Electronic music, fandom, and the rise of the Global South

I recently presented the tenth edition of the IMS Business Report at the Ibiza-based conference. In MIDiA’s second year creating the report, the findings reveal a global electronic music industry that not only has positive revenue trends but is also experiencing a global cultural resurgence. Here are some of the key findings of the report, which can be downloaded for free here:

• Fandom surge: Electronic music is the smaller of the big, global music genres, but it is, nonetheless, a member of that genre club and it is quickly gaining ground on its peers. Electronic music is growing fandom faster than most other leading genres, adding more fans across YouTube, TikTok, Instagram, Facebook, and Spotify in 2023. This was a turnaround from 2022 when the other big genres (hip hop, rock, Latin) were growing faster than electronic. Electronic music is having a fandom moment.
  
• New fan markets: Germany, the UK, and Australia have been three of electronic music’s leading markets in terms of culture, fanbase, and revenue for many years. Unsurprisingly, they are also the three countries with the largest cumulative number of Spotify monthly listeners to electronic music (by cumulative we mean the gross total of all ‘listeners’, which means one person can be more than one listener, as per Spotify’s definitions). But the remainder of the top ten Spotify markets reveals the rise of the Global South, with India, Brazil, Mexico, and South Africa all claiming top ten spots. South Africa is particularly interesting; it entered the top ten for the first time in 2023 and has twice as many cumulative monthly listeners as the country does people. Electronic music has quickly established cultural heft in South Africa.
  
• Rise of Africa: You can tell a trend is worth paying attention to when it starts cropping up in many different places. Not only is South Africa now a top fan territory, but Afro House also became a top 10 Beatport genre for the first time in 2023 as well as a top search term for sample platform LoopCloud. The former points to success of already-made music, the latter music yet-to-be-made. On top of this, #Amapiano views on TikTok hit 9.8bn in 2023, up 168% on 2022, with Tyla hitting 21.7bn global views. Western music, Anglo repertoire especially, has long been used to being the music that ‘exports’. Streaming and social are changing this. The strong rise of African music in global dance music culture is part of a seismic shift in global music culture, with the Global South set to increasingly shape global tastes.

Of course, the highlight of the IMS Business Report is the industry value figure. In 2023, the global electronic music industry was up by 17% to reach $11.8 billion. Growth didn’t always come easy, with over a third of executives saying they had to work hard at success in 2023, but it was nonetheless a good year for electronic music. 

Continued strong growth in live (festivals, clubs) was a core component of the industry revenue trend but recordings and publishing also performed well. While total industry growth was not as strong as in the 2022 post-pandemic ‘rebound’ year, 2023 showed what long term, organic growth can look like. The global dance music business is now in its post-post-pandemic growth phase!

Can’t cross the moat? Walk around it

The music business is bifurcating. On one side, a new AI, fandom, and creation centred business is coalescing. On the other, the traditional business is pulling the draw bridge over its moat by pushing up streaming royalty thresholds to ensure the soon-to-explode long tail knows it is not welcome. AI has arrived at just the right time, acting as the change catalyst that will propel the consumerisation of creation to the fore. The news of music AI start up Udio’s $10 million raise is just another piece in the puzzle.

The traditional music business has a long tradition of building moats. The genesis of the recorded music business was the first moat. Until the phonograph, everyone and anyone could be a performer and take part in music. Then suddenly, a business was built around those deemed ‘good enough’ to be able to record. The music business’ moat was thus dug, with the audience on one side and the artists firmly on the other. In later years, the moat was widened with a succession of developments, such as record label marketing budgets, TV appearances, exclusive licensing deals, expensive recording technology, and so forth.

The rise of the creator economy, AI, and consumer creation will probably not drain that moat. High quality music and artists are not going to be replaced – that is simply not the point of AI. Virtual artists are an entirely different proposition (!) but AI and consumer creation open up another, entirely new path. Instead of having to swim across the traditional industry’s century-old moat, this new, parallel movement / industry can, and will, simply walk around it and carve out its own space. This will be a good thing for both sides of the future industry and mirrors what already happens in video.

