On the heels of Google wading into the music streaming waters with its Google Play Music All Access service, with a $10 fee for all-you-can-eat streamed tracks, the indie music agency Merlin has today published results of a recent survey of its 20,000-label member group, plus an analysis of 6.5 billion music streams over the last year, which spell out where the money is coming from today. Streaming services are making increasing headway as a revenue driver for musicians, but digital downloads — specifically Apple’s iTunes — are still ruling the roost.

Worldwide, iTunes has held on to its spot as the single-biggest source of revenues for Merlin’s independent label members, both across key markets like the U.S. and UK, as well across Europe and globally. Interestingly, Spotify is securely in second position, underscoring just how popular both Spotify and streaming services  have become — second has been a place held by Amazon for some time prior to this. Amazon’s MP3 download service subsequently slipped down to third place across the board, while Deezer and eMusic are split regionally in terms of their influence and in grabbing fourth place.

We’re reaching out to Merlin to see if we can get a specific percentage breakdown here. Typically iTunes has been estimated to hold around 60% of the digital music market by revenues; NPD put its share at 63% in April 2013. (Update: A Merlin spokesperson says those breakdowns are not being disclosed.)

“The new generation of digital services has created a new dynamic of consumer freedom, limitless choice and myriad paths to discovery,” Charles Caldas, the chief executive of Merlin, said today in a speech at the Great Escape conference in Brighton. “Our numbers illustrate that this dynamic is bringing incremental value to the market, and the demand from music fans for the music being released by our independent members is higher than ever before.” However, in what might be a swipe not just at big labels but big players like Google jumping deeper into the market, he also cautioned against companies that might be trying to apply legacy music royalty concepts to digital.

“The ecosystem is fragile: power is more concentrated than ever, and we are seeing an attempted land grab by the largest companies for digital market share as they try to recreate the old-market advantages they are clearly losing in the digital space,” he noted. Merlin, despite its tens of thousands of indie label partners, only makes up about 10% of the world’s music market, so it has a place continuing to rage against the machine.

It will be interesting to see whether Spotify’s (and streaming’s) rise are eating into that 60% marketshare for iTunes. But the research from Merlin suggests that if this is the case it’s not a watershed moment quite yet: both formats appear to still be growing, even if streaming is growing more.

Some 92% of respondents in the survey said that streaming and subscription revenues (based on streaming) grew in 2012 compared to a year ago. One-third said the rise was as much as 100%.

The rise in downloads was less pronounced: around 66% said a-la-carte download sales grew alongside that streaming rise. Only 8.4% said the rise in download revenues increased by 100%.

In terms of what the growth in streaming means for actual businesses, the takeaway is still marginal.

Merlin’s members say that they expect royalties of $65 million or more for 2013 from streaming services, but if you just do the math and divide that among 20,000 members, that works out to only $3,250 per label. Considering that Merlin claims that its members’ share of streaming services is typically 12-20% higher than those of other major labels — included in Merlin’s counts are acts like The National, Grizzly Bear and Bon Iver, as well as labels like Domino and Beggars Group — it sounds like streaming, despite all the advances and popularity, remains for now just an opening act, and not the main event.

Full results of the report can be seen here.

Source: TechCrunch (by Ingrid Lunden)

Psy’s ‘Gangnam Style’ might have catapulted the South Korean music market into the global consciousness but to industry observers like myself it has long been a market of particular interest.  Being the first major music market to pass the 50% digital mark – in 2006 – South Korea has been held up both as a digital trailblazer and as a canary in the mine for the global music industry.  Strong growth over recent years hinted at a brighter international future, but just as ‘Gangnam Style’ was propelling South Korean music to unprecedented global heights the South Korea music market went back into decline.

The South Korean music market is one of contradictions and idiosyncrasies, but crucially it also holds many lessons that the global music market would do well to pay heed to.

Bucking Global Trends

According to the IFPI’s invaluable Recording Industry in Numbers, South Korean recorded music revenues declined by 5% in 2012, breaking a run of four years of successive growth. But unlike the global market, it wasn’t the CD that was to blame for the fall but digital.  Physical revenue grew by 19%, the third successive year of growth, while digital actually declined by 25%, dragging the entire market down with it. The mirror opposite of the global music market where 7% digital growth wasn’t enough to prevent a 5% physical decline drag down total revenues by 1%.

