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MBW Explains are a suite of analytical capabilities that explore the context behind key music industry talking points and suggest what might happen next.
what’s happened?
On paper, the last week wasn’t bad for the three major music companies – Universal Music Group, Sony Music Group and Warner Music Group.
On Tuesday (21 March), the International Trade Organization IFPI said: global music report, the official global revenue figures for the recorded music industry for 2022. These reflect double-digit annual growth rates in two key areas. subscription streaming revenue (+10.3% YoY) and overall streaming revenue (+11.5% YoY).
More good news the next day. Guggenheim Partners has announced upgrades to the stock price rankings of both companies. Warner Music Group (WMG) and Spotifyfrom “neutral” to “buy”), positive sentiment was not limited to these two companies.
Guggenheim research notes Michael Morris said the team:
in the meantime, Morgan Warrensigned to Big Loud, but released under UMG’s Mercury/Republic Records license and was busy reminding everyone of the power of megastars and the power of major label distribution.
Warren new album one thing at a timeon sale March 3, sold out 501,000 It’s an equivalent copy (streaming and sales combined) in its first week in the US and is set to blow past the “Million Seller” status in the US by the end of this month (according to Billboard/Luminate data).
So are the heads of major music companies satisfied? At this point.
But perhaps more upsetting than anything else is the mass release of music to streaming services every 24 hours.
what is the context?
Probably the most enlightening page on IFPI global music report This is the first year of the book (inset), and the three heads of majors convey brief reactions to current market conditions.
It creates positive emotions Sir Lucian Grange (Universal Music Group), Rob Stringer (Sony Music Group), and Robert Kinkle (Warner Music Group). However, when it comes to threats to the health of the industry, a clear note is warranted.
Part of this warning is directed at the potential future impact of artificial intelligence on music.
But the biggest concern, especially from the Universal and Sony corners, is that the fallout from the deluge of DIY distribution releases that hit the likes of Spotify is already quite present. today.
Universal’s Grainge called on the music industry to focus on creating “an environment where great music isn’t drowned out by a sea of noise,” in a statement.
Committed to Sony’s “high quality” output, Stringer encourages his music industry peers to “stay vigilant against the race to the bottom offered to consumers.” increase.
MBW readers will understand exactly what stringer means by it.
Last summer, we learned that he was an investor in Sony and that his company, primarily through its ownership of Orchard and AWAL,[ing] To increase the volume of independent music on Sony’s distribution system.
Part of the reason Sony is doing this is apparently to combat the inevitable market share erosion facing every major from the glut of independent releases currently hitting the platform.
Still, Stringer also seemed to suggest to investors that Sony Music has a certain minimum level of quality that it shouldn’t fall short of, even on a distribution basis. market share by size”.
MBW has previously reported on the impact of this music flood on market share declines for service majors like Spotify.
But I haven’t seen any solid, verified data on the exact scale of the major record company problem. until now.
Last week, MBW ran a popular analysis, citing a presentation from SXSW 2023. Rob Jonas – CEO of Luminate, a company that provides entertainment data and insights.
The segment of that presentation we quoted referred to the tens of millions of songs currently on music streaming platforms that have never been played.
However, Jonas’ presentation revealed some more knockout stats. In particular, the one shown in the slide below.
As you can see, the average 98,500 During the period in question (September 1 through October 18, 2022), individual music files (monitored by individual ISRC codes) were delivered daily to audio and/or video streaming services.
this is, ≈100,000 trucks/day Streaming upload estimates debated by top music executives last year were largely accurate.
But digging deeper into the data presented by Jonas reveals something else. That’s the exact numerical scale of the “vagrants and jetsams” problem of major record companies.
According to the Luminate figures, Four% Them 98,500 Average daily track uploads were delivered by three majors and/or their subsidiaries and affiliates.
in contrast, 96% (!) of 98,500 The tracks were distributed by companies other than the “Big 3”.
In other words, major record companies, on average, 3,940 Track your day.
It’s a drop in the ocean. about 94,500 “Non-major”, i.e. tracks released by independent labels and self-released/DIY artists primarily via platforms such as DistroKid, TuneCore, CD Baby, UnitedMasters.
A final twist to these numbers: Today, for every track released through major record label distributions, a separate twenty four released outside the wall.
what happened now?
Major record companies can be expected to continue to “grow their networks” in an attempt to limit the damage to market share from this trend and broaden the distribution business of independent artists and labels.
- A new era for Universal Music Group has begun. virgin music group (which houses InGrooves), an integrated global artist/label services division that is currently positioned as the company’s investment priority alongside UMG’s frontline record group.
- Sony Music Group continues to strengthen its relationships with indie artists around the world. Orchard and beginningand recently launched another independent delivery option santa ana – A subsidiary of Alamo Records (majority owned by Sony) operated by Todd Moscowitz.
- And at Warner, some (including this writer) Robert Kinkle While further strengthening the ADA, level music – Currently the only “open to all” self-uploading/DIY distribution platform partnered with major music companies.
Additionally, we can expect a continuation of the Sir Lucien Grainge-led campaign to adopt an ‘artist-centric’ loyalty model on streaming services. This is intended to financially sabotage what Grainge calls “low-quality functional music”.
At least for now, this crusade is largely limited to targeting the “bad guys” of streaming services (especially scams) and questioning whether a track that only offers the sound of falling rain, for example, deserves the same. It has been. Royalty payments for professional recordings of an artist’s original work.
Final thoughts…
Before the structure of music streaming distribution and royalties changes significantly? This problem is becoming more and more of a headache for majors.
In another slide published at SXSW, Luminate’s Rob Jonas has revealed that the number of releases by DIY artists has exploded in recent years and shows no signs of slowing down.
Here is the slide in question, showing the total number of audio and video music tracks placed on digital services (via ISRC – International Standard Recording Code) and how many were created/uploaded in the last five years.
Aside from the turbulent first pandemic year of 2020, the pattern is clear. Every year, more and more millions of tracks are recorded and uploaded to streaming services.
In the last three years alone, over 90 million individual audio or video recordings have been uploaded to streaming services, with the largest annual volume (34.1 million) is coming in 2022.
Rob Jonas said in his SXSW presentation (download the full deck here) that, paradoxically, the influx of tens of millions of new tracks to streaming services has caused the average streaming user’s play numbers to drift away from their catalogs and into their catalogs. I suggested that it could be a factor in the transition. Newly released music.
“In short, having too many choices often makes us, as consumers, default to what we know,” he said.
“Just under half of all music content we track in our system has been created since the beginning of 2020.”
Rob Jonas, Luminate
But then came the mic drop moment.
Jonas is one-third (33%) of 196 million Audio and video music tracks from today’s digital services released in 2021 or 2022.
“And you 26 million Tracks created in 2020 means less than half of all music content we track in our system was created after the beginning of 2020,” he said.
“If you think about it another way, almost half of all music [available today was released] In the pandemic or post-pandemic era. This is a staggering and staggering statistic. ”
correct. And this is a staggering statistic that major record companies are watching with a twinkle in their eye.global music business
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