AI will unlock creation rather than consumption

Unlike most new technology hype cycles, the impact of AI on the world is already surpassing expectations. The current hype around AI far exceeds that of more recent tech, such as VR, NFTs, and 3D printing. This is in part because AI represents a crucial part of the architecture of tomorrow’s internet, along with various web 3.0 technologies, rather than being just another new tech product. AI continues to shape the music industry’s contemporary narrative. News sites regularly reference new statements from industry execs and announcements from new companies, while AI dominates discussions both on and off stage at industry events. Of course, AI is a catch-all term that refers to a massive variety of applications even within music. Even with this caveat, it is clear that it is going to reshape the future of music, culture, business and, ultimately, society. However, as impactful as this change might be, it will help turn back the clock for music to how music was before the recorded music business came to the fore.

Prior to the establishment of the recorded music business, music was a participatory experience. Whether that be a 19^th century family gathering around a piano on a Sunday, mediaeval peasants singing along with a travelling bard, or the majority of 16^th–18^th century European populations singing hymns in church. Recorded music used quality to build walls between listeners and performers. The vast majority of people could never expect to sound as good as a piece of recorded music. However, the trend started to reverse with the introduction of music production software and sample culture, re-democratising the means of production, while streaming and social media combined to democratise the means of digital distribution.

In the 2020s, these technologies have accelerated scale and capability, supported by the proliferation of online learning (e.g., Masterclass) and skills sharing platforms (e.g., Fiverr), making it easier than ever for aspiring music creators to release good quality music. In 2022, the number of artists direct (i.e., self-releasing artists) reached 6.4 million, a 16.8% increase from 2021. While the music creator economy continues to grow; the even more transformative potential lies in the consumerisation of these technologies – much like Teflon making its way from NASA spaceships to kitchen pans.

Assistive AI is already well established in music creation (e.g., iZotope’s Neutron 4, Splice’s CoSo). It is a relatively small step to further simplify user interfaces, making them ready for consumer primetime. When combined with generative AI, anyone with a smartphone has the ability to create convincing-sounding music as easily as they would take a photo – a process that was far more difficult to do to a high standard before the consumerisation of digital photography by smartphones and Instagram.

The crossover between music creation and social media is still in its early days, largely confined to TikTok duets and Snapchat’s Sounds lens, but it is approaching a tipping point and AI is about to push it over the edge.

In 2011, I wrote a report entitled Agile Music in which I suggested that music’s creative full stop was going to be erased, with songs evolving beyond the static full stop. Endel’s UMG deal shows us that this future is coming to pass. The report laid out the ‘3 Cs’ framework:

• Customise
• Create 
• Contribute

AI is the technology that will unlock this new paradigm. Music will not only become better adapted to our behaviour, but it will also make music participative again. While record labels are focused on the copyright and volume / stream dilution threats AI poses (and they are very real threats), the truly exciting potential is making music something that all consumers can use as an expressive medium, rather than simply consuming. Is that the same as ‘real’ music? No, but just as TikTok is not the same as Netflix, the marketplace will inevitably delineate between places to create versus consume. Then, maybe, just maybe, the whole volume risk will become moot.

If you liked the themes in this blog post, check our latest report: AI and the future of music – The future is already here

The global dance music industry grew by 34% in 2022

Last week I was the International Music Summit in Ibiza, the annual music industry business event. This year MIDiA compiled the annual IMS Music Business Report and I presented the findings at the opening of the event. The full report is available here for download and you can view a video of the presentation here. Here are some of the key findings of the report.

The dance music industry has long been among the first music genres to be shaped by emerging technologies, not least because technology plays such an integral role in the production and performance of dance music. This has helped ensure that dance music has ridden the waves of music industry change. But it has also always been a genre built around performance, DJing especially. So when the pandemic came, dance music felt the impact particularly keenly, with festivals, clubs and bars all being hard hit. 2020 and 2021 were thus fallow years for dance music revenues, years in which DJs struggled to perform and the global industry looked much more towards its other revenue streams. With the global opening up of 2022, the dance music industry not only grew, but ended up bigger than pre-pandemic, pointing to the growing cultural reach and impact that dance music has in today’s global music business.

