Adele is Bond and BTS is Squid Game

When Spotify announced that Adele had broken the record for the most streams in one day, with 19.8 million streams, the caveat was that this was true as long as you do not include all of the streams BTS had accumulated in 24 hours for ‘Butter’ in May. ‘Butter’ racked up 20.9 million streams, but 10 million were wiped from the record for ineligibility, thus only counting the first 10 plays per user in any given 24-hour period. While the caveat makes sense from the perspective of countering chart manipulation, it also raises fundamental questions about just how we measure success and whether, what are fundamentally subjective definitions, discriminate, intentionally or otherwise, against certain types of fans and music.

Fandom is fragmenting

We are living in the age of fragmented fandom where niche can feel mainstream, and mainstream can feel niche. Central to this is the shift from cultural moments to cultural movements. In the old, mass media world, most people experienced the same TV shows, movies and songs, with mainstream media promoting a relatively narrow selection of titles to the majority of the population. Now, audiences are fragmented and marketing is more targeted. So, it is possible for something to feel entirely mainstream to the target audience, even though it may not even register for the majority of the population. Whereas big, old-school releases resulted in water cooler, cultural moments. Successful niches become cultural movements, driving sustained engagement and cultural capital among their respective audiences. 

Bond vs Squid Game

Nowhere is this seen better than in the successes of Squid Game and James Bond’s No Time to Die*. Bondwas the cultural moment, with wall-to-wall mainstream media support and is close to crossing $500 million in box office receipts. Squid game is Netflix’s most successful show to date with 132 million viewers, but was only watched by a minority of the total population in most countries. Nonetheless, it has become a cultural movement, seeping across popular culture via memes, social posts, fan content and so forth. Bond’s box office receipts translate into about 25-35 million viewers, while Squid Game is estimated to be worth around $900 million to Netflix. Bond was the global cultural moment, but was actually smaller on all counts than the less ‘traditional’ mainstream Squid Game.

A similar dynamic is at play when comparing BTS’ Butter with Adele’s Easy on Me. Easy on Me was the cultural moment, with the massive initial wave of listening soon dropping off, while Butter was a cultural movement, which sustained throughout the first 6 days of release at pretty much the same level. Adele was Bond, while BTS was Squid Game – perhaps no coincidence that their nationalities match too. 

Adele was still the bigger success, but only if measured by the way the music industry wants it to be measured, i.e., discounting all those extra BTS Army plays. But what if a 13-year-old BTS fan simply wants to listen to the track 20 times in a day because they love it so much, while an older Adele fan listens to her tune a couple of times in the evening after work? The way we measure success inherently suggests the former behaviour is invalid, while the latter is more valid. The system favours casual listening over super-engaged listening. Listen, I am fully aware that the BTS Army is renowned for caning BTS tracks 24-hours a day in their thousands. But the risk is that the baby is getting thrown out with the bathwater.

Converting success metrics

So, why does this all matter to music? Quite simply because, just as in the TV and film industry, traditional metrics are still used to measure success – even if the old units of measurement have progressively less relevance. Music charts especially so. Since the advent of music downloads, the music industry has continually revised its definitions for ‘sales’ in order to try to make the old ‘cultural event’ measures work for a world that is increasingly shaped by cultural movements. The industry and media both like being able to talk about ‘sales’ and platinum releases – it is convenient short hand. But, if a platinum certification from 2021 is not equivalent to one from 1991 then does it really serve any purpose?

All of this would be a minor inconvenience if it were simply a ‘currency exchange’ issue, e.g., understanding what a million sales in 2021 was versus 2020. But it is not just that. The current measurement frameworks are biased towards artists that fit better in the traditional artist model than the new, emerging one. Including all BTS Army plays is probably as wrong an answer as discounting half of them. But a solution does need to be found, one that better captures the impact of a song on its fans. Perhaps a blend of measures that incorporate number of listeners, number of listens per listener, and total number of listens. (Also, there is a strong case for treating lean-back plays differently than lean-in plays – both in terms of charts and royalties). Each measure would be useful in its own right, which implies there may not be a single measure anymore. But, given the fragmentation of fandom and the growing diversity of fan behaviour, that is probably not a bad thing. The days of trying to measure every artist and every release by the same metrics will eventually become a thing of the past, however inconvenient that may be.

*Why did James Bond go grey? No time to dye…

Adele’s success will be measured in cultural impact – not sales

Adele is something of an anomaly in the modern music business, a throwback to how things used to be. These days even the biggest artists struggle to get mainstream attention for their new releases in a flooded market that is defined by more releases than ever before, and the ‘always on’ artist who is continually releasing new music and talking to their audience. Adele, though, follows the old model of landmark releases every half a decade and, up to now, she has managed to make it work by creating a cultural zeitgeist that the world opts into at scale. But the world has moved on a lot since her 2015 release, 25, and the nagging question is whether she can do it again with 30 in the much-changed music world.

