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MBW Reacts is a series of comments from the Music Business Worldwide team. These are our analytical (and sometimes dogmatic) reactions to recent major entertainment news stories.
It’s been an interesting week for those of us with good Twitter accounts.
When I say “we” I don’t mean “I”. There are many personal reasons why I escaped the bully’s cage, but basically he boils down to two meows.
- (I) I’ve seen enough hot takes and fake protests to understand the silly rules of Twitter’s numbers game. If you want interactive nonsense to spike your cortisol at night, you want to play PlayStation.
- (ii) In the end, I put food on the table with words for my children. And I didn’t want to habitually pry those words to enrich my billionaire Silicon Valley brothers (Jack, Elon)…for free.
So when I say “we,” I mean “we.”
like, global music businessand other businesses whose online presence continues to use Twitter’s once-acclaimed blue verification shield.
You may have read in the media that Elon Musk is now selling blue-tick certifications for a monthly subscription price.
What you may not have read is that Musk is fixated on this carrot: Twitter, like shrewd gangsters, began robbing users of their technical security, and seconds later, replaced it. offered to do so for a considerable amount.
On Wednesday March 22nd, Team MBW received the following email from Twitter: global music business profile no longer supports two-factor authentication.
(In case you didn’t know, two-factor authentication = receiving a unique code every time you log on to the service to prevent dangerous people from hacking into your account.)
How can Twitter bring back two-factor authentication for mobile? Yes: Start paying Elon for your monthly subscription.
This is how Musk is taking the hard line. Are you willing to risk being hacked or tweeted to your name? “
So, reluctantly, I had to.
There are broader business lessons to be learned here. It’s Elon Musk’s rock-solid decision to start selling important service perks we’ve long been accustomed to getting for free.
That idea, in turn, made me think of Good Ship Spotify and fascinating slides from a particular presentation at SXSW in Austin last week.
That presentation came from Rob Jonas, CEO of Luminate, a monitor and insight provider for the entertainment market, formerly known as MRC Data and Nielsen Music. (You can listen to Jonas’ full text of his SXSW presentation here.)
The relevant slide in Jonas’ Presso is the one shown above based on data from Luminate. It provides some amazing information.
Check this first. 67.1 million Tracks currently subscribed to music streaming services in calendar year 2022 less than 10 Stream individually and globally.
or 67.1 million The numbers represent exactly less than half (42%) as you read this, you’ll see the entire catalog of tracks (based on ISRC) available on music streaming services around the world.
(The entire music catalog for these streaming platforms is 158 million Track total. )
Get ready for the next statistical hay maker: almost a quarter (twenty four%) of 158 million A collection of tracks from music streaming services to be monitored by Luminate in 2022 zero appeared that year.
it is approximately 38 million truck. 38 million! Play zero!
In the 365 days of 2022, you haven’t pressed a single sausage finger on the forward-facing arrows below the artwork of these songs on any streaming service anywhere, anytime.
Almost enough to make you cry.
It’s not meit was made myself Think Spotify.
As our regular readers may remember, MBW published an article in November that revealed startling stats about how much Spotify pays Google each year for its use of its cloud storage facilities. Did.
Spotify doesn’t publish exact figures for the annual cost of this Google cloud storage. However, SPOT discloses its annual currency in its annual reports filed with the SEC. gain The company’s costs for “use of cloud computing services and additional software license fees.”
What this means: MBW is minimum How much Google’s cloud storage service (and other software licenses) pays Spotify each year.
Again, the chart below minimum How much money Spotify spends on these services each year. The reality can be much (multiple) more expensive.
(Since Spotify filed last year’s most recent annual report in Q1 2023, we’re able to update the 2022 figures below.)
Question: if Spotify is now spending nine-figure hefty fees on Google Where does the revenue come from to cover your cloud hosting service’s annual bill?
A: Currently, that revenue comes from Spotify’s only three sources of income. (I) advertisement; (ii) subscriptions; and, to a much lesser extent, (iii) An on-service marketing fee paid by the music industry.
In other words, these hefty cloud hosting costs are directly eating into Spotify’s margins at a time when analysts all over Wall Street are calling for Spotify’s margins to grow.
But what if Spotify pulled out a piece of paper? Elon Musk’s Book RE: Two Factor Authentication?
What if Spotify relentlessly begins to pass the cost of practical technical benefits onto individual B2B clients (aka artists)?
to the millions of artists behind them under the threat of removal, especially if they initiate direct billing 38 million songs (still an incredible stat) zero Stream in 2022?
And, by extension, the artist behind it 42% Which track had 10 or fewer streams last year?
No pay, no stay (not played).
As it stands, Spotify technically cannot do this, at least directly.
Financial relationships with the above B2B customers (9 million artists and numbers) can only be done through intermediaries from the perspective of distributors and record companies.
Among those intermediaries, which sector is the most significant by volume? DIY distributors. Self-uploading clients are responsible for the majority of new music pushed to the streaming service’s massive catalog (158 million tracks).
It would be nice if there was a way for Spotify to establish a direct distribution relationship with the artist and start billing them 1:1 for the B2B services they need.
Oh yeah, Spotify launched a direct DIY distribution service for artists in 2018, but shut it down in 2019 after pressure from big record labels.
Since then, SoundCloud and, surprisingly, TikTok’s SoundOn, have launched their own DIY distribution services for music artists.
Four years after Spotify finally abandoned its own music distribution business, has Daniel Ek and company’s time arrived? How to get another crack in this market?global music business
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