All of the key elements of the dance music business were up in 2022:

• Recorded music up 11% to $1.5 billion
• Publishing up 22% to $0.4 billion
• Music hardware, software, sounds and services up 4% to $2.8 billion
• Live up 78% to $4.5 billion

The result was that the total revenue of the global dance music industry rose 34% in 2022 to hit $10.2 billion. 

Hardware and software

Music hardware, software, sounds and services represents one of dance music’s super powers. Dance music producers have always relied on these tools, but now they are becoming the mainstay of the wider music creator economy. With music software used more across all genres, dance music sounds and techniques will influence all genres

Skills sharing and learning grew fastest, and it was worth $108 million in 2022. Plus, demand will increase still, due to fast evolving production techniques and new software

This will be a long-term growth area for dance music, with producers constantly seeking to upskill to the fast changing world of music production tech and techniques

Live

In live, Ibiza club ticketing revenue reached €124 million in 2022, up 55% from the €80 million registered in 2019. This was underpinned by increases in the number of events per venue, average ticket prices, and the total number of tickets sold going from 2 million in 2019 to 2.5 million in 2022

Globally, the top 100 DJs saw their 2022 bookings grow by around threefold on the pandemic hit 2021, though male DJs grew bookings more than half faster than their female counterparts. Female DJs represented 15% of all top 100 DJ bookings in 2022. Building popularity and getting bookings is a virtuous circle, but if female DJs are losing share of bookings to male counterparts, then the virtuous circle becomes a vicious circle.

A bright, diversified future

Finally, the dance music industry has shaken off the effects of the pandemic, coming out the other side, bigger, better, stronger and more relevant than ever. The pandemic shone a harsh light on the industry’s heavy-reliance on live. Now, that reliance is even higher because of live’s huge growth. There are two key differences from 2019: 1) a resurgent creator tools sector; and 2) a music publishing business that is finally beginning to find its share. The future is bright, with the rise of creator culture, bringing ever more people into dance music, both as fans and creators, with the creator-fan set to be at the centre of tomorrow’s dance music world.

AI will transform music; the question is how?

Every new technology goes through a period of being overhyped before the dust settles, and that technology either fades or builds steadily thereafter. Think 3D printing, VR, NFTs. In my 20+ years as a media and tech analyst, only three technologies have had a level of hype that felt like it was going to live up to expectations: 1) the internet (which was already in full swing by the time I started out – I’m not that old); 2) smartphones / apps; and 3) AI. Those technologies have one big thing in common: what they could become is ungovernable by its originators. But while it was human-power that unlocked that potential of the first two, it is the technology itself that is the accelerant for AI. Of course, people will amplify it as well, but AI itself is already creating many of the new pathways. The business, societal and even humanity implications are so vast that the implications for music are small in comparison. This, however, does not mean that they will not be equally transformational and disruptive within the confines of the music business. Which brings us nicely onto ‘heart on my sleeve’.

For those of you that have been on Mars for the last few days, this AI-generated track mimics the musical style and voices of Drake and The Weeknd. As Trapital’s Dan Runcie observed “[It] isn’t that good, but it’s an improvement from 2020’s TravisBott and other generative music attempts in recent years”. UMG’s response was to encourage DSPs not to host generative-AI tracks, and Drake himself was not happy with the last time a ‘fake Drake’ track did the rounds. Drake will probably be even less happy with this latest AI addition to the Fake Drake roster, which raises the question: will Fake Drake Break Drake?! While there are valid concerns from both parties, there is a real risk of this becoming an old world versus new world conflict, and in such scenarios, the new most often comes out on top.

AI is going to change the future of music. That genie is well and truly out of its bottle. Should more have been done by the traditional music industry to work with music AI companies earlier on? Of course, but we are where we are. So the focus now should be on trying to work out how to influence and shape what the future might be, through collaboration as much as (perhaps more than) enforcement:

We have been here before: The music industry was vehemently against P2P piracy (and I am old enough to remember that). After more than a decade of trying to fight it, the music business finally built an entirely new business around piracy’s successor technology – streaming. P2P infringed copyright, it took control out of the hands of the traditional business, and it created previously impossible use cases. AI is doing the same. What is different now is that the very ecosystem that streaming created (along with social platforms) puts AI into the hands (and ears) of billions of people, whereas P2P reached just tens of millions. Consumers will experience AI at scale before the industry can shape it. And in the digital world, consumers tend to get what they want.