Adele’s album releases act as chapter markers for the evolution of the recorded music market. Back in 2008, when 19 was released, it was still a sales (physical and downloads) and album dominated world. 90% of global revenues were from sales, while streaming was just 2%. With each half-decade release, the music world had moved on. Indeed, it could be argued that the biggest risk was with 25 in 2015, when streaming was already more than a fifth of revenues, and physical sales had fallen by 44% from 2008. Yet the album still managed to rack up 22 million sales and, in turn, became one of the biggest selling albums of the millennium. Adele bucked the prevailing industry trends.

Streaming does not favour albums

Fast forward to 2021 and the world has shifted even further, with 65% of revenues coming from streaming, and sales accounting for just a quarter. This is a dramatically different music world from the one in which 25 was released. Streaming will be the main way in which success is measured. Yet, just 15% of people listen to full albums on streaming services, so either Adele pulls an Ed Sheeran and has her entire album dominate the most streamed song charts (a possibility, but not a probability), or she has a few really big songs that rack up big streaming numbers. And to do that, she has to perform like a streaming-era artist.

Competing with streaming-era artists

Right now, Adele has two songs on Spotify with a billion streams. Compare this with Travis Scott who has three songs, two of which are more than 1.5 billion. Or Ed Sheeran, who has five songs, one of which is about to hit three billion (Shape of You). Heck, even Marshmello has three one billion stream tracks, of which one has 1.5 billion. No offence to Marshmello, but Adele will be expecting to have bigger cultural impact than him. It should be achievable (assuming that the music is strong enough), if for no other reason than the fact that there are three quarters of a billion more people streaming than in 2015.

Cultural impact will be the truest measure of success

But even if she does catch up on streaming figures, that probably is not how we should measure Adele’s success. In today’s world of fragmented fandom, fandom is defined by cultural movements rather than cultural moments. This is a dynamic that is intensified by the fact that media is also far more fragmented. Audiences are spread more thinly across a much wider range of platforms, shows and apps. It is simply much harder to create cultural moments. But that is exactly what Adele’s team will be planning to do. And given the current media buzz, she looks on track to do so once again, supported, as ever, by a simple but clever marketing campaign.

Recently, Adele has become much more visible, using Instagram and Facebook Live, pushing herself back into the public consciousness and even playing into meme culture. Beyond the music itself, it will be the continued use of social media, coupled with meeting the eager demand of traditional media that will determine whether 30 can become the sort of cultural phenomenon that 21 and 25 were. The fact that she still sings from the heart and is so relatable gives her an authenticity that is so often thin on the ground with today’s pop stars.

Creating a cultural moment

So, the success of 30 will probably be best measured in terms of whether there is a genuine cultural moment. In short, how long will Adele’s music and her team be able to maintain global interest and relevance? Success may be more about whether, two months down the line, we still have memes flooding TikTok and James Corden doing skits. This will say as much about how the world is responding to her music than how many streams she clocks up. And, of course, I have not even mentioned sales – not by accident. These metrics are just not going to be the way to gauge her success anymore (even considering the industry’s obsession with artificially boosted ‘sales’ figures with ‘sales equivalent streams’).

Adele has always been something of an anomaly, finding success through the power of her music rather than by playing whatever the latest marketing game is. Of course, expect every contemporary marketing card to be played (especially TikTok). But it will be through cultural impact, not streams, that we will truly understand how loudly her music still speaks.

The Future of Music: A Vision of Post-Format

Formats have shaped and dictated the evolution of recorded music. The constraints that formats set have, in turn, become the creative frameworks within which music has operated. Now, in the internet era, formats are becoming a thing of the past – and yet the way in which music is made and distributed still conforms to the old physical world. It is time for a change in how we think about music, right from the creation process through to what a song actually sounds like. Here is a vision for what the future of music could be.

Bringing dead sounds back to life

When Edison invented the phonograph, a denigrator called it a machine ‘that brings dead sounds back to life’. Conditioned by the recorded era, it is hard for us to conceptualise a time when music only existed in the moment and was never heard exactly the same way twice. Nevertheless, this is a historical anomaly – a legacy of physical media. Songs became fixed, static and permanent because that was the only way we could squeeze music into little discs – mummified echoes of live performances.

