When artists sign a recording contract, they are understandably excited and can hardly wait to present their music to the masses with the strong support of a major record label. But many don’t actually get to that point. A good number of artists will release a few singles at best, while the album is withheld. But how can things come to this pretty pass where a record label can keep musicians from sharing their music with the world?

The needle in the haystack

An analysis from a few years ago shows that on average, major labels sign 2 artists per day, which means they have around 60 additional artists on contract by the end of the month. Some articles will tell you that 99% of these artists never publish any albums afterwards. Even worse, only 0.2% of signings stay with the major label until the end of their contract without being dropped.

Even if these numbers may be exaggerated, it is no secret that record labels always look for the needle in the haystack. A small fraction of their signings become global superstars and the profits they rake in make up for the less successful artists – or those that can never make a release. But what are the reasons why so many artists can’t release their music? Very rarely are things down to any unwillingness on the part of the artist or the quality of their music.

Lost in the shuffle

Most artists get a contract because an A&R believes in them and their potential for success. But if the A&R leaves the record label, nobody is there to recognize this potential. The priorities of the label could become a problem, as well. If these shift, maybe due to changing musical trends or a similar signing within the label, the music is held back. Sometimes the situation doesn’t even have anything to with the music, but rather with a merger where the artist ends up getting lost in the shuffle.

Oftentimes, record labels will present a contract when the artist is not even ready for an album yet (e.g., after one of their songs goes viral on TikTok). Upon the signing, the label will then have the artist work with all kinds of producers, in the hoped that a hit song will come out of it. If the record company does not find this to be the case, they will simply continue producing more and more songs that never get released. Sometimes, labels will also sign artists for the sole purpose of preventing them from signing with anyone else. If the artist is unlucky, the label will lose its interest as soon the ink is dry on the contract.

Caution when signing a contract

This all wouldn’t be half as bad if artists could simply terminate their contract. But often, this is exactly what they cannot do, even if the label makes it impossible for them to release music. Or, it is precisely because of this reason that they can’t: ironically, the artists still owe the label an album or even multiple ones. This is why there should always be a clause in the contract that lets the artist terminate the contract if the label doesn’t release the album within a reasonable timeframe (one to three years).

So, before you sign a recording contract – regardless if it’s with a major label or not – it is imperative for you to have some experienced management behind you and to get legal support on board, as well. Or, you can decide to remain independent from the start and keep your masters. If you work with an independent distributor like iGroove, for instance, you can always decide for yourself when you want to release your music and what that music will sound like.

In recent times, we often read of NFTs being sold for millions of dollars. Non-Fungible Tokens certainly are one of the biggest hypes of 2021. But what is effectively the volume of this market? This is a question that Chainalysis sought to answer in their NFT market report. According to their evaluation, 26.9 billion dollars were spent on NFTs last year. The most popular market place by far is OpenSea, where NFTs worth 16 billion dollars changed hands.

NFTs are a visual thing

The report does not specify how many of these NFTs come from the music sector, which doesn’t exactly speak for a huge number. The biggest profits continue to be made in the visual arts sector. The report especially highlights Bored Apes, CyberKongs, CrypToadz, and Pudgy Penguins. Even though we primarily read about million-dollar sales, according to Chainalysis, most NFTs go for under 10,000 dollars. 19% of all transactions are between 10,000 and 100,000 dollars, while those above 100,000 are far below one percent.

Low prices – few buyers

But those who are now all fired up for NFTs should take into account another study titled “Mapping the NFT revolution.” 6.1 million NFT transactions between 2017 and April 2021 were analyzed for it. What the researchers found was that 75% of all sales only brought in 15 dollars. According to the study, just about 1% of the transactions made more than 1,594 dollars. Another fact that might be of concern is that 85% of all transactions are executed by only 10% of all sellers.

The analysis also shows that people often speak of art when discussing NFTs, but art is only involved in 10% of all transactions. More than 80% of sales stem from the collectibles and games sector. Here, too, music is not mentioned explicitly. Even though most of the data comes from before the big hype, the researchers do not believe that much has changed since.

