Streaming Is Savior of Music Business: Silverman

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May 16 (Bloomberg) -- Tom Silverman, founder of Tommy Boy Records, discusses the digital media side of the music industry, what streaming means to the music business and why he sees a need for the industry to partner with web connected services. He speaks on Bloomberg Television’s “Bloomberg Surveillance.”

The defining issue says tom silverman, founder of tommy boy records.

The man who discovered queen latifah and 99 nature -- and naughty by nature.

Streaming is our future, especially companies like spotify.

They are subscription-based models that have the highest revenue per user.

Traditional music buying was only generating $40 to $50 a year for a record buyer.

Record buyers are maybe 5% to 10% of people in america.

This allows us to get into bigger numbers once we can get up to tv subscription numbers, which is 100 million plus.

We will see a business that is three times to four times bigger.

That means that three times or four times as many artists will be invested in the labels, which are venture capitalists.

Once you get there, artists will make money.

We are in a transitional economy.

You see people buying cds and buying downloads.

Downloads started to drop last year for the first time.

The two boom areas, the biggest is streaming.

Especially subscription-based streaming.

The other is vinyl.

You came out of colby college and single-handedly invented a part of independent records.

Where the -- is ascap and bmi in this debate?

They only collect on -- from radio, venues, and television?

Can't they get james taylor paid?

They collect for the person who writes the song only.

The people who are investing in the future of the artist are the record companies.

They historically have taken high risk investments.

Music publishers are a little bit more like banks.

They take a much lower risk and have a somewhat smaller return.

Steven davidoff of ohio state university, what do you make of all this?

I think the issue is if we are seeing it going up four times from where it is now, where should we be investing?

The stocks are not doing great work showing promise.

Is that really going to happen?

Are we really going to see them go up over time?

It is happening already.

It is happening very fast.

We have seen 20, 30%, 40% come in 50%. in countries like sweden and norway, 75% of music is subscription.

It happens through bundling.

If you look at sirius xm, almost 26 million subscribers at $15 a month.

It is not even interactive.

When you can have that many -- they bundle with cars.

We have to bundle with device manufacturers and internet providers and connected televisions.

All the connected web has to come with music.

There are 3.5 billion active unique cell phones in the world.

If everyone had a three dollar a month subscription, business would be five times bigger.

Is this what apple is buying beats?

I think there are two reasons why apple is buying beats.

One of them is they have to be in the straining business.

-- in the streaming business because downloads are on the way down.

I won't even call it the streaming business.

Youtube is a streaming business.

There are three kinds of streaming economies.

One is statutory like pandora.

They pay a fixed amount and can stream anything but air subject to regulation.

The second is ad-based, like youtube.

All the revenues -- the other is subscription.

That is where the revenues.

Average revenue per user.

Where does that leave terrestrial radio stations?

They do not pay artists at all, they only pay songwriters.

About 3% of their revenues.

Only digital broadcasters like sirius xm and pandora actually pay artists.

Their business is still a $16 billion business, traditional radio.

It is holding strong.

It is a different model and it is a great model.

We are in a transitional economy.

We have cds and traditional radio.

We have downloads and pandora.

We have on demand streaming like spotify and rhapsody.

We have many others.

How do you fight the piracy problem?

Why would anybody pirate when you can listen to anything for free on spotify or youtube?

Every song in the world is available on one of those.

The only thing you need to pirate is the seven or eight artists.

The artist is getting, as we learned from the gentleman earlier, pennies.

Fractions of pennies per song.

The music as ms.

Will grow -- the music business will grow.

Revenues have to trickle down to the artist.

Right now there is a logjam with major labels at how revenues are collected from the services end up passing through to the artist.

That is where the artists are concerned.

They do not feel like they are getting an adequate share.

Sound exchange, which collects from pandora and sirius, the artists get 50% directly.

It is a complicated scenario.

It is working itself out.

Within the next two years or three years -- pandora's going to cost me more.

It is still cheaper than your cable bill.

To get all the music in the world for that amount is fantastic.

Stay with us, tommy silverman.

We asked everyone who took the biggest hit this week.

Bond bearers, in a net streamers, jay-z. "net streamers, this will hurt

This text has been automatically generated. It may not be 100% accurate.


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