Over time, as recording techniques and technology improved, the recorded song developed into its own art form, with multitrack recording, effects, synthesis and programming enabling the creation of sounds that could never be truly replicated live. Now, with physical media accounting for an ever-smaller share of music consumption, there is no need to adhere to its constraints. We have 14 track albums because CDs were designed to fit Beethoven’s 9^thSymphony; we have static recordings to serve legacy distribution models; we have three minute songs to fit radio schedules. All three straightjackets can be discarded. Here is how:=

• Write and produce for the medium: We are already locked into a process of music being designed for Spotify success, through so-called Spotify Core and with the industrialisation of song writing seeing songs stitching together the best hooks from multiple songwriters. Much of this can be reductive, dumbing down to the lowest common denominator.However, it is the execution and intent that requires attention, not the strategy. In fact, it needs pushing further – much further. TikTok, YouTube, Instagram, Snapchat and Spotify are all dramatically different propositions with equally diverse use cases. So why would we expect a song to perform equally across each one? What video producer would create a meme for Netflix, or a two-hour movie for Snapchat? It is time to follow video’s lead and write for where the song is going to be listed to most. Lil Nas X when writing Hometown Road was focused on making something viral, something that would blow up on TikTok. The idea that songs should have fixed lengths, choruses, verses – all of this can now be played with in the mainstream in the way that it has been on the experimental fringe of music for many years. This time, it is to give listeners what they want rather than for avant-garde expression.
• Ditch / evolve the album: Just 16% of consumers listen to traditional albums and an even smaller 10% listen to full albums on streaming. 59% of consumers say they are listening to albums less because of streaming playlists. The album is not dead, but its addressable audience is far smaller. Now a new generation of artists is coming through who grew up with playlists, not albums, so do not even think in album terms. Of course, many artists, especially older ones, still want to write albums and they absolutely should do so. They should not, however, expect the majority of their audiences to listen to them in full. There will always be exceptions (Ed Sheeran, Adele etc.) but the direction of travel is clear. Artists and labels need to rethink what the album should be. We’re beginning to see artist contracts that stipulate numbers of tracks rather than albums. This is hugely positive and will enable far more creative freedom. Artists need to start pushing the boundaries, pulling every lever available (e.g. more tracks, fewer tracks, all tracks at once, over time, mixing in spoken word, images and video, EPs etc.). The only rule should be that there are no rules.
• Fill the space between recorded and live: Despite its ‘dead sounds’ origins, the recorded song is an established entity with established consumption patterns that is not going to disappear in any meaningful timeframe. But that does not mean that it has to be the only entity. Technologies such as live streaming, real time tipping, comment streams, virtual gifts and collaboration tools can be used to create music experiences that are neither live nor recorded, but something in between. Imagine an artist doing a pay-to-view live stream in the studio, with a set of beats in a shared folder that the audience can drop in and out but that only changes what they each individually hear. Then the guitarist starts cycling through a few riffs, and the viewers upvote their favourite one in the comment stream. Then as the keyboard player starts, listeners change the synth patch, but again just for their own stream. Think of this not as a blueprint for what the format could be, but an illustration of how to think about it. To create something that is unique, that exists in the moment and creates an indelible bond between artist and fan. 

This was not a definitive list of what post-format innovation needs to do but instead three principle areas of focus and illustrations of how to structure thought. Now it is time for creative artists, writers, labels and tech companies to pick up the baton and run with it. Standing still is of course an option, but in the increasingly competitive attention economy, if music does not up its game there can be no complaints if it loses share to video, games and social.

YouTube And Latin America Are Taking Over The World

Unless you have been on Mars for the last couple of days you will have seen the news that Luis Fonsi’s ‘Despacito’ has become the most streamed track in history with 4.6 billion streams. The figure includes a couple of versions of the track (ie the one include a certain Justin Bieber) but is an impressive tally nonetheless. The landmark raises 2 key trends:

1. The role of the Latin American market
2. The role of streaming

Latin Takeover

On the first point, Latin America is becoming a streaming powerhouse. This is a trend we have long anticipated at MIDiA and it is why we have a Latin American analyst (Leo Morel in Brazil) and have been fielding consumer surveys in the region since we launched the company. ‘Despacito’ is not an isolated event. For example, Shakira’s ‘Chantaje’ became the first Latin American Spanish language track to reach 1 billion views earlier this year. But Latin America’s contribution to streaming is uneven. It accounts for 17% of all subscribers globally but 27% of all streaming video users. Indeed, Brazil and Mexico are Vevo’s 2^nd and 3^rd largest markets globally, after only the US. The socio-economic realities of Latin America mean that it will always over index towards free streaming compared to European and North American markets. But the streaming appetite is clear. With such large streaming appetite, expect Latin American audiences to increasingly shape future hits. Once enough Latin American fans get behind a track the snowball effect kicks in: once in Spotify’s global streaming chart it then finds its way into curated playlists and then volumes grow even faster. A similar effect is felt as the momentum kicks YouTube’s and Vevo’s algorithms into gear. But because the region skews towards YouTube and Vevo the regional revenue impact under indexes. Thus we have an emerging dynamic where Latin American audiences create the hits and European and North American audiences pay for them. This is the new normal.

