Industry Groove – Week 6
As you may have suspected, this week’s newsletter wouldn’t be complete without the topic of “new streaming models.” In this context, it’s worth noting that the share of majors in the streaming market is steadily declining.
The other story of the week is the blatant provocation by TikTok towards major labels. Read more about it below.
Can a new streaming model actually solve the problems?
- As mentioned, the topic of “new streaming models” is still in focus. Not surprisingly, one of the most insightful articles on the topic comes from MIDiA.
- In this article, Mark Mulligan points out that none of the parties involved are really satisfied. Artists want a bigger slice of the pie, rights holders (labels, distributors, etc.) want higher licensing fees, and some streaming services, particularly Spotify, are running at a loss.
- However, it is impossible for all involved parties to receive more from the pie. If one party gets more, another gets less. This would hardly change with a new model.
- Nevertheless, Mulligan also presents a new idea, which is that each stream is paid a fixed amount (e.g. 0.01) and each user can then listen to as many songs as they want until they reach their monthly limit of 9.99 (i.e. 999 tracks). Those who want to listen to more pay extra.
- Additionally, Mulligan clearly shows that the problems lie on the supply side (i.e. artists, labels, DSPs) and not the demand side (listeners). We must never forget the needs of customers.
- Finally, he concludes that it is unlikely that the streaming model can be fixed, as even doubling the payout would not help most artists, but would cause the entire streaming system to collapse. Therefore, we must look for other sources of income and alternatives to streaming, as I have already outlined in this article.
Indies’ share of the streaming pie is growing
- A closer look at the numbers from Spotify reveals that 75% of streams come from the majors and Merlin (which includes iGroove). Conversely, every fourth stream is generated by a DIY artist or indie label that does not work with Merlin.
- Among those not contributing to the 25% are, for instance, DistroKid, which works with Merlin. However, other major distributors like TuneCore or UnitedMasters are not affiliated with Merlin.
- Merlin claims to represent about 15% of the music market. Therefore, the three majors would account for 60%.
- The share of DIY/indies is steadily growing, from 13% in 2017 to 15% in 2018, 18% in 2019, 22% in 2020, and 23% in 2021.
- This loss of 12% market share in five years clearly demonstrates why even the majors are now demanding a new streaming model.
TikTok without major label music?
- Even though everything is currently happening behind closed doors, it is clear that the majors and TikTok are in intense negotiations. It is also clear that much more money would have to flow from TikTok into the music industry. However, TikTok may see this somewhat differently.
- Australia has now been chosen as the playing field for some tests. On the one hand, some users Down Under currently cannot use music from major artists for their videos (and even for older videos, it is muted). On the other hand, TikTok’s distribution arm SoundOn is expanding into Australia. It is no coincidence.
- Why is TikTok doing this? It is presumed that they want to test the influence of major content and what happens when it is no longer present. This, of course, is with the negotiations in mind.
- Naturally, TikTok hopes that no significant effect will be felt. However, if it does, it was obviously a shot in the dark.
- Almost at the same time, it was announced that TikTok has launched its distribution platform SoundOn in Australia (it was previously available in the US, UK, Brazil, and Indonesia).
- With SoundOn, you can make your music available directly to TikTok and Resso. However, thanks to the collaboration with TuneCore, all other relevant stores are also supplied.
- This article from MBW goes into more detail about what TikTok without major content would look like and also highlights the role of SoundOn, as well as AI.
YouTube Shorts: 50 billion views daily
- In the first quarter of this year, YouTube reported 30 billion daily views, but at the end of last year, that number grew to 50 billion views.
- However, Shorts still lags behind Instagram Reels, which are said to generate 140 billion views per day. There are no figures available for daily views on TikTok.
- Since this month, YouTube has been sharing a portion of the ad revenue generated by Shorts with creators. It will be interesting to see if this has an impact on the number of Shorts produced and ultimately, the number of views.
- Meanwhile, YouTube’s ad revenue in Q4 fell to $7.96 billion, down from $8.63 billion the previous year. Revenues had already declined in Q3. Is a trend emerging here?
- Looking at the whole year, ad revenues did at least grow minimally, from $28.85 billion to $29.24 billion.
Piracy is on the rise
- In an older article, I already mentioned that I want to regularly remind everyone of what we actually all know: streaming has never completely eradicated piracy, but has created new options for it.
- Two new studies show that piracy is increasing again. A British study shows that 25% of respondents illegally consumed music at least once in the last 3 months. A year ago it was only 15%.
- It is particularly young consumers who are most likely to consume music illegally.
- At least it is only 3% who consume music exclusively illegally, but the number of those who use both legal and illegal methods has increased significantly, from 13% to 22%.
- A second study comes from the United States and also shows an increase in 2022, although music is less affected than films, for example.
- Many problems are identified in Russia, China, and Eastern Europe. A bit of Cold War rhetoric still.
- Originally, Spotify recommended only five distributors. Now this list has been updated again and there are now 23 names on it (iGroove has been one of them for several years). See here to find out which distributors are among the “Preferred Distributors”.
- Billboard annually compiles a list of the most powerful women and (mostly) men in the music industry. The latest one can be found here.
- This Trapital article argues that celebrities in the audio industry don’t have the same impact. Rather, fragmentation can be observed: there are streaming artists, touring artists, album sales artists, or festival artists – but hardly anyone is everything in one.
- There are currently some developments in the field of search engines and AI: Google, Baidu (China’s Google), and Microsoft (with ChatGPT) announced news this week. What this could mean for musicians, how such search AI could also be used in DSPs, and why one should probably revise their SEO strategy is shown in this article.
- The Grammys just took place. After such award shows, one can of course wonder if they have a strong influence on the streaming numbers of the artists. An investigation shows that it can, but doesn’t have to.
- Like in any industry, there are also some assholes in the music industry who, for example, enjoy shouting at people. But more so than in other industries, these are romanticized as rebels or geniuses. We urgently need to stop doing this, argues this article. That they continue to break spirits and destroy careers is not because they are admired but because they are feared.
- The L.A.-based music licensing company Songtradr has acquired 7Digital for £19.4 million here.