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Just two weeks after Spotify CEO Daniel Ek ripped Apple for “bullying” app owners in a Nov. 30 tweet thread, the executive doubled down on his comments during an interview that aired Thursday (Dec. 15) on the streamer’s For The Record podcast. During the appearance, Ek said Apple’s controls over payments and data on its app store create an anticompetitive environment that is “harmful for the economy and consumers.”
“They continue to give themselves unfair advantages really at every turn and setting themselves up as both the referee and player in this game,” stifling competition and hurting competitors and consumers, Ek said.
A vocal critic of the iPhone maker over the years, Ek has ramped up calls against Apple’s policies in recent months. The U.S. Senate has just weeks left in its current term to pass a bill that would rein in the control Apple and Alphabet Inc.’s Google exert over their apps marketplaces.
Introduced last year by Democratic Senators Amy Klobuchar and Richard Blumenthal along with Republican Senator Marsha Blackburn, the Open App Markets Act would block app store owners from requiring app developers to use its payments platform. The bill would also ban app stores from pushing their own products over competitors’ products and permit app developers to communicate more freely with customers and open the door to apps being downloadable from more platforms.
Speaking on the podcast, Senator Blackburn said the bill is gaining support daily.
“The reason we need this is to open up the marketplace to allow more competition, to allow developers to be able to take their product directly to the consumer,” which would lower some costs for developers at a time of high inflation in the U.S., Blackburn said.
App stores run by Apple and Google have traditionally taken a cut of in-app purchases. Prior to 2016, Spotify charged users 30% more if customers upgraded to a premium subscription inside Apple’s App Store to offset Apple’s 30% fee. To save on fees, Spotify has not allowed in-app purchasing on its Apple app since 2016.
Ek threw the weight of his company behind Blackburn’s bill on the podcast, saying that Spotify believes there needs to be regulation in this space to make clear that developers or companies can interact with consumers.
“There is an enormous concentration of power where one company here [is] dictating the rules for how millions of companies should be able to conduct business,” Ek said on the podcast.
This is not the first time Ek has taken on Apple’s App Store in the regulatory arena. In 2019, Spotify filed a complaint with the European Commission against Apple, alleging that rules governing its App Store “purposely limit choice and stifle innovation at the expense of the user experience — essentially acting as both a player and referee to deliberately disadvantage other app developers.”
Apple did not immediately respond to a request for comment.
In 2019 and 2020, promoting music on TikTok often meant paying prominent influencers to use a song in their videos. The concept was straightforward — cash for exposure — and on a good day, the results were easy to notice: Streams shot up. “All you needed was those [popular] people to post and a song flew,” one digital marketer reminisced earlier this year.
If this strategy once helped a track fly, it is now more likely to flop. “Bigger influencers actually don’t move the needle on music consumption” anymore, another digital marketer told Billboard in April. Lately worry has been spreading in the music industry that the link between song usage on TikTok more generally and consumption on streaming platforms appears to be losing potency. “For a while it was like, ‘All you gotta do is get a song going on TikTok, and it’s outta here!’” one major label executive says. “It’s not a guarantee anymore” that a song will become a hit.
This sentiment was reflected in a year-end report that TikTok published last week outlining the most popular songs and artists on the app. The top 10 TikTok tracks in the U.S. were streamed far less in 2022 than they were in 2021, according to data from Luminate. And the winners in 2021 were streamed far less than they were in 2020.
This indicates that the correlation between TikTok usage and U.S. streams is weakening. And it offers supports for a growing chorus of marketers who whisper that TikTok video usage isn’t “translating” as well to streams as it did in years past.
In 2020, being a top TikTok track in the U.S. practically ensured streaming success: Luminate data shows that nearly every song in TikTok’s top 10 earned more than 250 million on-demand plays Stateside. Just two years later, that no longer appears to be the case: See Luclover’s “L$d” (20.4 million, No. 2 on TikTok in the U.S.), Yung Lean’s “Ginseng Strip 2002” (71.1 million, No. 3), and Duke & Jones and Louis Theroux’s “Jiggle Jiggle” (82.5 million streams, No. 8). Now “There’s a bunch of stuff going off [on TikTok] that’s not even a hit,” says one A&R.