Guitar or tape machine?: These two old technologies both reshaped music. One was about creating, and one was about copying. AI is a mix of both, which is what makes the response so difficult. Assistive and generative AI is already a mainstay of music creation, such as iZotope’s Neutron 4 and Splice’s CoSo. AI music is a continuum, from tweaking mixes through to composition, with virtually everything else in between. There is not one single, simple answer for ‘what to do with AI?’

Enforcement will be difficult: With the best will in the world, copyright law was not designed for AI. Music rightsholders will do their best to apply existing law, but they will face challenges in doing so. Meanwhile, there will simply be too much output to effectively pursue plagiarism cases, which take time and ultimately depend on the personal interpretation of non-expert judges and juries. If you think 100,000 tracks being uploaded per day to streaming now is a problem, when generative AI goes mainstream among consumers (which it most likely will), the number of new ‘songs’ created daily could easily be a hundred times that – perhaps even a thousand. 

Focus on the input not the output: So, the most scalable solution for music rightsholders will be to fix the problem at the top, by ensuring that generative AI tools only learn from what they have permission to learn from. ‘heart on my sleeve’ can only sound like Drake and The Weeknd because the tech learned from theirmusic. A number of generative-AI companies already only learn from selective, pre-authorised datasets. If this becomes the norm then an entire new licensing opportunity emerges for music rightsholders. Artists and songwriters will likely need to consent first, similar to how sync works. The alternative (trying to license and / or collect royalties on the millions, billions or trillions of songs that will be created) would be a fool’s errand.

The reason why AI feels so frightening to much of the music business is not just because of what it is, but also because it is a catalyst for pre-existing market shifts. The last half decade was characterised by the rise of non-traditional music, in the shape of ‘fake artists’, mood music, and independent artists. All of which have eaten into the market share of traditional music companies and creators. 

Streaming’s finite royalty pot makes revenue a zero sum game. Whatever may be done to try to ‘formalise’ AI music, it is almost certainly going to accelerate the fragmentation paradigm shift, by putting music creation in the hands of consumers. Radiohead once sang that “anyone can play guitar”. In practice, most people cannot, and do not. But literally anyone can ‘play’ AI.

There is growing concern among investors that this will mean market share erosion for the majors (and it probably will), but there is still a play for traditional labels and publishers, by licensing AI at the top. In doing so, they can benefit from the shift, just in the same way that major labels benefit from the rise of independent labels and artists through owning distribution platforms. That opportunity, though, requires the right approach and for it to be taken fast. The time is now.

I will leave the final words to President Biden, whose comments on AI as a whole apply just as neatly to AI in music:

“Look what’s happening with artificial intelligence right now. It poses enormous promise and enormous concern. Our world stands at an inflection point. The choices we make today are literally going to determine the future of this world.”

Music fandom’s problem is TV’s opportunity

Music fandom is approaching a crisis point. The good news is that because of streaming, more people are listening to more music than ever and more artists are releasing music than at any time in the past. But, while doing so, streaming has turned music into a ubiquitous commodity – a passive soundtrack to our daily routines. The biggest price paid for convenience has been the steady erosion of fandom. With music transformed into a raging torrent of new songs that live for a few minutes in a user’s playlist before giving way to the ‘up next’, music has become a song economy. In this song economy, the artist is a second-class citizen, forever feeding the streaming algorithm with new music in an effort not to be swept away.

Music fandom is fragmenting. Super fans are still present, but there are fewer of them. Most have become passive music consumers, acclimatised through a decade of streaming to background listening and desensitized to the deprioritising of fandom. Even half of music aficionados (those who spend the most time and money on music) are now listening to music in the background while doing other things. It is an inevitable trajectory for a model that offers so few ways for listeners to lean in and connect with an artist’s story. To some extent, this gaping hole in music fandom has been filled by TikTok, allowing the rise of new internet-centric scenes and a place for music fandom to thrive again.

However, with TikTok being used by less than a third of the UK population (and two thirds of those being under 35 years old), most consumers still face a fandom blackhole. It was not always this way. There used to be many more places where even the most casual of music fans could learn about new artists and connect with their story. Traditional platforms such as radio and TV used to play a crucial role in this, but radio listening continues to fall and music showcases have become few and far between. Yet, TV (and video streaming) may represent the missing piece in the fandom puzzle.

