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Industry Groove – Week 35

We live in a time where there is a great desire not only to consume music but also to actively participate in its creation. At the same time, AI tools make this easier than ever before. These two optimally complementing developments will significantly shape the music industry in the coming years and pose powerful challenges. But, of course, opportunities arise from this as well.

Personally, I have been slightly alarmed by some of the discussions surrounding TikTok and its potential impact on fan-made music. Taking it a step further is the article that raises the question of whether soon everyone will receive custom-tailored music. This would mean that not only is the feed personalized, but the music itself is as well. Whether this is a dream or a dystopia, everyone must decide for themselves.

As kids are heading back to school, it’s the perfect time for those without school-age children to take a vacation. This includes myself, which means that the Industry Groove newsletter will not be published for the next two weeks. We’ll be back on September 21st.

TikTok and Fan-Made-Music

  • Remix culture, consumption, and creation are increasingly intertwined. One of the main drivers of this development is TikTok, and this is becoming more and more evident not only as a showcase for these creations.
  • With Mawf and Ripple, TikTok has two tools for music creation. Therefore, MIDiA predicts: TikTok’s music-making era is about to begin.
  • Ultimately, the goal is always to keep users on their own platform. Therefore, TikTok Music will expand so that users don’t have to resort to DSPs, and that’s why TikTok is also investing in music creation, ensuring that users don’t need to turn to other providers.
  • The future looks like this: not only can you incorporate existing songs into your videos, but you can also edit the tracks as desired before doing so.
  • And of course, this is where AI also comes into play, making it possible to create stems from songs and thus omit or alter certain elements of a track.
  • It is foreseeable that a generation will grow up for whom it is normal not only to play music, but to playing with music. Tracks are no longer solely consumed; they are edited, modified, or used as a foundation for something entirely new.
  • From the perspective of rights holders, this initially sounds quite alarming. However, MIDiA highlights the positive aspects, especially that fans identify much more strongly with a song or artist when they’ve been able to engage with the song creatively.
  • MIDiA then suggests that there should be a “Fan Made” section on artist profiles on TikTok Music where all song edits uploaded via SoundOn can be found.
  • They see music editing as an extension of fandom and therefore musical edits primarily as a (monetary) opportunity for rights holders.
  • While this is certainly not entirely wrong, it’s somewhat naive to assume that only enthusiastic fans will use the available tools with a positive intent. Just as always, scammers will also emerge, and because of them, certain rules and restrictions will likely be inevitable.

TikTok and Shopping

  • According to media reports, TikTok plans to block links to e-commerce stores like Amazon in the future. Users will only be able to shop through the in-house TikTok Shop.
  • This wouldn’t be surprising. Douyin, the Chinese version of TikTok, already took this step back in 2020.
  • Apparently, the TikTok Shop might need this boost as well. In the U.S., it’s projected to incur a loss of $500 million this year. This is due in part to substantial investments, but also because “only” about $3-4 million worth of goods are sold through the TikTok Shop daily.
  • However, the situation is quite different in Southeast Asia, where the shop launched in 2021 and now generates daily sales of $50-60 million.
  • If TikTok takes this step to exclude other providers, it can be expected that they will resist. In the current climate, where many governments aim to restrict TikTok as much as possible, they might indeed find success in doing so.
  • Of course, it will also be more complicated for musicians if they can’t just link to their already well-performing and established store, but have to switch to the TikTok Shop.

Unique songs for every user? Dream or dystopia?

  • It has become quite normal for each of us to have an individualized feed on the networks we use and for DSPs to create personalized playlists for us. An article by MIDiA shows that this hyper-personalization could go much further, catering to listeners even more intensely within their specific niches.
  • Once again, AI plays a significant role in amplifying this trend. For instance, soon everyone could create the exact music they desire with simple prompts.
  • Regarding the collaboration between Universal and YouTube, the author envisions the potential for pushing hyper-personalization to the extreme, wherein each user receives a slightly different version of a released song. A musical dream or a profound dystopia?
  • The fact remains that users already expect personalized content today, and in the current remix culture, releasing a song is just the beginning of its lifecycle (as mentioned above). AI only intensifies all of this.
  • So are we moving towards a future in which not only the feed is personalized, but also the content itself? Each user receives a version of the song tailored to their preferences, such as the tempo, instruments used, or language.
  • Are we moving towards a future where not only the feed is personalized, but the content itself is too? Each user receives a version of the song tailored to their preferences, such as tempo, instruments used, or language.
  • What might sound like a futuristic concept could soon become reality. Whether we actually want this, however, is an entirely different question.

Bonus Reads

  • Attentive readers will remember that in 2023 there was a long period without a rap album reaching the top of the US charts. This changed with Lil Uzi Vert and then of course Travis Scott. However, the situation is different in the single charts: For the first time in 23 years, an entire year has passed since a rap song was at the top. The last time this happened was on August 27, 2022, with Nicki Minaj’s “Super Freaky.” Billboard offers an attempt at an explanation and some context.
  • Of course, everyone wants to know how the algorithms of the platforms work and how to use this knowledge for themselves. YouTube has now created a video in which at least some information and best practices for its short video offering, Shorts, are revealed.
  • Once again, YouTube: The video giant is testing a feature with selected Android users, where you can hum, sing, or simply play a song and withing a few seconds, it will show which track it is. In comparison to the Apple-owned Shazam, this offers more options. Within just 3 seconds, users should be directed to the corresponding YouTube videos.

Industry Groove – Week 34

Putin’s soldiers have the “Z”, Elon Musk turns Twitter into “X”, and we are wondering “Y”. If Musk continues in this way, there is certainly a risk that “X” could become a network comparable to Trump’s Truth Social, which is entirely centered around one person and targets a very specific audience. For now, Twitter is clearly on the decline, but it has by no means lost all its relevance and remains an important source, especially for journalists. However, one can wonder how much longer this will be the case. Equally uncertain is whether Threads will be able to benefit from the weakening of Twitter, sorry “X”. It doesn’t seem that way at the moment. An interesting thought was recently published in a Swiss daily newspaper: “Will Twitter and Threads become what Fox News and MSNBC are in the United States, i.e., opinion platforms for their respective political camps?”

What predominantly unites the opposing camps is their aversion to TikTok. (Sidenote: Recently, TikTok has also been banned on the devices of New York City employees due to security concerns.) It will be interesting to observe how TikTok’s previously meteoric journey continues. Despite many people not wanting to admit it, TikTok is one of, if not the most important source of information for the younger generation. However, in this newsletter, our main interest lies in how TikTok is positioning itself in the music industry, and here too, there are still many unanswered questions, as the following article illustrates.

TikTok and its relationship with the music industry

  • In the article, MBW points out that TikTok is slowly maturing. Similar to other tech companies before them, with the most prominent example being YouTube, TikTok has realized that it must play by the rules when it comes to music rights. The deal with Warner Music indicates this, at least to some extent.
  • Although the details of the deal remain confidential, it can be assumed that Warner will no longer accept the previous lump sum payments.
  • The same applies, of course, to other major players like Universal, Sony, or Merlin. However, much remains unclear in this regard, leaving the relationship between TikTok and the music industry still uncertain. Especially concerning the expansion of TikTok Music, this is certainly not a satisfying starting point.
  • TikTok’s ambitions are clear: they want to be not only culturally relevant to the music industry but also an integral part of it. They make this evident not only with TikTok Music but also with Ripple or SoundOn.
  • A company that sees itself as such an essential part of the music industry and has over a billion users can’t possibly distribute less to the music industry than Peloton, with its 5.9 million users. This should be clear to all parties involved, and the deal with Warner is now a first step.
  • Once all the major players in the music industry have secured new contracts with TikTok, it is immensely important to be transparent with the artists so they know how revenues are generated, how they are calculated, and what their share is.
  • TikTok’s Head of Music, Ole Obermann, recently discussed the synergies between TikTok and TikTok Music in an interview. Obermann announced that they will create some amazing bridges between the two apps. For example, the recommendations on TikTok Music are expected to be strongly influenced by the music preferences shown on TikTok. However, the influence is meant to go both ways, allowing users, for example, to directly create videos from the songs in their playlists. This is intended to create a loop between the two apps, and I have repeatedly emphasized that this could be one of the great advantages of TikTok Music.
  • Lastly, this update: TikTok now features advertising in search results. While not necessarily pleasant for users, it’s certainly very interesting from the perspective of advertisers, including within the music sector.

