From high mortgage rates to shortages that have spread coast to coast, New York Times reporter Emily Badger explains the roots -- and consequences of our country's broken housing system.
In the world of on demand audio there were two big news events this past week. The first was singer Taylor Swift challenging Apple over its new music streaming service, and Apple’s announcement that the company would heed the musician’s advice and pay royalties during the free trial launch. The second was President Obama’s interview with WTF podcast host Marc Maron. One is music, the other news and entertainment — but both represent how mobile technology is changing how and what we listen to. Diane and her guests discuss the rising popularity of on demand audio and what it means for consumers, creators and advertisers.
- Cecilia Kang Entertainment and technology reporter, The Washington Post.
- Eric Nuzum Former vice president of programming at NPR. He starts as senior vice president of original content at Audible.com next month.
- Aram Sinnreich Associate professor, school of communication at American University. He is the author of the recent book "The Piracy Crusade: How the Music Industry’s War on Sharing Destroys Markets and Erodes Civil Liberties."
28 Podcasts You Should Download Now
Whether audio streaming and podcasting are, as The New York Times wonders, in the middle of "a long boom or a short bubble," it's clear demand for on-the-go audio content is here to stay, at least for now. Here's where to start.
MS. DIANE REHMThanks for joining us. I'm Diane Rehm. Music streaming and podcasts have been around for years, but both are having their moment and industry observers say they aren't going away anytime soon. Joining me to discuss the growing popularity of on demand audio, Eric Nuzum, former vice president of programming at NPR. He starts as senior vice president of original content at Audible.com next month.
MS. DIANE REHMCecilia Kang, entertainment and technology reporter for The Washington Post and Aram Sinnreich of the School of Communication at American University. I do invite your questions and comments throughout the hour. Give us a call at 800-433-8850. Send an email to email@example.com. Follow us on Facebook or send us a tweet. And it's good to see you all.
MR. ARAM SINNREICHSuch a pleasure to be here. Thank you.
MS. CECILIA KANGGreat to see you, Diane.
MR. ERIC NUZUMHello.
REHMThank you. And Cecilia Kang, tell us what happened with Taylor Swift, why it was such a big deal with Apple.
KANGSo fascinating, Diane, that a 25-year-old artist, one of the best-selling artists in the world, has really shed the light and has become, actually, the lead voice on artists rights as the whole industry goes through some growing pains in trying to figure out an economy, an economic model that works for them with the internet as they see sales of albums decline, physical copies, and a lot of new models emerging online.
KANGAnd what happened with Taylor Swift is she criticized Apple publically on social media, on Twitter as well as her Tumblr page, on something that was really wonky and specific to a business plan of Apple's new streaming service that begins next week. And it really had to just do with one slice of the whole streaming business that Apple will do. It's about a free trial and whether artists and musicians and producers should be paid during that period that Apple offers its free trial.
KANGThese kinds of things are never discussed in public. It was -- these are things that are usually discussed in boardrooms and on conference calls and the public never hears about this. But Taylor Swift, in saying, you know, enough. And this is, by the way, Diane, the second time she's been so vocal publically. She also wrote an op-ed for The Wall Street Journal last year on these issues. And by doing this, what she did was she, first of all, got Apple to change its mind within 24 hours.
KANGShe got Apple, the senior vice president of internet content, Eddie Cue, to say on Twitter and in various reports, say, okay, we change our mind. You're right. We're going to pay. We're going to pay you artists during this free trial. So that speaks to the power of Taylor Swift. But what she perhaps did, more importantly, and which has more long term effects is that she is shedding a light on really these really thorny questions of how artists, how labels, how the whole economy and ecosystem of the music industry will thrive online or be able to thrive online when there's so much music that is available for free or for cheap.
KANGAnd everybody's struggling with these questions so in a way, she's become sort of the, I don't know, the Cesar Chavez of the music industry.
SINNREICHExcept that she's speaking for labor and also for capital, unlike Cesar Chavez.
REHMAram Sinnreich, what did you make of it?
SINNREICHWell, I agree that this is a bit of contractual squabbling that's kind of been brought into the public eye for a change. I really don't see it as a great blow for artists rights. I think it's really more a great blow for the record industry, versus the tech industry. These are two great titans of industry that are battling each other over who's going to shoulder the costs of getting consumers interested in this new business model.
SINNREICHAnd in this case, Taylor Swift was able to leverage her tremendous popularity and visibility and charisma to strike a blow in favor of the record label and to shift that cost onto Apple.