The promise of streaming was to democratise listening and do away with the human gatekeepers in favour of the algorithm. As streaming nears its peak, the veneer is beginning to wear off. This is so much so that 54% of consumers want music chosen by humans, not algorithms, while 38% of music streamers say they struggle to find music they like on streaming services. If they are struggling to find new music they like,  they are also struggling to find and connect with new artists. When the half-life of a song is the swipe of a finger, the distance between an artist and their potential fans is greater than it ever was. Artists and their labels are finding it harder than ever to even start an artist’s career, let alone sustain it. Instead, artists are stuck in a perpetual struggle to keep their head (just) above water long enough to breath, playing an energy sapping game in the hope that a few streams happen. Consumption is abundant, fandom is not.

The endless hustle of the song economy has forced labels into pursuing short-term marketing tactics aimed at creating hits, pulling them away from their true heartland: long-term artist brand building. Artist branding requires expertise in the first principles of marketing – creativity and integrated marketing communications – joined-up campaigns that build an artist’s ‘brand equity’ and set them up for longevity. Instead, everybody finds themselves stuck in the hamster wheel of chasing the latest trend. It is no surprise so many artists have expressed relief that they arrived on the music scene before the dominance of social media.

The heart of problem Is that streaming is about consumption, not artist-fan engagement. While Spotify’s recent vertical feed launch is a step in the right direction, it is just one (as of yet unproven) move by one music streaming service. Artist storytelling must happen elsewhere. TikTok may be the industry’s go-to, but its role is far from perfect. 64% of TikTok users rarely know what the music is in a video they are watching and just 19% go elsewhere to listen to music they discover on the app.

The problem is not even TikTok. It is the fact that TikTok’s young audience skew means that it is not even part of the equation for most consumers. While the 16% of TikTok users that discover music from viral trends (equating just to 6% of all consumers) is small, 37% of consumers say they discover new music through TV shows (which includes streaming TV shows). It is not all about scale, it is about reaching different parts of the population: twice as many over 35s discover music through TV shows than discover music on TikTok.

Sync has become a massively important part of the modern music business and the power connection that music can deliver in a TV show is loud and clear. Imagine how much more impactful TV could be if there were more showcases where audiences could meaningfully engage in artists’ stories, not just at the breakneck 15 seconds of fame pace of social media.

TV / video is one of the few places genuine cultural moments can still occur. Why does everyone talk about The Last of Us? Because TV and video streaming are some of the few media assets left that can create watercooler moments – times when people can come together and be part of something bigger. TV and video formats enable people to see beyond the song, to share in the story of the artist, and build a depth of fandom so rare in the streaming era. They can help develop artists into more than playlist-fodder. Artists that have a voice, a story to tell, and a fanbase, that are greater than three minutes of a streaming consumer’s day or 15 seconds of a social media user’s day.

If TV sync can have such an impact on music discovery, think about the impact of TV showcases. There is power in seeing artists perform their songs while conveying their musical skills, talent as performers, and having their personality and passion shown on their sleeve. With showcases becoming fewer and further between, audiences are craving what they have been missing. It is no coincidence that Eurovision is enjoying a renaissance. Consider the 2021 winners Maneskin. The rock bands’ success follows a long list of TV showcases and award shows supercharging artist careers, from The Beatles on the Ed Sullivan Show, through Adele at the 2015 Brits, to X Factor launching the career of One Direction (without whom of course we would not have Grammy award winning Harry Styles).

Indeed, X Factor is a key illustration of how TV showcase formats can build fame and fandom while encouraging audiences to become invested in artists’ success by making them part of the story. It is a model that social platforms since tried to adopt for audiences to feel that they understand the artist and their journey, rather than swiping past a vacuous post about what someone happens to be doing that particular day. Showcase formats show artists at both their most creative and most vulnerable. It is that vulnerability that allows audiences in, building the foundations for a relationship where fans feel like they are part of the story. Something that is near impossible to build at scale anywhere else.

Streaming is an amazing consumer proposition, and it will continue to evolve and get better at doing what it does, but its reason for existence is consumption. TikTok and Instagram do a good job of driving virality, but they exist for engagement. Streaming builds audiences and social builds followings. Sustainability has never been a bigger issue for artists and their labels. There is no single-shot cure for the mass of inter-connected challenges, but creating more places where artists can tell their stories at their pace is a central part of what must come next. Until social and streaming get better at it, TV and video streaming are the fandom opportunity waiting to be tapped.

