Industry Groove – Week 14

In this edition, we again focus on the topic of new streaming models, bid farewell to Spotify Live, and take a look at the music markets of the two most populous countries, India and China.

What could a new streaming model look like?

• Since the beginning of the year, I have written a lot about this topic, and since many ideas are circulating, I have now summarized everything that has happened in one post.
• The article examines why the majors, particularly Universal, are now suddenly demanding a new streaming model.
• It also shows how the current syste and the most-discussed option to date, User-Centric, work.
• Finally, I present nine other possible models that are currently being discussed.

Spotify Live is history

• If any further proof was needed that social audio apps were just a short-lived Covid hype, it is now here. Spotify has shut down the app Spotify Live, formerly known as Greenroom.
• However, Spotify explains that they will continue to experiment with Live Creator features on their main app, but a standalone app is not necessary for this.
• They learned a lot from live activities, but they also paid 57 million for the app back then. There would certainly have been cheaper ways to learn those lessons.
• Some of the live shows will now be continued as podcasts on Spotify.
• Meanwhile, TechCrunch reports that Spotify is experimenting with new user profiles. As always with such tests, it is unclear whether they will ever be rolled out to all users.

New numbers from YouTube Shorts

• We already knew that YouTube Shorts generates 50 billion daily views. Now, YouTube Music’s boss Lyor Cohen has released some new numbers.
• The top 1,000 songs on Shorts generated more than 280 billion views in January alone.
• Fan-created Shorts are said to increase an artist’s audience by more than 80%.
• Artists who posted Shorts at least weekly received more than 50% of their new subscribers through Shorts.
• This not only positions YouTube Shorts as an alternative to TikTok or Reels but also as an entry point to YouTube Music, long-form videos, or livestreams, all within the same ecosystem.

Two-thirds of TikTok users don’t know what they’re listening to

• The latest article by MIDiA’s Mark Mulligan raises some general questions that should make everyone involved in music marketing think. He also presents some interesting numbers.
• First, he reminds us that fandom is in crisis. Music is becoming more and more commoditized, and in the constant flow of new songs, artists are increasingly fading into the background. There are fewer and fewer super fans, and more and more passive consumers.
• Partly filling this gap is TikTok, but the article shows that more people discover new music through TV than through TikTok (the numbers are all based on the UK). This, of course, indicates the increasing importance of sync placements.
• Perhaps the most alarming statistic is that 64% of users usually don’t know which artist they’re listening to on TikTok. And only 19% of users who discover music on TikTok leave the app to listen to the song on a streaming service.
• Mulligan also criticizes the fact that many labels build their marketing only on short-term success and not on the long-term development of artists, even though this would be much more lucrative in the long run.

1 billion lost annually through streaming fraud

• It would be one thing if the fraudsters were only stealing money from the DSPs. However, every fraudulently earned dollar means one less dollar for an honest artist. That’s why we need to keep bringing up this issue again and again (which I’m doing and probably starting to annoy people).
• The article by Billboard shows that the issue is receiving more attention again, and there are various new studies.
• As already reported, according to a study in France, 1-3% of all streams are fraudulent, but these are only the ones detected by DSPs. Deezer estimates the number to be closer to 7%. The company Beatdapp even believes that it’s 10%. However, as a manufacturer of “Fraud Detection Software,” they naturally have an interest in making the problem appear as large as possible.
• If we assume that it’s 10%, not less than $1 billion would end up in the wrong pockets.
• According to a study, 80% of fraud does not aim to push a release into the charts but rather to increase long-term streams.
• It’s also clear that fraud occurs at all stages of the career ladder, not just with smaller artists trying to launch their careers.
• At the moment, it’s mainly the DSPs themselves, as well as distributors, trying to detect and prevent fraud. With moderate success, as it turns out.
• Some voices are therefore calling for an independent institution to search for fraudulent streams. A worthwhile idea, in my opinion, as DSPs are known to have a limited interest in uncovering fraud.

Spotify grows strongly in India

• Spotify told Billboard that they were able to triple the number of users in India in the last two years. They didn’t want to give exact numbers, but estimates put the number of monthly active users (MAUs) at 55 million. This makes them one of the top 5 countries in terms of number of users.
• Around 10 billion streams are generated per month.
• Where they don’t belong to the top 5, of course, is generated revenue. Pay-per-stream is significantly lower in India than in the world’s largest music markets (a subscription also costs only around $1.45). Many users also use the free offering, which should not be surprising given the rampant poverty in the country. India ranks 140th out of 190 countries in terms of per capita income. Less than half have a smartphone or internet access.
• This is also reflected in the fact that India, soon to be the world’s most populous country, only has the 17th largest music market ($219 million in revenue).
• There are an estimated 300 million MAUs in India (for comparison: the US has 219 million). With 1.4 billion people, there is still potential here.
• When Spotify started, consumption of international music was between 70-80%. Meanwhile, it has reversed, with 70% of the songs listened to coming from local artists. That’s the highest share in the world, as Spotify explains.

The great potential of the Chinese music market

• According to the IFPI, China is for the first time one of the five most important music markets in the world.
• Last year, “Recorded Music Revenues” grew by an impressive 28.4%. Not less than 89% of these revenues were contributed by streaming.
• There are approximately 100 million paying subscribers in total. This is a huge number, but considering China’s population, there is still plenty of room for growth. Especially when compared to video streaming, where there are a whopping 700 million paying customers.

Bonus Reads

• The market shares of the majors are continuously declining, and as I reported last week, only 4% of uploaded songs come from the three majors. I already pointed out that the giants are now likely to push their independent distributors. The latest MBW article goes into more detail on this topic.
  
• According to a research institution dedicated to transparency in politics, ByteDance has invested $13.4 million in lobbying in the US since 2019. $5.3 million of this was invested in the last year alone. This would even surpass Amazon, Meta, and Alphabet (Google). Currently, it seems that it hasn’t helped much, but perhaps the ban on TikTok can still be avoided. Meanwhile, government employees in Australia and New Zealand are also not allowed to install TikTok on their business phones due to security concerns.
  
• This article aims to debunk 10 social media myths, such as the idea that you should spread unique content on each platform or that you have to post multiple times a day.
  
• The Federal Association of the Music Industry (BVMI) and its umbrella organization IFPI have won in court against YouTube-DL, a site that allows users to rip music from YouTube. As around 30% of music consumers also listen to music illegally, this is of course only a small victory, but one can hope that this precedent will have a greater impact.
  
• This announcement is only indirectly related to the music industry, but the news that Disney is shutting down its Metaverse division does have a signaling effect. It seems to me that more and more companies in the areas of Metaverse and NFTs are slowing down, which probably does not bode well for their imminent mass suitability.
  
• The latest media articles suggest that the music industry company Utopia based in Zug, Switzerland, is in dire financial straits. After buying one company after another last year, they are now experiencing setbacks. They have now sold the British publishing platform Sentric to Believe, who want to build their publishing business.
  
• The author of this article wonders why metadata isn’t handled as well everywhere as it is at Apple Music Classic. If this were the case for other DSPs, for example, one could search for Pharrell and not only get his own songs but also everything he produced. It probably interests very few people but would likely be something for a more expensive subscription that appeals to super fans and nerds like me.