A2IM Associate member, GoDigital Media Group have written a white paper on the value gap and the music eco-system.
Jason Peterson, GoDigital Chairman, starts with the summary of the paper:
Advertising supported platforms like YouTube are important to the music eco-system and music rights-holders should be grateful for their consumer reach and investment in label tools like Content ID. However there is a gap between what paid music streaming services and free ad-supported services like YouTube (and Facebook) deliver in terms of revenue per stream to music rights-holders. One way rights-holders can close the gap in value delivered is to charge a fixed CPM (cost per thousand views or streams). This fixed CPM could be fixed and based on each agreed upon business model and territory irrespective of the platform. In the future Apple, Google and Spotify could pay the same on a per stream basis. The retailers control their platforms and reap the benefits of their success (such as enterprise value in the stock market). Rights-holders on a rev-share don’t control the platforms or reap the rewards of success yet bear the risk of platform failure. The fixed CPM strategy aligns with the risk/reward tradeoff in that it shifts the business execution risk to the platforms and away from rights- holders.
Note from A2IM: We post this informative article to provide information to the members that they may wish to use in making independent decisions about pricing and contract terms with various streaming and ad-revenue platforms. As a reminder, no member company should reach agreement with or discuss specific pricing or contract terms with other members, but may of course use this kind of information in their own decisions about such matters.
A2IM is a 501(c)(6) not-for-profit trade organization headquartered in New York City that exists to support and strengthen the independent recorded music sector. Membership currently includes a broad coalition of more than 700 Independently-owned American music labels. A2IM represents these independently owned small and medium-sized enterprises’ (SMEs) interests in the marketplace, in the media, on Capitol Hill, and as part of the global music community. In doing so, it supports a key segment of America’s creative class that represents America’s diverse musical cultural heritage. Billboard Magazine identified the Independent music label sector as 37.32 percent of the music industry’s U.S. recorded music sales market in 2016 based on copyright ownership, making Independent labels collectively the largest music industry sector.