The overall streaming totals for TikTok’s biggest songs show a sharp decline year over year. Back in 2020, the top 10 singles on TikTok in the U.S. — from Doja Cat’s “Say So” to Roddy Ricch’s “The Box” — collectively amassed more than 4.9 billion Stateside streams. The top 10 songs on TikTok in the U.S. in 2021 — think back to Doja Cat’s “Kiss Me More” and Cardi B’s “Up” — garnered only a little more than 3 billion streams between them in America. And the top 10 TikTok songs in the U.S. in 2022, ranging from Lizzo’s “About Damn Time” to Kate Bush’s “Running Up That Hill (A Deal With God),” amassed just 1.9 billion Stateside streams combined. That’s a drop of roughly 3 billion streams, or 61%, in two years.
A representative for TikTok declined to comment for this story. In the platform’s year-end report, Ole Obermann, Global Head of Music, said that “13 out of 14 Billboard Hot 100 No. 1’s were supported by viral trends on TikTok.” “Our platform continues to unlock real-world opportunities for artists and labels,” Obermann added, “helping talent to secure record deals, brand collaborations, chart success, or be re-discovered decades later.”
But TikTok has changed markedly in the last few years, making it harder to turn success on the app into those opportunities — at least in the world of streaming. The first challenge for the music industry is saturation. “There’s so much noise; it’s harder to cut through,” says one manager whose acts have been at the center of multiple bidding wars following viral moments. “Once upon a time there wasn’t a lot of money pouring into TikTok. Now the music business, Hollywood, fashion, retail, beverage, everybody is trying to use TikTok to drive their product.” Music is competing for attention not only with other music, the huge amount of new songs and user-generated remixes that pop up each day, but with Marvel movies and canned cocktails.
And as TikTok’s user-base has swelled, it’s splintered into smaller communities that share the same interests, meaning that capturing everyone’s eyeballs — and ears — is increasingly difficult. “More users means TikTok’s ‘For You’ page algorithm has more content to offer, and it also means more data that allows it to be more targeted with its content recommendations,” one digital marketer told Billboard earlier this year. “People are less likely to see the same thing, like Charli D’Amelio dancing, and are more likely to see content from niches the algorithm recommends specifically for them.” As a result, “trends are siloed when they used to be community-wide,” a digital marketing company owner explained recently.
In addition, a handful of executives posit that TikTok is addictive enough that some users, especially younger ones, are starting to “use it as their music service,” according to one indie label-head, rather than leaving the app to go stream music elsewhere. Obermann hit back against this idea in November: “Our community comes to TikTok to watch videos,” he told Billboard, “not to listen to full-length tracks.”
It’s not clear that everyone wants to listen to full-length tracks these days. What is clear is that the interactivity that users find so compelling on TikTok threatens to undermine the traditional streaming experience. When music encountered on the app in a goofy or galvanizing video “is listened to [later] on streaming, it is stripped of all that creative and cultural context,” Mark Mulligan, managing director for music consultancy MIDiA Research, wrote recently. “It is like only listening to the soundtrack of a movie.” Some users may prefer to hear the music along with the video clips, even if it comes in short bursts.
The music industry views TikTok as a means to an end, and the equation has always been simple: More videos on the app using our music = more streams for our music. If the connection between the two weakens, it will have notable implications for A&R and marketing strategy. “There’s very little predictability now,” says one A&R. “You just can’t know how long something will sustain anymore.”
Latin music is expected to reach the billion-dollar mark in revenues by year-end in the United States for the first time, according to the RIAA. That’s a big deal. But at the pace the genre has been growing over the past decade, it’s not surprising.
“I feel every year we’re talking about the Latin boom and we’re certainly not going ‘despacito,’” says Hans Schafer, senior vp of global touring at Live Nation. “I’d say this is the best year for Latin because we see it in streaming, in the number of tickets we’re selling, grosses in those shows and it’s not only Bad Bunny.”
