Less than a week into the new decade and we already have the first indications that the streaming rulebook continues to be rewritten faster than the ink can dry on its last entry. Three separate articles, on the surface unrelated, when stitched together create the outline of a new streaming narrative that while firmly rooted in recent developments represents an entirely new chapter for the music industry:
- Ellie Goulding’s ‘River’ was the UK Christmas number one despite being an Amazon exclusive
- Jimmy Iovine claims Drake and Billie Eilish each have more streams than the entirety of the 1980s
- UK streaming revenue growth slowed, adding £191 million in 2019 compared to £210 million in 2019
Fusing consumption and retail
Streaming’s impact is both commercial and cultural, in large part because it fuses what used to be retail and radio. Like some kind of musical nuclear fusion, it smashes discovery and consumption together to create a chain reaction with explosive implications. In the old world, repeated radio spins drove awareness and then sales. In streaming environments, lean-back streams are simultaneously radio-like listens and sales. The distinction does not matter for streaming services – they are focused on user acquisition, engagement and retention, but for labels it challenges the very premise of what marketing campaigns are meant to achieve. It is in this environment that today’s streaming stars are made.
‘More of more’
With streaming services lacking any meaningful way to differentiate, they are forced to compete on who can deliver their users’ the most new music to drive the most listening. This strategic imperative of ‘more of more’ is at direct odds with the objective of any label campaign, which is inherently about ‘more of less’, i.e. listen to this song more instead of more songs. The net result is vast amounts of streams spread widely, but also an environment in which hits become megahits. The songs that get traction experience a domino effect of successive algorithmic decisions, rapidly pushing songs with buzz to a progressively wider number of playlists and users. In the old world this would have been radio airplay success; now it is just volume of streams.
Catalogue Darwinism
Because of the focus on new, streaming-era artists end up with far bigger streaming volumes than older artists that were ‘bigger’ in their respective eras, but an afterthought in the streaming era. Hence, Drake and Billie Eilish being bigger than the entirety of the 1980s. Back in mid-2018 MIDiA published a report predicting that music catalogue was going to decline. We faced a lot of opposition then but now we are beginning to see that catalogue is indeed undergoing a fundamental change. For deep, legacy catalogue, streaming dynamics are stripping out the long tail and boiling down entire decades to a handful of tracks. Think of it this way: if 10% of the artists released in the 1980s were ‘successful’ at the time, and 10% of those were successful enough for their music to still be listened to now, and that the songs that are still listened to are 10% of these artists’ entire 1980s output, then you end up with 0.1% of the music from the 1980s being streamed at any meaningful scale now. Added to that, new music gets pushed to more lean-back playlists so is listened to more times. The multiplier effect for new music acts as a divider for older music. As an illustration, 40 music videos on YouTube have more than one billion views but in October 2019 Guns ‘n Roses ‘Sweet Child o’ Mine’ was the only one from the 1980s that had a billion views.
If you own the rights to those catalogue gems then the value of that asset is arguably higher now than ever before, because it has won the Darwinian game of catalogue evolution. But the rest fall by the wayside.
Ellie Goulding: niche mainstream
So, the current dynamics of streaming programming favour new versus old. It may not always be so, but this is where we are right now. These same dynamics can then be used to create hits – demand creation, if you like. This is where Ellie Goulding comes in. Goulding’s Joni Mitchell cover ‘River’ was an Amazon exclusive yet became the overall UK number one in large part because Amazon ensured it was on just about every holiday-themed playlist. Every time someone asked Alexa to play Christmas music, ‘River’ soon found its way there. Because Echo listening skews so heavily lean-back, ‘River’ simply became part of the sonic festive wallpaper, much in the same way ‘All I Want for Christmas’ did on radio. Just like with radio, lean-back listeners are unlikely to stop whatever else they are doing in order to change the track. Because streaming economics do not differentiate with lean-back and lean-forward listening, passive listening is just as valuable as active listening. Radio has become as valuable as retail but is much easier to manipulate.
The other crucial aspect of this is that Amazon has shown that you only need to find and activate a small slice of the mainstream to have a mainstream hit. As MIDiA first said last year, niche is the new mainstream.
At the start of this post I stated that streaming’s effects are both cultural and commercial. The commercial backdrop to all of these consumption and programming shifts is that the rate of revenue growth is beginning to slow (not just in percentage terms – that is a natural effect of markets getting bigger) but also in absolute terms. Early last year we predicted that streaming growth would start to slow towards the end of 2019 in developed markets and the ERA figures for the UK are the first evidence of this shift. Globally, growth will be sustained by emerging and mid-tier markets, but in markets like the UK and US, growth is peaking. The significance is that the conflation of radio and retail does not matter so much when everything is growing. When growth slows, however, quirks of the market can become business challenges. The ROI of throwing money at campaigns to cut through the audio clutter becomes problematic when the promise of the pie getting ever bigger begins to wane.