2012 wasn’t the first year that South Korea stood out from the pack though, indeed the last 13 years have been vastly different from the global market (see figure):

• Revenue collapse: between 2000 and 2005 South Korea lost a whopping two thirds of its value while the global market shrunk by a more modest 18%
  
  
• Digital crossover: in 2006 South Korea became the first major music market to become more than 50% digital (the 2012 global rate was just 38%)
  
  
• Subscription dominance: a vast 74% of digital revenues were subscription in 2012, having hit 22% back In 2008 (the global rate was just 20%)
  
  
• Physical boom: physical revenues have risen all years but one since 2007, compared to a global market decline every year since 2000

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In 2011, a proposed class action lawsuit was launched against Universal Music Group over digital income. The litigation from Rob Zombie and Rick James on behalf of themselves and others under the UMG umbrella seeks substantial damages from the record label’s decision to treat income from downloads off of venues like Apple’s iTunes as “sales” instead of “licenses.”

Just how much money is at stake is an open question.

The lawyers representing the plaintiffs want UMG to turn over download revenue and volume data tied to particular artists so they are able to come up with a calculation of damages and order the information in an effort to gain class certification.

But UMG is telling a judge that’s not reasonable, and if it happens, the privacy of artists will suffer.

The current litigation, in many ways, is a follow-up from a path-breaking 2010 ruling by the Ninth Circuit Court of Appeals over a dispute pitting Eminem’s production team of Mark and Jeff Bass against Eminem’s record label, Aftermath (a subsidiary of UMG). At the 9th Circuit, the judges ruled that a lower court had erred by not deeming the label’s agreements with third-parties download providers as licenses instead of sales.

The attorneys for other UMG artists want to repeat the success, which would entitle these artists to collect about 50 percent of collected digital revenue instead of about 15 percent.

But this case is somewhat more complicated given the potential number of artists who have contracts with UMG. Not every artist has precisely the same contract. Not all artists enjoy the same level of success. Commonality is one of the factors that a judge will consider when deciding whether or not to certify a class action.

The plaintiffs’ lawyers think that having access to data will help them sort through the issues in preparation for certification. And they’re not willing to settle for data that leans on anonymity such as “Artist #437 had 1000 downloads and $785 in download revenue in 2005.”

The plaintiffs are willing to designate the information potentially handed over as “Attorneys’ Eyes Only,” but UMG is objecting with a noteworthy argument on “third-party privacy interests.”

UMG says that “the issue’ here is that the plaintiffs’ attorneys — “all 50 or so of them” — do work in the music industry. UMG lawyers stated in a court filing on Friday, “Under plaintiffs’ proposal, plaintiffs’ attorneys and music-industry professionals could review the private financial information of thousands of recording artists with whom they may have adverse relationships, and who have not indicated any desire to be part of any class or to be represented by these attorneys or professionals.”

In the case involving Eminem’s music referenced above, UMG asserts that “when plaintiffs earlier sought private download data for just a single artist, Eminem… he strenuously objected, and was prepared to intervene until Plaintiffs agreed not to seek such data at all.”

UMG also believes that the “true, disguised purpose in seeking the artist names is to help evaluate their case for settlement purposes.”

Nonsense, responds the other side.

According to the court documents, the plaintiffs tell the judge, “It is ironic that UMGR continues to press for more information about how Plaintiffs will calculate their damages, but seeks here to deprive Plaintiffs of important data Plaintiffs can use both for internal analysis of class certification theories, and to illustrate for the Court available methods for calculating damages for any class or subclass. Plaintiffs should not be handicapped in these tasks.”

Source: Billboard (by Eriq Gardner)

The following infographic from Mobile Roadie takes a look at the Mobile Music Industry as of 2012.  It was inspired by multiple sources, including Mobile Roadie’s client data, Compuware.com and Flurry Analytics. Believe it or not, ringtones currently represent the biggest proportion of global mobile music revenues. However, in 2013 it’s estimated that full track downloads via mobile will overtake this.