Gate keeping is still alive

What surprised them the most is that NFTs did not usher in the democratization that people expected them to, and that the middlemen did not disappear either. Gatekeeping is now simply happening in another form. Applying that to the music industry, we could say that the situation is similar to streaming, where only a very small fraction of artists is profiting.

Conclusion

While the two studies produced rather different results, they both show that many NFTs are not exactly sold for a high sum of money. But what might seem negative on first glance could also be a positive aspect. It could indicate that NFTs will become affordable for the average fan, as well. This is where it gets interesting for musicians, or at least those who don’t count themselves among the superstars and who cannot sell six- to seven-figure NFTs.

Looking back at the articles published by iGroove Magazine in 2021, you will find many that reporting on big successes: the music industry is growing, revenues are rising, more people are consuming music, and many are willing to pay for it, as well. There has also been positive news from the DSPs with rising numbers of users, profits, and investments. On the other hand, we often report on the problems that musicians are experiencing, as well – many of which are not necessarily new, but have been exacerbated by the pandemic.

To put it simply, two entirely different perspectives and realities have presented themselves: On one side, a growing and prospering industry, and on the other, the artists’ point of view that only sees a small portion of musicians actually profiting from streaming. With the loss of pay from concerts and, in part, also the sinking revenues from the publishing rights, the dream of turning music into a career remains unattainable for many artists, while others who managed to do so in the past must now give it up.

Before the end of the year, it is therefore well worth taking a look ahead and thinking about how to set the course for 2022 so that more of the generated revenues in the music industry actually gets distributed to those who make it all happen: the artists.

Alternatives to streaming?

Based on the market shares, this discussion will ultimately lead to the topic of streaming. There seems to be no alternative to it at the moment. But didn’t people use to think that about vinyl and CDs, as well? Both media are still around, but today, they are more comparable to merch like t-shirts or hoodies. People who buy CDs or vinyl do so to give artists additional support, but the majority of those who purchase physical records also use streaming. But what would it look like if streaming was only one of many viable alternatives to consume music?

While musicians used to go on tour to promote their CDs, they are now present on the streaming platforms, hoping to reach enough people who will go to their concerts. But this arrangement doesn’t really work, especially not in a pandemic. Let’s take a look at Spotify’s Loud & Clear Platform. Here, we learn that in 2020, there were 67,200 artists who made more than $5,000 per year on Spotify. Since there are around 8 million artists on Spotify in total, an income $500 per month ($6,000 per year), for instance, would mean that you are no longer part of the middle class, but actually the elite.

Even if Spotify were to double their payout per stream, the artist in our example would only make $1,000 per month. To reach a living wage of say, $4,000, the PPS would need to octuplicate. As we have shown in a recent post, this would lead to the collapse of the streaming industry. There is no doubt that the system needs to be optimized, so that more of the revenues actually end up in the pockets of the artists and songwriters. But it is fundamentally built in such a way that no more than a small fraction can earn a significant income from streaming. So, what the system really needs isn’t fine tuning, but rather, actual alternatives.

Reading up on these, you will soon come across terms like Web 3.0, Metaverse, Blockchain, and NFTs. Indeed, quite a few things suggest that this is where the future of the music industry lies. It is also foreseeable that there will be lots of developments in this area in 2022. However, in all likelihood, next year will still be far too early for a functioning, large-scale implementation of them.

Are Web 3.0, Metaverse & NFTs the future?

There are many who set their hopes for change in the music industry on Web 3.0, cryptocurrencies, NFTs or the Metaverse. But if your brain is hurting from just reading these terms, you are definitely not the only one. And herein currently lies the problem. If you as an artist haven’t fully figured out how tokens, cryptocurrencies, wallets, etc. work, then the average fan won’t have understood it either.

