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Digital Music Sales

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Moaad Mohammed

on 15 December 2013

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Transcript of Digital Music Sales

Digital Music Sales
6MU009

RECORDINGS
The record label pays the artist who can be the songwriter or performer or both, to create a record
Record Label
A Record label owns the copyrights in a recording and exploits them to make profit
MASTERS
Mastering is part of the post-production process. It helps the recording sound great no matter what hardware its played on. The record company usually pays for the masters, depending on the contract.

"it's the means to give it a final 'tweaking' before the record is released"
(Harrison,2011,p.163)
MARKETING AND PUBLISHING
Provides costs for video clips, public relations, tour support, marketing campaigns and promotion to get the songs played on the radio
DISTRIBUTION
Distributes physical or digital copies of records to music retailers
RETAILERS
CONSUMERS
Artist
An artist is generally the person who records and performs the music, but can also be the songwriter.
Songwriter
A songwriter is also a composer and who that has written, composed and published the music
META DATA
ISRC
UPC
File Formats
Each distributor has their own preferred format and it is up to the distributor to convert the content to the appropriate file type.
The label provides this data for their products so they can be identified
ISRC stands for International Standard Recording Code. Each ISRC is a unique identifier which can be permanently encoded into a sound recording or music video. Encoded ISRC’s can provide the means to automatically identify recordings for revenue payments. (PPL,2013,what is an ISRC?)
Performances are tracked by the ISRC code and it is crucial in making sure you receive your royalties.
You can obtain an ISRC code from the PPL who are the appointed sole agency for ISRC in the UK.(PPL,2013,what is an ISRC?)
UPC stands for Universal Product Code and is a 12 digit code that is unique to each bundle (album/EP) of recordings. Each individual album or EP must have its own UPC / bar code. UPC / bar code are also referred to as EAN codes. (GS1,2013,Bar Code Types)
Most services use a UPC / bar code or EAN number to track the delivery, process and sales of albums. UPC / bar code are used to group all your recordings in the same bundle. Without a UPC / bar code your content cannot be delivered to the network.
(GS1,2013,Bar Code Types)
AIM members can benefit from the Unique Music scheme, giving a discount of over £100 towards getting GS1 unique numbers for bar codes.
(AIM,2013,Bar Code FAQs)
PPL - Phonographic Performance Ltd
PPL collects royalties for a range of uses of recorded music – when it is played in public or broadcast on TV, radio and certain digital media services. PPL license will ensure that royalties are paid to the artists that have recorded the music and the record labels that own the recording.

(PPL,2013,What we do)
PPL use these codes (ISRC/UPC) to track the artists royalties
PRS - Performing Right Society Limited (PRS)
PRS for Music is a collecting society which songwriters, composers and music publishers become members of in order to get paid for the use of their music. PRS for Music collects license fees from anyone that uses music for a business benefit, and then pays royalties to music creators in the UK and around the world.

(PRS for music,2013,Our Mission)

PRS for Music ensures that royalties are paid to those that have written, composed and published the music
(PRS for music, 2013)
MCPS - Mechanical-Copyright Protection Society Limited
MCPS sits under the broader PRS for Music brand, and licenses your mechanical (reproduction) rights and pays your mechanical royalties.

(PRS for music,2013,MCPS)
"The current license fee is 8.5% of the dealer price of the record. The MPCS can only license the mechanical reproduction of a song if it's a straight 'cover', i.e. a faithful reproduction of the original by someone other than the original performers."

(Harrison,2008,p.91)
PRS for music collects mechanical royalties and other royalties from radio, TV, media (Synchronization) and live performances
100% goes to a songwriter without a publisher or otherwise split 50/50 between songwriter and his publisher
This is the start process of incoming revenue and royalties. I will provide an example of an album price and how each sector will gain their income and what percentage they take of the retail price according to PPD (Publishers price to dealer)

I will begin with an album retail price example of £12.99. A consumer will then pay this price for the album.
From that figure, 20 percent VAT is paid to the government by the shop, so subtract £2.19 and you have a net of £10.80. Shops generally mark up about 50 percent on the wholesale price charged by the distributor, so in this case the dealer price is £7.20
VAT paid to government is £2.19 (£12.99/1.20 = £10.80)
Net to shop: £10.80
Shop marks up 50 percent of
Official Published Price to Dealer (PPD) £10.80/1.50 = £7.20
PPD £7.20
The dealer price is £7.20, of which 20 percent VAT is paid to government by the distributor. so the net to the distributor will be £6.00. The distributor takes usually between 20 and 25 percent commission, but for this example I'll say 25 percent. That means that the net to the label is £4.80
Flint, T. (2003)
On The Record
[online]. [Accessed 18/11/13]. Available at: <http://www.soundonsound.com/sos/jan03/articles/diylabel5.asp>.
Flint, T. (2003) On The Record [online]. [Accessed 18/11/13]. Available at: <http://www.soundonsound.com/sos/jan03/articles/diylabel5.asp>.
Net to the label is £4.80, of which 20 percent VAT has to be paid to government by the label, if the label is VAT registered.