How misaligned incentives make the music business a zero-sum game

  • Lately, much has been written about the dwindling number of true superstars and the difficulty of standing out from the ever-growing mass. Various analyses have been presented to explain the situation we find ourselves in.
  • The latest article from MIDiA reveals that misaligned incentives are leading to negative outcomes across labels, DSPs, and even among the artists themselves.
  • Labels are under pressure to either maintain or expand their market share. As listeners increasingly spread across countless niches, labels are leaning more toward artists who have gone viral rather than focusing on long-term artist development. Due to the fragmentation of the audience, labels are clutching desperately to anything that has gained even a hint of virality.
  • DSPs face the challenge that the majority of their revenue, around 70%, goes to the rights holders of the music. Licensing music is expensive, especially music from established labels. As a result, it’s financially beneficial for DSPs to promote “cheaper” music like royalty-free songs, mood music, or even tracks generated by AI. The consequence: both labels and artists suffer, and the quality of music on DSPs noticeably declines.
  • For many artists, the goal is to make a living from their art. However, many soon realize that the money they receive from DSPs is not sufficient for this purpose. As a result, DSPs might not necessarily be a top priority anymore. They continue to upload their music to streaming platforms, of course, but promotion and monetization increasingly occur elsewhere. This leads to a decline in the cultural capital of DSPs, and other avenues emerge for connecting with fans. Notably, managing numerous channels often leads many musicians to experience burnout.
  • As one can observe, each stakeholder is grappling with their own issues, and an improvement for one party usually means a loss for another.
  • For MIDiA, it’s clear that the economics of streaming must undergo fundamental changes to break free from this negative cycle. Countless artists have been demanding this for quite some time, and Universal Music has also been pushing for a new streaming system this year. When we might see initial results remains to be seen.
  • However, we should stop comparing today’s situation to a past where global superstars dominated the scene. Their era is coming to an end, making room for more mid-sized stars with extremely loyal fan bases.
  • Tatiana Cirisano even goes as far as recommending that emerging artists should avoid having a viral moment, as it might not necessarily provide the best foundation for a long-term career. Instead, the industry should return to the practice of patiently building up musicians before they fully take off. Food for thought!

YouTube and Universal Music collaborate for AI incubator

  • There’s movement in the relationship between the music industry and AI. Recently, I reported that the major players Universal and Warner are collaborating with Google. Now, it’s been revealed that Universal is also partnering with YouTube, which is also a part of Google, to jointly develop tools in the field of AI.
  • These tools are intended to provide secure, responsible, and ultimately profitable opportunities for music rights holders, writes Universal CEO Lucian Grainge in a guest post on the YouTube Blog.
  • YouTube CEO Neal Mohan has also authored a blog post outlining the three principles that will guide them in the development of new AI tools.
  • Principle #1: AI is here, and we will embrace it responsibly together with our music partners.
  • Principle #2: AI is ushering in a new age of creative expression, but it must include appropriate protections and unlock opportunities for music partners who decide to participate.
  • Principle #3: We’ve built an industry-leading trust and safety organization and content policies. We will scale those to meet the challenges of AI.
  • A new type of Content ID that recognizes Deepfakes and monetizes them for the artists is already being discussed.
  • Furthermore, this won’t be a unilateral effort by YouTube and Universal. Other industry stakeholders are invited to participate as well.
  • However, at present, it seems that Universal and Google are taking the lead together to advance the regulation and monetization of AI-generated music. Whether this is beneficial for artists when the world’s most powerful company and the largest music company join forces at the forefront is certainly a topic open for discussion. Initial critical voices are already emerging, and this is also necessary and important!

Bonus Reads

  • This article from Billboard demonstrates that in the past, it was primarily the industry that was interested in the charts, and labels wanted to push their acts onto the charts. However, increasingly, super fans are now taking on this role, using (almost) all means to do so.
  • Wired takes a look at HipHop in 2073, when it will celebrate its 100th birthday. Of course, this is science fiction and undoubtedly scary, but in a certain way it is also hopeful.
  • This year, we are celebrating HipHop and its legends. But Billboard wonders who the future legends will be and who will drive HipHop forward in the coming years. They do not only focus on artists, but also list songwriters, producers, and people who work behind the scenes. In the end, the list will include 50 names. The first 10 can be found here.

Industry Groove – Week 33

In my newsletter from last week, I reported on the upcoming collaboration between Google and majors Universal and Warner. Together, they aim to tackle the Deepfake issue, allowing fans to use the voices and melodies of their favorite artists without legal issues, while also enabling these artists to earn from it. Since the information is still quite vague, there are currently far more questions than answers. For example, if Taylor Swift were to release her voice for Deepfakes and the tools for creating Deepfakes continue to improve and become easier to use (which is a reasonable assumption), who would listen to all these potentially thousands of TAIlor Swift-songs to screen them for toxic content? Would Taylor’s team also have the right to reject songs based solely on musical quality? And would the songs of the “real” Taylor and of TAIlor land on the same profile on DSPs? You can find other unanswered questions below.

Want another example of how (alarmingly) good AI already is today? Then listen to this “collaboration” between Tupac and DMX.

A heartfelt thank you to everyone who participated in the survey and for the overwhelmingly positive feedback. It’s great to know that while the newsletter is lengthy, it’s not overly so for most people, and that I often include the relevant topics. This gives me an extra boost of motivation!

Google and major labels’ Deepfake solution raises new issues

  • Following the motto “If you can’t beat ’em, join ’em,” the majors seem willing to allow Deepfakes of their artists in the future.
  • This is understandable on one hand and even offers significant monetization potential. At the same time, it’s not entirely without risk, as highlighted by MBW in this article, outlining the following problems:
  • Firstly, they see the possibility that AI-generated songs could become serious competition for an artist’s “real” songs. For instance, if constantly new Fake-Drake songs flood the market and some of them even become hits, it could diminish the interest in new songs by Drake since fans would have already received their dose in the form of Deepfakes. The question also arises: Would Drake, for example, play these AI-generated hits at his shows, and if so, who gets paid? Brave new world!
  • While artists will likely have the option to not allow their voices for Deepfakes, there will probably be significant pressure to still do so. Not least because even with a legal solution, countless illegal Deepfakes will likely continue to circulate online. Many artists might have no choice but to participate.
  • Thirdly, the influx of Deepfake content could lead to fewer new acts being discovered. Not only will there be more songs from the current top artists, but there might also be a substantial amount of new music from artists who have already passed away. As a result, an even smaller portion of fans’ limited attention span would remain for new, emerging acts.

HipHop accounts for nearly a quarter of all Spotify streams

  • In celebration of HipHop’s birthday, Spotify has released some statistics about the currently most popular genre.
  • According to the blog post, in 2023, almost one in four streams can be attributed to HipHop.
  • Luminate recently showed that in the U.S., 27.3% of all streams come from the HipHop and R&B genres. However, Spotify’s numbers are global, making them even more impressive.
  • The U.S. is not only the birthplace of HipHop but also remains the most important market. Following that are Mexico, Brazil, Germany, France, the UK, Spain, India, Canada, and, to my surprise, Italy.
  • Spotify further notes that 400 million of their users have streamed HipHop music, which accounts for almost 73% of their monthly active users.
  • Some more interesting facts: In the last three years, nearly half of the top 50 most streamed artists on Spotify were HipHop acts.
  • Over 53 million user-generated and Spotify-created playlists have “HipHop” or “Rap” in the title, and 2 billion playlists include at least one HipHop song.
  • The most listened-to HipHop playlist is “Rap Caviar,” which is also the Spotify playlist with the second-highest number of followers overall.
  • This article analyzes why HipHop does not achieve the same market share in the live sector as it does in streaming.

Bonus Reads

  • YouTube Music is the next DSP to use vertical videos for discovering new music. These can now be found under the “Samples” tab. Through these samples, users can not only perform various actions on YouTube Music, such as liking a song or adding it to a playlist, but there is also a direct connection to YouTube Shorts. Additionally, viewed samples count as views on the music video. YouTube is cleverly leveraging and combining its different offerings in this context.
  • Since we’re already discussing YouTube Shorts: Would you like to know how the algorithms of Shorts work? Hootsuite has delved into the topic.
  • Step by step, Spotify is providing artists on their platform with additional revenue opportunities. The latest move is that Spotify now allows integration with Patreon – although, for now, this is limited to podcasters. Whether this will also be expanded to musicians is not yet known. I’ve explored whether Patreon is worthwhile for musicians in this post.
  • The long overdue price increases at DSPs continue merrily. Now it’s Amazon Music’s turn again, raising the price of Amazon Music Unlimited and Amazon Music Unlimited Family by one dollar each in the U.S..
  • From now on, it is possible to add music not only to Stories, Reels, or individual feed photos on Instagram, but also to carousel posts (provided they are not only videos).