Of course, Bad Bunny and his record-shattering album Un Verano Sin Ti — which became the first all-Spanish album to be ranked No. 1 on the Billboard 200 year-end albums chart — played a major role in giving the genre a boost. But the Puerto Rican hitmaker isn’t the only factor at play in what has been a years-long slow boil for Latin music, which was often seen as a fad in the past but is now regarded as a cornerstone genre in the U.S. music market.
Spanish-language music has been having a moment in the U.S. ever since Daddy Yankee released his breakthrough single “Gasolina” in 2004. After the Latin explosion of the late ‘90s, when Shakira and Ricky Martin were recording in English to achieve mainstream success in the U.S., the euphoric anthem became the first time a Spanish-language hit went global. Then, there was Luis Fonsi‘s “Despacito,” the Billboard Hot 100 chart-topping song — spending a then-record 16 weeks at No. 1 in 2017 — that changed Latin music forever, spearheading a global Latin movement made possible by streaming.
This year, Spanish-language music in the U.S. and other non-Latin markets has reached new heights across multiple metrics, including on the charts, in market share growth and in global reach. In the U.S. alone, market share for the Latin genre — defined as music sung predominantly in Spanish — was 6.6% of the total market in the first half of the year, up from 5.9% last year, according to the RIAA’s mid-year report in October.
On the Hot 100 chart, a total of 45 Latin songs have entered the tally so far this year, way ahead of 2021’s 25 titles. Among this year’s crop, 22 were off Bad Bunny’s genre-hopping set Un Verano Sin Ti, which powered his extraordinary year along with two history-making U.S. tours. Those back-to-back runs grossed a total of $373.5 million from 1.8 million tickets across 65 shows, allowing the superstar to rank as the top act on Billboard’s year-end Top Tours chart.
Newer acts have also seen success on the touring front this year. Colombian reggaeton artist Feid sold out all 14 dates of his first-ever U.S. tour in a span of 24 hours after announcing it in October. So did up-and-coming sad sierreño act Ivan Cornejo, whose first U.S. trek — supported by local promoters and set to kick off in January for a total of 13 shows — sold out “within minutes,” according to his team, of the pre-sale.
The development of new artists, and understanding how the touring component complements their streaming and music video views, has been key to the continued growth of Latin music in the U.S. Emerging artists across Latin genres, notably in regional Mexican, are more diverse and younger, which has led to a new generation of Latin music fans who are bilingual, tech-savvy and more likely to embrace genre-blurring acts. The rise of Latin also coincides with shifting demographics in the U.S., where Latinos now represent nearly 20% of the population.
Mexican music had a banner year. The legacy genre is reaching a wider audience thanks to a new generation of acts such as Grupo Firme, the first banda outfit to perform at Coachella, who followed up that history-making performance with a stadium tour; Eslabon Armado, whose Nostalgia became the first top 10-charting regional Mexican album ever on the Billboard 200; and artists like Ivan Cornejo and Yahritza Y Su Esencia, to name a few. On Billboard’s year-end Hot Latin Songs Artists chart, seven out of the top 20 are regional Mexican acts. What was once considered music by Mexican artists for a Mexican audience has now become big business in the U.S. market.
“[Regional Mexican] music is a lot more relatable now for a Mexican American kid that lives in the U.S. because the sound and lyrics have evolved,” says Brayan Guerra, label manager at Lumbre Music, whose roster includes Yahritza Y Su Esencia. The sibling trio broke earlier this year with “Soy El Único,” which became the fourth regional Mexican song ever to enter the Hot 100. In November, they signed with Columbia Records in partnership with Lumbre and Sony Music Latin, making them the first Mexican music act to join the Columbia roster.
Streaming has played a huge role in the increase in Latin music consumption, with the RIAA’s mid-year Latin revenue report showing that streaming revenues were the biggest growth driver for the genre. Through the first half of 2022, music streaming formats comprised 97% of all Latin music revenues ($510 million), with paid subscriptions the biggest source of sales at 71%. That amounts to 69% of overall Latin revenues, totaling $350 million in paid subscriptions alone.