REHMSo according to Taylor Swift, do artists get paid less under this streaming model?
KANGThey certainly get less than they do in selling digital -- excuse me, physical copies of CDs.
KANGWhat's happened is there's been -- there's a long evolution over the last 10 years of the decline of physical albums and that's been disaggregated. So then, singles are sold online, the downloads on iTunes, for example, with Apple. Those also generate money, but the sales now of downloads are declining and so there's a new model, streaming, and there are various -- and it's complicated, Diane. There are various models emerging in streaming.
KANGThere's Pandora, which is like internet radio. There's Spotify which offers free as well as paid streaming. And there are lots of other smaller players that have entered this field. And what they say is the royalties that they get, depending on these models, almost always turn out smaller than it is, for sure, then selling a CD and even downloads.
NUZUMWell, I've actually done some pretty disgustingly detailed research on these royalties. And what I found out is actually pretty fascinating. If you look specifically at how much a given artist is going to be paid, at the end of the day, when a single consumer listens to their song a single time, those dollars actually end up being identical, regardless of whether a consumer buys a CD, downloads an MP3 or streams a song from Pandora or Spotify.
NUZUMGenerally speaking, we're talking about between 50 and 75 cents that ends up in the artist's pocket for every thousand times a consumer listens to their songs.
KANGFor every thousand times. Well, I was just going to say that there -- what complicates this also is there are a lot of people who take a slice of that pie. There's the labels. There's the producers. There's the writers and there's the musicians themselves. And so it really depends, you know, Taylor Swift's a writer and she is a musician as well so she might get two slices of that pie. Then there are others who might just get one.
KANGThe labels sometimes get the biggest slice of the pie. So it's -- all these things are really opaque. They're never transparent, a lot of these deals, so it's hard to see if there's a blanket sort of metric or calculus for how people are getting paid and that's one of the things that Taylor is doing by shedding light on these issues is getting discussion.
REHMWell, the whole discussion may be opaque to a lot of people and that's why we're hoping to elucidate some of these tricky questions in this hour. Eric Nuzum, turning to you. First, congratulations on your new job.
NUZUMThank you, Diane.
REHMAnd tell us about Marc Maron's program. That's the other big news that happened this week. Podcast, explain first why President Obama went on Marc Maron's podcast.
NUZUMIt is -- podcasts have become the kind of preferred listening mechanism for spoken word content among younger people. It is -- it combines easy access with -- both for the listener and for the creator. It's a lot like independent music in the sense that there's a lot of people who produce people and maybe market it in a much smaller level than on the music industry with the Taylor Swifts of the world. But podcasting is very much of a democratic space. It's very much in a Wild West phase where it's growing and growing and people are able to produce and find an audience very easily.
NUZUMIt's also becoming a very crowded space. There are 285,000 podcasts available right now because the barrier to entry is so low. We could go in the other room and have a podcast in 15 minutes, if we wanted to. But for -- when reaching this audience, it fits into all of the demographic profiles of a millennial, of its the content they want that's geared specifically towards their interests and it's available when they want it.
NUZUMAnd so by going to Marc Maron, his WTF podcast is consistently listed as one of the better podcasts in that space and is one of the most popular as well, which is also sometimes not always the case with things that are popular and good. But it is a great way to reach a very specific audience of people who are seeking out those kind of conversations and are really listening, much like your own show.
REHMWell, I was going to tell you I spoke to a group of women last evening and every single one of them listened to the show on podcast not on radio, which really took me by surprise. They're all working women. They cannot listen at work. They listen -- and one thing you didn't mention is at their own convenience.
NUZUMYes, on their time.
REHMAnd that makes a huge difference.
NUZUMThe podcasting really is two different universes that are kind of collided together, at this point. There is -- it is a distribution mechanism for radio programs and TV programs and other producers of content another way for them to reach their audience, much like your own show. There is another -- and this is where a lot of the momentum in podcasting is, is things that are podcasts first or digital first or that is the platform that people have chosen to create on and so you have two kind of universes occupying that same space.
REHMSo is it all still growing? Is the universe...
KANGThere's no ceiling really.
KANGIt's so big. And I think what's happening here is actually very similar to what's happening in video entertainment in that people now have come to expect their -- they're habitualized now to expect to see and listen to whatever they want whenever they want.
REHMWhen they want.
KANGAnd wherever -- exactly. It's an on demand world now. So you know, you mentioned the women that you spoke to who all listen to -- my parents in Seattle listen to you on podcast, too. And so it's not just younger people. It's all generations. It's become so easy. And the reason why it's become so easy is that hundreds of millions of people have, in their hands, Smartphones with an app that's for podcasts and that makes it really easy to download WTF, "The Diane Rehm Show," "Kojo," whatever.