Industry Groove – Week 32

Streaming saved the music industry from downfall, and now the superfans are expected to save the music industry from streaming. This summarizes the current hopes in a simplified and pointed manner. However, this week’s most important article reveals that many fans have “forgotten” how to be superfans, and it will be a challenging yet immensely important task to teach them once again.

The second significant news of the week concerns the emerging collaboration between Google and the major labels in the field of AI and deepfakes. There is still too little known for a precise assessment, but it already seems clear that this collaboration will likely set crucial directions.

Thank you to everyone who has already filled out my short survey. For those who haven’t yet, I kindly ask you to take just one minute to do so. The survey will be open for another week.

Tomorrow, HipHop celebrates its 50th birthday. One person who has contributed not only greatly to the culture but also to the anniversary is Nas. Therefore, I recommend this interview to you. Nas is not only an artist and businessman but also, at heart, still a fan.

Fans need to be encouraged to become Superfans again

  • Superfans have been a recurring topic lately, such as in last week’s newsletter, in which I presented the numbers from a Spotify study. The latest article from MIDiA doesn’t aim to question the importance of these superfans, but it warns against idealizing them as saviors.
  • Mark Mulligan demonstrates in the article that superfans have always been important, but their significance might diminish in the future due to the changes brought about by the streaming industry.
  • With a brief overview of the history of superfans, Mulligan illustrates that in the past, there were practically no limits to how much a superfan would spend monthly. The investment was primarily in physical recordings.
  • With the rise of streaming, the spending habits of superfans shifted toward live shows and merchandise.
  • The superfans, who used to buy multiple albums per month, now suddenly pay the same amount for a streaming subscription as former occasional buyers. Additionally, a generation has grown up for whom having access to all the world’s music for $9.99 (or now $10.99) is normal. Or, as Mulligan writes: “When everybody’s super, no one’s super.”
  • As long as streaming ensured consistent growth, this didn’t seem to bother anyone too much. However, now that even the majors are demanding changes from the DSPs, the focus is shifting back onto superfans. Yet, a problem arises now that, after 15 years of the streaming era, consumer behavior has completely changed.
  • Fans must therefore be encouraged, or even educated, to become superfans again. However, Mulligan sees another stumbling block here: At a live concert, a fan receives a unique experience. If they buy a vinyl record or another special edition, they’re essentially purchasing music that they can also find on streaming platforms.
  • Therefore, new elements are needed that provide fans with added value and give them a reason to spend more money without feeling like they’ve been ripped off. Without this added value, superfans are unlikely to become the pillar of support that many are currently hoping for.

Amazon Music launches merch integration with Bandsintown

  • This announcement about the collaboration between Amazon Music and Bandsintown is a great addition to the article about superfans, further emphasizing the shift of revenue towards the live sector and merchandise.
  • Amazon Music is now ensuring that on the concert discovery platform Bandsintown, not only the shows of your favorite artists are visible, but you can also conveniently purchase their merchandise.
  • The term “Merch” encompasses not only T-shirts or hoodies but also physical recordings and various other accessories.
  • All artists who already offer their merchandise through Amazon Music can now integrate it into Bandsintown and promote it to their followers using Bandsintown’s marketing tools.

Major labels and Google negotiating on AI Tool with deepfakes

  • Despite the legal situation regarding deepfakes like Fake-Drake not being as clear-cut as it may seem at first glance, the major labels, especially Universal Music, are taking a stringent stance against deepfakes, removing them wherever possible. This is likely to remain their strategy until a tool emerges that allows them to profit from deepfakes themselves.
  • The majors Universal Music and Warner Music are reportedly collaborating with Google on such a tool. This is according to a report by the Financial Times. This tool aims to enable users to create new music based on existing songs or using the voices of well-known artists.
  • Copyright holders would then be automatically compensated. However, artists should also have the option to opt-out.
  • It was also reported that YouTube Music boss and industry veteran Lyor Cohen is involved in the project. Neither he nor anyone else has officially commented yet.
  • Thus, a tech giant is joining forces with the giants of the music industry to regulate and license in the realm of deepfakes. It’s also conceivable that other tech giants might follow suit. The prospects for smaller startups active in this field are now understandably uncertain.
  • However, since everything is still in a very, very early stage, numerous questions remain unanswered. It will also take some time before the tool is effectively introduced.

Bonus Reads

  • Billboard shows in this article, apart from any Fake-Drake fuss, what AI has already changed in the music industry.
  • Threads has had a meteoric start, surpassing the mark of 100 million users within a few days. However, many musicians remain indifferent to this, as highlighted in this article from Music Ally. In general, indications are increasing that while the start was rocket-like, the descent began soon after.
  • Bandcamp has launched a new tool called Listening Party, which delivers exactly what the name suggests. You can listen to your album together with your fans, who can (pre-)order it during the session. Meanwhile, you can directly engage with the fans via live chat.
  • What if Spotify in the US were to follow the example of TikTok Music, Deezer, or Gaana and end its free tier to gain additional subscribers? This intriguing question is explored in the interesting article by MBW, which shows that millions of additional subscribers would be needed to compensate for lost advertising revenue.
  • All three major labels have released their figures for the second quarter, prompting MBW to examine the performance of the top three labels in the first half of the year. Collectively, the majors (including publishing) generated $12.99 billion, which is precisely one billion more than the first half of 2022. In other words, this translates to $72 million per day or $3 million per hour. More figures can be found here.
  • Only in football is the audience treated worse than in the live music industry, at least according to Eamonn Forde in this simultaneously amusing and thought-provoking opinion piece.
  • Initially, Spotify’s AI DJ was available only to premium subscribers in the US and Canada. It was later introduced in the UK and Ireland and is now available in 50 countries where English is one of the main languages.
  • A few months ago, Meta released the tool MusicGen. However, as it now appears, this was only the first step in the field of music AI. Under the name AudioCraft, Meta is bringing together three products: AudioGen, EnCodec, and the previously known MusicGen. All three are open-source tools and therefore serve more as a basis for new projects than as finished solutions.

Industry Groove – Week 31

For all those who have been with us from the beginning, this is the fifteenth Industry Groove newsletter. If you’ve done the same thing fifteen times, you’re allowed to ask how it’s been, right? That’s why I would truly appreciate if you could take part in this really (!) short survey. It takes a minute at worst, but helps me tremendously at best. Grazia fitg (that’s the only thing I can say in Romansh, the fourth national language of Switzerland. Oh yeah, it means thank you very much).

Spotify Study: 2% Superfans account for 18% of streams and 52% of merch purchases

  • It’s no secret that superfans play an immensely important role for artists and are often the subject of research and analysis.
  • For example, Luminate has identified 15% of the US population as superfans who spend 80% more per month than average consumers. Goldman Sachs, on the other hand, believes that 20% of all people with a paid streaming subscription fall into the category of superfans.
  • Now, Spotify has also tapped into its immense data pool and published a study on superfans, or as they call them, Super Listeners. This comes in light of the recent introduction of the Segments section on Spotify for Artists, which shows artists the number of their listeners who are superfans.
  • So, what did Spotify find? On average, 2% of monthly listeners are Super Listeners. However, they account for 18% of monthly streams.
  • Surprisingly for me: The fewer monthly listeners an artist has, the lower the proportion of superfans. For artists with up to one million monthly listeners, superfans constitute only 1%. For artists with 5 to 25 million monthly listeners, it’s 3%, and for the elite with over 25 million, it’s even 5%.
  • The share of superfans in monthly streams also varies. The impact is greatest for artists at the very top and the very bottom of the pyramid. Superfans contribute a significant 30% of all streams for artists with over 25 million monthly listeners. For artists with up to 10,000 monthly listeners, they account for 22% of streams.
  • The least influence on streams is in the middle class, i.e. artists with 10,000 to one million monthly listeners. In this range, super fans account for 13% of all streams.
  • The number of Super Listeners grows the most when new music is released, which is not surprising. However, these Super Listeners are very loyal, with more than two-thirds still listening to the music six months later.
  • The figures regarding merchandise sales are impressive. While superfans constitute only 2% of all listeners, they are responsible for 52% of all merch purchases.
  • According to Spotify, the most super fans are found in Latin America.