So now, you have the option of either trying to familiarize your fans with the subject matter, or you can hope for some crypto bro to buy your NFT while your real fans will largely be left out. At the moment, you won’t be able to take the majority of your fans on this journey, which might upset them. So, as an artist, you have to ask yourself whether you really want to jump on the bandwagon at this point in time, and if so, what benefit that brings to your fans.

Interesting projects are popping up in the Web 3.0 and NFT sectors practically every week. But many of them are still in their infancy or often, not even that. One of the first steps for these start-ups is to convince artists to join in. The second, even more important step, is to bring the fans on board, as well. As mentioned before, we are still quite a way from that, but it is entirely possible that 2022 will set the foundation for a direct connection between artist and fan without any middlemen.

2022 will also show whether NFTs will go down in history as a fleeting hype or whether they can actually establish themselves as a phenomenon suitable for the mass market. There have been a few success stories, and of course, these are the ones readily shouted from the rooftops. But there are also figures that give rise to a little doubt. Bloomberg, for instance, has shown that some music NFTs were re-sold for a much lower price than they were originally purchased for.

This could be a sign of a hype cooling down or, at second glance, a positive development. Perhaps the focus is shifting from pure speculation to real value both for the artists and the fans. The coming year will certainly give us more information about that. As already stated in our last NFT-post, we recommend keeping an eye on things but staying put for the moment.

Focus on the artist-fan relationship

In the past, fans were always willing to spend money for their favorite artists. But streaming has turned music into a basic commodity, where a few Dollars will get you everything you want. Of course, fans are still willing to spend money, but unfortunately, fan status is hardly expressible on a streaming platform, as it is equally difficult to monetize on social media. When it comes to streaming, the individual song takes center stage, but the focus needs to shift back to the artist-fan relationship.

The big question now is how to find out who the superfans are, how to reach them and ultimately, how to have them support you financially, as well. What we are talking about here are revenues that are extremely small for the industry, but hugely important for the artists. If you can find 600 subscribers who support you with 5 Euros per month, these 600 people will earn you the same amount as you would from one million monthly streams. These micro-communities are entirely irrelevant to the music industry, but they are an actual way for artists to make a living.

In this discussion, it is worth taking a look at China. The streaming services of Tencent Music (QQ Music, Kugou, and Kuwo) offer users the option of transferring small amounts of money to their favorite artists. This feature is used so much that only 30% of revenues on Tencent stems from subscriptions and ad revenues, while the rest is made up of commissions from the transfers users make to artists. Of course, one could argue that tips like these are more of a traditional fixture in China compared to other places. But platforms like Twitch prove that they can work just as well in the Western world.

Additional incentives could boost the concept even more. For instance, for a small monetary amount, fans can stream an album earlier or gain access to other bonus features. This gives fans the opportunity to show their support on streaming platforms, too, and opens a new source of revenue for artists.

Of course, there are already digital fan clubs that exist on platforms like Patreon. But that means that musicians have to enter and work with yet another ecosystem. As we all know, it is not easy to direct users from one platform to another. Many artists already fail at convincing their TikTok followers to listen to their music on Spotify. Having to ask them to go on Patreon on top of it all, poses yet another challenge.

It would thus be easier to have such functions integrated into Spotify and similar platforms. Of course, the drawback is an even bigger level of dependency on those streaming services and thus on these tech giants like Spotify, Apple, Amazon, or Google. These companies already wield enormous, centralized power in the music industry today, and their focus lies primarily on their own products and the interests of their shareholders, not on the payouts for the artists, songwriters, producers, or independent labels.

This isn’t exactly surprising; Apple, Amazon, and Google are no music companies, and when it comes down to it, Spotify is also more of a tech company than a music business. Assuming these corporations don’t offer additional monetization options for musicians, the artists will have to reduce their dependency on these giants and find direct ways to get to their fans. There are many interesting projects, ideas, and opportunities that are being developed right now, and 2022 will show which of them will be able to establish themselves. iGroove Magazine will keep an eye on things for you in the coming year, as well.

Note: This is an updated version of the post from December 8th, 2020. Additional points were added in December 2021, and further additions and specifications were made in October 2023. If you have any uncertainties, it is recommended to contact the relevant collecting society.