Just as important as the rise of Latin America, is the continued rise of YouTube. Value Gap or no Value Gap, YouTube’s role in breaking and making hits is clear. More so, it is becoming more pronounced. YouTube streaming growth might be slowing in the US but the same does not necessarily apply globally. Indeed, taking the time it takes for YouTube / Vevo music videos to reach 1 billion views we can see that the 2017 hits ‘Despacito’ and ‘Shape Of You’ got there 40% faster than the average for tracks from 2016, 2015 and 2012. Only Adele’s 2015 hit ‘Hello’ got there faster, and that was a highly anticipated event that is a unique case.

 

YouTube added 500 million users between 2012 and 2017. That is no mean feat but nor is it stellar growth. Over the same period Facebook added more than 1 billion users and WhatsApp came from next to zero to 1.2 billion. YouTube is a mature platform and so growth is not just measured in terms of users but also in terms of engagement, especially streams per user. And this is where YouTube really seems to be delivering. A way of relating the growth of 1 billion view music videos to the total user base is dividing the average number of monthly views each video had en route to 1 billion and dividing that by the total number of YouTube users. In 2012 this figure was 0.19, by 2017 it had fallen to 0.17. Thus, for the 1 billion club, more YouTube users are streaming these songs more times. Growth is coming both from audience and activity.

 

There are other mitigating factors. For example it is conceivable that YouTube and Vevo are simply becoming better at creating mega hits, concentrating the audience around big hits. Thus making YouTube/Vevo more of a superstar economy. Vevo’s recommendation algorithms and YouTube’s autoplay feature play a role too, contributing to more streams. The autoplay was negotiated, along with full albums, from the labels as part of YouTube’s Music Key service. A service that never even made it out of beta, but YouTube of course held onto the good parts of that deal. Spotify, that is how you do digital deals!

 

The fact that streaming records are now being broken with such regularity shows that we have arrived at a tipping point. Streaming is transitioning from fast growing digital revenue stream, to the centre of an entirely new business. As impressive as ‘Despacito’s numbers are, get used to these sorts of records being made and broken on a regular basis. And get used to Latin America and YouTube playing an ever bigger role.

 

The Labels Still Don’t Get YouTube And It’s Costing Them

This is the fifth post in my YouTube economy series. You can read the other posts here, here,here and here

2015 was the year that streaming came of age across global markets (it had already got there in the Nordics and South Korea of course). In the UK and the US stream volumes grew by 85% and 93% respectively in 2015. These markets matter because they are the 1st and 4th largest recorded music markets and between them account for 40% of global revenue. But as strong as a validation of the music streaming model as those numbers might be, the real success story here isn’t Spotify, Deezer or Apple Music…it’s YouTube. In both the US and UK YouTube outgrew audio streaming services. With YouTube delivering so much less back per stream to rights holders than freemium audio services and the whole issue of safe harbour and un-monetized tracks (however good Content ID has gotten) it is little wonder that the record labels are having an identity crisis over YouTube. Indeed, as I wrote last year, the YouTube discovery journey has become the consumption destination. The advert has become the product. But there’s even more to it than this. Not only is YouTube outperforming the audio pure plays, music is being outperformed on YouTube by its growing body of native creators, the new generation of YouTubers.

YouTube started out as a place simply to watch (and upload) videos but has evolved into a sophisticated entertainment platform that supports a multitude of diverse use cases, both in terms of content and audience. Nowhere is this more pronounced than in channel subscriptions. In many respects ‘channel’ isn’t the most appropriate term as they are in effect talent feeds rather than channels in a traditional video / TV sense. Nonetheless, or perhaps because of this, they have become the lifeblood of native YouTube creators as diverse as Michelle Phan, PewDiePie, Zoella, SMOSH, stampylongnose and IISuperwomanII.

These are creators who often do everything from writing, filming, production through to front-of-camera. DIY superstars if you like. And they are fast becoming the lifeblood of YouTube. Of the 330 million subscriptions in the top 50 YouTube channels, YouTubers account for 34%. Compare and contrast with the measly 15% music artist and label channels have. And despite all the excitement around the increased subscribers Adele and Justin Bieber have racked up these last few months – they gained 8 million subscribers between them, making them the two fastest gainers across all of YouTube – music artists as a whole lost ground, accounting for just 31% of the top 50 gains during the last 90 days compared to 53% for YouTubers.