Source: Mobile Roadie (by Terri Kim)

Here’s where the war on piracy gets really complicated. Because for all the ‘just embrace it’ advice from the tech community, it seems that shutting down massive piracy hubs actually improves digital sales.  You need an attractive carrot…

…and a giant stick as well.  It was true for song downloads following the shutdown of Limewire, and now, there are statistics backing the Megaupload shutdown, as well.  ”The shutdown of Megaupload caused a statistically significant increase in digital sales,” Carnegie Mellon professor of information technology and market Michael Smith recently told an audience last week at the Digital Book World Conference in New York.

According to details from MediaBistro, Smith analyzed and compared countries with varying degrees of Megaupload penetration (low, medium, high).  And after crunching the numbers he determined the following result:

Every 1% decrease in Megaupload usage

=

+2.6-4.1% increase in digital sales.

“It does suggest that when you look at competing with free, using anti-piracy measures to make piracy less attractive does work,” Smith said.  Perhaps the more important questions are how long the effect lasts, and whether it was worth the effort.  Limewire took years and millions of dollars to shut down (and let’s not even get into the costs of the Megaupload takedown).  

And sometimes, shutting down one massive piracy hub merely creates a void for another to fill.  In the case of Megaupload, Kim Dotcom is now filling that void himself.

Source: Digital Music News

And then there were three.

The bidding war for EMI — the record label behind Katy Perry, Lady Antebellum, and Coldplay — is over. A consortium headed by Sony (SNE) agreed to pay $2.1 billion for EMI’s publishing business earlier this month, while Vivendi’s Universal Music was the last suitor standing with its $1.9 billion bid for the label itself.

Breaking EMI in two was inevitable, but the meaty morsel here is that EMI’s publishing arm sold for more than the label itself. In other words, EMI’s past is more valuable than its present and future.

Need a Tissue?

There aren’t too many people mourning the passing of the major labels. The labels and their thin artist rosters monopolize the already limited playlists of commercial radio. Then there’s the negative publicity stirred up when the label-backed RIAA went after unemployed moms downloading tracks. Music piracy is a problem that needs to be addressed, but the labels didn’t do themselves any favor by making it personal.

Even the fact that Universal will now control nearly 40% of the market — leaving Sony at 30%, Warner Music Group at 19%, and a smattering of indies battling for the rest — is unlikely to raise eyebrows with antitrust regulators. Prerecorded music has been a fading industry for years, and herding struggling labels together will only make it that much easier to identify the remains.

The Gradual Fadeout

CD sales peaked in 2000 when the labels sold 942 million units, raking in $13.2 billion in sales. It’s been pretty much downhill the rest of the way.

Digital sales were supposed to save the day, but the label-backed MusicNet and pressplay initiatives were too restrictive. It didn’t make sense that music lovers had to jump through more hoops to pay for music than the pirated options available on peer-to-peer file-sharing networks.

Apple (AAPL) finally got it right with the iTunes Music Store, which launched in 2003. Labels didn’t like the $0.99 price point for singles. Artists didn’t like the pricing either, since it found consumers cherry-picking the songs they actually liked instead of paying $9.99 for complete albums. However, Apple’s storefront was far better for the industry than the piracy alternative.

Legal downloads should have been the industry’s salvation. Record companies — what were then five major labels and countless independents — would benefit from the benefits of digital distribution. Labels wouldn’t have to worry about pressing and packaging discs. There were no shipping or return hassles. Apple did all of the work, and labels got to keep roughly two-thirds of the sales. Unfortunately, it didn’t play out that way. The growth in digital music — which by 2008 found Apple replacing Wal-Mart (WMT) as the country’s largest music retailer — wasn’t enough to offset the serious slide in CD sales.

Internet Killed the Radio Star

What went wrong? The labels will point back to Napster, LimeWire, Kazaa, and other disruptive peer-to-peer networks that swayed countless Web-savvy users to download and share pirated tracks. They’re right, but there’s a bigger picture that the major labels are missing.

The Internet made it easier to swap virtual mix tapes, but it also armed garage bands with the tools to get noticed. The playing field was leveled as artists set up MySpace music pages and uploaded tracks to the original MP3.com website.

Where would Justin Bieber or Susan Boyle be without YouTube? How many bands are scoring national attention through Facebook fan pages?

For better or regrettably worse, everyone’s demo tape is now a click away.

Who says you need a major label for digital distribution? Getting your music on iTunes, Spotify, or any of the popular e-music stores and streaming sites will cost most artists less than a video game.