Many artists gain a lot of attention by uploading their versions of well-known songs without clearance on platforms like YouTube, SoundCloud, etc. However, it is also possible to legally release cover songs. We show you how.

Releasing a cover song is tricky because you are neither the composer nor the lyricist of the song and therefore do not own any copyrights to the track. However, a successful cover version can help you gain new listeners quickly. Luckily, you only need to consider a few points to legally release your version.

When is my song considered a cover?

Your song is only considered a cover if you closely adhere to the original. This means that the melody, lyrics, and song structure must remain unchanged. If your version deviates too much from the original, it will be considered an adaptation. In such cases, you must obtain permission from the rights holders. However, it should be noted that the boundaries between a cover and an adaptation are often fluid and not always clearly identifiable.

Using samples or releasing a remix without obtaining corresponding permission is not allowed, as these are always considered adaptations. In addition to copyright, sampling and remixing also affect the rights of the sound recording producers who own the original recording. Their permission must also be obtained.

Difference between streaming and download / physical release

Furthermore, it depends on the channels through which you want to make your cover version available. If the song is exclusively released on established streaming platforms such as Spotify, Apple Music, Deezer, or YouTube Music, they are obliged to take care of licensing with the collecting society through framework agreements. However, there are still some important considerations to keep in mind:

• When submitting your song to your distributor, make sure to provide the names of the original composers and lyricists.
• Additionally, label the song as a cover during registration (but not in the song title).
• The original song must be registered with a collecting society. If not, you must obtain permission directly from the rights holders.

If you also want to offer the song for download, for example on iTunes or Bandcamp, it becomes more complicated. Major download providers like iTunes and Amazon do compensate the authors worldwide, similar to streaming. However, in some countries, such as the United States, obtaining permission (mechanical license) from the rights holders for downloads is required. Therefore, you should not only consider the points mentioned above but also ensure you obtain permission from the authors in the US.

Please note that despite the current system of obtaining rights and compensating authors through streaming platforms and music stores, you as an artist ultimately remain responsible for obtaining permission and licenses. Therefore, always keep an eye on the current developments in the global music market and stay informed about changes and innovations.

If you plan to release the track physically on CD or vinyl, you will always need a separate license for that. You can obtain this license through collecting societies. Note: If you want to cover a song by a British artist, for example, you don’t necessarily have to contact the British collecting society. The collecting societies are all interconnected, so you can simply contact the one you are already working with.

Additionally, the points mentioned above for streaming must also be considered.

Revenue sharing

It is also important to know that the copyright share (publishing rights) is fully paid to the lyricists and composers of the original song. However, the sales revenue from the exploitation of the recording itself (master rights) remains with you.

If you follow all these rules, you now just need to figure out which song would best suit you as an artist.

TikTok’s rapid growth has brought forth many copypcats – from Instragram Reels all the way to YouTube Shorts. Now, Spotify, too, is testing a vertical video feed called “Discover,” where users can like or swipe away videos. According to first reports on various blogs, users are shown the canvases that the artists upload themselves for their songs.

Video feed in test phase

Spotify doesn’t want to reveal too much at the moment; the only fact they have confirmed to TechCrunch is that they are performing these tests. But that doesn’t mean that the feature is actually being rolled out on a on a large scale. It is similar to the time Spotify was testing out their Story feature, although this was never made available to all users. Should the video feed take hold, however, it may prove to be an interesting new tool for discovering new music.

Merch insights

As we have reported not too long ago, Spotify has joined together with Shopify to allow even more artists to sell their merch. Now, Spotify has released a few statistics, as well: users click on more merch over the weekend, meaning from Friday to Sunday, than they do on workdays. Spotify therefore recommends launching new items on a Friday.

The biggest months for merch sales are April and May.

A merch item will have the most clicks 24 hours after a new release. In general, there will be a significantly higher number of clicks up to one month after a release when compared to other months. Spotify, therefore, reminds musicians once again to update their artist profile accordingly before any new release, and to include the merch section in that update, as well.