No one confuses a TikTok short for a Netflix original because they operate in entirely different lanes. Right now, both sides of music occupy the same places (streaming and social). For as long as it was only the long tail of single millions of independent artists, that awkward cohabitation just about worked. But not for much longer. Now, we have tens of millions of creators uploading music to social (but not streaming) and we face the prospect of hundreds of millions of consumer creations, perhaps even a billion, according to BandLab’s Meng Ru Kuok.

And as much as this consumerisation trend will largely happen outside of the moat, some of it will happen inside it too. Look no further than the reports that Spotify is planning to allow users to modify songs. So, perhaps the demarcation will be modification within the moat and fully fledged creation outside of it.

What is fast approaching in the music industry’s rear view mirror is what MIDiA termed ‘Music’s Instagram Moment’, where making music becomes just as accessible to the average consumer as photos and video are now. Thom Yorke might have uttered the words ‘anyone can play guitar’ but in practice, most people don’t – either because they do not have a guitar or the will to learn. But anyone can write a text prompt. The traditional music industry’s moat kept the accomplished safely clear of the enthusiast. AI changes all of that.

Of course, the counter argument is that all this consumer creation will likely be garbage. But that misses the point. This is not about music as consumption, nor even fandom. It is music as expression and identity. Professional photographers did not look at Kodak and call them merchants of garbage because they enabled millions of consumers to take overly exposed holiday snaps with fingers obscuring the lens. 

The current fear around AI is it creating million stream songs, but that is not the point either. Don’t worry about the one AI track with a million streams, worry about the million AI tracks with one stream.

After all, who is going to listen to all this consumer creation? The friends and family of those who make it.  If each consumer creator has, say, ten people who will listen to what they create, and they make a track a month, that results in 120 streams minimum per year (assuming each person only listens once). Turn that one consumer creator into 100 million people (15% of Spotify’s current user base) and you end up with 12 billion streams. Now imagine that 25% of those 100 million consumer creators make two tracks a month, have more than 30 friends that listen, and that their music is good enough for those friends to each listen twice, then the total annual streams becomes 45 billion. Now imagine if those consumer creators make music every single day….

It is when you consider this sort of scale that it becomes clear why it is good for both sides of the business that they occupy different spaces, because they serve different purposes. 

Yes, consumer creation will compete for time. It will turn a considerable amount of time that is currently spent listening into time spent creating. Surely that is only a positive thing. Music as a form of expression and creation. It can – and should – be for everyone. 

If this kind of thing interests you, then keep an eye out for a major new report coming from MIDiA: Bifurcation theory: How today’s music business will become two. More on that soon!

State of the music creator economy – The consumer era

MIDiA is excited to announce the publication of the latest edition of its annual ‘State of the music creator economy’ report. Based on months of research, MIDiA creator and consumer surveys, market sizes and forecasts, this report is the definitive assessment of the music creator tools industry. The report is available to clients here.

The highlights:

The pandemic triggered a surge in the music creator economy, bringing an influx of interest and investment. Suddenly, everyone was talking about music creator tools while investors ploughed investment into leading companies, like Native Instruments and Splice, while newer entrants, like LANDR, carved out new models. 

By 2022, the industry found itself in a post-pandemic lull – always a possibility, even before the subsequent cost-of-living crisis. But, as our report reveals, the slowdown does not represent a sector returning to a pre-inflated level, but instead, a natural rebalancing before long-term, dynamic growth kicks in. This is because the pandemic did not create the market but catalysed an already growing sector, driven by a new wave of creators focused on simplicity and efficiency. The pandemic compressed three years of user growth into one and a half years, so slowing revenues are, in large part, a reflection of the bedding in of this cohort. 

But it is post-pandemic trends that will grow the market most: a) the rapid rise of AI, and B) the rise of the consumer-creator. Consumer-creators transformed photography (Instagram) and videography (TikTok); music will be next. Not only will casual music creation become mainstream, it will trigger an unprecedented widening of the music creator economy funnel. So the market’s future will be defined by: 

1. Simplification
2. Consumerization 

Perhaps the clearest sign that the music creator space continues to grow at pace, despite lacklustre results from some key companies, is that the number of creators grew by 12% to reach 76 million, with the number of those who upload their music growing by more than double that rate. Interestingly, the number of artists who self-release into the traditional streaming supply chain grew at half this rate. A forking of the music business is taking place before our very eyes, with the streaming ecosystem playing the traditional establishment, and social apps and new platforms, like BandLab, representing a new, future-facing, creator-centred ecosystem. 

