Streaming
Page: 62
A new song believed to feature AI-generated fake vocals from Drake and The Weeknd that went viral over the weekend has been pulled from most streaming platforms after their label, Universal Music Group, released a statement Monday (April 17) condemning “infringing content created with generative AI.”
Released by an anonymous TikTok user called Ghostwriter977 and credited as Ghostwriter on steaming platforms where it racked up hundreds of thousands of streams, the track “Heart On My Sleeve” features uncannily similar voices to the two superstars — a trick that the creator says was accomplished by using artificial intelligence. It’s unclear if the entire song was created with AI, or just the soundalike vocals.
By Monday afternoon, the song had generated more 600,000 spins on Spotify, and Ghostwriter977’s TikTok videos had been viewed more than 15 million times. A YouTube video had another 275,000 views, with an ominous comment from the creator below it: “This is just the beginning.”
Many music fans seemed impressed. One comment on TikTok with more than 75,000 likes said it was the “first AI song that has actually impressed me.” Another said Ghostwriter was “putting out better drake songs than drake himself.” A third said AI was “getting dangerously good.”
But the end could already be in sight. At time of publishing on Monday evening, “Heart On My Sleeve” had recently been pulled from Spotify, as well as Apple Music, Deezer and TIDAL before it.
Even if short-lived, the sensational success of “Heart On My Sleeve” will no doubt underscore growing concerns over the impact of AI on the music industry. Last week, UMG urged streaming platforms like Spotify to block AI companies from accessing the label’s songs to “train” their machines, and the RIAA has warned that doing so infringes copyrights on a mass scale. Last month, a large coalition of industry organizations warned that AI technology should not be used to “replace or erode” human artistry.
Representatives for Drake and The Weeknd declined to comment on Monday. But in a statement to Billboard, UMG said the viral postings “demonstrate why platforms have a fundamental legal and ethical responsibility to prevent the use of their services in ways that harm artists.”
“The training of generative AI using our artists’ music (which represents both a breach of our agreements and a violation of copyright law) as well as the availability of infringing content created with generative AI on DSPs, begs the question as to which side of history all stakeholders in the music ecosystem want to be on: the side of artists, fans and human creative expression, or on the side of deep fakes, fraud and denying artists their due compensation,” a UMG spokesman said in a statement. “We’re encouraged by the engagement of our platform partners on these issues – as they recognize they need to be part of the solution.”
UMG declined to comment on whether it had sent formal takedown requests to streaming services and social media websites.
Does Beatport know something the rest of the music business doesn’t? Look at some of the dance music platform’s recent numbers across paid downloads and streaming, and it feels that way.
While digital downloads have fallen to near all-time lows across the music business, with global revenue down 43.75% in the past five years, according to IFPI, for Beatport they’ve increased 35% in that same period. In 2022, the digital service claims to have sold 25,519,770 song downloads — making up nearly 12% of all tracks downloaded globally, based on Luminate data.
A key to Beatport’s growth is its focus specifically on DJs. By offering high-quality downloads for use in live sets, that functionality is still driving sales in a music market dominated by streaming. (The cost of a digital track at Beatport averages $1.29). Other platforms are, meanwhile, following broader industry trends and have started burying downloads; on the desktop version of iTunes, for example, options to purchase tracks notably appear halfway down the homepage.
Beatport is working in a smaller market than Spotify or Apple Music, of course, and most casual streamers won’t go on to become practicing DJs, but Beatport CEO Robb McDaniels expects that the fraction that do will contribute to Beatport’s continued growth. “Our hope is that 1% or 2% of Spotify’s paying subscribers decide that their music experience isn’t a lean back one — it’s an active and immersive one where they’ll spend their time listening to their music in the DJ booth or while they’re DJing at home,” he says. “As a result, you’ll see the shift from the really low payouts at Spotify and Apple to the much higher ones at Beatport, and the copyright holders are the ones who benefit.”
Over the past two years, meanwhile, streaming has grown by 60% at Beatport — a jump supported by the platform’s push to appeal to the next generation of DJs, who are expected to gravitate to streaming-based workflows due to their greater familiarity with streaming models versus download models, according to McDaniels. The company is driving this push with its browser-based DJ web application, Beatport DJ, which allows users to access and DJ from its library of music (which includes all major labels as well as leading and boutique dance imprints) without any additional hardware or software.
New Beatport data also paints the platform as a leader in pay-per-stream rates, with Beatport paying 50 to 60 times more per stream than other DSPs. At a time when subscription services including Apple Music and Amazon music have raised their monthly prices, and Spotify is expected to eventually do the same, Beatport’s royalty payouts are boosted by drastically higher subscription rates. While the service offers a baseline, standard $9.99 subscription offer, it also has tiers at $14.99 and $29.99 that allow for integrations with other platforms like Serato and Traktor, and being able to play songs while offline — important functions for DJs.
In 2022, Beatport paid an average of $0.10808333 per stream, while its service aimed at open-format DJs, Beatsource, averaged $ 0.17773333 per stream — more than 30 times the industry-wide blended average streaming rates across platforms in the United States was $.0053 per stream. After launching in mid-2019, Beatport’s music subscription products now make up 20% of its revenue.