Unsurprisingly, it is primarily loyal fans who are interested in merch. 67% of all clicks come from users that either follow the artists or have liked at least one of their tracks or included it their playlists. But new fans, too, will often click on merch. This, they will do 7.8 times more often on the first day than at a later time.

When it comes to colors, artists have shown not to be very daring. More than half of all shirts being offered are black. Adding gray and white shirts, as well, brings the total to 80%. So, using a little color can easily make you stand out of the crowd.

The conflict with the streaming system and especially with the payout for musicians has been going on for a while now and the pandemic has only put fuel to the fire. Many artists are protesting, some are actively engaging in various movements, and in the UK, the question of whether payouts are fair is even being discussed on a parliamentary level. A recently published analysis by MIDiA shows which musicians are suffering the most under the low payouts from streaming services.

The mechanisms of streaming

The analysis agrees that labels, publishers, and streaming services should be handing over a bigger portion of the revenues to their artists, but it also reveals that this is not the main problem. That lies within the mechanism of streaming itself. It would never be possible to increase the payout per stream to such a degree that middle-class artists could live off it without the entire streaming structure collapsing on itself.

Middle class hit hardest

It is Spotify’s declared goal to have more and more artists able to make a living off their streaming revenues alone. But even though this number is sure to increase further, MIDiA’s analysts do not believe that the broad middle class will be able to generate enough revenues. If a musician earned USD 35,000 per year from CD sales in the past, he might make 7,000 from their streams today. Even if the payout per stream were to double, the revenues would still be strikingly lower than those from the sales-based model. In order to get the same amount, you would actually need to quintuplicate the payout, which would cause the entire streaming system to collapse.

Since the top artists still make a significant amount from streaming, as well, and those who were already making little to nothing prior to streaming will continue to do so, this means that those most affected are the middle class. In the old, sales-based model, you made more revenues with fewer fans. In the streaming model, you reach a bigger audience, which can lead to more revenues from live performances, merch sales, etc.

Conclusion

For most artists at the moment, it is not realistic to live off streaming revenues alone unless they make it into the superstar league. What middle-class artists need to do is find their niche and focus on their biggest fans. These are the ones who go to the concerts, buy merch and NFTs, or support the artist on Patreon. These revenues plus the streaming might enable middle-class artists to live off their art, as well.

Turning away from streaming entirely because you’re frustrated by the low payouts would be a big mistake. That would mean losing one of the most important platforms for gaining new fans. You should not view streaming services primarily as a source of income but rather a tool, just like radio, for instance. You can use it to reach new listeners and have other monetization avenues that your now larger audience can use to support you. iGroove Magazine provides regularly posted tips on what other tools you can use so that your most loyal fans can also bring you some financial gain and stability.

A little less than a year ago, we reported on a study asking people in the live music sector when they think the business would return to full capacity. At that time, 54.7% believed that it would be possible again sometime in 2021. However, the 30.6% who thought it only realistic in 2022 at the earliest were unfortunately proven right. The fact that the COVID-19 crisis is not yet over is evident not only in the increasing number of cases in various countries but also the ever-sinking turnover in live music.

83% fewer visitors and 81% less revenue

A new report by Live DMA, a network of different event organizers and venues from all over Europe, shows that that the effects of the pandemic in 2021 were even more drastic than in the year prior. This analysis is based on data gathered from 3,200 members of Live DMA. Even fewer artists went on tour in 2021 than in 2020, and the decline in concertgoers when compared to before the pandemic started has now amounted to 83%. In 2020, it was still 77%. Correspondingly, the revenues of clubs and live venues, too, sank by 81%, while they saw a 75% drop in 2020.

When put in actual numbers, the decline looks even more drastic. Ever since the beginning of the pandemic, Live DMA’s venues has had 141 million fewer visitors, thousands of jobs have been lost, and revenues amounting to 3.1 billion Euros have gone down the drain. We are now faced with the same question as last year: Will 2022 see a return to full capacity? Few would likely to bet on it.