Music Is Losing Ground To Native YouTubers

Music does fare better in terms of views with 36% of the 41 billion top 50 views in the last 90 days. However it still plays second fiddle to YouTubers who account for 45%. But it is the direction of travel that reveals the most telling trend. Over the last 90 days 42% of the 50 top 50 growing channel views compared to 39% for music. In itself that may sound like a modest difference, but this is just the latest 90 day chapter in a much longer story. Music used to be the clear focal point of YouTube but that is changing. In terms of all time views music actually outpaces YouTubers with 42% compared to 41%. But at current rates that lead will be wiped out in the next 90 days. And here’s the paradox: music’s hold on YouTube is slipping even though YouTube is outperforming music services.

Part of driving force is out of the hands of the labels: video is eating the world, with more than 5 trillion short form views in 2015 alone. Music is always the first mover in digital content consumption, the trailblazer for other media. Once distribution, bandwidth and consumer sophistication all improve, video moves in.

Time To Stop Using YouTube Like School Kids Use Instragram

But record labels and artists can seize some control of their destiny, by taking a more sophisticated view of YouTube and exploring how to build strategies that work for YouTube in 2016 not for YouTube in 2010.  Right now record labels are using YouTube like school kids use Instagram, obsessing with vanity metrics such as views rather than thinking more deeply about how to build lasting relationships with YouTube audiences. A new generation of music artists is emerging that have created and nurtured audiences on YouTube, often with little or no help from labels. Artist like Dave Days, Tyler Ward, Boyce Avenue and Hannah Trigwell have built their fanbases on YouTube, often starting with covers but also crucially often non-music content such as parodies and vlogs. Raised in YouTube these artists are entirely native to the platform. They understand what audiences want because that’s where they come from.

If the big traditional artists and labels want to start making up some ground on the YouTuber revolution they could do worse than take a few hints from this new breed of YouTube artist.

The Three Things You Need To Know About The UK Music Sales Figures

As most people expected, the UK recorded music industry returned to growth in 2015. The UK now follows an increasingly familiar European narrative of strong streaming growth helping bring total markets back to growth. Sales revenue increased 3.5% to reach £1.1 billion while total streams increased by 85% to reach 53.7 billion, with audio stream representing 49.9% of that total. There is no doubt that these are welcome figures for the UK music industry but as is always the case, a little digging beneath the surface of the numbers reveals a more complex and nuanced story. Here are the three things you need to know about UK music sales in 2015.

1 – Streaming Growth Accompanied A Download Collapse

Long term readers will know that I’ve long argued the ‘Replacement Theory’, that streaming growth directly reduces download sales. It is a simple and inevitable artefact of the transition process. Indeed a quarter of subscribers state they used to but no longer buy more than one album a month since they started paying for streaming. There have been plenty of opponents to this argument, normally from parties with vested interests. But the market data is now becoming unequivocal. While streams increased by 257% between 2013 and 2015 download sales decreased by 23%. And of course the vast majority of that streaming volume came from free streams, not paid.

2 – The Transition Follows A Clear Defined Path

The download to streaming transition is an inevitability, whatever business models are wrapped around it. It is part of the fundamental shift from ownership to access of which streaming music is but single component. It comprises consumers progressively replacing one behaviour with another. In fact, the evolution is so deliberate and predictable that it manifests in a clear numerical relationship: the Transition Triangle.

The UK music industry trade body the BPI has created a number of additional classifications for music sales and consumption. These include Stream Equivalent Albums (1,000 streams = 1 album) and Track Equivalent Sales (10 track sales = 1 album). Using these classifications and adding in actual album download sales we see a very clear relationship between the growth of streaming and the decline of downloads. The difference in volumes between downloads and streams each year is almost exactly the same as the amount by which downloads decreased the previous year. At this point even the most ardent replacement theory sceptic might start suspecting there’s at least some degree of causality at play.

3 – Thanks Are Due To Adele, Again

Back when Adele’s ‘21’ was setting sales records, music markets across the globe owed her a debt of gratitude for helping slow the incessant decline in sales. Global revenue decline fell to less than 1% and US revenue actually grew by 2.9% (falling back down the following year). Now she’s done it again with ’25’, giving album sales enough of a boost to ensure that the growth in streaming revenue lifted the entire market. For although album sales actually declined in 2015 and streaming volumes had grown more strongly in 2014, it was the combined impact of slowed album decline and streaming growth in 2015 that enabled the total market to grow so strongly.

