Welcome to Music Business Worldwide’s weekly round-up – where we make sure you caught the five biggest stories to hit our headlines over the past seven days. MBW’s round-up is supported by Centtrip, which helps over 500 of the world’s best-selling artists maximize their income and reduce their touring costs.
The start of a new year is often a time when business leaders articulate their plans for the coming year, as a way of focusing their colleagues on common goals, and reassuring them that there is, indeed, a grand vision behind the daily grind.
Grainge unveiled a specific vision for the new year in his memo to staff: After last year’s (thus far) successful effort to shift towards an “artist-centric” royalty payment model at the streaming services, the coming year at UMG will be focused on “strengthening the artist-fan relationship through superfan experiences and products”.
Kyncl, in his own memo to WMG staff, set out a broad vision for the approach Warner should take over the next 10 years. Among the core areas of focus Kyncl identified are increasing engagement with music, increasing the value of music, and evolving how WMG’s employees work together.
The past week also brought the first of the new year’s data and statistical releases looking back on 2023. Among them was market monitor Luminate’s Year-End Music Report, which found that, of the 184 million music tracks on audio streaming services that it tracked via ISRCs, 158.6 million of them, or 86.2%, got fewer than 1,000 plays. And a massive 45.6 million, or 24.8%, got no plays at all.
Another data point came from the UK’s Entertainment Retailers’ Association, which reported that annual consumer spending on music streaming subscriptions in the UK in 2023 rose 9.8% YoY to GBP £1.866 billion (USD $2.32bn). Spotify‘s 10% increase in the price of an individual Premium subscription last summer had something to do with that, no doubt.
Finally, SoundCloud confirmed it may sell itself this year, but only if its board can find the right “long-term” buyer. CEO Eliah Seton told MBW that there is a “universe of opportunities” in front of the company, which attained profitability last year.
Here’s what happened this week…
1) 158 MILLION TRACKS HAD 1,000 PLAYS OR FEWER ON MUSIC STREAMING SERVICES LAST YEAR. 45 MILLION HAD NO PLAYS AT ALL.
For at least the past year, music industry leaders have voiced unease about the flood of tracks hitting streaming services.
Some worry that, under streaming’s dominant pro-rata royalty system, professional and popular artists’ share of the royalty pie is being diluted by payments going to low-quality tracks.
Others are concerned that high-quality artists will simply be drowned out by this tidal wave of new material – a fear heightened by news last year that an estimated 120,000 new tracks are being uploaded to streaming services every day.
Such considerations have now impacted the policies of leading streaming services – not least Spotify.
In a move seemingly influenced by Universal Music Group’s ‘artist-centric’ strategy, from this quarter (Q1 2024) onwards, Spotify will no longer pay royalties to tracks that have attracted fewer than 1,000 plays on its platform in the prior 12 months.
One very relevant question, then: Just how many tracks on streaming services today are receiving fewer than 1,000 plays per year – and how many are getting no plays at all?
The answer, according to a new report from market monitor Luminate, is a heck of a lot…
2) MORE PRICE RISES… NOW? SPOTIFY PRICE HIKE HELPED DRIVE A 9.8% YOY JUMP IN UK MUSIC SUBSCRIPTION SPENDING IN 2023
July 2023 marked the first time in its 15-year history that Spotify increased its flagship subscription price point in the UK (and many other territories).
Since that point, an individual monthly Premium subscription to Spotify in the UK has cost GBP £10.99, as opposed to its previous price of £9.99; the platform’s Family Plan tariff has moved from £16.99 per month to £17.99 per month.
This tweak in Spotify’s pricing was bound to have a significant effect on the UK market’s value: Data captured by the Competitions and Markets Authority (CMA) shows that in December 2021, Spotify’s market share of all music streaming’s monthly active users (‘free’ plus ‘premium’) in the UK stood at over 50%.
Now, for the first time, we can see the impact of Spotify’s 2023 price rise within official industry numbers for the UK (the world’s third-largest recorded music market, according to IFPI).
On January 9, ERA published fresh data showing that annual consumer spending on music streaming subscriptions in 2023 rose 9.8% YoY to GBP £1.866 billion (USD $2.32bn)…
3) SIR LUCIAN GRAINGE: AFTER ‘ARTIST-CENTRIC’ ROYALTIES, UMG’S ‘NEXT FOCUS’ IS ‘SUPERFAN EXPERIENCES AND PRODUCTS’
At the start of 2023, Universal Music Group Chairman and CEO Sir Lucian Grainge called for a new streaming payout model in his New Year note to the company’s global workforce.
Over the course of last year, that plan became a reality, with a UMG-approved ‘artist-centric’ model announced by Deezer in September.
The world’s largest subscription music streaming platform, Spotify, is also embracing elements of Universal Music Group’s ‘artist-centric’ royalties model, as part of major changes coming to the service this quarter.
Looking to the rest of 2024, according to Grainge, UMG’s “pioneering artist-centric strategy will extend its reach”.
His latest comments arrive in a New Year memo for 2024, issued to the company’s global team on Tuesday (January 9), and obtained by MBW.
In it, Grainge revealed the next focus of UMG’s strategy.
“We first focused on a fairer way to allocate the streaming pie among real artists by addressing fraud and other aspects that deprive artists of their just compensation,” he explained.
“The next focus of our strategy will be to grow the pie for all artists, by strengthening the artist-fan relationship through superfan experiences and products.”
Grainge said that UMG is “already in advanced discussions with [its] platform partners regarding this phase and will have more to announce in the coming months…”
The music industry of 2024 is in a very different state of health than it was a decade ago: global recorded music trade revenues in 2014 were less than half the size that they are today, according to IFPI data.
But what do the next ten years of the global music business hold for the industry? And how can its biggest players ensure they’re in a position to make the most of it?
On Monday (January 8), Warner Music Group CEO Robert Kyncl outlined his plans for WMG to do just that – in an internal note sent to the company’s global team.
Within the memo, obtained by MBW, Kyncl highlighted three key areas that he said WMG will focus on in 2024, including growing engagement with music; increasing the value of music, and evolving how WMG’s employees work together.
“As we start the new year, one thing I’d like us all to remember is that our world has fundamentally changed,” Kyncl told WMG’s workforce.
He added: “The music business is in a very different place than it was ten years ago. Now, we’re in a position of strength. That is the time to get ahead for the future…”
5) AS SOUNDCLOUD CONSIDERS OPTIONS FOR SALE (OR INVESTMENT) IT HIRES EX-KOBALT EXEC TOM SANSONE AS CFO AND COO
It’s official: SoundCloud may sell this year – but only if the firm’s board can find the “right long-term” buyer. Otherwise? It might do something altogether different.
In conversation with MBW, SoundCloud’s CEO, Eliah Seton, stressed that there is a “universe of opportunities” now available to the company he leads, after it became profitable in 2023.
“Becoming a profitable growth company was mission-criticial to finally realizing the opportunity that’s available to SoundCloud,” said Seton. “[By becoming profitable] we’ve put ourselves in the driver’s seat. For the first time, we control our own destiny”.
When pressed on what that ‘destiny’ might look like – following reports that SoundCloud has started engaging investment banks over a potential sale – Seton added: “To realize the commercial opportunity ahead of us, now is the time to consider all potential strategic alternatives.
“That may mean SoundCloud being acquisitive, [buying] things ourselves. It may mean raising new capital; it may mean [striking] new strategic or financial partnerships, or a combination of the two. Or it may mean the sale of the company to the right long-term partner…”