Below, McDaniels details the mechanisms of Beatport’s growth, its capacity to pay streaming rates that far exceed the industry standard, and why the DJ booth is “the most valuable real estate in the music industry.”
Billboard: Are there any demographic shifts among Beatport’s active users that could have contributed to the increase in downloads?
Robb McDaniels: We’ve been trying to answer this for ourselves so we can figure out the right levers to pull and buttons to push as we try to spread the brand around the world. Right before the pandemic year, [active use] was heavily skewed towards the Western world [the top five countries for paid downloads at Beatport are the United States, United Kingdom, Germany, Australia and Canada] , but dance music and DJ culture is global; we have these communities all over the world.
We just weren’t doing an effective job of engaging with them or keeping them engaged, so we started making an effort to do that in ways that were inspired or triggered by the pandemic. We wanted to speak to everybody and let them know that we were still going to be supporting the community in any way that we could. We had to broaden our perspective, and I think by doing that, we activated customers that had visited Beatport and been customers in the early years, or the people who’d put away their controllers and had maybe given up on DJing. Obviously, being stuck at home, it was the perfect time for them to wipe off the dust and start DJing again.
How so?
Going into the pandemic, we thought that our business would decline, because all the clubs were shut down, but it actually increased because of customers like these who realized how important music and DJ culture was to their happiness.
The other thing we did was fortuitous: We dropped our download prices the month before the pandemic. This reduced the sticker shock of high download prices when people came to the store. All of these things led to an increase in accessibility for anybody who wants to try DJing.
Were there other reasons why Beatport wasn’t reaching some of the global DJ communities as effectively as possible?
Historically, there have been a number of mitigating factors for Beatport. First, we’re a small company. When I joined in 2017, [after Beatport downsized in 2016 following its parent company, SFX, filing Chapter 11 bankruptcy] there were about 40 people. We’re now a lot bigger; we’ve grown tremendously through acquisition and organic growth over the last few years, but the brand is still a lot bigger than the company itself. You’ve got folks all over the world that know about Beatport, but they’re typically buying in dollars or euros. We weren’t a big enough company to accept all currencies [all over the world], so we didn’t directly market in those areas. We also didn’t have the marketing budget to spend $20,000 a month on ads in India.
There are other issues with places like the emerging markets where the price that customers could support is just not something that fits our business model, but we’re beginning to address that. Now, as we look into these emerging markets, they’re really not emerging anymore; India’s massive, and the Middle East and Latin America have a lot of opportunities. We are now beginning to make the investments that are necessary to really serve and activate those markets, so I think we’ll see that benefit in the next few years.”
Beyond broadening Beatport’s reach and re-engaging with existing users, what else has driven Beatport’s paid downloads?
I think the goodwill that Beatport generated during the pandemic by putting on livestreams to raise money for various charitable organizations, along with the focus on communicating and connecting with people around the world, are the primary reasons downloads increased in the last couple of years. Other business decisions like reducing the price of downloads and improving system performance, infrastructure, uptime — all of the stuff that we’ve been investing in — has helped to buck the global trend in the download market.
Robb McDaniels
Courtesy of Beatport
Can you tell me more about why the livestreams were so impactful?
Just before the pandemic, we had signed a deal with Twitch to broadcast live DJ gigs at the big festivals on our Twitch channel. We did the first one at CRSSD Festival in San Diego with Carl Cox and Charlotte de Witte; I think that was the last festival before everything shut down. Our media group team then moved it online, and we started doing all of these massive 24-hour livestreams with DJs all around the world. The team went on to do a number of other [livestreams]. While livestreams have generally decreased in popularity, we acquired a lot of customers, as well as followers, that way. Our social media outlets just went through the roof.
[Our media team] continues to produce and create really engaging content that keeps this global community revolving around Beatport and interested in what we’re doing. I think that inevitably brings a lot of the customers in, and you don’t really see any other traditional music store doing that kind of thing for and with the community. In that way, Beatport is pretty unique compared to the Amazons and iTunes and Deezers of the world.
Turning to streaming, how is Beatport able to pay so much more per stream than other DSPs?
There are a few things. Number one is — and this is the most important thing — our customers are different. The regular music experience has been a passive one where you throw on your Spotify in the background for six hours a day and just forget about it. Our customers are DJs; it’s a much more active and immersive music experience. We believe the industry is now shifting to this more active and immersive music experience, because the music experience changes every generation. Inevitably, it happens: vinyl to tapes, tapes to CDs, CDs to streaming, streaming to…it’s going to be something, right? We’re already about 15 years into the streaming experience, so this is when the next music experience is typically taking hold.
We’re also charging more because our services integrate with DJ software and hardware, and we also have offline mode. There’s a premium paid for these integrations. So, our average monthly revenue from our customers is probably almost double what it is from the Spotifys of the world. These two contributing factors result in a much higher payout rate per stream to our rights holders.
What can sectors outside of dance learn from Beatport’s approach, and how can the larger industry profit from Beatport’s success?