Support urgently needed

It comes as no surprise that Live DMA is demanding more government support to avert further damage to the live music industry and offer some form of relief. This is primarily to help privately owned venues as well as non-profit venues which receive either little or no subsidies at all and are thus almost entirely dependent on ticket sales and consumption. What’s more, a lot of venues already had to economize with a small budget even before the pandemic hit, especially when they wanted to give up and coming musicians a platform, as well.

2022 will not be easier

Less established artists in particular are in danger of getting fewer chances to perform even after the pandemic, since due to the financial uncertainty, many venues are taking fewer risks and opt for tried tested acts instead. For musicians whose revenues are largely dependent on concerts, 2022 probably won’t be an easy year either.

The company now referred to as Meta, aka Facebook, has made quite a few headlines recently, and not exactly positive ones either. Nevertheless, or perhaps precisely for that reason, they are constantly working on new features. Two of them are particularly interesting for musicians. On Instagram, you will soon be able to integrate music in Feed posts and show your catalog on your artist profile.

Music in the Feed

It’s hard to imagine Stories and Reels without integrated songs and that is certainly an important tool for artists to widen their reach. Now, Instagram wants to extend this to the photo posts in the Feed, as well. At the moment, the feature is only available for a test group in Brasil, India, and Turkey, but Meta reports that they hope to roll it out on a wider basis in the coming months, upon completion of the test.

Catalogs on artist profiles

In addition, Instagram will be showing select artists’ catalogs in a sub-category on their respective profiles. This is to make it easier for fans to find the artist’s songs and then, of course, use these for their own Reels and Stories. The feature will also make it easier for musicians to build a community around their music. It is currently being tested on a small group of artists in the USA along with a number of select users.

If the entire available catalog is visible on the artist profile, the songs will be quick to find for users and invite them to give older tracks another listen or use them in a post. The fact that this is now possible for the more permanent feed posts definitely helps in building an artist’s reach. The only thing left to do now is hope that these two features will soon be made available for artists everywhere.

Up until recently, song lyrics on Spotify were only available in select countries in Latin America and Asia. Now, Spotify is rolling out the feature to all its users worldwide – which includes both free and premium subscribers – on the mobile app, desktop, gaming console, and TV. On the app, users additionally have the option to use a Sharecard to share a portion of the lyrics on Instagram, Facebook, and Twitter.

This feature has long been overdue, considering that it has been tested since 2019 and requested by users for a long time. A lot of musicians, as well, are certainly happy to share this aspect of their song with their listeners. It’s also possible that because users are now able to follow along with the lyrics, the songs will be streamed longer and the lyrics will be shared more often on social media.

How do I put my lyrics on Spotify?

Unfortunately, you can’t do it directly on Spotify for Artists, but instead have to go on Musixmatch. On the plus side, you can make the lyrics available on Apple Music, Instagram, and Tidal, and various other platforms, as well, while you’re at it. To be able to enter and synch up the lyrics on Musixmatch, you must register and get yourself verified first. We also recommend reading the Musixmatch guidelines carefully so that your lyrics can be properly stored and displayed.

Subscription fee for podcasts

Speaking of expansion and Spotify: The option of a monthly subscription fee for podcasts is also being developed further. Up until recently, podcasters were only able to offer exclusive content to listeners in the US. 33 new markets have now been added to the list. While in the past there were only three different price categories, they have now been expanded to 20. These range between $0.49 and $150 per month.

Until 2023, all of the revenues will directly go to the creators; after that, Spotify will apply a 5% commission fee. They are thus clearly challenging Apple, who are keeping a whopping 30% in the first year and a still substantial 15% after that.

Additionally, the creators now have the opportunity to download their subscribers’ contact info to use, for instance, for their newsletters.