Recorded music market 2022 | Reality bites

Following a spectacular year of growth in 2021, global recorded music revenue growth slowed significantly in 2022 due to the combined impact of global economic headwinds and growth slowdown in mature streaming markets. Context, though, is everything – not many industries can deliver solid growth while the global economy is in turmoil, ad markets are falling and many emerging tech sectors are in crisis.

Global recorded music growth has oscillated in recent years, slowing in the pandemic, booming in 2021, and then returning to more modest growth in 2022.

2022 was a year of realignment for much of the global economy, and the music business had to contend not only with the wider trend of the cost-of-living-crisis, but also rising interest rates softening music catalogue M+A demand and the long expected streaming slowdown kicking in. It is testament to the solidity of the recorded music market that, despite these multiple headwinds, global revenues grew by 6.7% to reach $31.2 billion in 2022. While this was significantly down on the 24.8% registered in 2021, it illustrates the strong role music plays in consumers’ lives, especially in uncertain times when escapism and identity are more important than ever. The persistent value of music was even more strongly illustrated by music publishing, which grew by 16.6% in 2022.

Streaming was again the main driver of industry growth, with revenues up by $1.5 billion in 2022 (8.3% growth), though this was less than half the $4.2 billion added in 2021.  The slowdown was underpinned by a) slowing subscriptions growth in mature markets; b) a slowdown in ad-supported revenues, reflecting wider advertising market dynamics. Music subscriber growth was markedly stronger, up by 13.7% to 652 million, however, the more mature North America and Europe regions accounted for just a third of the growth. Emerging markets will become a progressively larger part of global streaming growth, but due to lower ARPU and low shares of Anglo repertoire, the divergence between growth revenue and subscriber growth rates seen in 2022 will become a long-term market characteristic.

Independent labels and artists direct both strongly out-performed the wider streaming market, growing streaming revenues by 13.9% and 17.9% respectively. In terms of total recorded music revenues, 

UMG added more recorded music revenue in 2022 than the other two majors, adding $0.5 billion to reach $9.2 billion, giving it a 29.5% share of the global recorded music market. UMG’s percentage growth (6.2%), though, was slower than SMG’s (8.7%), with SMG gaining 0.4 points of market share.

Artists direct (i.e., artists who release without labels, directly via a distributor) were the big success story once again, growing by 16.6% in 2022 to generate $1.7 billion of recorded music revenue, giving it a 5.7% market share, up from 5.2% in 2021. 

Independent labels also outgrew the wider market (up by 7.1%), and the combined market share of artists direct and independent labels reached 34.6% in 2022, up from 34.0% in 2021. Though it is worth noting that this does not include the additional revenue from independent labels distributed by major labels.

Combined, independent labels and artists direct, were the largest single market segment with $10.8 billion.

Though overall market growth was down in 2022 compared to 2021, 2021 was in many respects a year of artificially accentuated, post-Covid growth, while 2022 was at the opposite end of the scale, with a host of economic headwinds. In this context, 6.7% growth for 2022 could be considered even more of an achievement than the 24.8% achieved in 2021.

The full report and dataset (with quarterly revenue by segment and format going back to Q1 2015) will be shortly available to MIDiA clients. If you are not a MIDiA client and would like to learn how to get access to our research, data and analysis, email stephen@midiaresearch.com

Music creators and independent labels – have your voice heard!

MIDiA is currently fielding two separate surveys that will help us create the definitive view of the contribution from music creators and independent labels to the global music market. We are exploring what it means to be a label and a creator in today’s fast-changing and challenge-strewn music business. We are listening to what challenges they face and how they feel about the coming year.

We have already got some great responses, but we want more! Not only will these surveys give you the chance to have your voice heard, we will share a summary of the results with all respondents. This means you will be able to benchmark yourself against your peers to get a better sense of how you are doing and assess whether your concerns and aspirations are shared by others.

Crucially, we do not share ANY respondent-level data. What this means is that your responses only ever go into the total average responses. Nothing is ever attributable to you and we have a comprehensive privacy and data protection policy that you can read when you take the survey.

