Showing posts with label revenue. Show all posts
Showing posts with label revenue. Show all posts

Friday, May 28, 2021

What Does Pro-Rata Mean? Especially With Reference to Streaming Royalties.

Pro rata is a Latin adverb or adjective meaning a proportionate allocation.

When services calculate streaming royalties to licensors on a pro rata basis, it usually means allocating earnings to each licensor according to its share of a pool of total earnings.

However, licensors of content that attracts the most profitable per-stream users are apt to find such standard pro-rata methodology to be unfair and may favor user-centric royalty calculations instead of those that are pool-based. In a user-centric calculation, a streaming service instead pro-rates earnings from each individual user to the relevant licensors and does not first pool earnings matched to individual users.

Pro rata calculations can be used to determine the proportionate shares of any given whole and it is often used in business finance.

Friday, January 1, 2016

2015 Year In Review: YouTube

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Monday, October 19, 2015

Visualizing Decimated Revenue in the Record Business

Since 1999, the old "record business" (i.e., of manufacturing and distributing physical consumer products) has dropped over 70%.  See charts below based on RIAA data:

Record companies collectively lost control of music distribution, albums unbundled into tracks, and downloads have had their day (note: downloads are declining in market share at this point). 

A small number of digital music services have seized control of music distribution; YouTube, Spotify, Amazon and Pandora compete with Apple to offer consumers better, faster and/or cheaper experiences, making streaming one of few recorded music market segments with strong growth.

Losing control of distribution to digital companies has weighed heavily on music license fees, resulting in controversially low royalty rates, which are often based on subscriber or ad revenues. See Boschan Corp.’s estimates below of roughly how many digital downloads or streams are required to achieve $1 Million in US recorded music revenue on many of the popular services:

Note that actual rates do vary based on the services deals with record companies and/or SoundExchange as well as the type of exploitation (e.g., subscriptions vs. ad-supported).

Also, it is important to note that while recorded music revenues have dropped, so have costs (e.g., for physical product), and that record companies have a multitude of other income streams that they classify as "investment" or other types of income or offsets to costs.  As a result of these and other factors, the profitability picture is not quite as grim as it appears when we focus solely on revenues of the recorded music sector.

Monday, September 21, 2015

Live Music: Is Growth of the Industry's Largest Source of Revenue Sustainable?

Live music is the largest of the music industry's three major revenue streams, representing over 40%:

Accordingly, nearly half of the money that the average U.S. consumer spends on music is for live music experiences.

Over the past few years, the live concert industry has had a good run, globally as well as in the US, as shown in the chart below:

Pollstar reported that North American concert revenues totaled $6.2 billion in 2014 and 2015 may be another record-setting year for live music events, in terms of revenues, attendance and high ticket prices.  Many credit such growth in live music to maturing audiences, as evidenced by trade publication Pollstar’s list of top five concert tours worldwide during the first half of 2015, which includes just one act with fewer than two decades of history (i.e., One Direction):
  1. One Direction
  2. Fleetwood Mac
  3. The Rolling Stones
  4. Garth Brooks
  5. Paul McCartney

There is clearly a risk that the live concert industry (and industries that depend on it, such as pro-audio equipment), will suffer sharp declines as top-grossing entertainers and their audiences age out of the marketplace.

However, it is worth noting that the above list of top five concert tours during the first half of 2015 does not reflect the latest Taylor Swift tour.  Also, it does not reflect non-tour related events such as festivals and electronic dance music events, all of which attract a younger demographic of consumers with lower discretionary income than the typical Fleetwood Mac or Paul McCartney concertgoer, but who are likely to continue to attend music events for decades to come.

Regardless, some analysts believe that, as the over-saturated market for festivals contracts, live music revenues may decline.  Also, while electronic dance music has been a bright spot, notable EDM promoter SFX has struggled financially. 

The bottom line is that few experts think the record growth in live music is sustainable in the long term.