All of these things are of course simply part of a maturing and changing market. Nevertheless, the marketing strategies currently employed have been developed in an environment of growth abundance. The challenge for streaming’s next chapter is finding the new rules that are more ROI focused but can still play to streaming’s consumption strengths. Delineating different rates for lean-forward and lean-back streams feels like a logical place to start, but more evolution will need to follow – each iteration of which will trigger its own waves of unintended consequences. Exciting times.
Music Industry Blog 
Great piece, but a question regarding catalog. Wondering if the current state of catalog spins is permanent or a transitory artifact of the transition from widgets to streaming over the last 15 years.
Don’t you think that younger listeners, who were raised on streaming, may generate more catalog spins in the future than do older listeners now? If I’m 15 right now and I love a particular playlist, don’t I just come back to it at 35 in much the same way that a grown-up 1980s 15 y/o might come back to one of their beloved albums or a handmade mix tape from the 1980s?
I know that the 2020s will likely be more about the cultural now than the cultural past, even for grown-ups, who face more pressure to stay culturally current into middle-age. But music is so tied up with nostalgia and studies show that most people seek out much less new music once they get past 30. So just wondering whether the value of 2010s catalog may be higher in 2030 or 2035 than the value of 1980s catalog is right now.
Another interesting question would be whether Billie Ellish has out-streamed the 1960s or 1970s catalog that is more important to core Baby Boomers (i.e., the parents of the current teenagers).
In any case, I’m clearly an outlier, because my most listened to song in 2019 was a Tampa Red tune from 1929. That’s what I love about Spotify. So easy to learn more about the history of pop music. Perhaps some enterprising music companies will figure out ways to activate more of this back catalog. Might be pushing against a strong current, but it also feels like an opportunity.
Something like the Cocaine and Rhinestones podcast seems like one possible way of doing that. One of the best podcasts ever done and such an great invitation to listen to a bunch of great old country music tunes.
A couple of other thoughts.
1. To the extent that many records went out of print in the era prior to streaming, hasn’t there always been a pretty significant thinning of catalog stuff and by extension, its value to labels? For every Velvet Underground album, far more albums went out of print and were never heard from again (or were reissued by small labels at the cottage industry level).
2. To the extent that very few songs actually generated significant radio play back in the day, wasn’t that kind of a similar winnowing process to what is happening now?
Years ago, I attended a roundtable outreach meeting with John Simson, who was then the executive director of SoundExchange. This was pretty early in the curve of streaming. I wish I could remember the numbers, but he indicated that a relatively small universe of songs generated almost all of the performance royalties from terrestrial radio (like under 500 songs). So there was a serious winnowing going on there too.
I know there are meaningful differences between then and now, and you’ve highlighted some important ones here, but it still seems important to keep things in historical perspective.
I’m reading this book called the “Birth of Loud” right now. Great book. It’s about the early history of the electric guitar, so a lot of discussion of Les Paul’s career. He and Mary Ford sold millions of records in the 1950s and early 1960s. But did their catalog generate a lot of sales after the Beatles hit? I doubt it, and I suspect that’s been the case ever since, to the extent those records even stayed in print during the period from 1970 until the birth of streaming.
The cresting cultural wave of the Baby Boom was bound to negatively affect the value of rock era back catalog, I suspect, even if streaming hadn’t happened, because that’s how cultural history works. Out of all the cultural production of a particular historical moment, only a limited number of cultural artifacts are elevated as exemplars of that moment (canonized), and that’s what most people remember, unless they’re serious enthusiasts.
How certain things get elevated and why is hard to predict and filled with politics and luck.
But imho, if there’s one positive about the streaming era it’s that it’s much easier and cheaper to be a serious enthusiast about something old. Much less work and expense to hear the entire Tampa Red back catalog today than it was in the 1980s I suspect.
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These figures and assessments are based almost entirely on the/an idea that doesn’t include listeners who came of age later than the say the past 15 years. Looking at 1980’s music and looking at streaming numbers for Billie Eilish, et al, and making a grand statement that her streams have eclipsed all of the 80’s combined, forgets that the commitment made by fans in the 80’s was a much more invested effort. They had to plop down money for each and every purchase they made as opposed to paying for a monthly streaming service that costs the price of one album back then. To compare Billie’s or Ellie’s streaming numbers to 80’s artists is ludicrous. Streaming is still and will probably stay a very similar experience to the Star Wars franchise when a brand new technology broke out and changed the experience for fans at that time; primarily younger consumers. The experience is a combined enjoyment of the technology and the music; not primarily the music alone as it was in the 80’s and 90’s and earlier decades. Who knows how long that will last with a younger audience as they move onto the next technology that sparkles.
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