KANGYou know, and so it doesn't matter where you are anywhere in the world. It's so easy.
REHMCecilia Kang, she's entertainment technology reporter for The Washington Post. Short break here. Your calls, your thoughts when we come back. Stay with us.
REHMAnd welcome back. I can see by our phones lighting up, the number of emails coming in, many people are interested in these subjects. I have an email here, but first I want to ask, because we were talking about this during the break. You know, when television came along, everybody said, well, there goes radio. And now Aram, you are saying there goes radio.
SINNREICHWell, I'm saying that no, not there goes radio, but the paradigm of having to tune in appointment programming, making sure that you can only hear your show, you know, when you happen to turn on the radio at the right time, to the right station, that's gone out the door.
REHMThat I understand, and that goes to your point, Eric Nuzum, about convenience.
NUZUMYes, there's a convenience factor of being able to listen to something on your time. A great radio station offers a consistent experience all day long.
NUZUMSo that when you tune in, you're able to find something that you know is going to be of a certain quality, a certain perspective and world view and that you know that that's the experience that's going to happen there. And so a lot of radio listening continues to be very rooted in activities that are time-based. Like, I'm in the car in the morning, so I listen to Morning Edition. And podcasts tend to be things that happen on your schedule, like walking the dog in the evening. You might walk the dog at 7 o'clock or 8 o'clock or 6:45, and you listen to podcasts while you're doing that. It's on your time.
KANGGoing back to something that Eric said, I think speaking to this is there really has to be the marriage of the technology and the available programming. So in the car-driving experience, that is still very much prime radio time. But dashboard technology is changing. New technology is going into cars that make it easier to get on demand. Even your smartphone connecting to, you know, a USB port, makes a big difference.
KANGSo these things together have to move in the same direction for these changes to happen.
REHMCecilia, explain for those of us who may be less well-informed exactly how music streaming works.
KANGSo music streaming is different than downloading in that you don't actually save a file and listen to it whenever you want. It's real-time Internet access. It's just like when you watch a Netflix video or a Hulu video. It's streaming real-time on the Internet, and it's streaming real-time to your device. So streaming services from YouTube, Pandora and, you know, YouTube, Pandora, and I'm trying to think...
KANGSpotify, excuse, sorry, the big one, and Apple soon, they are storing the music. You don't control -- you don't own the music on your device like you would when you listening to your iPod.
REHMYou cannot keep it.
KANGYou cannot keep it. You can still download, you know, download a lot of music, and podcasts are downloaded. Podcasts can be streamed, as well. But technologically, it's just really easy. The bandwidth has really improved in our Internet access. The phones themselves have greater capacity, and battery power is great. So it's just, it's all enabled to you to get real-time Internet these days.
REHMAll right, here's email from Ben. He says I really hope you get to spend time on the difference now between the scale and the economic power of Apple, Google, Amazon or even Spotify versus the power brokers before -- from before the fast Internet era. Their influence on the future right now is truly uncanny. While digital services offer fans more access to artists than ever, the economics are not looking as expansive for the future of musicians and performers as they should be with the all the opportunities artists and fans can have to communicate with each other now. Economics look good for the service providers, though. Where's the money going?
NUZUMWell, the vast bulk of the money goes where it always went, which is to the record labels. So Spotify, Pandora, Apple, these companies are paying out roughly 70 percent of all the money that they take in from us and all the money that they generate from advertising directly to the right-holders, and record labels get the lion's share of that. Publishers and songwriters get a much smaller piece.
NUZUMAnd there are three major record labels that control 80 percent of the global music market, down from six about 15 years ago. So this is still a highly consolidated, extremely powerful, very profitable industry. And reports of its death have been vastly exaggerated.
REHMSo how did audio streaming become the preferred choice for consumers?
NUZUMWell, if you think about it, we all got sold iPods back in the early 21st century, and if you remember the tagline for Apple's original iPod was 1,000 songs in your pocket. The problem is at the same time, they launched a download music store, where you had to pay a dollar for each song. Well, if you do the math, it would cost $1,000 to fill your new iPod with legally downloaded songs.
NUZUMSo there was always a disjuncture between the capacity of the new technology to bring you lots of music and the economic model that was required to bring that music into your life. So a new model, where you pay a little bit each month, but you have access to 30 million songs on demand, makes a lot more sense for a consumer in that kind of a technological environment.