The two surveys are:

• Music creator survey: if you are an artist, songwriter, producer / engineer, performer, sound designer, and / or composer then this survey is the one for you. Click here to take the survey
  
• Independent label survey: if you are a record label or distributor of any size that is not a division of a major record label, then this is the survey for you. Click here to take the survey. (Note – the extra reason for independent labels and distributors to take this survey is that we use the data to help create the global market shares data, to create the most accurate reflection of the contribution of independents possible)

If you have any questions then please email info@midiaresearch.com

Filling music streaming’s Disney+-shaped hole

Back when Disney+ started its meteoric rise, there was a lot of thinking around what lessons the music streaming market could learn. Three years on from the launch of the subscription video on demand platform, the shine has come off it a little, registering its first ever subscriber loss, but not before becoming a major market player and changing the way in which the industry thinks about developing streaming shows. Disney+ was part of the ‘big bang moment’ of transformative change in the video streaming market. Meanwhile, the music streaming market basically stayed the same. This may have been tolerable during its time of plenty, but now, with global music streaming revenue growth looking set to have dropped to 7% for 2022, the lack of change leaves music streaming vulnerable in a time of scarcity. Never has there been more need for change and innovation. Disney+ might still just point us to the path forward.

There are many weaknesses in the Western music streaming market that are well known and that do not need to be relisted in their entirety here, but there are three that stand out above all others (and to be clear, we are talking about the services side of the market, not the remuneration side, which we previously covered here):

Unlimited, ungated access to everything, everywhere

Minimal differentiation (catalogue, pricing, value proposition, etc.)

A fandom void

Meanwhile, video streaming has long provided a ‘sliding doors’ view of what music streaming could have been if licensing had been done differently at the start:

Catalogue segmented across different services

Wide variety of price points and value propositions

Ability to target niches

Strong ARPU growth due to users having multiple subscriptions

But, just as music has been hit by economic scarcity, video has even more so. Expecting consumers to have multiple subscriptions (nearly three quarters have two or more) might fly in a time of plenty, but as household budgets tighten, the business case suddenly looks vulnerable. Cancelling one video subscription is a relatively pain-free decision. It reduces choice, but it does not mean losing everything. By contrast, the vast majority of music subscribers have just one account, giving them access to everything. Music streaming’s exceptional value for money is becoming a recession-busting asset that the TV industry may be looking at with envy at this stage.

It is all about growth

So, with all this said, why could there still be lessons to learn from Disney+? The simple answer is: growth. With subscriber penetration topping out in mature Western markets, music rightsholders and streaming services only have price increases as a realistic growth driver in these markets. But, if a new, additional service was to launch, then a very real chance of ARPU and revenue growth arises. To be clear, now would not be the time to launch it (for the very same reasons that Disney+ just lost subscribers). But now is the perfect time to plan and build, with a view to launch once the global economy returns to full health and consumer purse springs loosen. The challenge, of course, is how to build something that can deliver genuine additive value when all the other DSPs already have all the music. Here is a vision for how that particular circle can be squared.

Introducing music+

Let us call this concept ‘music+’ for now. Music+ would have to be something that is different from, and complementary to, the mainstream DSPs, in terms of both content and value proposition. It would need two key ingredients:

Community and identity: As MIDiA identified last year, scenes are the new growth opportunity for music and fandom. Fandom itself is simply a symptom of identity. Music has long played a crucial role in communicating and shaping identity. But Western streaming services are audio utilities that sacrificed fandom in favour of convenience. There is no meaningful way of communicating identity. This is why TikTok is the place that music fandom happens in the West, driven by gen Z, who sought something more meaningful than the convenience that was so valued by millennials. So, music+ would have community and identity at its core. User profile pages would be the core asset. A place where users can say who they are, what music they like, where they can connect and communicate with other users, curate radio shows, post playlists, etc. They would also display listening badges (e.g., “I am in the top 5% of fans of…”) and virtual artist merchandise, such as badges, limited-run digital artwork, etc. NFTs may yet prove to be the future of artist merch, but right now it lacks the crucial ingredient – context. Buying merch is about communicating identity. User profile pages would be the trophy cabinet for virtual merch and collectibles.