Adele generated around £25 million of retail sales revenue in 2015, which was equivalent to 70% of the £36 million by which UK music sales revenue increased that year. While of course a portion of that £25 million would have been spent on other repertoire if ‘25’ had not been released, the majority would not. With ‘21’ and now with ‘25’ Adele has been able to pull casual music consumers out of the woodwork and persuade them to buy one of the only albums they’ll buy all year, often the only one.

Without that £25 million UK music sales would have increased by just 1%.  So in effect streaming services have Adele to thank for ensuring their growth lifted the whole market even though she famously held ‘25’ back from each and every one of them. Sweet irony indeed.

As a final postscript, the role of YouTube, while underplayed in the official figures, is crucial. While audio streams grew by an impressive 81% in 2015, video streams grew by 88%. So however good a job the streaming services might be doing of growing their market, YouTube is doing an even better one.

The Beatles, Streaming And The End Of The Record Label Business Model

So the Beatles are finally coming to streaming…well much of the Beatles’ catalogue is at least.  Is it a big deal?  Kind of. The Beatles were late to iTunes and they’re now late to streaming.  Fashionably late though. No so soon as to be left standing awkwardly waiting for something to happen and not too late to miss the real action.

The Beatles are unique enough, and important enough to dictate their own terms and set their own timetable. For streaming services the Beatles catalogue is strategically important in the way it was for iTunes in that it helps communicate the value proposition of all the music in the world…well most of it. For the Beatles it represents the opportunity to reach younger audiences that sales are currently missing (which in large part explains why the catalogue is being made available on free tiers too).

It’s All About Targeting

20 years ago everyone pretty much bought the same product, the CD. Now though the music consumer landscape is fragmented and siloed. The fact that Adele’s ‘Hello’ simultaneously delivered stellar performance across audio streaming, video streaming, download sales and radio illustrates that there are many highly distinct groups of consumers that do one but not the other. This what Universal will be banking on with bringing the Beatles to streaming: they’ll be hoping that most of the future prospective buyers of Beatles albums are not streaming. For as long as this elongated transition phase continues, this sort of approach can work.

What Happens When The Bottom Falls Out Of the Catalogue Business?

The business model of record labels has long depended on revenue from back catalogue propping up the loss-leading new artists, on whom labels have to spend heavily to break. That model works as long as back catalogue sales are vibrant. But cracks are now showing in that model. Labels, especially the big ones, are increasingly spending even more heavily on a smaller number of big bets. For major labels many of these are either manufactured or laser targeted pop acts that grow big fast but like genetically modified crops, soak the nutrients out of their fan-base soil and are less likely to have long term careers. This means breaking artists are costing more to break and have less long term revenue potential.

That double whammy in itself would be bad enough, but there is an even more important structural factor at play. Catalogue sales depend on people buying classic albums, reissues and retrospectives. The secret is in the term ‘sales’. The model does not translate the same way to sales. Getting someone to spend $10 on an album for old times’ sake that they might listen to a handful of times but value having in their collection is very different from earning $0.20 or so from the same number of listens. But that is the way the world is heading. Older music buyers (i.e. from late 30’s onwards) are the lifeblood of catalogue sales.

That model works for older consumers that grew up buying music and thus have the habit. But what happens what happens when the first millennials enter their late 30s? Which is exactly what is going to start happening from 2016 onwards. As each new cohort of aging millennials passes 35 a smaller percentage of them will have ever regularly bought music. Thus from 2016 onwards every year will mean an ever smaller number of catalogue buyers coming into the top of the funnel.

The long term implications are clear. While this will not be anything like an instant collapse, the impact will be progressively more painful as each year passes. The old label model of developing a vast bank of copyrights will become less and less relevant.

So Beatles, welcome to streaming, this will be your last new format hurrah.

Why Streaming Doesn’t Really Matter For Adele

The outstanding success of Adele’s single ‘Hello’ has stoked up the already eager debate around whether Adele’s forthcoming ‘25’ album is going to be a success.  Indeed some are asking whether it is going to ‘save the industry’. One of the aspects that is getting a lot of attention is whether the album is going to be held back from some or all of the streaming services.  The parallels with Taylor Swift’s ‘1989’ are clear, especially because both Swift and Adele are strong album artists, which is an increasingly rare commodity these days. But the similarities do not go much further.  In fact the two artists have dramatically different audience profiles which is why streaming plays a very different role for Adele than it does for Swift.

Lapsed Music Buyers Were Key To the Success Of ‘21’

Adele’s ’21’ was a stand out success, selling 30 million copies globally.  Core to ‘21’s commercial success was that the album touched so many people and in doing so pulled lapsed and infrequent music buyers out of the woodwork.  The question is whether the feat can be repeated? In many respects it looks a tall ask.  We’re 4 years on since the launch of ‘21’ and the music world has changed.  Music sales revenue (downloads and CDs) have fallen by a quarter while streaming revenues have tripled.  And the problem with pulling lapsed and infrequent buyers out of the woodwork is that they have receded even further 4 years on.  In fact a chunk of them are gone for good as buyers.