Artists use AI but also express concerns

  • AI is the topic of the hour, and there is much discussion about its impact on the music industry and the artists themselves. Believe and its subsidiary, TuneCore, felt it was time to survey the artists themselves. Their survey was answered by 1,588 independent artists from 10 countries, almost equally divided between pop, hip-hop, rock, and electronic genres.
  • The survey revealed that 50% of the respondents are “aware and engaged in AI” and have a “positive perception of its benefits and opportunities.” In contrast, 39% are “unaware and apathetic toward AI” and have “fears and concerns with the technology.”
  • Only 27% of the surveyed artists have already used AI tools. Within this group, 57% used AI for artworks, 37% to create promo assets, and 20% to engage fans.
  • 35% of the respondents are generally interested in incorporating AI into their creative process, with most of them primarily focusing on marketing and promotion.
  • Interestingly, 50% are willing to make their music available for machine learning. At the same time, much emphasis is placed on responsible use of AI. Specifically, this means that permission is needed for machine learning, it should be compensated, and artists should receive credit.
  • Overall, the artists display a very pragmatic approach to AI, without blind faith in technology, but also without outright rejection. Nevertheless, certain concerns still exist.
  • 77% of respondents fear being replaced by AI. 61% are concerned about plagiarism and 46% about the fair distribution of revenue.

Bonus Reads

  • Last week, YouTube announced that 2 billion logged-in users watch Shorts. Now, Meta also wants to support the importance of their Reels with numbers (although there are doubts about it). According to Mr. Zuckerberg, there are 200 billion Reels viewed daily on Instagram and Facebook. Last fall, it was 140 billion. The monetization of Reels is also thriving. While they generated 3 billion dollars in revenue last fall, it is now up to $10 billion dollars.
  • Only a small portion of artists account for the majority of streams on Spotify. Recent figures show a similar pattern on Twitch. The top 100 streamers contribute to 20% of all views, the top 1,000 streamers account for 46% of all watched hours, and the top 10,000 streamers already make up 76%. Therefore, only 5% of streamers are responsible for three-quarters of the views.
  • The latest article/podcast on Trapital discusses the current status of middle-class musicians.

Industry Groove – Week 30

I was sick for two days this week (ohhh) and that’s why the newsletter is a bit shorter. The focus is entirely on Spotify. The streaming giant has not only released its second-quarter figures but also – I can hardly believe I’m writing this – raised prices in over 50 markets. Can someone please pinch me? Am I dreaming, or is this actually happening? This increase is, of course, long overdue and not a revolution in itself, but it still sends an important signal. There is a real chance that it will become a consensus for major DSPs to continuously adjust their prices, thus generating more revenue for musicians. Currently, these cautious increases don’t even compensate for inflation, and one may wonder whether slightly higher revenues can save a struggling system. Valid concerns, but let’s just take a moment to appreciate this small but not entirely insignificant step.

Spotify finally raises prices

  • For a long time, Spotify has only selectively increased prices and otherwise watched from the sidelines as competitors, including YouTube Music most recently, made slight adjustments to their prices. I had expected Spotify to introduce their “Supremium” subscription and overhaul the entire price structure in that context, but things turned out differently.
  • The market leader is keeping its existing subscription plans for now but is finally adjusting their prices in 53 markets, including the US. The price had remained unchanged in the US for a whopping twelve years.
  • In many important European markets, such as France, Spain, Italy, the UK, Belgium, the Netherlands, Portugal, and the Scandinavian countries, prices have also been increased. Surprisingly, however, not in Germany.
  • Why should musicians rejoice that their fans have to pay more? Well, because it means there will be more money available to distribute. MBW has roughly estimated how much that could be.

Spotify has significantly more users but is earning less from them

  • One day after the price increase, Spotify announced its numbers for the second quarter of 2023. At first glance, they look promising, but upon closer inspection, they are a bit less so…
  • Let’s first focus on the user numbers: Spotify now has 220 million premium subscribers, which is 10 million or 5% more than the previous quarter and 32 million or 17% more than a year ago.
  • The monthly active users (MAU) amount to 551 million, which is 36 million or 7% more than Q1 2023 and 118 million or 27% more than the previous year.
  • The Ad-Supported MAUs saw significant growth, increasing by a whopping 34% to reach 343 million.
  • Overall, Spotify describes this growth as the strongest in its history, surpassing predictions by a significant margin. So, that’s certainly positive news.
  • Now, let’s look at the financial figures: Premium subscribers contributed €2.77 billion to the quarterly revenue, with an additional €247 million coming from advertising revenue.
  • However, there’s a negative aspect to consider: While Spotify can increase its user base, it is earning steadily less per user on average. The “Average Revenue per User” decreased by 6% compared to the previous year and now stands at €4.27. In the first quarter of 2023, it was €4.32. With the price increases, this value is expected to rise significantly soon.
  • Despite or perhaps due to (referring to severance payments) numerous layoffs, the bottom line shows a loss of €247 million. This is significantly more than the same quarter of the previous year (€125 million) and the first quarter of this year (€156 million).
  • As is often the case, the overall picture is mixed. If the focus is solely on the increase in user numbers, one can certainly be satisfied. However, when looking at how much revenue they bring, one is confronted with steadily declining numbers.
  • Despite the price increases and the record-high growth in users, the price of Spotify’s stock has notably declined.

Twitter is now X, and TikTok also allows text posts

  • Every time you think Elon Musk couldn’t make it any crazier on Twitter, he drops another bombshell. Apparently, he has decided to bury the Twitter brand and rename the platform X. I’ll refrain from commenting and quote: “An instantly recognizable color palette, a globally known logo and brand verbs such as ‘tweeting’ have worked their way into the zeitgeist of popular culture. All were destroyed overnight. This may or may not be the worst rebrand of the last few years, but it will certainly be a case study for design students for many years to come”
  • Naturally, the competition is taking advantage of Twitter’s X’s self-inflicted weakness. Meta has successfully launched Threads in response, and now TikTok is trying to capitalize on it as well. Now, text postings are also possible on TikTok.
  • The text posts can be embellished with stickers, tags, hashtags, background colors, and music.

Bonus Reads

  • This week, Spotify is in the spotlight, and this article fits well with that theme. In this intriguing analysis, it’s shown how Spotify could generate additional revenues similar to Netflix by curbing password sharing.
  • I highly value MIDiA’s analyses, as you know. Here is their latest forecast for the future of the music industry until 2030.
  • And yet another MIDiA analysis. For this one, they have examined the future of the live music industry. You can find out what they have discovered here.
  • Of course, not only Spotify, but also numerous other companies have published their quarterly figures, including Alphabet and thus also YouTube. After three quarters of declining advertising revenue, YouTube is now on the rise again. Advertising revenue amounts to 7.665 billion dollars, which is 4.4% more than the previous year. Separate figures for YouTube Music are not published. Additionally, it was announced that 2 billion logged-in users are watching Shorts. A year ago, it was 1.5 billion.

Industry Groove – Week 29

“It’s likely that TikTok Music will launch in many more markets over the next few months” I wrote last week in my newsletter. Now, it happened even faster than expected. After initially launching only in Indonesia and Brazil, where it was essentially just a name change, the service has now launched in three new territories: Mexico, Singapore, and with Australia being the first so-called “Western country” on the list. It is highly likely that this is just the beginning, with the service expected to roll out in the most lucrative markets of Europe and the USA.

Also, last week I mentioned that the launch of TikTok Music most likely indicated that TikTok had reached agreements with the three major record labels. At least the agreement with Warner Music has now been made public. Considering that Sony Music has also uploaded its catalog back onto Resso/TikTok Music, it can be assumed that an agreement was reached or is imminent there as well. Finally, one might wonder whether TikTok Music would have launched without the approval of the most important major label, Universal Music. But does TikTok Music also share Universal’s vision of an artist-centric model? At the moment, it doesn’t seem so, as their ecosystem tends to contribute to an overflow of new music. The announcement about the deal with Warner states, at least: “Further, the deal will see the joint development of additional and alternative economic models.” What exactly this means remains intriguing!

