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We recently had the opportunity to speak to Music Producer Mark Berry of Attack Media Group about money in the music industry. Berry has 36 international gold and platinum record awards under his name, and has worked with such Grammy- and Juno-nominated artists as David Bowie, Duran Duran, Billy Idol, Boy George, Yes, Joan Jett, Cameo and Kool & The Gang.
Dividend.com (D.com): Who pockets the money from iTunes, Spotify, and Google Play?
Mark Berry (MB): The majority of the streaming revenue goes to the aggregator, e.g. The Orchard or Tunecore, along with the streaming distribution entity. The artist receives a very small percentage of the revenue in the area of 10-15 cents per download. The balance of the revenue is split between the label, distributor, and the aggregator along with applicable writer and publisher royalties (mechanical revenue) and producers royalty.
D.com: Subscriptions-based radio stations like Rdio, Spotify, Tidal, and Songza are all great sites for shareholders, but what about the musician? Is there a plan to one day expand this into record labels?
MB: These models are generally not great deals for artists but have turned into windfalls for investors. The subscription model has not yet kicked in or taken hold in the streaming world, just look at Spotify. Their freemium is not working. I believe that the king of the hill will be Apple streaming and radio, unless it gets hampered with antitrust violations for controlling a large percentage of the pie. Apple has possession of about 850 million credit card numbers, so it’s a natural fit and easy pay model.
D.com: A band’s biggest expense is its recording fees, ranging between $150,000 to $2 million. Do online streaming services plan to front the money for up-and-coming bands? How does your label deal with funding?
MB: No, streaming is the new distribution model, taking over what retail used to be. It doesn’t make sense for the streaming entities to pay for the recording of the masters of an artist, it would just be an additional expense. Besides, the artist is better off owning the masters and coordinating the various licensing opportunities associated with the masters himself or herself. I can’t see streaming companies paying $2 million for a new Rihanna record and then trying to control the internet streaming and usage of that specific master, it just won’t happen. And they would need to invest in videos, touring, merch, etc.
D.com: A small indie band like Joy Felt Analog has a great sound, but in today’s industry doesn’t stand a chance against the Kanyes and One Directions, or of truly spiking on YouTube. What would you say to them?
MB: I’d say they need to coordinate multiple revenue streams through companies like Deevel.com that service radio, film, TV, ad agencies, video games, movie trailers, international licensing, weblogs, social media, etc., to take advantage of the absence of retail. These bands do not have the promotional muscle to coordinate international videos, tours, merch, and endorsements.
D.com: Will there come a day when Google and Apple are also the biggest record labels, with the other music streaming services following suit?
MB: I think Apple is well positioned to become the largest label in the world, as mentioned with the 850 million credit cards on file for iTunes, app purchases, and now Apple streaming and radio. I cannot foresee the survival of the major label system with its present business model.
D.com: While YouTube is corporate controlled, does it put some of the power back into the hands of the artists?
MB: Not really. It’s simply another avenue of promotion and marketing that cannot be ignored. Getting the views up and working on the social media aspect of a band’s career can only further document the interest from overseas, radio, etc.
D.com: When scouting new talent, is the number of followers on any platform the key indicator? Are the people selecting the bands that labels should pay attention to now?
MB: Absolutely! Social media is the barometer for any new artist. We look at the number of views, downloads, and streams. This is the new A&R (artists and repertoire). The old A&R of walking into a bar and hearing a killer band does not exist anymore, it’s all activity that is seen and documented online. It’s like what the old soundscan system used to be. If I said a band sold 10,000 copies of a CD, then soundscan would document those sales at retail, but retail is over. Everything has moved online, from sales to streaming to downloads to merch.
D.com: Do A&R folks even look at bands that may have a great sound but don’t show up as “winners” on the web?
MB: Yes and no. They need the ball at the 50 yard line now because they simply do not have the money to start the ball rolling from the 1 yard line anymore. There are no more A&R development departments to go find new talent. They rely on producers like myself to find the bands and do a new CD inexpensively and then get that into a system that creates value for the masters and copyrights.