Spotify now available in 184 countries

And finally, the third aspect of Spotify’s expansion: If anyone is interested, Spotify is now also available in Iraq, Libya, Venezuela, the Republic of the Congo, and the Democratic Republic of the Congo. If we’re not mistaken, that means that users can now access Spotify in 184 countries/territories.

In principle, TIDAL is doing quite a few things right: they were the first to offer better sound quality, they pay significantly more than most of their competitors, they show more credits, and a considerable percentage of their shares is owned by musicians (albeit only filthy rich ones, of course). Despite all that, however, the streaming provider has never been able to pose serious threat to Spotify or Apple Music. When the Fintech company Square took over TIDAL this year, people speculated that a new dynamic will emerge. Now, we can see the first results of it.

Direct Artist Payout

TIDAL is launching two changes at once from which they say musicians will be profiting. The Direct Artist Payout is one of them and it is live now. If a user has a HiFi Plus subscription, the artist that the user streamed the most over the course of that month will receive up to 10% of the monthly subscription fee on top of what the artist makes from the streams anyway. This is equivalent to $2 per user per month. Thus, TIDAL is rewarding musicians for their superfans.

User-Centric-Model

Starting in 2022, TIDAL will also test out the user-centric distribution model, but just as SoundCloud only on a limited scale. That is to say that the model only applies to the streams generated by users with a HiFi Plus subscription. As a reminder, the user-centric distribution model does not see all revenues thrown together into one big pot and then divided among the artists on a pro rata basis, which has been the case up til now. Instead, the subscription fees of each user are only given out to those artists that they have effectively listened to. The artists who receive the money will be visible to the users. They can look at their activities and see which artists receive which amount of their subscription fees.

Since the user-centric model is being introduced exclusively to the most expensive subscription package and thus only a small portion of TIDAL users, we may look at it as an experiment. Both TIDAL themselves as well as their partners in the music industry can use this manageable framework to find out whether they profit from this change. If that is the case, the user-centric model is likely to be expanded to the standard subscription, as well, which in turn might increase the pressure on Spotify, Apple, Amazon, etc. not to close themselves off to a possible change in their own distribution model.

New subscriptions

There will be changes for TIDAL users, as well:

• A free subscription will be introduced with which users can discover TIDAL. However, at the moment, this offer is only available to users in the US.
• The premium subscription will now be known as TIDAL HiFi and include all the previous features plus the brand-new lossless audio quality.
• The previous HiFi subscription will be known as Tidal HiFi Plus and offer additional audio formats as well as the Direct Artist Payout and the fan-centered payout that we have already mentioned.

After TIDAL has already marketed their more expensive subscription primarily with their better sound quality, they now want to put their focus on their superfans, as well.

Is TIDAL becoming a bank for musicians?

It remains interesting to see what other innovations TIDAL is going to launch with their new investor Square. Since Square is also the owner of the highly popular Cash App (unfortunately only available in the US and UK), some have speculated that TIDAL might become some sort of bank for musicians, thus cutting out middlemen such as record labels and distributors. But that, if it happens at all, is still a long way off in future.

Most consumers usually have two streaming subscriptions: one for watching movies and series and one for listening to music and podcasts. For reasons of convenience, many would probably be happy to see all these options available in one app. The closest platforms we’ve had so far to this sort of convenience are Amazon and Apple, which both offer audio as well as video streaming, albeit separate from one another. One possible trendsetter, however, is an unexpected one, namely RTL, or rather, its streaming offshoot RTL+ (formerly known as TVNOW).

RTL+ and Deezer join forces

RTL+ is the European media group’s response to the competition from streaming providers like Netflix, Sky, Prime, or Disney+. It currently has 3.4 million paying subscribers. Now, RTL is set to be restructured as a cross-media entertainment platform. On top of the current selection of movies and series, there will be a new addition of podcasts, audiobooks, e-magazines, and music. The launch is set for the first half of 2022.