“Artists were able to build communities during the pandemic because of the time people spent consuming music during lockdown, and we’re seeing the impact now,” says Carlos Abreu, a London-based music agent at UTA. “Like Karol G when she had all her fans wearing blue wigs, Rosalía with the motomamis and motopapis.”
Success in the U.S. reflects the ever-growing popularity of the genre in other non-Latin markets. “Latin America and the U.S. continue to drive the consumption and engagement, but we do see it becoming more global with bigger acts like Rosalía, Karol G and Bad Bunny being consumed in continents like Africa,” says Maykol Sanchez, head of artist & label partnerships, LatAm & US Latin at Spotify, where 10 Latin artists were within the Top 50 global most-streamed artists this year. “The last few years have been an explosion with our friend Bad Bunny leading the way but a lot of other great artists having big moments too.”
To name a few, Anitta reached the No. 1 spot on Spotify’s Top 50 – Global chart with “Envolver” in March, making her the first Brazilian artist to do so. The same day, Paulo Londra landed in the No. 2 position with his song “Plan A.” And in July, Argentine producer Bizarrap and Spanish artist Quevedo reached the No. 1 position on the Spotify Global tally with their smash hit “Bzrp Music Sessions, Vol. 52.”
“It’s more a global business than it ever has been,” says Abreu, whose client Rosalía earned $28.1 million touring on three continents so far this year. Europe is now quicker to embrace Latin music than it did previously, he adds. “I’ve seen the shift in real-time. Especially [when] booking European festivals and tours. Before there was the education that needed to happen, the convincing. Five or six years ago we were trying to convince promoters or buyers that these artists were mainstream. It’s exciting that the world is [finally] catching up and it feels good to say, ‘I told you so.’”
In terms of expanding Latin music’s global reach, the U.S. remains the jackpot market “because it’s the seal of approval” that helps launch Latin artists in other parts of the world, says Bruno Del Granado, head of global Latin music touring at CAA. “When I started working in the label business many years, at the end of the year the U.S. market would generate probably 70% of our revenue and international was 30%. Now it’s the opposite: 30% U.S., 70% international. The U.S. gives you prestige, but you also want China, India and Latin America. It adds into this big puzzle and every artist, the smart ones, always look at the world as their market.”
Spotify has canceled at least six of its live audio shows as part of the audio giant’s latest round of programming cuts.
Included in the cancelations are Deux Me After Dark, a celebrity gossip show hosted by the anonymous creator known as Deux Moi; Doughboys: Snack Pack, a food show hosted by the comedians Nick Wiger and Mike Mitchell; The Movie Buff, a movie review show hosted by the comedian Jon Gabrus; A Gay in the Life, a current events and LGBTQ+ culture show from Teen Beach Movie star Garrett Clayton and writer Blake Knight; Taylor Talk, a Taylor Swift fan show hosted by Ellie Schnitt; and Lorem Life, a music show based on Spotify’s Lorem playlist hosted by Dev Lemons and Max Motley.
The cancelations, two of which were not previously reported, were confirmed to The Hollywood Reporter by a Spotify spokesperson.
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At least two deals for the Spotify Live shows were canceled midway through the creators’ contracts, according to a person familiar with the matter. A second source close to the matter said that all the contracts are being paid out in full, despite the cancelations.
The audio giant, which rebranded its live audio offering in April from Spotify Greenroom to Spotify Live, will continue to release live episodes from The Ringer MMA Show and The Fantasy Footballers, the latter of which struck a deal with Spotify earlier this year that included an extension of the show’s partnership with Spotify Live through the next three NFL seasons.
Other creators like Alex Cooper, whose Spotify Live show was promoted as part of the company’s live audio rebrand, have not continued hosting live episodes since launching their shows earlier this year. Cooper’s second and most recent live episode took place in April and was made available for on-demand listening on April 28.
The programming changes, first reported by Bloomberg, are the latest cuts from the audio giant, which recently canceled a total of 11 shows from in-house studios Gimlet and Parcast — 10 of which came to an end last month. The cuts have followed a similar model to cancelations in TV programming for broadcasters and streamers.