The expansion of TikTok Music has begun

  • As mentioned in the intro, TikTok Music is now available in Mexico, Singapore, and Australia. In all three countries, only a premium offering is available, and there won’t be an ad-supported free subscription option.
  • The launch begins with a beta phase, and participants will receive the service free for three months. The prices after that are roughly comparable to the competition, so TikTok Music is not trying to undercut them.
  • TikTok is currently silent about further expansion plans. However, they do announce that there will be news about this in the next few months. It will be interesting to see which markets they target next.
  • Additionally, TikTok and Warner Music have revealed that they have extended their deal, calling it an expansion of their existing agreement.
  • The deal covers both Warner Music and its publishing arm, Warner Chappell. On ByteDance’s side, the deal encompasses TikTok, TikTok Music, CapCut, and TikTok’s “Commercial Music Library.”
  • As expected, no specific details have been made public. Therefore, it’s not known whether Warner will now receive a percentage of TikTok’s advertising revenue.

Spotify for Artists: Additional listener insights added

  • Spotify has been rightfully criticized regularly for sharing only a fraction of the vast amount of information they collect about listeners with artists.
  • Therefore, Spotify for Artists is updated from time to time, gradually providing artists and their teams with a bit more information. Just like now, with the new “Segments” tab.
  • This tab shows you how many listeners you have reached in the last two years and divides them into three groups: Active Audience, Previously Active Audience, and Programmed Audience.
  • The Active Audience includes all listeners who have consciously listened to your music in the last 28 days, for example, through your artist profile, the album, or their own library or playlists. They further divide this segment into Superfans, Moderate listeners, and Occasional listeners.
  • Previously Active Audience: These are all listeners who were once part of the Active Audience but haven’t consciously streamed any of your songs in the last 28 days. However, it’s possible that they consumed your music through programmed sources.
  • Programmed Audience: These are the listeners who have only heard your music through programmed sources such as editorial playlists, algorithmically generated playlists, or the radio function. This category includes all those who have played at least one of your tracks in the last two years.
  • I may be repeating myself, but it shouldn’t go unnoticed that it is now essential to provide artists with a way to directly engage with their Superfans or reactivate the “Previously Active Audience.”

Vinyl boom continues, other formats also growing

  • In my newsletter last week, I already reported on Luminate’s midyear report and the positive developments. Now, I’d like to shed some light on additional figures, specifically regarding different music formats.
  • Although there were moments when it seemed like the growth in vinyl sales might cool down, it actually increased by 21.7% in the USA compared to the previous year. This means that vinyl experienced a stronger percentage growth than streaming.
  • It is also remarkable that, apart from downloads, all formats were able to achieve growth, including CDs, which grew by a respectable 3.8%.
  • This growth can be attributed to K-Pop artists, who occupied all Top-10 spots in CD sales, with the exception of Taylor Swift. Ms. Swift was also the one who sold by far the most vinyl albums (Midnights sold 251,000 copies, Folklore 107,000).
  • In total, 41.6 million physical albums were sold in the US during the first half of the year, which represents a 13.3% increase compared to the same period in 2022. Among these sales, 23.6 million were vinyl albums, 17 million were CDs, and there were still 212,000 tapes sold.

English-language music listening decline

  • All those old enough and raised in a non-English-speaking country can still remember a time when predominantly US and UK acts dominated the charts, radio airwaves, and festival stages.
  • However, this dominance of the English language is steadily declining, as the latest figures from the Luminate Report demonstrate.
  • Overall, there’s a trend indicating that the music industry is more global than ever before. However, when zooming in on individual markets, a localization trend becomes apparent.
  • Of all the songs consumed worldwide in 2022, only 62.1% were in the English language. The previous year, it was 67.1%. In the first half of 2023, this number dropped even further to 56.4%.
  • Even in the USA, the percentage of English-language music is decreasing, though it still stands at a proud 88.3%.
  • I will certainly keep a close eye on this trend because if it continues, the share of English-language music could soon drop below 50%.

Bonus Reads

  • Water & Music provides a good overview of how DSPs work and how artists are paid with their latest paper. There’s little new information, but it serves as a helpful recap and offers some food for thought.
  • Pre-saves are a well-known tool to generate buzz before a release and stimulate algorithms on the release day. YouTube Music has now partnered with Linkfire to also offer pre-saves. As usual, the release will appear in the in users’ libraries on the release date, and data will be shared with the artists’ team. However, unlike Spotify or Apple Music, this feature is tied to a single platform – Linkfire.
  • Apple Music has launched a feature that allows listeners to add artists to their favorites. Once they do, they will receive notifications when you release new music. Additionally, they will have access to your content under “Listen Now” and receive improved music recommendations based on your content. On Apple Music for Artists, you can find templates to promote your profile on social media and encourage fans to mark it as a favorite.
  • Eamonn Forde argues that the importance and reach of DSPs (or platforms in general) should not be measured solely based on their Monthly Active User (MAU) metric. There are no clear guidelines for measuring this metric, and therefore each platform interprets it in a way that suits them best. He has a point here.

Industry Groove – Week 28

When discussing TikTok, most people immediately think of the app that has reshaped the social media landscape in recent years. However, it’s important to remember that TikTok’s owner, ByteDance, has created an entire ecosystem around the app. While they don’t explicitly state it, their aim seems to be to provide musicians with a comprehensive package that renders record labels unnecessary. Although they emphasize that they do not intend to act as a label themselves, the direction is clear: they offer Mawf and recently Ripple as tools for music creation, SoundOn for song distribution, TikTok itself for marketing releases, and ultimately, the music is meant to be consumed on TikTok Music.

Exactly, TikTok Music. It has been clear for a while that TikTok Music would come, as there have been too many indications to ignore. Currently, the whole thing is still unremarkable; in Indonesia and Brazil, where the streaming service was previously known as Resso, it is now being rebranded to TikTok Music. But this is likely just the beginning. Now that all three major labels, including Sony Music, are once again offering their catalogs on Resso/TikTok Music, it appears that ByteDance and key players in the music industry have reached an agreement on compensation. This should pave the way for expansion, and it’s likely that TikTok Music will launch in many more markets over the next few months.

TikTok Music is here

  • In Indonesia and Brazil, where ByteDance’s streaming service was previously called Resso, TikTok Music is now live. Starting from September 5th, Resso will be completely discontinued in both countries, and users can switch to TikTok Music until then. TikTok Music is only available as a premium subscription, there is no ad-supported offering.
  • In India, the third country where Resso is available, the name will be retained. This also makes sense as TikTok is blocked in India.
  • TikTok Music will adopt the functionalities of Resso, but the new feature is that users can synchronize their TikTok and TikTok Music accounts. This is a crucial aspect, and the integration of the two apps is likely to be further expanded.
  • As mentioned in the intro, TikTok Music will offer content from all three major labels since Sony Music has re-released their catalog. This is also crucial, especially for the expansion plans.
  • Also worth reading on the topic is Tatiana Cirisano’s analysis for MIDiA. As I highlighted in this article, TikTok can access much more data than Spotify, which is not solely related to the songs listened to. This could have a strong influence on recommendations. MIDiA refers to this as the “Cultural Graph” and also notes that this vast knowledge about the users can be quite alarming.

Will Threads be the “Twitter Killer”?

  • Will Threads, the short messaging platform launched by Meta, pose a threat to Twitter? The numbers suggest so. Within just 7 hours, Threads registered 10 million users, while Twitter took 780 days to reach the same number. In less than five days, it reached 100 million users, and this is without users in the EU. By now, the number is likely much higher.
  • However, it should be noted that this is a slightly unfair comparison. Meta has made it very easy for users because even though Threads is a standalone app, users can log in with their Instagram accounts and keep their usernames. More importantly, they can also bring along their Instagram followers, provided, of course, that those followers are willing to try out Threads.
  • These are not good news for Twitter: the traffic declined long before the launch of Threads. The often irrational behavior of Elon Musk is leaving its mark.
  • Twitter is already showing signs of nervousness, threatening to sue Meta. They are also blocking links leading from Twitter to Threads.
  • For musicians who have their audience primarily on Instagram, it is certainly worth being active on Threads as well. Even if only a portion of Instagram followers also use Threads, one can likely reach more people than on Twitter.
  • Of course, there are also some downsides. Meta collects an excessive amount of user data through Threads, which is why Threads is currently not available in the EU. This is also a problem for many musicians. Additionally, there are still a few missing practical features, but one can assume that Meta will address these sooner or later.
  • Meta CEO Mark Zuckerberg envisions a friendlier version of Twitter. However, it is reported that the usual right-wing troublemakers have already signed up for Threads and will likely test the boundaries before getting banned, proudly announcing it on their other channels and portraying themselves as victims.
  • Meta has failed with several standalone apps intended to copy successful competitors. This could happen again, of course. But for now, it seems like they have done a lot of things right and picked the right moment.