For their partner in music streaming, RTL has decided to bring Deezer on board. What’s different from other partnerships is that users won’t just have a Deezer subscription included in the price, but that all audio content from Deezer will be integrated on RTL+ in its entirety. Since more and more traditional broadcast networks are feeling the pressure from video streaming providers, there will probably be more collaborations like this one in the future. We also cannot rule out the possibility that market leaders such as Netflix, Sky, or Disney+ could be entering into cooperative arrangements with music streaming providers.

Would this have an impact on the musicians’ income?

But what would this mean for musicians? At the moment, we can only speculate. Such cooperations certainly have the potential to convince more people to use music streaming, which means that the payout pot will grow bigger. However, we also have to assume that the subscription fees, which mathematically should be rising, will actually be put under pressure even more. One reason for this is that the competition would be heating up and no provider would dare increase the prices in this kind of environment. Another is that these types of bundle-offers come with the inherent risk of beaten down prices.

Let’s assume that the two market leaders Netflix and Spotify band together. At the moment, a Netflix subscription costs 13.99 and the premium subscription for Spotify 9.99. It is entirely feasible that a potential price war will see to it that the bundle will be available for 19.99. At least a portion of those missing 4 Dollars would be taken out of the pockets of musicians. Many artists are already skeptical of Spotify’s current strong focus on their podcast business. If video-streaming were to join the platform, it would create yet another entirely new dynamic.

What happens next?

At the current state, all of this is still a long way off. But the step that RTL+ and Deezer are taking shows that cooperations like this are one, being considered, and two, are also actionable from a technical point of view. It remains to be seen how big the consumer demand is and which other streaming providers will follow suit. Then, we will be able to observe whether the benefits will outweigh the risks. We will certainly keep you updated on the subject.

It’s been 15 years since Spotify was founded in Sweden and set out to conquer the world. A decade and a half later, they’ve helped change (some would say save) the music industry, reduce (though not eradicate) piracy, break Apple’s dominance, personalize music for each individual listener, and shift the focus away from genres to moods. And they continue to grow.

Spotify now has 381 million users

At the end of Q3 2021, Spotify reported 381 million monthly active users, including 172 million paying listeners. This is a growth of about 4% in both metrics compared to the previous quarter and an increase of 19% compared to the third quarter of 2020. By the end of the year, they expect 400-407 million monthly users and 177-181 million paying customers.

Meanwhile, Spotify is available in 178 countries, almost everywhere. They then also point to the growth in countries such as India, the Philippines, Indonesia, South Korea, Bangladesh and Pakistan. However, this should not hide the fact that their main market is still Europe (34%) and North America (24%). In addition, 22% of customers come from Latin America, while what is somewhat casually referred to as the “rest of the world” still only accounts for 21%. If you want to look at it positively, Spotify still has a lot of growth potential.

Rising advertising revenues

Spotify was also profitable this quarter, which is the exception rather than the rule. The bottom line was a profit of 2 million euros, compared to a loss of 101 million euros in the same quarter last year. In total, sales in the third quarter amounted to 2.5 billion euros. But where does this money come from? 2.18 billion was generated by paying users, while 323 million was flushed into the till via advertising revenues.

Compared to the revenue generated by Premium Subscribers, this 323 million seemed more like a tip. However, it is still 12.9% of total revenue, which is a lot for Spotify; previously, the advertising share was often less than 10%. This was also due to the fact that Spotify CEO Daniel Ek saw the free offer for a long time only as a means to an end in order to gain new paying customers.

This has definitely changed and Ek has discovered the advertising business as an important source of revenue. Ek proudly announced that Spotify will earn over a billion from advertising for the first time this year. This is not least thanks to rising revenues in the podcast sector. In the next 5-10 years, he wants to increase the share of advertising in total revenues to at least 20%, even better to 30-40%.

Higher payouts for musicians?

Whether this new focus will primarily affect podcasters or if it will also have an impact on payouts to musicians, remains to be seen. The fact is that you currently receive significantly less for ad-based streams than for those from premium subscribers. With increasing advertising revenues, the payouts for ad-based streams should also increase. Since well over half of Spotify’s users currently have a free subscription, an increase could lead to a not insignificant increase in payouts.