I’ve been asking everybody to change their definition of “dance music” to any music that makes people dance, because that’s 75% of the music industry. If you can dance to the music, then you can DJ with it. This is why we launched Beatsource for the open-format DJ community. I haven’t been to a wedding where I haven’t heard the DJ play “Come On Eileen”; the wedding DJ is our customer just as much as David Guetta and Tiësto.
Overall, we think other genres and their artists can benefit tremendously from the exposure that these DJs get them. If you DJ at a club in Vegas and play a new song, half the audience is examining the song and adding it to their Spotify or Apple playlist. Your revenue is amplified just because that DJ played your song.
What should the industry at large take away from the DJ’s role and how it relates to exposure?
It’s really important to realize the value that these DJs play in the overall music ecosystem and not treat them the same as any other customer. These are the most important customers in the music industry, in my opinion, and the DJ booth is the most valuable real estate in the music industry. The DJ booth is for profits, amplification and promotion. We need to make sure that as an industry, we’re serving this constituency correctly and delivering the types of products they need.
[At Beatport,] we’re constantly working with labels and publishers to clear derivative works, remixes, stems. We try to point out how important it is to the health of the overall music industry, and that this benefits them in a myriad of ways beyond just the download fee or the stream fee. There are a lot of positive benefits.
Spotify is targeting radio broadcasters with its latest product update that will make it easier to convert radio shows into on-demand podcasts and offer a new source of ad revenue on existing content.
Beginning Thursday, Spotify’s “broadcast-to-podcast” technology will be fully integrated into Megaphone, the podcast ad tech and hosting platform that Spotify acquired in late 2020. The radio-to-podcast conversion technology itself comes from the Australian podcasting platform Whooshkaa, which was purchased by Spotify in 2021.
Using Megaphone, publishers will be able to input the URL to a live stream of their broadcasted content and automatically have a podcast created from that programming, according to Emma Vaughn, Spotify’s global head of advertising business development and partnerships. The “broadcast-to-podcast” tech will identify ad marker locations, giving publishers the opportunity to remove the ads that were originally aired on the live version of the program and dynamically insert new ad spots in their place, resulting in more revenue.
Companies using “broadcast to podcast” can continue to sell their own ad inventory or, in the near future, do so through the Spotify Audience Network, the audio giant’s ad marketplace.
“These publishers obviously have a ton of content that they create. The libraries are massive, [but] they don’t always have a full podcast operation that’s set up, [so] creating podcast-only content might not make sense for them,” Vaughn told The Hollywood Reporter. “That’s where ‘broadcast to podcast’ comes in because it’s seamless and allows them to join the ecosystem.”
As part of the initial rollout, publishers like Fox Corp. — which has an existing advertising and distribution deal with Megaphone for its Fox Audio Network — will use the conversion technology to create on-demand podcast versions of the broadcaster’s radio programming, though Vaughn said the goal is to attract publishers and broadcasters around the globe that “previously weren’t able to access Megaphone and access the podcast ecosystem.”
The executive also noted that converting radio programming into podcasts could give radio broadcasters a better chance at expanding their reach to Gen-Z listeners.
“More and more people are listening to content via these digital channels,” Vaughn said, “so it’s going to be able to bring some of this broadcast content that was maybe more isolated to a certain type of demographic to the Spotify demographic and to these young audiences that they haven’t been able to capture before.”
This story was originally published by The Hollywood Reporter.
MQA, the audio coding technology company that makes high-resolution streams for companies like Tidal, entered into administration after its founding financial backer stepped down from its board, according to company filings and media reports.
Anton Rupert, grandson of the billionaire South African tobacco tycoon of the same name, was terminated from the position of director of the board of MQA Limited on March 17, according to a filing. Rupert represented Reinet Investments S.C.A., MQA’s founding funder.
The London-based company specializes in making large music files small enough to be compatible on any service or playback device without losing any quality, it says. While it grew its brand presence through partnerships with major music compies like Xiami Music in China, Tidal and the independent music trade group Merlin, it has struggled to make a profit.
The company flagged its uncertain financial future in its most recent annual report, which was for the year ending Dec. 31, 2021. In a statement in the report, MQA chief executive Mike Jbara described the company as a “loss-making start-up” and said it is aware it faces competition for its employees from other U.K.-based technology companies offering certain financial incentives. The company also stated it had secured funding committments to maintain operations only through the first quarter 2023.
MQA’s business was built on driving demand for their tech by providing tools to content creators who would add to the catalog of music made using MQA’s technology. Those MQA files would make their way to consumers ears via distributors and broadcasters that have agreements with MQA.
For listeners, the proof would be in the quality of the stream. The company said it had 132 consumer product agreements as of Dec. 2021.
Last week, technology news website What HiFi? wrote MQA was going into administration, citing a statement from the company. What will happen to the services MQA provides to its partner companies is unclear, but going into adminstration does not always disrupt a companies’ core operations, at least not at first.