Global streaming numbers continue to grow strongly

  • The US analytics firm Luminate regularly publishes interesting figures from the music industry and has now released its mid-year report for the current year. Here are some of the most interesting numbers:
  • Globally, there were 3.3 trillion streams in the first six months of this year when combining audio and video streams. This represents a growth of 30.8%. Looking at audio streams alone, the growth is 22.9%, with a total of 2 trillion streams.
  • In the largest music market, the US, on-demand streams increased by 15% to 713.5 billion. When considering audio streams only, the growth was 13.5% to 616.5 billion.
  • When looking at not only streaming but also “total album consumption,” including downloads and physical sales, there was a growth of 13.4% in the US. In this calculation, 1,250 premium streams or 3,750 ad-supported streams count as one album sale. In total, 538.9 million albums were sold.
  • The share of catalog music in the US has also continued to increase, albeit marginally, from 72.4% in the first half of 2022 to 72.8% in the first half of 2023. Catalog music refers to anything older than 18 months at the time of streaming/purchase.
  • Luminate further reports that the number of songs uploaded daily to DSPs has stabilized at an average of 112,000 songs per day in the first half of the year.
  • Additionally, Luminate defines the percentage of superfans in the US at 15%. Now, it would be important to find ways to monetize these superfans through DSPs.

Bonus Reads

  • In the newsletter of Week 25, I reported that no rap album or song had reached the top of the US charts in 2023. However, this has now changed as Lil Uzi Vert’s “Pink Tape” landed at number one on June 30th. Nevertheless, this achievement came later in the year than ever before since 1993 when Cypress Hill’s “Black Sunday” claimed the top spot on August 7th (yes, that was 30 years ago. Some of us might feel old now, myself included). Dan Runcie from Trapital takes a differentiated look at the situation, defuses the issue a bit, but also highlighting the challenges that lie ahead for hip-hop.
  • Ari Herstand believes that combating streaming fraud cannot be achieved with the common pro-rata model but only with the user-centric model. He has therefore written a passionate plea for this approach, although he likely knows that it will have a very, very difficult time due to the lack of support from the majors and some DSPs.
  • When it comes to the sheer volume of songs available on DSPs, it is increasingly being associated with AI tools. An example of this is the platform Mubert, which has been in existence since 2017 and recently announced that their AI has generated 100 million songs, with 56 million of them created by users. That’s roughly the same number of songs as found on Spotify. It would be even more interesting to know how many of these tracks were actually saved or even released later. Another platform, Boomy, founded in 2019, currently stands at 16.3 million created songs. And we are really just at the beginning…

Industry Groove – Week 27

The most important contribution this week comes from music industry analyst Mark Mulligan. His razor-sharp analysis sees the music industry at a turning point and clearly explains why.

Other important news this week aligns seamlessly with Mulligan’s analysis. For example, SoundCloud is trying to solve a problem that will only grow bigger, namely that many songs are listened to very little or not at all. TikTok, with its tool Ripple, is doing precisely what Mulligan highlights in his analysis, namely giving people the opportunity to create music as easily as taking a photo or shooting a video. Furthermore, there are parallels to Goldman Sachs’ report, which, although predominantly optimistic in tone, also recognizes a structural transformation, warns of a flood of songs, and considers the current streaming model as outdated.

Of course, one can still comfortably settle within the existing system, but it would be much more important to engage with what is to come. As Mulligan rightly warns, we now have the opportunity to shape the future, but this window of time is small and will close soon.

The music industry is at a turning point: A plan B is needed

  • It is a truism that nobody is really happy with streaming. Artists have been complaining for years and even superstars are now struggling, prompting the majors to rethink their strategies. And while artists and labels believe they are getting too little, streaming services are operating at a loss. In the end, nobody is getting what they would like to have.
  • According to Mulligan, a system that was developed when albums, charts, downloads, and radio were relevant simply cannot work in today’s music world.
  • Therefore, AI is not the cause but rather a catalyst for existing problems.
  • Mulligan also does not believe that a system change to a user-centric or similar model is the solution. He sees the real issue as the shift in music consumption from active to passive due to streaming. The focus should be on fixing consumption, not the payout.
  • Additionally, a problem arises from the fact that AI-generated music has the greatest potential in the short term, particularly in the passive lean-back space. In other words, passive listening is likely to become even more prevalent.
  • It’s much more about creating a unified sonic landscape than individual songs or the artists themselves. Listeners are being offered increasingly specific music that AI can produce or tailor even better than human producers.
  • If DSPs now produce AI music themselves, they can not only increase their margins, but also impose this music on listeners. Because whoever controls the algorithms also controls listening behavior.
  • He sees the real danger in the combination of very simple AI music tools and platforms like TikTok, Snapchat or BandLab. When users can create music as easily as photos or videos, this will result in millions of songs per day. This will ultimately cause the current model of streaming royalties to collapse.
  • For Mulligan, it is clear that improving the existing system is not enough. A Plan B is needed to create a music world that revolves around fandom, identity, creativity, and exceptionalism – the human elements of music.
  • Mulligan concludes his analysis with the following statement: “Five years ago, it would have been crazy to be thinking about how machines will shape the near future of both the business of music and of music itself. Just imagine what we might be discussing five years in the future?..…”

SoundCloud attempts to solve the problem of many songs going unheard

  • Lately, SoundCloud has increasingly been the DSP attempting to find timely solutions to current problems. And indeed, there is a problem: As I previously reported, 42% of all songs uploaded to streaming services are streamed less than 10 times. An astounding 24% or 38 million tracks haven’t received a single stream.
  • With currently 120,000 songs uploaded per day (and soon possibly even millions of songs daily), this problem is certainly not diminishing.
  • Of course, SoundCloud cannot guarantee a decent number of streams for each of these hundreds of thousands of songs – and let’s be honest, many of them wouldn’t deserve it anyway – but at least all songs should receive a little boost.
  • This is where the new feature “First Fans” comes in. Through the autoplay algorithm, each newly uploaded track will be presented to approximately 100 users who have matching musical preferences.
  • However, SoundCloud clarifies that this doesn’t necessarily equate to 100 streams, as they cannot control whether the song will actually be listened to.
  • Unlike Spotify’s Discovery Mode, the streams generated through this feature will be compensated the same as any other stream.
  • First Fans is currently being tested with a selected group of artists, and if the test proves successful, the feature will be rolled out more broadly.

TikTok launches AI music app Ripple

  • It has only been two months since I reported that TikTok owner ByteDance was working on an AI music creation app. Now, it has been released under the name Ripple.
  • ByteDance describes Ripple as a “music creation, composition, and audio editing” app. Currently, it is available by invitation only and exclusively in the United States for iOS, but that is likely to change soon.
  • Ripple is targeting both musicians and social media creators. The former are supposed to receive help with music production through Ripple, while the latter get a tool to create music for their videos themselves. This point is particularly highlighted in an article by MBW. Because TikTok would benefit from creators making their own music instead of using licensed music, which TikTok has to pay for.
  • With the “Melody to Sing” feature, users are given the ability to sing or hum a melody, which the app will then convert into instrumental songs in various genres.
  • Currently, Ripple can only produce instrumental music in general.
  • Additionally, Ripple offers a virtual recording studio where audio tracks can be edited.
  • The AI has been trained using music that ByteDance has licensed or owns, as well as in-house produced songs. The company confirms that no commercially released music has been used, not even from artists who use SoundOn as distribution.
  • How Ripple handles situations where users hum copyrighted melodies into their phones remains to be seen.

Full music videos coming to Spotify soon?

  • Currently, videos on Spotify are limited to podcasts, 30-second storytelling clips, and, of course, Canvas. However, rumors suggest that Spotify may soon offer full music videos on its platform.
  • This would be a direct challenge to YouTube and Apple Music, which have long been offering music videos on their platforms. And as with virtually all major moves in recent times, it is also an attempt to keep up with TikTok.
  • Spotify has not yet commented on the rumors, so it remains unclear for now how musicians would be compensated for video views.