Humans like to think of history in chapters, and music is no different – sorted into neat sections: the CD, piracy, downloads, streaming. We are now entering the creator era. A paradigm shift that will see the creator become centre stage, with creation itself being entertainment, and fans being given ever-more ways to participate and create themselves.

The new, post-streaming models will be defined by characteristics that are almost mirror opposites to the DSP model: 

• Creator-centric versus rights-centric 
• Creation versus consumption 
• Dynamic versus static 
• Non-linear versus linear 
• Fans versus audiences 

The streaming-centred music business and creator tools used to be separate industries but they are now becoming part of one, extended value chain. With revenues of nearly six billion in 2022, and rising to $10 billion by 2030, the creator tools sector is going to have both commercial and cultural transformational impact. Though hardware will continue to be a crucial part of the market, creation is becoming increasingly virtual, software, sounds and services will account for the majority of future growth.

The growth of the creator tools market to date has resulted in a surge of new tools and services. In fact, there are too many, making it hard for creators to identify what they need and why. Cloud services, such as the recently launched FL Cloud, which combine multiple tools to create joined-up workflows, are a new and important part of the market. This reaggregation approach will become far more prevalent, with subscriptions gaining share, up from a quarter of software, sound and services revenues in 2022, to nearly a third in 2030.

AI will, of course, also be a key growth driver, building on an already long history in creation. Current music AI tools cluster around three groups: 

1. Assistive tools 
2. Generative creator tools 
3. Generative consumer tools 

Established creators will increasingly use generative tools as sound sources, but they will play a more foundational role for younger, newer creators. AI’s biggest impact will be its opening up of the consumerization of music, which itself will comprise of three key components: 

1. Voice
2. AI
3. The phone 

The days of audience, creation, rights and distribution being discreet sectors are numbered. Creation is going to become the linking element, with a new generation of fast-moving creators opting into new models that enable them to operate across all elements simultaneously. The shift of cultural capital will be industry-changing and, in this context, ByteDance launching its creator tools, Mawf and Ripple, demonstrates it is staking its claim to be a key player in this brave new world.

Even though this post covered a lot of ground, it is only a tiny fraction of the 7,000 word, 46 page, 18 figure report! It includes four sections, covering:

1. Music creators
2. AI
3. Market size
4. Future models

With deep data on music creators, consumer creators, market sizes and forecasts, AI vendor mapping and future business models, there is simply no other report you need to understand both the creator tools market and its growing influence on music business and culture.

If you are not yet a MIDiA client and would like to learn more about how to become one, email stephen@midiaresearch.com.

Finally, here is a list of the companies and brands mentioned in the report: Ableton, Amp, Apple, Arturia, Audiocipher, Avid, BandLab, Bandzoogle, Beatclub, BeatStars, Boomy, ByteDance, CD Baby, Coursera, Discord, Discovery Mode, Distrokd, Fender Play, Final Cut Pro, Fiverr, Focusrite, FL Cloud, FL Studio, FRTYFVE, Google, HIFI, IK Multimedia, Image-Line, Instagram, iZotope, Jamahook, Korg, LALAL.AI, LANDR, LANDR Network, Linkfire, Live, Logic, Loopcloud, MasterClass, Mawf, Meta, Moises, Moog, Native Instruments, Neutron, Pandora, Ripple, Roland, SongStarter, SoundBetter, SoundCloud, Songtradr, Spitfire Audio, Splice, Spotify, Stem, Submix, Suno Chirp Bot, Symphony OS, TB303, TikTok, Tracklib, TuneCore, United Masters, Waves, Yamaha, YouTube, YouTube Shorts 

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 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

The music industry needs a new format

Non-DSP streaming was one of – arguably the – differences between steady growth and stellar growth for the music business in 2021. With three billion dollars of retail revenues in 2021, non-DSP has quickly become a key source of revenue, but not without bringing its own set of challenges. Music rightsholders have been criticised in the past, including by MIDiA, for being too prescriptive in their licensing approaches, often curtailing the potential of new ventures. The homogenised nature of Western DSP streaming being a case in point. But with non-DSP partners, rightsholder recognised that it was still too early to define exactly what the dominant use cases would be and opted for blanket type deals instead, thus monetising new partners while leaving room for innovation. Now though, creators and rightsholders alike are coming to the point of view that the time is right for greater clarity and definition, with calls for ad revenue share as a starting point. But even if these changes were to come into play, there is a much more fundamental issue at hand: the music business does not have a format to license to non-DSP partners.