Similar to declaring bankruptcy in the U.S., entering into administration in the U.K. protects insolvent company from creditors. This breathing space gives the company time to pull itself out of its financial problems or the court-appointed administrator will advise taking steps — such as selling off assets — to help pay off the company’s debts.
MQA did not respond to a request for comment.
In their last annual report, the company said it is “confident that we will obtain additional funding commitments during those discussions in (the first quarter) 2023.”
Amazon Music will serve as the exclusive streaming home for this year’s Stagecoach Festival, which takes place April 28-30 in at the Empire Polo Club in Indio, Calif.
The livestream will be available on the Amazon Music channel on Twitch and Prime Video, starting at 3 p.m. PDT each day, courtesy of sponsors T-Mobile, Magnum Ice Cream and finance company SoFi.
As part of the build-up to the Goldenvoice-presented festival, Amazon will release Amazon Originals from a number of artists preforming at the event, including BRELAND’s reimaging of his track “Happy Song” featuring Danielle Bradbery, and Luke Grimes’ cover of Blaze Foley’s “Clay Pigeons.”
Among the other acts playing the 15th edition of Stagecoach are Chris Stapleton, Jon Pardi, Kane Brown, Lainey Wilson, Luke Bryan, Old Dominion, Gabby Barrett, Brooks & Dunn, Diplo, Bryan Adams, Jackson Dean, Priscilla Block, Keb’ Mo’ and Bailey Zimmerman.
Once on site, Kelly Sutton and Amber Anderson, hosts of Amazon Music’s Country Heat Weekly podcast, will interview participating artists from the Amazon Music backstage set.
Amazon Music will also host the Amazon Music Live lounge, located in the vendor area. The air-conditioned lounge will include charging stations and behind-the-scenes content broadcast on a jumbo screen.
In addition to seeing Yellowstone star Grimes perform, Stagecoach will provide an ever bigger Yellowstone tie in as the Dutton Ranch from the Paramount Network’s hit show will be transported to the desert. Fans will be able to play in a Yellowstone cornhold competition, as well as purchase items from a Yellowstone Airsteam pop-up shop.
In May 2022, the German Music Industry Association (BVMI) set its sights on “curbing streaming manipulation and streaming fraud.” These issues are “a central concern” for the music business, the organization wrote in a confidential document reviewed by Billboard, due to their “distortion of the chart ranking and/or influencing of royalty payments.” As a result, BVMI issued a call for proposals to “establish a ‘Fraud Detection System.’ ”
Related discussions have been taking place around the music industry recently. In January, the French government published what appears to be the first-ever national analysis of streaming fraud. In the United States, the outline of a fraud-mitigation proposal is circulating among several distributors, publishers and streaming platforms, while the annual Music Biz conference in Nashville in May will feature not one but three panels on the topic.
Why all the sudden attention on this issue? The Centre National de la Musique (CNM), an organization that operates under France’s Ministry of Culture, found that 1% to 3% of streams in the country were fraudulent in 2021. If those numbers were to hold true for the worldwide music market — which IFPI valued at $17.5 billion in 2022 — that would mean approximately $175 million to $525 million of streaming royalties are being hijacked globally.
Some think that’s on the low end. The streaming service Deezer has said that 7% of streams on the platform are fraudulent — and that’s just what it identifies. BeatDapp, a Vancouver-based company that builds fraud detection software for labels, distributors and streaming services all over the world, estimates that around 10% of global streams are fraudulent; while some of this activity is caught, that could mean that over $1 billion in royalties ends up in the wrong pockets.
“Nobody’s immune” to streaming fraud, says Christine Barnum, chief revenue officer at the distributor CD Baby. “So people are finally having the realization, ‘Yeah, this is a problem.’ ”
“It’s just very common,” adds one indie-label head who has “definitely bought” streams. “People are really worried about optics — ‘I need to have at least a million streams on a song,’ whatever the bar is that they’re trying to hit to make it look a certain way. There’s so much pressure.”
“Streaming fraud” is a rangy term that can encompass a variety of behaviors. These include uploading an unauthorized remix of a viral single, boosting play counts by streaming music through a hacked Spotify account or creating a bot network to drive streams to a pop hit (for chart purposes) or a white noise recording (for royalties). (CNM’s study found that 80% of fraud was detected in streaming’s “long tail,” meaning it had little to do with the charts.)
The unifying thread across these activities: They can siphon money from the royalty pool. For most streaming services, dollars from ads and subscriptions are lumped together and then distributed to rights holders according to their share of total plays. “If the demand for certain titles is increased due to streaming manipulation,” BVMI’s document explains, “other rights holders automatically receive lower royalty payments.”
Or, as Barnum puts it, fraud is “ruining it for the genuine artists who deserve to be accurately compensated for their listens. That’s being diluted.”
Some fraud is similar to old-fashioned music piracy, like uploading an unsanctioned version of an artist’s work to Spotify — or even just a duplicate under an alternate name — and claiming royalties from the resulting streams. With both piracy and fraud, “artists and anyone that makes their living from music have the potential to suffer real economic loss,” says Morgan Hayduk, co-founder/CEO of BeatDapp.