Goldman Sachs’ forecasts for the music industry

  • The report by investment bank(st)ers Goldman Sachs, titled “Music in the Air,” always garners a lot of attention in the music industry, not least because people love to hear the very optimistic forecasts.
  • Last year, they projected revenues of $94.9 billion for 2023 and $153 billion for 2030. These figures have now been slightly revised downward to $92 billion for this year and $151.4 billion for 2030. These are the projected revenues in the areas of recordings, publishing, and the live music industry.
  • In addition to gross revenues, Goldman Sachs estimates net revenues, which are expected to reach $65.1 billion in 2023. This is divided into $28.2 billion for recorded music, $8.8 billion for publishing, and $28.1 billion for live music.
  • Goldman Sachs expects net revenues of $104.4 billion for 2030, with $50.1 billion for recorded music, $14.7 billion for publishing, and $39.5 billion for the live business.
  • The bankers also predict a significant structural transformation for the music industry. Not surprisingly, they attribute this to the lack of monetization of music content, outdated structures of streaming payouts, and, unsurprisingly, artificial intelligence.
  • They believe that it is necessary for the costs of streaming subscriptions to continuously increase. They also label Pro-Rata as an outdated model.
  • Additionally, they predict that in the foreseeable future, not 120,000 but millions of songs will be uploaded to DSPs every day, as creation becomes so much easier (or already is) through AI.
  • It is important to keep in mind that this analysis comes from a single firm, which may have its own interests, including investments in companies like Universal and Spotify.

Twitter competitor Instagram Threads now live

  • As I previously announced, Meta has been working on a Twitter clone, and it has arrived sooner than expected. Specifically, the Instagram platform called Threads is now available – at least for some users.
  • Threads has been launched in over 100 countries, but EU users still need to be patient a little longer. The launch has been postponed to ensure that Threads complies with European data protection regulations.
  • Posts on Threads can be up to 500 characters long, and users can also upload photos or videos up to five minutes in length.
  • Undoubtedly, it is a good time to introduce a competitor product to Twitter, as Twitter has consistently faced criticism, and Musk himself has repeatedly stirred controversy surrounding his company.
  • While there are already some competitors, it is clear that Meta, with its enormous market power, has the greatest chance of capturing Twitter’s users. And it seems to be working: Within the first four hours, 5 million people have already signed up. However, it remains to be seen how many of them will stay and even leave Twitter.

Bonus Reads

  • As usual, when something new suddenly dominates the headlines, many untruths and half-truths are circulating. This article attempts to debunk some myths surrounding AI-generated music. It highlights, in particular, that as an artist or engineer, you will not be replaced today or tomorrow, and that AI tools in the music domain are not as advanced as some may think.
  • After Apple Music, Amazon Music, Deezer, and other DSPs, TIDAL has now also announced that they will be raising the price of their subscription in the USA from $9.99 to $10.99. The increase will take effect from August 1st and is expected to impact several other markets as well. Spotify’s exact plans remain unclear. This article also shows that the price increases did not cost Apple Music and Amazon Music any subscribers – on the contrary, in fact.

Industry Groove – Week 26

As the saying goes, there are two sides to every coin. On one hand, it is certainly a positive development when there are fewer barriers to creating music oneself, especially when access to music production is no longer dependent on budget. On the other hand, it is also a little alarming and alienating when suddenly everyone can produce and release music with just a few steps, thanks to simpler tools and the kind support of AI. If almost everyone sees themselves as creators (as we can see in the Culture & Trends Report below), will there even be superstars anymore? Can true talents still stand out from the crowd?

With easier access to music and its production, the music industry will undergo another fundamental change, as demonstrated in this insightful post by MIDiA. However, despite these concerns, there is no need to worry too much, because the increasing fusion of consumer and creator actually presents new opportunities. Just about anyone can take a ball and play football (or, if you prefer: soccer), but the Champions League is still followed, and players in the Premier League or Bundesliga are admired. Not everyone will become the next Messi or Mbappé, and very few will even make it to the substitute bench in the second division. Similarly, only a few musicians will stand out from the crowd, and this will likely become even more difficult in the future. However, some will still succeed simply because talent continues to be valued. There may be fewer global superstars, but there will still be artists who achieve success within their niches, can sustain themselves through streams and sales, and perform live shows.

As you have surely noticed, the newsletter is shorter than usual during these summery weeks. This little breather can be used, for example, to dive into the archive of our iGroove Magazine and delve into some topics. The articles can be filtered by category (e.g. Streaming, Social Media) as well as by topics (e.g. Spotify, TikTok, NFTs). Enjoy diving in, whether it’s into the pool or into our archive.

YouTube releases latest “Culture & Trends Report”

  • YouTube has released its annual “Culture & Trends Report,” which is based on a survey of 25,892 participants from 14 countries and aims to provide a deeper insight into the changing trends on YouTube. Here are some of the key facts from the report:
  • 47% of Gen Z have watched a video created by a fan of specific content, an artist, or a public figure in the past year. This statistic underscores the importance of user-generated content.
  • Even more impressive is this figure: 82% of 18-44 year-olds have posted video content themselves in the last year. This includes not only YouTube but also platforms like Instagram Stories, TikTok, or Snapchat.
  • Equally impressive: a whopping 40% of respondents would describe themselves as “content creators”.
  • Language barriers are becoming less important. 54% of respondents follow at least one creator who does not speak their language. This trend is also evident in music, with the hype around Spanish or Korean music.
  • YouTube sees itself confirmed by its “multi-format strategy”, as 87% of respondents consumed at least four different formats on YouTube. These can include longer videos, shorts, livestreams, podcasts, or TV. 67% of Gen Z support their favorite creators using different formats.
  • Of course, the topic of AI cannot be ignored. An increasing number of videos are being produced using AI or even feature virtual YouTubers, known as VTubers.
  • 60% are open to watching videos created with the help of AI. 52% have already watched a video featuring a VTuber in the past year.

Reminder: Last chance to download your data from Spotify for Artists

  • As I previously announced, all historical data on Spotify for Artists that is older than 2021 will be deleted. If you wish to save this data, you only have until the end of June to do so. Starting from July 1st, the historical data will no longer be accessible. Downloading is possible on the desktop version but not through the app.
  • Historical data can be useful for analyzing past releases and planning marketing strategies for upcoming releases, as it allows you to learn from the successes and mistakes of previous releases.
  • The deletion of older data, with which Spotify can save massive amounts of storage space and therefore costs, will not have any impact on your all-time stream count.

Bonus Reads

  • Chartmetric presents an interesting article on the “Fan Journey” – from discovering music to becoming a Stan – and provides some additional tips.
  • Until now, Patreon has essentially operated as a platform where users become paying members of a fan club. However, the platform has now expanded its offering to include Free Memberships with the goal of allowing artists to grow their communities and attract even more fans to the platform. Artists can then provide these fans with content and sell targeted digital standalone products. Patreon advertises that unlike social media platforms, users do not need to cater to algorithms or pay for ads to reach their fans.
  • This article highlights why Elon Musk should take the lawsuit by publishers against Twitter, which I reported on two weeks ago, seriously. It also raises the question of whether Twitter can currently afford a deal with publishers. One thing is pretty certain: the company can hardly afford to not make a deal.
  • An analysis by MBW has revealed that the three major labels, Universal, Sony, and Warner, employ a total of 27,292 people worldwide (both permanent and temporary positions). This is over 1,000 more than the previous year and approximately 6,600 more than five years ago. Universal has 9,992 employees, Sony employs a whopping 11,100 staff members, and Warner has 6,200 workers.

Industry Groove – Week 25

Unless all relevant music industry news channels have copied a false report from each other, a new, more expensive Spotify subscription will be introduced sometime this year. In the second half of 2023, a package called “Supremium,” at least internally referred to as such by Spotify, should be available, offering not only HiFi quality but also access to audiobooks.

While it is commendable that Spotify is adjusting its pricing and aiming to provide better sound quality, there are still some concerns. It is questionable whether this will appease the growing number of voices demanding price increases. Shareholders, who desire higher revenue and a more profitable company, are unlikely to be thrilled either.

Additionally, it remains to be seen whether the package will truly offer enough to persuade users to switch to a significantly more expensive subscription or attract new customers. In the worst-case scenario, it could even have the opposite effect, as, based on current knowledge, the only benefit for those uninterested in audiobooks would be the improved sound quality. However, various other providers like Apple Music and Amazon Music offer this without an additional cost. Thus, Spotify might be giving users another reason to switch to the competition.

Is Spotify launching the Supremium plan?

