Is the music industry hitting the right notes?
From vinyl to CDs and from digital downloads to streaming: music has seen its share of disruptions. The advent of streaming has resulted in a booming industry, but some of the consequences are unexpected: older music is becoming more popular at the expense of newcomers.
Streaming: ‘music’s savior’ needs an update
Since the music industry bottomed out in 2014 at $14 billion in total recorded music revenues, streaming turned the tide, accounting in 2021 for 65% of the $25.9 billion in revenues. Not everyone agrees that streaming saved music, however. While the labels benefit from their catalogs, artists face tough times, requiring hundreds of thousands of streams per month to earn a living. One way to fix this issue could be to increase user prices or scrap free-tier subscriptions. The idea of user-centric licensing is also gaining popularity. In this model, a set per-stream rate goes to artists directly instead of the current model where royalties are collected and paid out according to a total play share. Meanwhile, many new artists have decided to take matters into their own hands. Some are using videogames, the metaverse and platforms like TikTok to reach new audiences. Others are abandoning record labels and taking full control of production, distribution and marketing. In short, it looks like a bottom-up revolution is already underway.
Broaden Your Horizons
- Despite a slowing ad market for many tech companies, Spotify’s advertising business is booming. This Bloomberg article discusses the reasons why.
- Meta announced that creators can now monetize videos with music. Its relations with the music industry are increasingly strained however, with Epidemic Sound suing the company for ‘rampant theft’.
- This podcast by the Wall Street Journal explains how Gen Z is flocking to BeReal, a new photo-sharing app that promotes authenticity.
Old music is back in fashion
A recent study by the Competition and Markets authority (CMA) in the UK revealed that 86% of streams in 2021 were for music over a year old and according to MRC Data, old songs now represent over 70% of the US market. Industry leaders like BMG and investors including Blackstone, KKR and Apollo are benefiting with their back catalogs and are scrambling to buy more rights. Why older music suddenly seems in fashion again is subject to debate. One factor might be the rise of streaming, which makes it easier than ever to access music from any time period and older generations are increasingly becoming adopters too. Another factor could be the concentration of the major labels; Sony, Universal and Warner Music, which – unlike independent labels – rely heavily on established back catalogs and seem less inclined to take risks on new songwriters. The CMA, however, placed the blame on a ‘huge increase’ in the number of artists and songs. The result is an oversaturated market in which newcomers are less likely to be noticed.
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