But while piracy in the file-trading and CD-burning era of the 2000s stemmed from “consumer demand for lower costs and more choice,” streaming fraud is “primarily driven by the profit motivations of nonconsumer enterprises seeking to extract revenue from the digital music industry,” Hayduk continues. “They leverage the same tools used for other types of online fraud, like stolen account credentials and bots. This isn’t a consumer-led phenomenon — it’s a reflection of the ease with which digital platforms can be manipulated for specific commercial gain.”
Sure enough, CNM’s report lamented that “fraud seems to be getting easier and easier to commit.” “In the beginning, fraud came mostly from unknown artists trying to get visibility, increased promotion or maybe a record or distribution contract,” says Ludovic Pouilly, senior vp of institutional and music industry relations at Deezer. “Right now, streaming fraud is more sophisticated and increasingly harder to detect, and we can see activity for the music of artists on all levels.” Meaning both that bad actors are diverting streams from major artists and it’s no longer simply unknown artists using bots to get visibility.
Currently, most efforts to combat fraud take place within individual organizations — whether that’s a streaming service or a distributor — which try to detect suspicious activity before it can affect payouts. In addition, IFPI has had some success taking legal action against streaming fraud sites in Germany and Brazil.
But fraud persists, which might be why there’s a growing realization that if the music industry really wants to prevent hundreds of millions of dollars from slipping out a side door, it may need a more comprehensive, cooperative approach. That said, there’s no consensus yet on what that might look like. In a statement to Billboard, BVMI said, “We are currently working on a tool to find artificial streams,” calling it a “work in progress.”
Louis Posen, founder of Hopeless Records, is an advocate for third-party oversight. “Currently, security is on a [digital service provider] by DSP level,” he says. “I think we need a monitoring, prevention, detection, mitigation and enforcement system at the level of the financial industry — both a third-party company that can monitor all the services as well as a department at each service with full resources.”
A senior executive at a major label doesn’t agree. “I’d really like to believe it’s not necessary, because it adds cost to the ecosystem,” the executive says. “Between the DSPs, the labels and the distribution side of our business, there are ways to solve this: having strong technology and technology controls, having strong rules and policies [around fraud] and adding consequences when you violate those.”
While the major labels either declined to speak about this issue on the record or did not respond to requests for comment, the senior executive notes that “we have concern over any level of fraud that happens in any of the platforms.” In 2019, the majors were among those that signed a code of conduct condemning streaming fraud, though the document was not legally binding, so it’s hard to tell the extent of its impact.
The disagreement about the best ways to combat fraud were evident in the CNM report. The study was hamstrung by several streaming services — Apple Music, YouTube and Amazon — declining to share information about fraud on their platforms, seemingly content to handle the issue internally. Those three platforms are estimated to account for a little over 35% of global streaming subscriptions; CNM was forced to perform its analysis without a complete view of the French streaming market.
Barnum maintains that “a global problem is going to take a global solution.” For now, she’s at least heartened by the fact that more people are willing to acknowledge streaming fraud’s existence: “I’m no longer a weirdo on the corner saying, ‘I think there’s a problem.’ ”
As the music industry becomes increasingly conscious of — and vocal about — the challenges of the streaming model, fraudulent streams have become a source of growing frustration. “Every penny that goes to a fraudulent stream is a penny that doesn’t go to a legitimate stream,” says Richard Burgess, president and CEO of the American Association of Independent Music. “Fraudulently increased stream counts can affect recording budgets, licensing deals, catalog valuations and can result in the misallocation of marketing budgets.”
The French government, which recently published the results of a months-long, country-wide investigation into streaming fraud, portrayed understanding the impacts of this activity as an imperative. “The stakes are high in our country as well as in the rest of the world: the development of music services, which can be free and financed by advertising, or paid through subscriptions, as individual or family plans, constitutes a tremendous opportunity for the music sector, after years of a long crisis,” the report asserted. “…Such growth whets the appetites and stimulates the creativity of those who seek to abuse the system.”
“The multiplication of fake streams, that is to say the processes allowing [bad actors] to artificially boost play counts or views to generate an income, is nothing short of theft,” the report continued.
The French study, conducted without data from YouTube, Apple Music, or Amazon Music, found that 1% to 3% of plays were fraudulent, while also noting somberly that “the reality of fake streams goes beyond what is detected.” BeatDapp, a Vancouver-based company that creates fraud detection software for labels, publishers, distributors and streaming services, believes the global level of fraud is higher. “In 2020, estimates were 3 to 10% of all streaming activity was fraud,” the company wrote in 2022. “Today, we confidently say it’s at least 10%, and more in some regions. That equals ~$2B in potentially misallocated streaming revenues this year, and will be ~$7.5B by 2030 if left unchecked.”
So what forms does streaming fraud take? According to Burgess, the practice “covers a multitude of techniques used to increase stream counts or impressions by other than legitimate means.”
Here are three of the most common:
Bots
Discussion of streaming fraud often turns quickly to bots, which Burgess defines as “automated software that can be used to generate views, streams or interactions.” To detect bot activity and prevent it from affecting royalty payouts, companies build models that trawl streaming data and look for listening patterns that appear anomalous: BeatDapp likes to discuss an example of finding tens of thousands of accounts all streaming the same 63 songs.