REHMSo then are we back to the 75 cents that each artist or performer gets?
NUZUMYeah, well, that's the thing is if you think about it, you buy a CD that has 12 songs, and you're going to listen to that CD 100 times over your life. If you think about each time you listen to each of those songs, the amount that you paid, the $10 or $15 at retail, the amount that actually trickles down to the artist comes down to about 60 or 70 cents per 1,000 listens.
KANGSo a big thing that happened after iTunes launched in 2003 is Pandora and YouTube came along, and everybody could get access to music free, not always exactly the song they wanted at the time, not always constantly streamed, you know, on YouTube you have to continue to search and then play song by song. On Pandora, you can sit back, but you get recommended songs. So it's a different experience. But that was good enough for a lot of consumers because it was free.
KANGAnd so being able to access so much free music became almost a norm. It's a habit for a lot of people, too, especially younger listeners. And so the challenge right now, and this is why people, the music industry is so excited about Apple, is that the challenge right now is to get people to pay for music again. And Apple is only offering a $10 monthly subscription service. It's not offering a free level, like Spotify does.
KANGSpotify, which was actually supported very much by the music industry, the three major labels, they -- it now has become sort of this source of frustration because the music label executives are now saying, you know, you're not doing enough to push the people off of free onto the premium level and start paying.
REHMAnd what about podcasts, Eric? Are they free of charge? What is a podcast?
NUZUMPodcasts generally are free of charge. They're supported -- instead of being supported by subscription, they're supported by either a combination of sponsorship, which many podcasts do, and the rate in which they're being compensated for running spots is extremely high right now, or there are some that accept free-will donations or have Kickstarter campaigns to do fundraising. With such a low barrier to entry and cost to distribute the podcasts, you don't need to make -- you don't need to make a lot of money in order to make it worth your while.
REHMOkay, how much money is Marc Maron being paid? I understand his show gets more than five million downloads a month, averages 450,000 downloads per episode. How much money does he get from all that?
NUZUMI'm not going to be foolish enough to do math in my head, but a lot of podcasts are seeing an advertising rate, which paid by thousand listens, of between $20, $40, $60 per thousand listens. So you can do the calculation of if he's doing five million listens, and he's getting paid, let's say, a round figure of $30, $35 for an advertising spot per thousand, you can do the math and figure out, $150,000 I believe, yeah.
REHMHow does the advertising spot work itself in to the podcast? Are people willing to listen to those ads?
NUZUMNot only are they willing to listen, the reason that the rate is so high is advertisers are finding podcasts to be an extremely effective medium for sponsorship because the people who are listening to that podcast sought it out. It's not a casual thing you hear in a store or while you're driving and preoccupied. You said I want to listen to Marc Maron. And so you're very attentive, you're very tuned in, and there's -- many podcasts, including Marc's, have what we refer to as a tribe around them of people who are very ardent fans and support businesses, that support that podcast.
REHMSo are there other podcasts out there as popular as Marc Maron's?
NUZUMYes, two things to say. I think there's actually a number of podcasts that are far, far more popular than that. If you look at many of the podcasts that NPR offers, that would be a very -- any of the top 10 or 15 podcasts that NPR distributes, that would be a really reasonable number of downloads to see. And in the wider world of podcasting, you know, it's much larger than most, but if you look at the top 25, 30 podcasts, they're all in that range.
SINNREICHWhat's strange is that he's managed to maintain and grow that audience over the long term. He's putting out two podcasts a week, every week, now for five years or so. You know, we saw a big podcast called "Serial" coming out of nowhere, seemingly, about six months ago, but that only had 12 episodes, and it garnered the kind of Marc Maron numbers that we're seeing, but once it was over, it was over. And, you know, maybe we're all waiting on tenterhooks for the next season, but it's going to be hard to sustain that level of excitement.
NUZUMWhile at NPR this year, we did a podcast called "Invisibilia," which was a radio show and podcast.
REHMYes, of course.
NUZUMWe had six million downloads for every one of those episodes. We only produced six, and they're in the process of figuring how to produce more now, but...
REHMAnd what about "Serial"?
NUZUMAnd "Serial," I believe the number I've heard is over 80 million, so far, downloads for that.
KANGThat was a phenomenon.
SINNREICHAnd well worth it.
REHMAnd free of charge?
NUZUMFree of charge, but it does contain sponsorship messages in it.
REHMAll right, and let's open the phones. We've got lots of listeners waiting. First to Cleveland, Ohio. Phil, you're on the air.