  • As mentioned in the intro, Bloomberg and numerous other media outlets report that Spotify will be launching a new subscription called “Supremium” this year. Spotify currently neither confirms nor denies this.
  • Screenshots circulated in October of last year showing that Spotify was testing a more expensive premium subscription, which would also include the long-awaited and overdue HiFi offering.
  • According to media reports, the pricier subscription is said to offer access to HiFi quality and audiobooks. It is unlikely that users would have unlimited access to all audiobooks, but rather a specific number of books or a certain number of hours per month.
  • As Music Ally correctly points out, it will be interesting to observe how the revenues from these subscriptions are divided between musicians and audiobook authors.
  • It is currently unclear whether the features announced in the fall, such as Studio Sound, Headphone Tuner, Audio Insights, Library Pro, and Playlist Pro, will still be part of the offering.
  • Rumor has it that the subscription will be launched in the US in October, and even earlier in other markets. The price is currently unknown, as well as everything else, including whether the new subscription will even be introduced. I will keep you updated!
  • Additionally, Spotify has given its desktop app an update, aligning it with the mobile version. Interestingly, my library has looked like this for weeks, if not months. It seems that I was part of the testing group for once.

Reaching Fans Directly with “Channels” on Instagram

  • For many musicians, it is becoming increasingly important to connect directly with their fans. Therefore, having tools at their disposal to reach as many fans as possible with ease is significant.
  • Instagram will be globally rolling out such a tool called “Channels” in the coming weeks, after testing it with only a few influencers thus far.
  • Channels are essentially groups where only the creator of the group (i.e., the artist) can post content, while other participants (i.e., the fans) can only react to these posts.
  • You can post text, photos, videos, voice messages, and polls.
  • According to an announcement by Mark Zuckerberg, this tool will also be expanded to the Facebook Messenger in the near future.

YouTube eases requirements for monetization

  • It’s no secret that TikTok has become a serious competitor to YouTube. It’s a battle taking place on various fronts, and one of the challenges is undoubtedly attracting important creators and influencers.
  • YouTube’s latest move can certainly be understood as an attempt to address this challenge. YouTube is lowering the requirements for content monetization.
  • To gain access to the YouTube Partner Program, one now needs a minimum of 500 subscribers (previously it was 1,000), at least 3 public uploads in the last 90 days, and either 3,000 watch hours (previously 4,000) in the past year or 3 million short views (previously 10 million) in the last 90 days.
  • Meeting these requirements doesn’t automatically grant access; one must apply for it. Once access is granted, creators can utilize features such as Super Chat, Super Thanks, Super Stickers, set up Channel Memberships, and use the Shopping feature.
  • Initially, these new requirements only apply to creators in the US, Canada, UK, Taiwan, and South Korea. However, they are expected to be expanded to all YPP eligible countries throughout the year.
  • The requirements for video monetization to receive a share of advertising revenue and premium subscriptions, on the other hand, have not changed.

Bonus Reads

  • This article by Cherie Hu on ethics and opportunities for creativity is one of the most intelligent pieces I have read on the topic of AI. However, one should set aside some time to fully engage with it…
  • For a somewhat rusty institution, the Grammy Awards have surprisingly reacted quickly and established guidelines for dealing with AI-generated music. It is clear that a song created entirely by AI will not be eligible to win a Grammy. However, a combination of human and machine is permissible as long as the human contribution was significant.
  • HipHop has dominated the commercial scene in recent years, but so far in 2023, no rap album or song has reached the top of the US charts. Billboard is investigating the reasons behind this phenomenon.
  • It is foreseeable that the numbers of streaming subscriptions will soon stagnate in many countries. Some are placing their hopes on the baby boomer generation, as there is still a lot of untapped potential there. However, an analysis by Music Watch in the USA now reveals that only 10% of boomers who do not yet have a subscription intend to get one. Therefore, it is highly unlikely that the boomer generation will contribute to a surge, and one can legitimately ask: If not them, then who?
  • Here, you can read or listen to how music videos have evolved over the years, both in terms of their style and their significance.

Industry Groove – Week 24

There may not be a summer lull in the music industry anymore, but nevertheless, you can still notice that many people are enjoying their summer vacations, festivals dominate the agenda, and some prefer to lounge around in the outdoor pool rather than work overtime. Consequently, this also means that the wheel turns a bit slower and the news is somewhat sparser than in other seasons. However, this short break can’t hurt and provides an opportunity to calmly reflect on the changes that the first half of the year has brought. Or simply to spend more time in the pool. Enjoy the weather!

Universal also wants to involve SoundCloud

  • Universal is in search of a new streaming model and has previously partnered with Tidal and Deezer, as reported.
  • According to media reports, SoundCloud will now also be seeking the optimal model. Insiders expect the negotiations to be concluded by the end of the year.
  • I really hope that, unlike Tidal, SoundCloud will not abandon its user-centric, also known as fan-powered, experiment.
  • At this point, I would like to once again refer to the study by Pro Musik, which I already mentioned in Week 19’s newsletter. It examined the user-centric model in 18 countries and concluded that 32.6% of royalties would be redistributed.
  • According to their analysis, 29.3% of artists would earn over 40% more with the user-centric model, but 38.8% of all artists would earn over 40% less.
  • 19% of artists could double their income under the new model. However, the problem is: twice as much as little is still not really much.
  • As long as the pie doesn’t grow, only the slices of the pie are distributed differently. The bottom line? For real change to happen, the pie needs to get bigger.

Meta presents MusicGen

  • Recently, numerous new music AI tools have emerged and even the big tech companies are dealing with the topic. After Alphabet (Google) recently released MusicLM, Meta now follows suit with MusicGen.
  • By using text commands, users can guide the AI in the desired direction, and it then generates 12-second snippets.
  • The AI was trained on 20,000 hours of licensed music (for comparison: MusicLM is based on 280,000 hours of music).
  • As evident, both MusicGen and MusicLM are primarily research projects rather than commercially released tools for end users. According to Music Ally, they serve much more as a foundation for start-ups and developers.
  • You can try out the tool yourself here. Personally, I am not very impressed so far, and neither are others.

Publishers sue Twitter for $250 million

  • Social media platforms and the music industry have traditionally had a somewhat challenging relationship. Undoubtedly, social media is hugely important for musicians and labels. Similarly, the platforms benefit from their presence and, even more so, from the music that their users can utilize. However, there is a dispute about how this usage should be compensated.
  • Twitter has proven to be particularly resistant, leading 17 publishing companies to file a lawsuit against the company acquired by Elon Musk.
  • These are not just any companies filing the lawsuit; they are major players in the publishing industry such as Concord, Universal Music Publishing Group, BMG Rights Management, Hipgnosis Songs Group, Kobalt Music Publishing, Sony Music Publishing, and Warner Chappell Music.
  • In the lawsuit, the publishers make it clear that many of Twitter’s competitors have recognized the need for proper licenses and respect agreements for the use of musical compositions. However, Twitter is guilty of substantial copyright infringement.
  • In fact, unlike Instagram, Facebook, or TikTok, Twitter has not signed a licensing agreement with the major music companies. They are no longer tolerating this.

Bonus Reads

  • Music Ally has released its latest “Streaming Report” providing detailed and interesting insights into the state of various DSPs (Digital Service Providers). The report examines recent launches by different providers, what sets them apart from the competition, and identifies potential risks. Furthermore, the authors take a glimpse into the future. I would claim it’s a must-read.
  • The blog BPB conducted a survey on the topic of AI in music among 1,533 producers. Of these, a staggering 73% believe that AI could replace them sooner or later—an astonishingly high number. Despite this existing fear, only 17.3% of the respondents have a negative view of AI, while 47.9% remain neutral. 36.8% of the producers are already using AI tools, mainly in the field of mixing and mastering. You can find all the results here.
  • Although summer has already arrived, Spotify is still doing some spring cleaning. After numerous layoffs and the discontinuation of Heardle and Spotify Live, the music creation tool SoundTrap is now being sold back to its founders. Spotify had taken a similar approach with SoundBetter in the fall of 2021.
  • Streaming fraud is a serious problem that negatively impacts many musicians who promote their releases in an honest manner. This is also recognized by various distributors and DSPs such as Spotify and Amazon Music. They have joined forces to form the Music Fights Fraud (MFF) alliance. Instead of each party taking individual measures, the alliance aims to consolidate these efforts. It is a fundamentally good initiative, although it should be noted that the alliance consists of players who, if at all, are only indirectly affected by fraud.