“If I’m trying to push numbers up, I’m going to do it across streaming services in a subtle fashion this way,” BeatDapp co-CEO Andrew Batey says. “Spread it across a lot of accounts and multiple platforms, and you can drive a significant number of plays with no one looking.”
Click Farms
Streaming services are looking for suspicious play patterns that don’t reflect human behavior. Fraudsters are aware of this, so they try to camouflage their activity in ways that appear human. One method is to get actual humans to press Play through what are known as “click farms.”
Eric Drott, a professor at the University of Texas in Austin who has written about streaming fraud, describes these as “enterprises concentrating low-paid, precarious workers who are engaged to perform the sort of rote, repetitive tasks that keep the flows of digital capitalism moving: creating social media accounts, moderating content for platforms, clicking online ads, liking or rating items and, of course, generating plays on streaming services.” Accounts that stream music 24 hours a day or stem from a smartphone that never moves or dips below 100% power could be evidence of click-farm activity.
Imposters
A third prominent form of fraud identified by Burgess involves impersonating creators by uploading a version of their song to streaming services and illegally collecting creators’ legitimate royalties. This is a common problem faced by artists who are having a moment on TikTok, for example: Imposters post a version of the TikTok hit on streaming services under a slightly different name, aiming to divert some streams (and hopefully royalties) their way.
“It happens to every single viral artist,” says one manager who shepherded a viral act to a major-label deal last year. There are many distribution companies out there, and managers say that some of them have lax oversight of what’s being uploaded to the DSPs through their platforms. This means artists and their teams have to keep close watch on streaming platforms and issue takedowns when they find imposter versions.
MUMBAI — India is driving Spotify’s international expansion, vaulting into the top five territories in total users for the platform after just four years of operation in the country.
“India is the single market that has contributed the most to our global growth over the last year,” says Gustav Gyllenhammar, Spotify’s vp of markets and subscriber growth. The company’s user count in India has tripled over the last two years, according to Gyllenhammar.
Spotify did not provide numbers, but Comscore estimates the platform has about 55 million monthly active users (MAUs) in India, and Spotify is the country’s top audio-streaming service in terms of engagement, with nearly 10 billion tracks streamed in India in January alone, sources close to the company say. Last year, Spotify says, Bollywood playback singer Arijit Singh tallied more streams on the app than Beyonce. Then in January, Singh broke into the top 10 of Spotify’s Global Top Artists chart, even though most of his plays were in India.
Despite this, India is not a top five revenue market for the service, Gyllenhammar says, demonstrating the limits of the country — which has 1.4 billion people and is expected to soon pass China as the most populous nation — as a music market. Multiple factors are at play, including India’s significantly lower per-stream payouts, a resistance to paying for music subscriptions and the challenges of a market with two official languages and another 22 regional ones.
India was the 17th-largest recorded-music market in 2021 with $219 million in revenue, up 20% from 2020 and driven largely by streaming, according to IFPI’s Global Music Report. But at just $0.16, its per-capita music revenue is among the lowest in the world.
India’s economy is one of the world’s largest, but a 2022 report by the International Monetary Fund ranks its per-capita income at 140 out of 190 countries, which contributes to the problems streaming services have in getting more consumers to pay for subscriptions. A monthly Spotify subscription costs 119 rupees ($1.45) compared with $9.99 in the United States. Gyllenhammar says the service doesn’t plan to increase prices in India in the near future.
India’s streaming market is estimated to have over 300 million MAUs. (For comparison, there are 219 million in the United States.) When Spotify launched there in 2019, it was the eighth major audio-streaming service to enter a market ruled by local streaming services Gaana, JioSaavn and Wynk. Since then, it has overtaken Gaana, which has turned into a subscription-only service after talks for an acquisition by Wynk’s parent, the telco Bharti Airtel, fell through. JioSaavn, which saw an overhaul of its top management last year, has witnessed a fall in engagement.
Though JioSaavn and Wynk still have more MAUs than Spotify, 20.1% of respondents picked Spotify as their favorite music streaming service, compared with 4.9% who chose either JioSaavn or Wynk, in a study conducted last year by IFPI and the Indian Music Industry, the country’s recorded-music trade group. (YouTube topped the list with 46%.)
Spotify’s closest competition for engagement, according to industry insiders, is ByteDance-owned Resso, which officially launched in India in March 2020 as one of three test markets for the app outside of China. (Indonesia and Brazil are the others.) Resso, they say, has a stronger presence in smaller cities and tallies a similar number of streams. But it’s been growing at a slower rate than Spotify and has been affected by the loss of Sony Music’s catalog — which includes several hit Indian film soundtracks — after Sony removed its titles from the service in September.
Indian music executives say Spotify has better technology for generating algorithmic recommendations and playlist personalization — and that gives it an edge over domestic rivals. It also emulated its local competition by emphasizing the importance of regional-language music and by creating a generous ad-based tier.