Content for fans not consumers: Streaming has commodified listening, even for music aficionados (half of whom stream passively). Music+ would be a place for aficionados (20% of all consumers), where fans go to deep dive on their favourite artists and connect with likeminded fans. Artists would provide content, such as sessions, cover versions, sneak previews, limited-availability live streamed concerts, Q+A sessions, photos, etc. That would provide much of the content, but even more would come from fans themselves. Aficionados are four times more likely than average consumers to lean forward and create content. Leaning through to create is the ultimate expression of fandom, and TikTok has proven the use case. So – and this is where things get controversial – music+ would need to operate under a user-generated content (UGC) license. The vast majority of music’s current UGC platforms (YouTube, SoundCloud, TikTok) followed the ‘do first, ask for forgiveness later’ approach. Music rightsholders would need to embrace, rather than tolerate, UGC in order to power the creation of an entirely new music catalogue. Their incentive would be to drive rather than respond, by seeding the platform with content, such as artist sound packs and stems.

Music+ would not be a mainstream proposition, but that is entirely the point. It would be an additive proposition for fans. If priced at a modest cost (say $4.99) and got enough support and input from artists and rightsholders, then it would have a good shot at developing a content library that would deliver real value to fans, and in doing so, plug the fandom hole that Western streaming has never seemed to be able to fill. 

Independent labels and distributors: take our survey!

Measuring the actual contribution of the independent sector to the global recorded music market is an important but difficult task. The traditional way of thinking about independent market share is to take the total market and remove the majors’ revenues from that. But this ‘distribution’ basis of market share under-represents independents because the majors also distribute independent labels and artists. The truest measure of the independents’ contribution is on a copyright ownership basis. This is a task MIDiA has conducted for many years now and a crucial input into this is our global independent label and distributor survey.

This survey is now live and we encourage independent labels and distributors of all sizes and geographies to complete it. The more completes submitted, the more accurate the final dataset will be. 

We use this survey to take the pulse of what the independent sector is thinking, what challenges and opportunities it is facing, and as a measure of its commercial performance. Thus, confidentiality is absolutely crucial. All responses to this survey are treated as strictly confidential, and no company-level data, nor company-level market share is shared with any party or presented anywhere. This commitment has earnt the trust of independent labels and distributors to collect their data and build market-level datasets that they can benefit from.

All survey respondents will receive a summary of the themes component of the survey (e.g., market sentiment, market opportunities, marketing challenges, etc.) and a complete summary of the global market shares dataset. In short, MIDiA Research wants to ensure that all participants benefit from this market intel and can benchmark themselves against the market.

Take the survey here: https://www.surveymonkey.co.uk/r/TYVBLJL

Please feel free to share this link with anyone you think would be interested in taking the survey.

Everyone hurts – the problem with ‘fixing’ streaming

Apple’s Q4 2022 revenue fall was further illustration that the global economic environment is affecting everyone. During such times, companies look for ways to avoid the worst of the impacts, partially through ‘efficiencies’ but also through growth, by exploring new income streams and improving deal terms. The music industry is no exception. With global streaming revenues slowing – despite a strong performance from Spotify– there is growing pressure on music rightsholders to identify new growth drivers. This is especially the case for major labels, who have new institutional investors who have become acclimatised to rapid growth. All of which leads to streaming royalties taking centre stage. But the problem is that everyone in the streaming ecosystem has problems with the model. So, can any fix make everyone happy? [TL;DR, no]

To heavily oversimplify, streaming has three main constituents:

• Creators (songwriters, artists, etc.)
• Rightsholders (labels, publishers, distributors, CMOs, etc.)
• Streaming services 

At the start of 2023, all three have issues with streaming:

1. Songwriters continue to push for higher royalties while long and mid-tail artists cannot make streaming economics add up
2. Publishers continue to lobby for higher rates while UMG is now advocating for a new royalty system
3. Spotify just reported a net loss of nearly half a billion dollars for 2022

Then add in all the perennials: too much music being released; no artist longevity; the commodification of music; listening fragmentation; the decline of superstars etc.

We have a streaming market in which none of the stakeholder groups feel entirely content with the current market and all would like a larger share of the revenues to flow to them. Because they all extract value from the same revenue pot, the arithmetic is simple: one stakeholder’s gain is another’s loss.

None of this is an argument for, or against, the relative merits of the case of any of the three main interest groups. But it does mean that any change to the system will leave someone unhappy. This is the impossible equation that must be balanced.