But beneath the headline numbers the picture is more nuanced (see graphic).  Looking at mid-year 2015 consumer data from the US we can see that music buyers (i.e. CD buyers and download buyers) are still a largely distinct group from free streamers (excluding YouTube).  While this may seem counter intuitive it is in fact evidence of the twin speed music consumer landscape that is emerging.  This is why ‘Hello’ was both a streaming success (the 2nd fastest Vevo video to reach 100m views) and a sales success (the first ever song to sell a million downloads in one week in the US).  These are two largely distinct groups of consumers.

Streaming A Non-Issue?

As a reader of this blog you probably live much or most of your music life digitally, but for vast swathes of the population, including many music buyers, this is simply not the case.  Given that the mainstream audience was so key to ‘21’s success we can make a sensible assumption that many of these will also fall into the 27% of consumers that buy music but do not stream.  The implication is thus that being on streaming really is not that big of a deal for ‘25’ one way or the other.  Whereas Taylor Swift’s audience is young and streams avidly, Adele’s is not.  That is not to say there aren’t young Adele fans, of course there are, but they are a far smaller portion of Adele’s fan base than Swift’s.

60% of 16-24 year olds stream while just 20% buy CDs.  Compare that to 40-50 year olds where 34% stream and 43% buy CDs.  These are dramatically different audiences which require dramatically different strategies.  Audio streaming is unlikely to be a major factor either way for Adele, neither in terms of lost sales nor revenue.  Unless of course she ‘does a Jazy-Z‘ or ‘does a U2’ and takes a big fat cheque from Apple to appear exclusively on Apple Music.  But I’d like to think she’d like to think she’d have the confidence of earning sales the real way.

The Importance Of The Digitally Engaged Super Fan

What unites Swift and Adele is that they are both mass market album artists and as such are something of a historical anomaly.  Swift bucked the trend by making an album targeted at Digital Natives shift more than 8 million units.  Adele will likely also buck the trend.  But paradoxically, considering the above data, in some ways it will be a harder task for Adele.  Swift has a very tightly defined, super engaged fan base that identifies itself with her.  Adele’s fanbase is more amorphous and pragmatic.  You don’t get ‘Adelle-ettes’.  Swift was able to mobilise her fanbase into music buying action like a presidential candidate with a passionate grassroots following and big donors.  The importance of digitally engaged super fans is the secret sauce of success for digital era creators.  It is the exact same dynamic that ensured UK YouTuber Joe Sugg was able to leverage his fanbase to give his debut book ‘Codename Evie’ the biggest 1st week sales for graphic novel EVER in the UK this year.

If Adele and her team do pull off a sales success with ‘25’ they will owe a debt of gratitude to that 27% of consumers.  While the odds are against it being quite as big as ‘21’ (simply because the market is smaller) it still has every chance of being a milestone event that will out perform everything else.  But do not mistake that for this being ‘Adele saves the music industry’.  Album sales are declining.  Success from Taylor Swift and Adele are (welcome) throwbacks and they are most certainly not a glimpse into the future.

Why Full Albums Need to Go from YouTube Right Away

YouTube has long been the digital music anomaly: hugely successful, almost free of criticism but with a pitifully small pay-per-stream rate (below half that of Spotify, who does get criticism, and some).  YouTube is now on the verge of launching a subscription product and this will hopefully go some way of addressing the fact it has made the marketing journey the consumption destination.  But the music industry should keep its aspirations in check, not just about the potential impact of the service, but also – and perhaps most importantly – because of YouTube’s intent.

Google is a rights frenemy.  Rights frenemies strike a careful balance between maintaining good relations with rights holders on one side of their business but testing the limits on the other side. They pursue a do first, ask forgiveness later strategy.  Thus all the while Google is launching two music subscription services (Google Play Music All Access and the forthcoming YouTube offering) it is also lobbying for copyright reform and posting a link to chillingeffects.org for every successful copyright takedown.  In other words Google talks the talk but only reluctantly so and it does the absolute minimum of walking the walk.

Nowhere is this approach more apparent in YouTube and the presence of user uploaded ‘full albums’.   A coherent argument can be made that 383 million views of Miley Cyrus’s ‘Wrecking Ball’ Vevo video delivered clear benefits to the artist and her team (both though direct Vevo advertising and the vast exposure).  Full length albums ripped into YouTube by users have no such benefit.  In fact labels in the main do what they can to remove them using YouTube’s takedown process.  If Google was a rights ally rather than a rights frenemy it wouldn’t solely wait to be told to take stuff down, at least for the really obvious and high profile stuff, but it doesn’t.