PHILGood morning, Diane.
PHILThank you so much. I wanted to talk about Taylor Swift. I think it's wonderful what she's doing. I think it's worth noting also that the injustice of the current royalty system is something that classical musicians have known about for decades. There's the story of Igor Stravinsky going to pick up a royalty check from Columbia Record, and on the way out the door, he said thanks for the tip. So I think it's possible to overstate Taylor Swift's insight into this industry practice. It's not really news to most people, but, you know, good for her and hopefully good for all of us.
KANGTaylor Swift has said herself that she can do this because she actually doesn't rely on these royalties. She can make enough money just from her concerts to support herself and be rich by herself, as well as support her band and her management. So she is in a great position to be able to be a voice on this topic. And absolutely, these issues have been around for decades.
KANGThe interesting question, one interesting question, in all of these online models is what's the future of the music labels because they've been an important mediary when it comes to sales and distribution and concerts and all these different things. But online, when consumers, when musicians can have direct access so their consumers and new, new ways of reaching out to audiences are emerging every day, a big question is, so this whole layer of management and this whole corporate layer that takes a big part, a piece of that pie that I was describing before, do they need to even exist in that form going forward? That's a question.
SINNREICHWell, sadly I think the answer is yes because as I mentioned before, they do suck up the vast majority of the revenues, and to the extent that artists are seeing bad royalty checks, it's not because Spotify is stealing their money, or Apple is stealing their money, it's because they have a bad contract with their record label. In fact, going back, you know, to the beginning of this industry, 19 out of 20 recording artists never see a royalty check beyond their initial advance because their contracts require that the record recoup their own expenses before they pay the artist at all. So that's the real problem, I think.
REHMAram Sinnreich, he's associate professor at American University and the author of the recent book "The Piracy Crusade: How the Music Industry’s War on Sharing Destroys Markets and Erodes Civil Liberties." And you're listening to the Diane Rehm Show.
REHMLet's go now to Mario in San Francisco, California. You're on the air.
MARIOGood morning, Diane. My question is about Taylor Swift's endgame. If you remember when Napster came out, there was a series of people pirating music because they tended to be on the low income scale. So if we start charging for music again and have services like Spotify eliminated, will we start litigating again and going to the courts to sue these people who are pirating music?
SINNREICHThank you so much for raising that very important point. You are absolutely right. The main reason why peer-to-peer file sharing has ceased to play such an essential role in the music industry is because of services like Spotify and Pandora and YouTube, which bring free, ad-supported, revenue-creating music streams to consumers. And if those streams disappear, we're going to see a tremendous growth in contraband distribution of music.
KANGYou know, iTunes was created as a response to Napster, and peer-to-peer file sharing or piracy, and piracy, I should say and, and Pandora was created in response to iTunes. In some ways Spotify was created in response to YouTube and Pandora. There's an evolution here. So I think that there's so many more ways to access, and there's also an evolution of thinking by the musicians and the labels themselves to not be so protective about their content in the same way that it did when Napster first came out, and you had Metallica and everybody else sort of raising their arms about what it meant and how this was the doom of the industry.
KANGSo there are -- there's more nuanced approach to business models, and if you read Taylor Swift's op-ed column, you read her Tumblr page, you'd be surprised. It was, like, written by an MBA in a lot of ways. You know, you couldn't -- you really got into these really wonky financial discussions about what does it mean to do windowing or freemium or premium, and what's the difference between all these things, and how do I feel about this. And it was -- it was a little lesson in the economics of digital music.
SINNREICHBriefly, in answer to the question about her endgame, I was just thinking this morning that we probably see a Senator Swift circa 2040.
SINNREICHI would not be surprised.
REHMAll right, let's go now to Detroit, Michigan. Julie, you're on the air.
JULIEHi, my question is about radio technology, and I've been wanting for years to see a DVR-type system appear in my radio so that when I'm listening to a show, I can pause it when I'm interrupted or rewind it or even program it to, separately from a podcasting, but program it to record shows the way I do on my DVR.
REHMIs that in the future?
NUZUMIt could be. They've been promising that kind of technology for years. I think there are rights considerations that make that very difficult. But podcasting is accomplishing quite a bit of that, just on its own. You know, podcasting is not a new technology. It's been around for 10 years, 10, 15 years. The thing that has made it explode so much in the last year has been it's gone from being accessible to easy, that when you get your phone, you download the operating system on your phone, the podcast app is part of the download that's installed on your phone. You don't have to seek anything out. You just pop that button, and then you have a whole library there of things to choose from in front of you. So it went from a nine-step process to a two-step process.