Value gaps

Much has been made of the comparison between YouTube and TikTok, and their perceived ‘value gaps’ (YouTube’s former value gap, and TikTok’s current one). YouTube’s road to music industry partnership was a rocky one, but now the relationship is positively rosy, as is YouTube’s contribution to music industry revenues. In 2021, YouTube delivered around $3.4 billion in revenues to record labels alone, with ad supported accounting for around two thirds of that. YouTube has gone from pariah to the second largest contributor of label streaming revenue. But, regardless of all the infighting, negotiating and lobbying that happened in the intervening years, it would not have been able to become the success it has were it not for the fact it was already using a well-established music industry format: music videos. This contrasts with non-DSP partners, like TikTok, Meta and Snap, that are, instead, licensing music to soundtrack their formats. In many respects, this is 21^st century sync, soundtracking the parts of digital entertainment where traditional sync does not reach. Indeed, the deals also tend to be classed as sync deals. 

Sync’s strengths and weaknesses 

Sync’s strength is being able to take music to places where music formats do not exist. Its problem, however, is that there has always been a massive value gap between its cultural impact (not least giving music exposure) versus its revenue contribution (less than 10% of 2021 retail revenues). But there is an even bigger challenge with this new ‘digital sync’: whereas traditional sync simply enhances traditional audio-visual formats (TV, games, ads, etc.), in many of digital sync’s use cases it is actually a central component of the experience. Duets, lip-syncs and other lean-through behaviour has music at its core. Without music, the behaviour does not exist. So a licensing structure that leans on monetising a soundtrack falls short of music’s defining role in many of these non-DSP experiences. On top of this, there is much that music creators do on non-DSP platforms (e.g., live chats, non-music posts) that delivers value to the platforms (by generating ad impressions) but do not generate income for those creators nor their rightsholders (if they have them).

A new format for non-DSP

So, how can this circle be squared? The solution is simple in concept but complex in practice: the music industry needs a new format for non-DSP environments, one that will ideally pave the way for metaverse monetisation also. Non-DSP music behaviours rarely revolve around the full-length song, nor full-length music videos. Instead, they revolve around components and snippets of songs, as well as the music creator’s non-music activity. The music industry needs a licensable format that reflects this new usage, not least because everything points to ‘lean through’ and the consumerisation of creation growing, not shrinking. A 15-30 second music format would be one solution, but that would likely be too static, as the more that creator culture grows, the more cultural value will reside in the music being modified by users – as illustrated by TikTok’s new partnership with Stemdrop – which could also form part of a new format structure. And, of course, it would miss the non-music activity. Last year, MIDiA published a report with Utopia (free to download here) that proposed a creator right that would ensure that value accrues to the creator for all their activity, not just musical. It may sound far-fetched, but it is not much different than an actor getting paid for appearing on a TV show.

The solution likely lies in a combination of short-form music formats and new licensable rights – which does not necessarily need to have legislation, there are other widely licensed ‘rights’ that do not legislative underpinnings. As I have already said, the concept is simple, the implementation is difficult. But things worth doing are often difficult to do. Over to you, music industry!

The creator economy’s post-lockdown growth

The Covid pandemic created a unique catalyst for the music creator economy. More time on hands and more cash in pockets gave novices and veterans alike the opportunity to spend both more time and money making music. Though the pandemic was a peak, it also marked the start of a new era for the music creator economy across every one of its aspects, from revenue to creation to remuneration. In MIDiA’s new landmark report ‘State of the music creator economy’ we provide the definitive assessment of this exciting marketplace, covering everything from creator behaviours, creator personas, all the way through to workflows, market sizes, and growth forecasts. The full report and datasets are available to MIDiA clients here. Here is an overview of some of the key themes explored in the report.