In India, Spotify offers a mobile-only “mini” subscription where users pay 7 rupees ($0.09) per day. It offers ad-free music on phones, group listening sessions and downloads of 30 songs per device. There aren’t any restrictions on the number of songs free users can stream in the ad-based tier.
A Focus On Servicing Local Languages
Today, in addition to English, Spotify offers its service in 12 Indian languages, including Hindi, Bengali, Punjabi and Urdu. To focus on local languages, Spotify has had to customize its operations. “Until we came to India, most [of our] markets [were dominated by] one or two languages,” says Amarjit Singh Batra, GM/managing director for India. “The whole structure, from the teams to the way we work to how we look at recommendations, curation — every piece had to be re-looked at.”
Local content accounts for about 85% of listening on domestic platforms like JioSaavn and Wynk, for example, but initially only made up 20% to 30% of Spotify streams in the market. “When we launched, consumption looked very similar to many other countries globally, [which is] predominantly international English-language music,” Gyllenhammar says. Then Spotify pushed to expand its audience beyond India’s big cities, and today, out of Spotify’s 184 markets, India has the highest share of local consumption, at 70%.
During the pandemic, as competitors tightened their budgets, the Swedish company says it spent heavily on nationwide and region-specific advertising and marketing — including ads on broadcast and streaming TV. “We have never paid so much attention to marketing in any single market,” says Gyllenhammar. The platform has run marketing campaigns in Hindi and English, as well as the four main languages spoken in south India: Telugu, Tamil, Kannada and Malayalam.
Spotify has also resisted pressure from labels to ensure their songs feature at the top of playlists, which music companies had come to expect from Indian platforms. “They keep looking at Spotify to be something like that,” says Padmanabhan “Paddy” NS, Spotify’s head of artist and label partnerships. Instead, Spotify realized early on the potential of independent and non-film music and showcased them through playlists and programs such as Radar. The strategy paid dividends during the pandemic when the closure of cinemas led to a paucity of new soundtrack releases, which local platforms had relied on.
Since it launched in the country, Spotify has more than doubled its number of India-based employees, Gyllenhammar and Singh say, and they’re planning to expand their India ad sales teams five-fold by the end of the year. (They decline to share how many people the company currently employs in India.)
While India is primarily a low-price, high-volume play for Spotify, the country offers tremendous growth potential. It has the second-largest share of internet and smartphone users in the world (after China), at about 658 million, though that’s just under half of its total population. (The United States and the United Kingdom both have 90% internet penetration.) “If you look at other sectors online, whether it’s in search or social media or e-commerce, [India is] a billion-dollar market for the global players,” Gyllenhammar says.
Singh Batra says Spotify’s focus over the next four years will be on reaching “a level where the audience for each and every core [Indian] language is able to say, ‘Spotify is for me, for my region.’” By focusing on regional-language listeners, Spotify aims to gain new consumers in smaller cities and rural areas, as well as by pulling customers from JioSaavn and Resso, which dominate those regions.
The company says it’s gaining subscribers in India at a faster rate than total users. In 2022, premium subscriptions grew by 85% and MAUs by 80% year on year. Spotify executives say they see India following the same growth path as Latin America, where the level of paid users is now about the same as the global average of 40%.
It took eight years after Spotify launched in Brazil in 2014 for the region to reach that 40% level, Gyllenhammar says. “It didn’t happen in the first four years,” he observes. “It happened during the second phase of those eight years. So similarly, for India, the next four years is a period where we will see improvement on this side.”
Spotify is closing down its live-audio app Spotify Live, the streamer said Monday (April 3).
“After a period of experimentation and learnings around how Spotify users interact with live audio, we’ve made the decision to sunset the Spotify Live app,” a spokesperson for the platform said in a statement. “We believe there is a future for live fan-creator interactions in the Spotify ecosystem; however, based on our learnings, it no longer makes sense as a standalone app. We have seen promising results in the artist-focused use case of ‘listening parties,’ which we will continue to explore moving forward to facilitate live interactions between artists and fans.”
Spotify Live started as the sports-focused live-audio app Locker Room, which Spotify acquired in March 2021 when the streaming service purchased its developer, Betty Labs, for more than $65 million. At the time, the Clubhouse app was popular, and Locker Room was widely viewed as a competitor.
At the time of the acquisition, Spotify said it aimed to “evolve and expand Locker Room into an enhanced live audio experience for a wider range of creators and fans… We’ll give professional athletes, writers, musicians, songwriters, podcasters, and other global voices opportunities to host real-time discussions, debates, ask me anything (AMA) sessions, and more.”
Locker Room was relaunched as Spotify Greenroom in the summer of 2021. The following April, it was renamed Spotify Live and incorporated as a livestream function in the main Spotify app. To celebrate that iteration, Spotify Live streamed Swedish House Mafia’s Paradise Again album release party. But in a round of programming cuts in December, some of the live shows were shut down.