REHMEric Nuzum, former vice president of programming at NPR. He starts as senior vice president of original content at Audible.com next month. Short break here. We'll be right back.
REHMAnd welcome back. We've got lots of emails. Here's a question. How do your guests feel about podcast networks like Gimlet Media and media, Gimlet Media and Panaple? Eric.
NUZUMGimlet Media is an independent media company that started up to create a sustainable business models around podcasts, and to try to -- and it's off to a real great start. Panoply is an operation part of Slate, which is doing a very similar thing. Something I think is very important is that we've learned at NPR, Gimlet and Panoply are learning that when you aggregate a small group of podcasts together and they promote each other and they can do some economy of scale, it makes life easier for everyone.
NUZUMCreating great content is very important, but connecting it to an audience is equally as important.
REHMSo, what is Audible going to be doing?
NUZUMAudible is creating, is well known for being a subscription service and also a way for people to obtain digital copies of audio books. And is making a very significant investment in creating its own original content. But instead of being focused on tonnage, like trying to create hundreds of things, or acquire rights to hundreds of things, we're going to create a portfolio of several dozen things, which are meant to be extraordinary. Much like an HBO or a Netflix, that you see the original productions they do reach a certain level of quality. And the expectation is that you're going to find something that's good there.
REHMSo, Aram, you're smiling there. What are you smiling about?
SINNREICHWell, because the missing piece of this equation is the advertising money. You know, I think podcasting networks are merging for the same reason that radio networks and TV networks are merged. Which is that, you know, one station or one show might have an audience of 50,000, but if you pull together 10 of them, then you've got half a million. And that's a large enough number of people to sell to an advertiser with a big budget.
REHMAll right. Here's an email from Tristen in Indianapolis, who says, I'm afforded the opportunity to listen to music all day at my job. I pay my 10 dollars a month for Spotify. The only time I'm usually not listening to music is when I'm listening to your show. That said, I'm also an avid vinyl collector, and have read studies of the increase in vinyl sales. Just wondering if there are any comments about that. And Tristen, I have to ask you, I hope you are also paying 10 dollars a month to your public radio station as you listen to this program. Go ahead, Aram.
SINNREICHSo, long story short, vinyl sales have skyrocketed in the last few years. They're 100 percent higher than they were, you know, when the process began. But I don't think most of the people who are buying vinyl right now can really tell the difference, sonically, between a vinyl recording and a high quality MP3. Or a high quality stream. Vinyl has really become a kind of merchandise that people like to show off and it's a way for them to kind of have a tactile relationship to the artist. But ultimately, it's like having a tee shirt from the concert that you went to.
SINNREICHOr a poster of your favorite artist on the wall. It's a way to show your friends where your affinities lie.
REHMAnd one last question from Ralph on Twitter. What about using technology to bypass record labels? Artists can use YouTube, Spotify to distribute their music without labels.
SINNREICHWell, actually, a significant portion of new, major label contracts are of artists who were first discovered on YouTube. So, it's not so much that these two media, or these two sectors are in competition with each other. But the internet has allowed independent artists to promote their work and to showcase their work in a way that makes it easier for the record labels to figure out what's gonna sell on a large scale. The reality is that now there's so much information out there.
SINNREICHSo many millions of podcasts and songs and streams and shows and videos that record labels are more important than they've ever been. Because what they can do is use their promotional power and marketing power to cut through the clutter and get millions of people to instantly know someone's name. We wouldn't know who Taylor Swift was if she was only a YouTube phenomenon. She would have a cadre of five or 10 million fans. But now, everybody in America knows who she is, and that's because she's got a record label.
REHMOkay. Let's go to Garrett in Sterling, Virginia. Hi there, Garrett.
GARRETTHello, Diane. It's a pleasure to be on with you and your guests.
GARRETTI wanted to make a comment about Taylor Swift. I'm a big fan. I have a toddler, and sometimes I sing "Shake It Off" with her in the morning. But, I want to also say that what she's done for artists is huge in standing up in this way. And the fact that it got so much attention blows my mind. But I want to say what she's done for artists, to stand up for intellectual property, is and what maybe some might call the big companies abusing the artist. Her concert, her tour company, and therefore she, is doing the exact same thing to photographers that she's -- at her concerts.
GARRETTIf you don't know, most concert photographers get about three songs to shoot and then they're ushered out, whether they're shooting for Rolling Stone or shooting on spec, hoping to sell it. But regardless of who they're shooting for, they have to sign a contract with the label. And these contracts are overreaching, essentially giving them rights to all their intellectual property they create for use in whichever way they see fit.