A new generation of music makers

The music creator tools space is being transformed by the increasing availability of simple, affordable music-making tools, plus a new generation of consumers that is steeped in creator culture. We are entering a new era for the music creator economy. Yet, despite all the dramatic changes, underpinning this new era of creator behaviour are suites of complex software that arose over two decades ago and, at their core, have seen little substantial change. The digital audio workstation (DAW) is the foundation of modern music making, but was not designed for the modern music maker. This presents fertile soils for seeds of disruption as more casual music making, centred around mobile devices and sharing music online, becomes the new top of funnel for the music creation space, and the music industry as a whole. 

Having grown up as social media mainstreamed creativity, the new generation of music makers expects to achieve professional results quickly. However, as their aspirations clash with the harsh reality of streaming economics, more creators are seeking out a diversity of income streams — from selling beats to mixing and engineering — underscoring the need for creator tools companies to help drive creator remuneration. Combined with the growth of casual creators, catalysed by embedded tools on social platforms, like TikTok and BandLab, the result is a newfound fluidity in defining what it means to be a music creator. 

Though much of that generational shift will take time to permeate through to the current market, seismic change is already manifesting. Nowhere is this better seen than in the that hardware music creators use. As recently as five years ago, music creators would have invested in hardware mixing desks, synthesisers, and outboard effects. But today, the most widely owned hardware is devices that plug into computers, such as controller keyboards and audio interfaces. These affordable devices free up creators to spend on the software and sounds on their computers, relying on the hardware to control sound making, rather than actually making the sound.

And it is the spending on software, sounds and services that is currently propelling the market. With an average creator spending more than $600 a year on music creation, promotion, distribution, and commercial tools. For beginners this can mean spending three and half times more than they earn from music, while for advanced creators it is a little over one tenth. In total, the music creator tools market was worth $4.1 billion in 2022, across learning, collaboration, production software, sounds, funding, commerce, distribution, marketing and commercial, with distribution and production software being the two largest segments.

In 2021, the cumulative number of creators paying for software, sounds, skills sharing, and learning was under 30 million – by 2030 there will be nearly 100 million with learning and skills sharing becoming the largest single group of buyers. Learning and skill sharing were among the fastest growing components of the music creator economy in 2021, with strong rise in both formal and informal learning as well as in skills sharing. Just under half of the learning revenue was from companies that were largely or entirely focused on music production learning. With 83% of creators feeling that they still have much to learn and improve upon, the opportunity for learning is pronounced and will become even more so because of the fast-changing nature of the sector.

However, much of all this may seem like a separate and parallel industry to those in the traditional music business (labels, publishers, streaming services, etc.), the creator tools market that commands much of the attention, time and spend of artists and songwriters. Streaming is only around a fifth of the income of the average creator, with many aspects of the creator tools marketplace representing new ways that they can earn meaningful income, whether that is selling singing sessions on skills marketplaces, writing soundpacks for sounds platforms or producing tracks for other creators. Furthermore, clear connections are being made across the two industries, such as Avid and LANDR both offering distribution, Sony Music Publishing striking a partnership with BeatStars and Spotify launching a bundle subscription for its Cloud DAW Soundtrap. The most impactful synergies, however, will come from audience platforms, like TikTok and Shorts, that are already home to music creators and already provide their own creator tools. But what they have that rightsholders and most creator tools companies do not, is audience. As the culture of creation spreads towards audiences themselves, it is these sorts of companies that have the ability to play the most transformative role in the future of music creation.

If you are interested in learning more about MIDiA’s state of the music creator economy report, email stephen@midiaresearch.com

Re-creating the creator economy

Everyone is a creator! Or so goes the dismissive put down of many a traditional media executive when talking about the creator economy. But regardless of what your perspective on the creator economy might be, there is no denying its meteoric rise. Perhaps what stokes the ire of some elements of traditional media is that the creator economy is evolving from being simply a talent funnel for traditional entertainment companies, into something self-contained and self-sustaining. But, for all of the positive change, there is much that is also problematic about the space. 