Spotify unveiled a host of new features in March — including a swipe-able vertical feed that will play previews of music and podcasts, a pre-save feature with “countdown pages” for upcoming releases, and “Clips,” which allows acts to post 30-second videos on their artist pages — that were widely viewed as an attempt to contend with a different competitor: TikTok. CEO Daniel Ek called these updates “the biggest” transformation Spotify has undergone in a decade.
Even if classical music made up just 1% of U.S. music consumption in 2022, according to Luminate, Apple’s new streaming service dedicated to the genre could mean big things for the subscription market.
Global recorded music revenues rose for the eighth straight year in 2022 — but markets are maturing, and the once high-flying growth rate fell to single digits. That doesn’t mean the music subscription business is getting stale, though. In fact, there are plenty of new ideas and much-needed innovations that can help push the streaming market forward.
The latest, and one of the best, examples of how the music business can build a better mousetrap is Apple Music Classical. Apple wanted to better serve classical music fans but realized the best path was to break away from the Apple Music subscription app that works fine for every other genre. So, it built Apple Music Classical, a standalone app for Apple’s iOS devices — the Android app will arrive later — that launched on Tuesday to some rave reviews (GQ called it “a ton of fun”).
Classical music has always been a second-class citizen in digital music because of the way its metadata — information about the recording — is organized. For most genres, describing music by artist, track and album is an adequate way to organize a massive number of recordings. Download stores and streaming services are built around this classification system. But since the advent of iTunes and download purchases, people have recognized that classical music doesn’t fit well in the standard metadata system. In classical music, music is better organized by such categories as conductor, orchestra and movement. This could help explain why classical music accounted for 2.7% of U.S. digital album sales but just 0.8% of on-demand streams in the U.S. last year, according to Luminate.
“It’s the works-based nature of classical,” says Dart Music founder Chris McMurtry, now a vp at Pex, a digital music rights company. “That’s why Apple had to build a separate app.” McMurtry addressed that problem at Dart Music, a digital distributor that focused on classical music and built a database with metadata fields better suited for the genre.
Apple wasn’t the first company to see an opportunity in classical music. Dart Music launched in 2015 to tackle the metadata angle (its assets were acquired in 2017 by Haawk), and classical-focused streaming isn’t new, either. Idagio debuted in 2015. Primephonic launched in 2019 and was acquired by Apple in 2021. Universal Music Group’s Deutsche Grammophon imprint debuted its own service, Stage+, in 2022.
But Apple’s entry into the classical music streaming market could be the most impactful to date. Apple has billions of customers around the globe and an increasingly successful services business that includes the Apple Music subscription app and Apple TV+, a streaming video-on-demand platform. Those cloud-based services, combined with Apple’s bread-and-butter business of selling smartphones and laptops, give the company the resources and marketing might to activate a passionate group of music aficionados that has been underserved by streaming platforms better suited for rock, pop and hip-hop.
“It exceeded my expectations,” says McMurtry, who looked up well-known names and obscure composers to appreciate the app’s level of detail. He says he was impressed by the depth of metadata — the producers, engineers, mixers, other contributors, year of the recording and even the composers’ birth and death years. “It’s a very educational experience.”
If Apple Music Classical can hook McMurtry, maybe it can lure more people into the music subscription market. In 2022, there were 92 million subscribers to streaming services such as Spotify, Apple Music and YouTube Music, according to the RIAA. In total, 214 million Americans — 75% of the population 12 and older — streamed music in the past month, according to a January 2023 survey by Edison Research. Younger consumers were far more likely to stream music than older listeners, however, with 53% of people over the age of 55 having done so compared to 89% of 12-to-34-year-olds and 85% of 35-to-54-year-olds. A good classical music app can help narrow that sizable gap, attract more subscribers and generate more subscription revenue.
Going after classical music fans makes financial sense, too. For starters, they’re plentiful, says Russ Crupnick, partner at market research firm MusicWatch. “By comparison, they are somewhat larger than the entire population of vinyl buyers,” he says. As older consumers, they can afford a standalone classical music app: Crupnick says classical music fans’ mean income is 35% higher than average. They’re also twice as likely to purchase expensive, audiophile stereo equipment. When asked if obtaining the highest-quality sound format is important, 64% of classical music fans said yes, and 54% are willing to pay more to get it. Fortunately for them, Apple Music Classical is free of charge to Apple Music subscribers. “It will be interesting to see whether Apple eventually adds fees to monetize the service, or subsidizes it as they have higher resolution audio,” says Crupnick.
There’s great potential outside of the United States, too. Apple Music Classical will eventually be available in three strong markets for classical music: Japan, China and South Korea. In China, the fifth-largest recorded music market in 2022, according to the IFPI, classical music has been a phenomenon since the Cultural Revolution. Gramophone magazine described it as a “gargantuan market for the consumption of recorded classical music even if only as a study aid or as a residue of having Mozart and Beethoven sonatas tinkling through the family home.”
The digital market has performed incredibly well without a mass appeal offering tailored for classical music fans. Record labels generated $16.9 billion from streaming in 2022 while mostly ignoring an important subset of the market. With Apple Music Classical, Idagio and Stage+ super-serving classical music fans, there’s potential to do better.