REHMThat's interesting. Eric or Aram.
NUZUMYeah, well, there was a photographer who published an open letter to Taylor Swift this week, following her open letter to Apple, complaining about exactly this form of hypocrisy. And I think it's a very valid critique. And as I've been trying to communicate throughout this show, I don't think Taylor Swift is really standing up for artists. I think she's representing the interests of the record label sector in their battle of the titans against the tech sector.
REHMAnd to Joanne in Orlando, Florida. You're on the air.
JOANNEHello, Diane. Love your show.
JOANNEI feel very compelled to call in this morning. I'm a female producer and I've had experience of having digital sales in streams. And one of the things that I found out was that who is monitoring, who is, you know, overseeing and monitoring the streams and the downloads. There's no outside organization that does it, such as you call Soundscan. Cause I felt I was underpaid, cause I hit number one on like three charts in best seller. I got no physical good accounting. I didn't get much money.
JOANNEAnd I called up Soundscan, and they told me, bluntly, they just call up the distributor or the person who, you know, sells it, like Amazon or Tradebit or Juno, and they just ask them. They just take their word for it. And that is wrong.
REHMLots of stuff to be worked out here, Aram.
SINNREICHYeah. Doing audits of radio streams has always been more of an art than a science and you know, famously, Arbitron, the company who keeps track of who listens to what shows, like the one that we're on, used to just distribute little notebooks to audience members and they would write down what channel they were listening to and when. And it's gotten a little bit better, but it hasn't really gotten better in pace with the rapid explosion of distribution channels. So, there's always going to be a lag between what people are actually listening to and what the recording companies are able to say about audience behaviors.
SINNREICHThis is a big thing in podcasting, now. Of like, what metric do we use to report to each other so we can compare apples to apples between podcasts? Because we know that people are downloading podcasts, but we aren't quite sure if they're actually listening to them or not.
KANGThis is at the heart of some sort of a crisis that the advertising industry's going under, sort of experiencing, in that in video as well, in publishing, in podcasts and music, as we're explaining. People listen in so many different ways, at so many different times. And trying to figure out, for example, are you watching that video two days after? Are you watching it in a stream or in a download? Or are you watching it real time in a scheduled appointment? That's all part of what should be part of an advertising model.
KANGAnd as of now, all these media industries do not have that figured out. And that's why advertising is, in some ways, being held up a lot. There's an argument that many more dollars would be distributed if we could have proper measurement.
REHMInteresting. Eric, having come from NPR, moving on now to Audible, how do you think radio is holding up in this whole brand new world?
NUZUMI think radio and audio are experiencing some of the digital disruption that movies have seen, that print have seen, the music industry has seen. It's just radio's turn. And much like all those industries, radio will emerge on the other side and there will still be a -- it will still be a valuable part of peoples' lives, but it will be different. And I think that's probably the closest to a prediction that anyone could possibly make.
REHMHow is it going be different?
NUZUMYou mentioned earlier about television. How television was a very disruptive force in the 40s and 50s to radio. Sucked out a lot of talent away from radio. Went to television, and what came out of that was the birth of music being on the radio. That was very unusual to have recorded music, disc jockeys playing music before the evolution of television. Television, in its disruption of radio, created that. And so, now, you're seeing radio being disrupted by digital outlets, and it will find, you know, radio is the cockroach of media. It continues to find a way to move on and thrive.
REHMI never thought of it that way, Eric.
NUZUMYeah, it's a loveable cockroach.
SINNREICHThat's a quote for the ages.
REHMYeah. You bet. All right, to Birmingham, Alabama. Armand, it's your turn.
ARMANDThanks for having me on your show.
ARMANDSo, I just wanted to shed a little bit of light on what it cost to put a record together and why I feel really strongly about some of us artists who maybe only get like 4,000 to 10 to 15,000 plays on like Soundcloud and Spotify. But we never see -- we really never see a dime of that, because the bigger artists, who are getting millions of plays, such as, and this may be a bad example, but like Maroon 5 or maybe Taylor Swift even, back when she was on Spotify or SoundCloud.
ARMANDThat money, all that money that my friends, for example, paid 10 dollars a month, all that goes to the big artists. It never goes to me. And I get all those thousands of plays and I'm not sure what else to do to make some of that money back, but, you know, just to be aware, for example, to hire and engineer, just an average engineer, rate per day, is like 300 to 500 dollars a day. An average time to make a record, even when you're going really fast is about two weeks. And then mixing it, there's another 3,000 dollars. And mastering is another 2,000 dollars.