Harnessing aspiration at scale

First and foremost, the creator economy is a business model for the platforms and adjacent services, one that is built upon harnessing the hopes, dreams, and aspirations of large-scale creator audiences. While each of those creators individually craves success – however they might measure it – the platforms do not need the creators to find success for their respective business models to work. This is because, they monetise creators by harnessing aspiration at scale. If there are enough creators – and the pool is growing fast – a multitude of small-scale audiences are enough to drive the platforms’ strategic objectives of driving audience engagement, which, in turn, drives revenue.  What complicates matters further is the fact that creators are developing platform dependence – merely renting space on the platforms they depend upon, rarely with tenancy rights and often slave to the algorithm. It might be the creator economy, but creators fuel it rather than drive it.

Platforms are using audience as the new form of distribution

What has enabled this conflicted set of priorities to become established is the rise of platforms that use audience as the new form of distribution. Whereas traditional entertainment services, like Netflix and Spotify, license and create content to distribute to audiences, audience platforms, like TikTok and Twitch, pull their content from the audiences themselves. Even though most users consume rather than create, the creators come from their ranks. The old paradigm of license / create-distribute-audience has been replaced by audience-create-audience. If the traditional entertainment business depends on cannon balls, the creator economy trades in bullets.

Audiences are becoming creators, too, with 18% doing some form of content creation and 10% using creation tools in social platforms. Only 33% of consumers only ever purely consume content. Audiences went from lean back in the analogue era, lean in during the streaming era, and now lean through in the creator era. A growing body of creators is learning to harness this growing demand for creation, as evidenced by music creators, like Pink Panthress, Sadie Jean and Russ, canvassing input from their fanbases on TikTok.

The current surge in the creator economy is opening more doors for more creators than ever before while also bringing audiences ever closer to creation, too. But, as the number of creators grows, fandom and consumption fragment. The longer the tail, the harder it is for creators to cut through, find audiences, and build careers. Creators find themselves locked in a perpetual cycle of create / produce / perform / engage, with their host platforms demanding ever higher levels of frequency and volume of output. 

With creators’ constant fear that jumping out of the creator hamster wheel will see them disappear from the algorithm, there is a growing awareness that owning their audiences and having direct communication with them has never been more important. Yet today’s creator economy is not built this way. The rise of companies like Pico, Disciple Media and India’s ChargeBee point to the growing recognition of the ‘off-platform’ opportunity. But the majority of creators have the majority of their audiences on platforms where they are slave to the algorithm.

Owning audience is just one item on a long list of structural challenges (e.g., remuneration, discovery) that the creator economy must address if it is to transition from its current phase of undoubted opportunity, into something that can genuinely reshape and redefine the future of entertainment itself. There is both a duty of care and a window of opportunity that creator-economy companies must seize with both hands, but the second cannot be achieved without the first. That is why it is time to re-create the creator economy.

Whether you are in music, video, games, sports, or even comics, the creator economy is reshaping your business, your audience, your content, and, of course, your creators. Building upon MIDiA’s years of work in the creator economy, we have just published a landmark new report: Re-creating the creator economy. In this report, we present data, analysis and case studies of the creator economy across music, video, social, games, podcasts, sports and more, covering topics such as creator remuneration, women creators, business strategy, distribution and what independence really means.

If you are not yet a MIDiA client and would like to find out how to access this report then email stephen@midiaresearch.com

From binging to burnout: the creator economy’s fault line

The streaming revolution has been built upon audience choice and control, replacing linear with on-demand and in turn opening whole new consumption paradigms. No user behaviour better encapsulates this shift than binge watching, which is done by 60% of video subscribers. But there is an inherent tension with giving the audience so much control: content is consumed much more quickly. If you are a video service, an entire season can be watched in one or two evenings, whereas in the old world, those millions spent on making the show would deliver a return over a period of months, not two nights. Little wonder Disney+ has gone for weekly episodes of its shows. 

As big as the problem is for media companies, however, it is the creator economy that is most exposed. In order to keep up with insatiable audience demand, music, podcast and video creators (and more) are often pushing themselves to their creative limits. Creators are risking burnout in order to meet their audiences’ demand for binging.

