the founder of Vulcan Wire, Inc., an industrial baler wire company with $10 million of annual sales.
Have Working Capital And Credit
There were many pitfalls along the way to my eventual success. My daughters and I were subsisting from my unemployment checks, erratic alimony and child-support payments, and food stamps. I had no money stashed up to start up a business.
I paid for the first wire with a check for which I had no funds, an illegal act, but I thought it wouldn't matter as long as I made a deposit to cover the deficit before the bank received the check. My expectation was that I'd receive payment immediately upon delivery, for which I used a rented truck.
Little did I know that this Fortune 500 company's modus operandi was to pay all bills thirty or more days after receipts. My customer initially refused to pay on the spot. I told him I would consequently have to return the wire, so he reluctantly decided to call corporate headquarters for this unusual request.
My stomach was in knots the whole time he was gone, because he said it was iffy that corporate would come through. Fifty minutes later, however, he emerged with a check in hand, resentful of the time away from his busy schedule. Stressed, he told me to never again expect another C.O.D. and that any future sale must be on credit. Luckily, I made it to the bank with a few minutes to spare.
Know Your Product Thoroughly
I received a disheartening phone call shortly thereafter: my wire was breaking. This horrible news fueled the fire of my fears. Would I have to reimburse my customer? Would my vendor refuse to reimburse me?
My customer told me to come over and take samples of his good wire to see if I might duplicate it. I did that and educated myself on the necessary qualities.
My primary goal then was to find a career in which nobody had the power to fire me and that provided a comfortable living for my two little girls and myself.
Voila! I found another wire supplier that had the right specifications. By then, I was savvy enough to act as though they would naturally give me thirty-day terms. They did!
More good news: My customer merely threw away all the bad wire I'd sold him, and the new wire worked perfectly; he then gave me leads and a good endorsement. I rapidly gained more wire customers.
Anticipate The Dangers Of Exponential Growth
I had made a depressing discovery. My working capital was inadequate. After I purchased the wire, I had to wait ten to thirty days for a fabricator to get it reconfigured, which became a looming problem. It meant that to maintain a good credit standing, I had to pay for the wire ten to thirty days before my customers paid me.
I was successful on paper but was incredibly cash deprived. In other words, my exponentially growing business was about to implode due to too many sales. Eventually, my increasing sales grew at a slower rate, solving my cash flow problem.
Delegate From The Bottom Up
I learned how to delegate and eventually delegated myself out of the top jobs of CEO, President, CFO, and Vice President of Finance. Now, at seventy-eight years old, I've sold all but a third of Vulcan's stock and am semi-retired with my only job currently serving as Vice President of Stock and Consultant.
In the interim, I survived many obstacles and learned many other lessons, but hopefully these five will get you started and help prevent some of you from having the same struggles that I did. And in the end, I figured it all out, just like you will.