What further complicates matters is that market benefits to different stakeholders can be perceived as negatives to others. For example:

• Streaming helped democratise the means of production and distribution. Long-tail and mid-tail artists benefit, and superstars lose their share
• Streaming helped make music the soundtrack of daily routines. Suppliers of mood music benefit, traditional artists, and labels lose listening share
• Streaming helped level the playing field, making it easier for smaller labels to compete. Larger labels faced stronger competition

The debate around new royalty regimes has been around for some time, but momentum is picking up. When the CEO of the world’s biggest record label weighs in, then you know that change is going to come. But as the above illustrates, what might make a major label happy, has the potential be detrimental to other stakeholders. There is no ‘make everyone happy’ fix.

Here are two pragmatic alternatives:

Lean forward premium 

One of the cleanest fixes would be to create a two-tier royalty system based on the nature of the plays:

1. Lean forward plays (higher royalty): when a consumer plays from their own collection or seeks out a song to play it
2. Lean back plays (lower royalty): when a consumer listens to music in an algorithmic ‘radio’ channel or listens to curated playlists

As with all streaming ‘fixes’, the approach would not be without problems. Mood-based music would certainly find itself generally collecting a smaller share of royalties, but also, many of streaming’s hits (including those from majors) rely on driving larger numbers of streams in curated playlists and ‘stations’ – which in turn help fire up the algorithms and power songs to further success.

Penny per stream

Another approach would be a fixed stream rate, which would effectively mean metered streaming. For example, if every stream generated $0.01, a subscriber would be able to listen until their subscription fee was used up, with the ability to top up to listen further or upgrade to a higher capacity tier. This would certainly help drive increased ARPU (something all parties want) but could deter some subscribers as it would mean an end to the all-you-can-eat (AYCE) proposition. But maybe it is time for that. Music is not a scalable resource in the way that, say, mobile data is. Everyone’s song is someone’s creation. Also, there would need to be a solution for free streams.

Don’t forget the listener, ever

Of course, there is a massive missing detail in all of this, the missing stakeholder in the streaming economy: the listener. Crucially though, for all the problems creators and rightsholders face, consumers are not complaining en masse. They are content with a proposition that not only represents exceptional value for money but that also evolves to meet their tastes and behaviours. 

Streaming’s problems are supply side issues, not demand-side. All industry stakeholders should be careful about pushing solutions that could favour the supply side without proper consideration of the demand side. The history of business is littered with the corpses of companies that did not properly consider the needs of their customers.

Streaming was built for yesterday’s music business

The saying goes that in a good compromise, no one is truly happy. So, there is an argument that streaming is already the balance of compromise. Against this though, streaming was built for an industry that is very different than today, so it is only logical that the model needs honing to catch up, and many of streaming’s second-order consequences cannot be undone. On the demand side, music consumption has become commodified, transformed from a largely artist-centric fan experience (radio excepted) into an audio soundtrack to everyday life. On the supply side, there are simply more people than seats at the table.

Any significant ‘fix’ is going to come at one, or more, stakeholder’s expense. And even then, increased royalties will only go so far. For example, an independent label artist might expect to earn around $2,000 from a million streams (after distribution and label deductions). Members of a four-piece band would thus take home $250 each. Even doubling the standard royalty rate (which could not happen without breaking the entire model) would still only mean $500 each, which is not going to turn streaming into a living wage for most mid-tail artists, let alone the long-tail. So, ‘fixes’ will only go so far. Perhaps it is time to double down on building new things on top of and around streaming, and nurture those that already exist (Bandcamp, etc.). 

Absolutely continue to focus on improving streaming economics but do so alongside building a new industry infrastructure that is built to meet the needs of today’s creators and business rather than those of the noughties. In short, grow the pie rather than simply look at how to re-slice it.

Take part in MIDiA’s music creator survey

It’s that time of year again: MIDiA is fielding its annual global survey of music creators. If you are a music creator (artist, songwriter, producer, whatever!), whether you are independent, signed to a label or publisher, or not even releasing music at all, we want to hear from you.

The survey explores issues such as income sources, marketing, industry challenges, music production and spend. In short, it will create a full view of what it means to be a music creator in 2023. What’s the reason for taking part? Well, every creator that completes the survey will get an Excel and slide deck summarising the results of the full survey, so that you can benchmark your career against your peers and learn how they are approaching building their careers.

As with all MIDiA surveys, the results will be treated as strictly confidential, so none of your responses will ever be seen by anyone else as we only ever report the total responses for the whole survey. 

You can take the survey here; it should take you less than ten minutes. And, of course, feel free to share with any other creators you think would be interested in taking it and seeing the results.