When Daniel Ek suggested that artists should be releasing music monthly, he was simply reflecting the realities of streaming-era music consumption. With just 16% of consumers listening to full albums, music audiences are beginning to replicate wider digital audiences: they expect a steady stream of (mostly) new content. The creator economy first met this audience shift with the rise of YouTubers, signing up millions of followers and delivering ‘content’ every day or so. YouTube subscriptions acted as talent feeds, setting the blueprint for content consumption that now dominates social, from TikTok to Instagram. In this world, the creator is locked in a constant battle for attention with every other content provider, big or small. Creators thus end up in a perpetual cycle of content creation to ensure they can remain present in their audiences’ content feeds.

The harsh reality of this environment is that it creates a vicious circle of influence. The more that creators create in order to try to cut through, the more content there is, which means it is even harder to cut through. This is the exact same challenge that record labels and artists currently face on streaming, forced into the volume and velocity game of releasing more music and doing so more frequently. Creators are forced to focus on volume of output rather than quality, and most often feel that however much they create, it is never enough. The net result is a growing number of creators dealing with burnout and mental health issues.

Audiences and platforms both win in the binge economy, while creators become collateral damage. With content commodified, audiences en masse do not notice as individual creators fall by the wayside, because the platforms’ algorithms will seamlessly slot in another creator who is so close the one that went, that the change will be all but unnoticeable. Platforms may have created the environments in which content is commodified, but by playing the game, the creators themselves have played a central role in commodifying content to the degree that it is content, not the creator, that matters most.

Yet, whatever the role of platforms and creators might be, it is perhaps us, the audience, that is most to blame. It is our ravenous appetite for more that creates the market. Just like Western consumers’ demand for fast fashion underpins Asian sweat shops, binging is creating a digital supply chain which favours production-line output. Some creators are beginning to create work arounds by staggering projects, dropping teasers, or even engaging fans in the creation process and having fan input points become the content they crave. But even these tactics most often require significant creator effort and maintaining a constant dialogue with the audience. 

Despite the best efforts of the creator community, the dominant direction of travel is that there is little room for careful craft. Spend three months making a song or a video, and the algorithms will already consider you history.

What BandLab and Bruce Springsteen tell us about the music business at the end of 2021

2021 was another year in which capital continued to flow into the music business at pace. Two deals that got over the line before year end have shone an interesting light on the differing strategies that are underpinning this investment: Bruce Springsteen sold his catalogue to Sony Music for between $500-550 million, while BandLab raised $53 million against a valuation of $303 million. These two deals represent the opposite ends of music industry investment in 2021.

The Bruce Springsteen catalogue deal reflects the continuing surge in music catalogues as an asset class, with the total value of deals set to far exceed the $4.7 billion that was invested in 2019. The bulk of this investment has been driven by large, institutional investors, such as Private Equity (PE) and pension funds, as well as publishers and labels – many of whom have raised capital specifically to acquire catalogues. Big institutional money is rarely focused on high-risk opportunities, but, instead, often on low-risk, predictable revenue drivers. Music catalogue falls into this category. So, a bet on catalogues is a safe(ish) bet on today’s music business.

In contrast, the investment in creator tools company, Bandlab, reflects a bet on tomorrow’s music business – including investment from venture firm K3 Ventures. Today’s music business is dominated by music rights and by music rightsholders. A growing trend among investors (both venture and later stage) is making a bet that the future of the music business will increasingly be shaped by creators. 

So, we have a situation where big, safer bets are being made on rights, and riskier, bolder bets are being made on creators. There is little irony in the fact that if the riskier bets pay off then they could reduce the value of the safer bets, thus increasing the risk profile of those safe bets. Still with me?

BandLab’s $53 million investment reflected a 17% stake (based on the $303 million valuation). To acquire 17% of the $500 million Bruce Springsteen catalogue, it would cost $83 million (if it was available for purchase, of course). This means that there is effectively a 60% premium on investing in yesterday’s (proven) music business, versus tomorrow’s (unproven) music business.

Such is the nature of venture vs later-stage investments – and there are good arguments as to why this is not an apples-to-apples comparison – but it is nonetheless a useful lens through which to reflect on the music business at the end of 2021: the big money is banking on things staying the same, the riskier money is banking on things changing. Draw your own conclusions…