ARMANDProduction is another 3,000 and so forth, and by the time we're done, as an independent artist, we've spent 40,000 dollars on a record. And to -- I just can't sit by and just listen to someone like previous callers who have been like, we need to have free music. You know, what's going to happen when they take away our free music? We're basically, we should be considered as union workers, you know?
SINNREICHListen, I'm an independent musician, too. I've got several albums up on Spotify. I'm going back to the studio next week. I've spent those tens of thousands of dollars on production that you're talking about and I feel your pain. On the other hand, the reality is that, you know, YouTube and Spotify and iTunes and Pandora have given us independent musicians an access to the larger market, to tens of millions, hundreds of millions of potential listeners that we would not have had under the old system where you had to use payola to get onto the radio.
SINNREICHWhere you had to, you know, be a hot 20 something who could dance well to get a major record label contract. You know, this is actually a golden era for independent musicians. And the reality is that we're not missing out on any revenues, because we wouldn't have had any revenues in the old days either. So, you know, I would say that, you know, we have to think about our recordings, not as a recooperable expense through the sale of those recordings, but rather as a promotional device that's going to bring people to our concerts and allow us to build our larger careers as musicians.
REHMAnd you're listening to The Diane Rehm Show. But you're also saying to Armand, you know, put your money out there and you may go nowhere.
SINNREICHOh, it's a crapshoot, for sure. And it always has been. I mean, this is an industry where you can only have a handful of winners, and the rest of us are going to be at the bottom of the pyramid. And, you know, I've reached the point, I'm in my 40s, I'm happy to have, you know, 1,000 people listen to a stream if I put it up on Soundcloud. Or, you know, on Spotify or something like that. And by the way, this filtering upwards of the royalties predates the digital era by years.
SINNREICHI mean, look at something like ASCAP. I've been an ASCAP member for 20 years. I play my songs in clubs, those clubs are paying ASCAP for the right to have my songs performed. ASCAP pays that money to Elton John, because I don't, you know, in most quarters, reach the threshold required to get a royalty check from them.
KANGIt's going to be tough for our caller.
REHMIt's a tough business.
KANGIn a way, all these new technological innovations don't actually move the needle all that much. In some ways, as we're describing. I think the ability to be discovered is important. It's harder to get discovered, as you see, as we talked about the labels and these sort of holding companies and podcasts to sort of kick up their marketing efforts to promote their own artists, as well. But, you know, for a lot of artists, particularly the smaller ones, they see album sales as just one piece of the puzzle.
KANGA lot of times, if it is for that artist that knows, okay, I have a thousand uber fans in D.C. and they will see me at the 9:30 club. And for me to be able to continue to put my music out online, and to promote my shows, when I go to North Carolina or wherever it might be, they're reaching audiences in a way that they never have been able to before. And they're able to sell merchandise, even CD physical sales are important to them, still. I mean, there's a lot of different...
KANGLicensing. So, I think looking at this as just a royalty -- a debate over royalties and the prices and the money that you get from these streaming services -- it's just -- it's sort of a narrow view into the whole economy.
REHMEric, I want to ask you about the downloads of podcasts. And the amount of money the producers of something like Invisibilia. And Cereal. What do the producers of those podcasts get?
NUZUMWell, they get whatever the sponsorship revenue, Cereal, for example, have a small listener campaign, where they ask people to fund their next season. They receive sponsorship. They probably have several sources of income, but that goes to them. You know, unlike a radio station, which has a transmitter and expenses to distribute. The cost to distribute in podcasting is dollars, small dollars.
NUZUMSingle dollars. 10 dollars a month to be a podcaster.
REHMAs compared, yeah. But at the same time, I mean, how are they making a living? That's what I want to know.
NUZUMWith the way that sponsorship is going in podcasting right now, and the rates that they're getting, you don't have to have a lot of downloads in order to make a sustainable living off of it. You can see, many people who are seeing a couple hundred thousand downloads a month are able to eke out a living doing it. You know, it's much like any other industry. When something is done for passion, whether it's you're doing a spoken word product or doing music, you know, you do it for that reason. Because you're passionate about it.
REHMAll right. And that's what seems to be at the bottom of all this is passion. Thank you all so much for being here. Eric Nuzum, Cecilia Kang, Aram Sinnreich, it was a wonderful education. Thank you.
KANGThank you, Diane.
REHMAnd thanks all for listening. I'm Diane Rehm.
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