In terms of getting noticed, setting up pages on YouTube, MySpace, and Facebook are no-brainers, but music-dedicated sites including Bandcamp and SoundCloud are also there for promoting your digital presence.

The opportunities keep coming. Google (GOOG) introduced the Google Music Artist Hub last Wednesday, giving artists a free way to get their music available on what are now 200 million activated Android devices.

Last Round for the Music Moguls

The record companies aren’t worthless, even in this scorched climate. Even if CDs go away, there are still promotional, radio, and touring benefits that are easier to secure under a major label. The problem for the prerecorded music industry is that the gap between the signed and unsigned has narrowed.

Even proven bands are finding it more lucrative to leave their labels and strike out on their own. As home recording equipment gets better and cheaper, record companies are no longer necessary to bankroll the once costly recording sessions.

Labels used to love signing artists with established followings, but now those same artists are wondering why they should be tied down to long-term deals when they have the digital distribution tools at their disposal to reach their growing audiences.

There’s a new world out there, and its soundtrack is being scored by unsigned artists that you don’t know — yet.

Google Music helps you spend more time listening to your collection and less time managing it. We automatically sync your entire music library—both purchases and uploads—across all your devices so you don’t have to worry about cables, file transfers or running out of storage space. We’ll keep your playlists in tact, too, so your “Chill” playlist is always your “Chill” playlist, whether you’re on your laptop, tablet or phone. You can even select the specific artists, albums and playlists you want to listen to when you’re offline.

Purchase and share

We also want to make it easy and seamless for you to grow your music collection. Today, we added a new music store in Android Market, fully integrated with Google Music.

The store offers more than 13 million tracks from artists on Universal Music Group, Sony Music Entertainment, EMI, and the global independent rights agency Merlin as well as over 1,000 prominent independent labels including Merge Records, Warp Records, Matador Records, XL Recordings and Naxos. We’ve also partnered with the world’s largest digital distributors of independent music including IODA, INgrooves, The Orchard and Believe Digital.

You can purchase individual songs or entire albums right from your computer or your Android device and they’ll be added instantly to your Google Music library, and accessible anywhere.

Good music makes you want to turn up the volume, but great music makes you want to roll down the windows and blast it for everyone. We captured this sentiment by giving you the ability to share a free full play of a purchased song with your friends on Google+.

Exclusively on Google Music

We’re celebrating our launch with a variety of music that you won’t find anywhere else, much of it free. There’s something for everyone, with a variety of free tracks to choose from:

• The Rolling Stones are offering an exclusive, never-before-released live concert album, Brussels Affair (Live, 1973), including a free single, “Dancing with Mr. D.” This is the first of six in an unreleased concert series that will be made available exclusively through Google Music over the coming months.
• Coldplay fans will find some original music that’s not available anywhere else: a free, live recording of “Every Teardrop Is A Waterfall”, a five-track live EP from their recent concert in Madrid and a remix of “Paradise” by Tiësto.
• Busta Rhymes’s first single from his upcoming album, Why Stop Now (feat. Chris Brown), is available for free.
• Shakira’s live EP from her recent concert in Paris and her new studio single, “Je L’Aime à Mourir” are both being offered up free.
• Pearl Jam are releasing a live album from their 9/11/11 concert in Toronto, free to Google Music users.
• Dave Matthews Band are offering up free albums from two live concerts, including new material from Live On Lakeside.
• Tiësto is offering up a new mix, “What Can We Do?” (feat. Anastacia), exclusively to Google Music users.

Artist hub Whether you’re on a label or the do-it-yourself variety, artists are at the heart of Google Music. With the Google Music artist hub, any artist who has all the necessary rights can distribute his or her own music on our platform, and use the artist hub interface to build an artist page, upload original tracks, set prices and sell content directly to fans—essentially becoming the manager of their own far-reaching music store. This goes for new artists as well as established independent artists, like Tiesto, who debuts a new single on Google Music today.

Starting today, Google Music is open in the U.S. at market.android.com, and over the next few days, we will roll out the music store to Android Market on devices running Android 2.2 and above. You can also pick up the new music app from Android Market and start listening to your music on your phone or tablet today. And don’t forget to turn your speakers up to eleven.

Article originally appeared on Google Blog (http://www.googleblog.blogspot.com) and was written by Andy Rubin.