The MCPS (Mechanical Copyright Protection Society) take 8.5 percent of the published dealer price, which, in this case, is 8.5 percent of £7.20. (Bear in mind that the set dealer price declared by the label is not necessarily what they actually receive from the retailers if a discount deal has been struck.) In this example the MCPS collect 66p.
Flint, T. (2003) On The Record [online]. [Accessed 18/11/13]. Available at: <http://www.soundonsound.com/sos/jan03/articles/diylabel5.asp>.
The MCPS collect 66p from the dealer price and this is eventually passed on to the publisher, if there is one, or the songwriter(s), If there is a publisher, they will then take 20 to 30 percent before eventually, months later, passing the rest on to the songwriter or writers.
Flint, T. (2003) On The Record [online]. [Accessed 18/11/13]. Available at: <http://www.soundonsound.com/sos/jan03/articles/diylabel5.asp>.
After Marketing and promotion costs are taken away the label gets an average of £2.66, take away any artist's royalty at 14 percent of PPD (£7.20x0.14 = £1.01), and take away mastering, artwork, and wages for freelancers.
Flint, T. (2003) On The Record [online]. [Accessed 18/11/13]. Available at: <http://www.soundonsound.com/sos/jan03/articles/diylabel5.asp>.
According to the PPD (Publishers price to dealer) The artist's cut varies from 10-25% in this case it is a 14% cut from the price of the dealer (distributor) which was £7.20.

(£7.20x0.14 = £1.01) the artist is then left with a cut of £1.01 of £12.99 of each album they sell. In some cases the artist will have to pay a certain percentage to the producer(s) and manager from their final cut.
Flint, T. (2003) On The Record [online]. [Accessed 18/11/13]. Available at: <http://www.soundonsound.com/sos/jan03/articles/diylabel5.asp>.
"The Percentage the Distributor keeps is open to negotiation and will often start around 20%."

(Harrison,2008,p.153)
"An online distributor will make sure the tracks are correctly digitized and that the correct meta data is included with the online file to enable the downloads to be tracked and payment paid."
PPD (Published Price to Dealer)
"In the music industry, the Published Price to Dealer is the wholesale unit price of a recorded work. It is often used in recording industry contracts as a basic figure for defining royalty shares."
Donald S. P, (2006) All You Need To Know About The Music Business: Revised and Updated, Sixth Edition (New York: Free Press)
An online music store is a legitimate music distribution organization that pays royalties to the music's copyright holders.
Copyright
Copyright protects original literary, dramatic, musical and artistic works. It allows an original work to be considered a property that is owned by somebody.

If you play music in your business you need clearance from the owners of that music. PRS for Music represents the owners and can get you the clearances you need.

PRS for music (2013)
what is copyright?
[online] [accessed 22/11/13] available at <http://www.prsformusic.com/gibraltar/Pages/Whatiscopyright.aspx>
The way providers prepare and format their files is by using an encoder. Hart, J. (2013) states “an encoder is a device, circuit, transducer, software program, algorithm or person that converts information from one format or code to another, for the purposes of standardization, speed, secrecy, security, or saving space by shrinking size.”
References
4) Flint, T. (2003)
On The Record
[online]. [Accessed 18/11/13]. Available at: <http://www.soundonsound.com/sos/jan03/articles/diylabel5.asp>.
1) Harrison, A. (2008) Music – The Business, the essential guide to the law and the deal, Virgin Books LTD, 4th Edition
3) Donald S. P, (2006) All You Need To Know About The Music Business: Revised and Updated, Sixth Edition (New York: Free Press)
5) PRS for music (2013)
what is copyright?
[online] [accessed 22/11/13] available at <http://www.prsformusic.com/gibraltar/Pages/Whatiscopyright.aspx>
8) PPL UK (2013)
What is an ISRC?
[online] [accessed 24/11/13] available at <http://www.ppluk.com/I-Make-Music/Why-Should-I-Become-A-Member/What-is-an-ISRC/>
10) GS1 (2013)
Bar code types
[online] [accessed 29/11/13] available at <http://www.gs1.org/barcodes/technical/bar_code_types>
11) AIM (2013)
Bar Code FAQ
[online] [accessed 27/11/13] available at <http://www.aimglobal.org/?page=bc_faq>
6) PRS for music (2013)
MCPS royalty payments
[online] [accessed 22/11/13] available at <http://www.prsformusic.com/creators/memberresources/MCPSroyalties/Pages/MCPS.aspx>
7) PRS for music (2013) Our Mission [online] [accessed 23/11/13] available at <http://www.prsformusic.com/aboutus/ourmission/Pages/default.aspx>
9) PPL UK (2013)
What we do
[online] [accessed 25/11/13] available at <http://www.ppluk.com/About-Us/What-We-Do/>
2) Harrison, A. (2011) Music – The Business, the essential guide to the law and the deal, Virgin Books LTD, 5th Edition
Moaad Mohammed - 1105980
Hart, J. (2013) states "Meta data is structured data which describes the characteristics of a resource. Meta data is a critical part of all deliveries as it is the easiest and most effective way to identify your products."
12) Hart, J. (2013) File Formats. Lecture 7 [online]. [Accessed 4 December 2013]. Available at <https://wolf.wlv.ac.uk/spal/74806/no-content?menu=1027793>
Hart, J. (2013) File Formats. Lecture 7 [online]. [Accessed 4 December 2013]. Available at <https://wolf.wlv.ac.uk/spal/74806/no-content?menu=1027793>
(Harrison,2008,p.153)
music consumers will purchase physical or digital music products from music retailers and online providers
Artist signed to major record label
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