Take a look at these top search results for Adele, U2, the Red Hot Chili Peppers and the Beatles (see figure 1).  The full album results are high lighted in red, many of which have hundreds of thousands of views each, in the case of Adele’s ‘21’ it is more than 1 million, and some have been live for more than a year.  In the case of the Beatles all of the top results are full albums.  I doubt that the Beatles spent the best part of a decade not licensing to iTunes in order to suddenly throw it all straight up on YouTube.

There are also endless ripped live DVDs and recorded TV broadcasts of live concerts (see figure 2). It’s pretty hard to see why somebody would want to buy a live DVD of a U2 show when they can get the entire show in 1080p HD on YouTube.  And of course because it is a continual 2 hours and 22 minutes of video the viewing experience will be virtually ad free, save for a 30 second pre-roll and the odd pop up which can easily be clicked off.  The only winner here in business terms is YouTube.

Not all the blame can be laid at Google’s feet though: these examples were found immediately, with no effort, so it is inconceivable that someone somewhere in each of the respective labels doesn’t also know about this.  Thus someone has taken the decision in some of these instances to take the benefit of the ‘exposure’ in return for cannibalizing sales of the exact same music the exposure is supposed to drive sales of.  It is this conflicted view of YouTube (i.e. ‘we couldn’t sell as much music without it even though we lose sales because of it) that needs to be fixed.  Google can hardly be blamed for having a schizophrenic approach to the music industry if the industry does exactly the same back.

But relationship issues notwithstanding, full albums need to disappear from YouTube right now. They need to do so if for no other reason than to level the playing field for those music services that pay back at higher rates to rights owners and that actually try to get consumers to pay for music.  Labels and Google, bang your respective heads together!

What are an Artist’s Metrics for Success in the Digital Age?

Last night I was fortunate enough to be on stage with Talking Head David Byrne and legendary DJ Dave Haslam at the Royal Northern College of Music discussing Byrne’s latest book ‘How Music Works’.  It was a fun event with a lot of thoughtful debate and also insight into Byrne’s approach to making and performing music.  Prior to our discussion I gave a short presentation on the state of the digital music nation to help illustrate how the music market is so dramatically different after the music industry’s first digital decade.

One of the slides I updated for my presentation was that of artist ‘success metrics’ in the digital age (see figure).

Prior to the advent of digital, and more specifically the spread of the contagion of free, the way in which artist’s measured their success was primarily through sales of albums.  But in the digital era, with album sales becoming less and less important to many artists, metrics such as total YouTube views and number of Facebook likes are becoming just as important measures of success.

As we are still in the early days of digital, the shift in success metrics does not apply in a uniform manner.  Some artists’ success metrics still look more like those of artists from the analogue age than they do the digital age.  Take a look at two of the UK’s most successful contemporary artists: Adele and Coldplay.  Both of these artists are still predominately album artists and both have had huge success with their latest albums.  Yet look at their YouTube views and Facebook likes, and they significantly trail more canonically digital-age artists such as Rihanna and Lady Gaga.  This is illustrated even more starkly by the case of Pitbull who has sold a relatively modest 8 million albums but has a staggering 2.95 billion YouTube views.

A key factor that underpins this diversity is the age of the core audiences of the artists.  Coldplay and Adele appeal more to older audiences who are still in the habit of buying albums, or who do not buy many albums anymore but do so on occasion when an album like ‘21’ comes along.

Does this mean that as we progress more deeply into the music industry’s second digital decade that the success metric balance will tilt more firmly in the favour of YouTube and Facebook?  Quite probably.  Which inherently means that album sales will continue to dwindle.  A key reason for this is that the majority of album buyers are still CD buyers, and more of these consumers are stopping buying music entirely rather than going digital.  In the UK the total number of people buying music dropped by 5.1 million between 2008 and 2011.  Against a population of 61 million that is a vast number to lose in such a short period of time.  In the US the numbers are similar but slightly lower on a per capita basis.

Until a clear path is carved for physical album buyers into the digital realm, album sales will continue to dwindle.  And that not only matters in industry revenue terms, it matters from a creative perspective as well.  I am not arguing that we try to turn back the tide of album atomization (many consumers will forever more only want individual tracks from many artists).  But what must happen is the emergence of a new generation of album products that deliver not just as much, but more value to music fans than CD albums currently do.  This means leveraging the principles of DISC (Dynamic, Interactive, Social, Curated) to create a new breed of album experiences.  Because the alternative is swapping albums sales for YouTube views and Facebook likes, neither of which pay the bills.