This article originally appeared in THR.com.
SoundCloud Holdings GmbH and its subsidiaries reported revenue in 2021 of 230.7 million euros ($273 million at the average exchange rate in 2021 of 1.18308), up 19% from the prior year, according to audited financial statements published by the privately held company in Germany on Tuesday (Dec. 13).
SoundCloud, which originally gained popularity for its embeddable streaming widget, has a unique business model that mixes tools for music creators and listening for fans. Fan revenue — from advertising and subscriptions — improved 16.6% to 143.3 million euros ($170 million), or 62.2% of total revenue, down from 63.5% in 2020. Revenue from subscribers grew 20% year over year and exceeded internal expectations, according to the financial statements. Advertising revenue was in line with expectations, with 12% year-over-year growth.
Revenues from creator tools grew 23.7% to 87.3 million euros ($103 million) and increased to 37.8% of total revenue, up from 36.5% in 2020. The company attributed the improvement to the number of artists that chose to self-release music through the platform to take advantage of organic growth at major DSPs such as Spotify, as well as improving monetization of platforms such as Meta, TikTok and Twitch.
Founded in 2007, SoundCloud originally gained popularity through its ubiquitous, embeddable music player. It eventually launched a subscription streaming service, SoundCloud Go, in 2016, but did not rank in the top eight music subscriptions in the second quarter of 2022, according to figures released on Dec. 7 by MIDiA Research. Deezer was the eighth-largest subscription service with 9.5 million subscribers and a 1.5% global share. Spotify had the largest share with 30.5%, equal to 187.8 million subscribers. SoundCloud’s financial statements did not reveal the number of subscribers to its streaming service.
Unlike its peers, though, SoundCloud has always been a unique destination for artists to connect with listeners. The platform offers SoundCloud Next Pro, a service that allows artists to upload tracks to the platform and distribute them to other streaming services as well as pitch music to SiriusXM, which owns a minority stake in SoundCloud following a $75 million investment in 2020. A 2019 acquisition of Repost Network, an artist rights management and distribution platform, provides SoundCloud with a subscription product that offers creative services such as promotion and marketing.
In January 2022, SoundCloud added a third business segment, called roster, to connect fans and artists. Roster provides support services for emerging and developing artists. Its launch coincided with the announcement of a joint venture with artist management firm Solid Foundation Management to “identify, invest in, and foster the careers of artists featured.”
Gross profit margin — defined as gross profit as a percent of revenue — improved 12% to 35.4% on the strength of growth in subscriptions. Content costs — mainly royalties paid to record labels, publishers and independent artists — totaled 120.8 million euros ($143 million), up 14.1% from 105.9 million euros ($125 million) in 2020. As a percent of fan revenue, content costs declined to 84.2% from 86.1% in the prior year.
Despite the improved gross margin, operating loss deepened to 21.1 million euros (-$25 million) from 15.4 million euros (-$18 million) in 2020. SoundCloud increased its marketing spending 69.7% and made “significant investments” in headcount to help “propel the company into its next phase of growth.” Although Russia’s invasion of Ukraine has created uncertainties and disrupted supply chains, it has had a limited impact on SoundCloud’s financials, as direct business with partners in Russia accounted for only 0.5% of its annual revenues.
Since the end of the period covered by these financial statements, SoundCloud announced in August its plans to lay off 20% of its workforce due to “a significant company transformation and the challenging and economic and financial environment,” a spokesperson told Billboard at the time. The company had an average of 451 employees in 2021, up from 392 in 2020, with growth spread across its technology, business and operations segments.
SoundCloud expects slower growth in 2022 due to inflation and other macroeconomic trends that could stifle consumer spending levels. It expects gross profit “to grow slightly” with a similar or higher gross margin as in 2021. Free cash flow from operations is expected to be “slightly negative” in 2022.
It also believes it has opportunities to find acquisition targets. In April, it acquired Musiio, an artificial intelligence and machine learning company, for approximately $7 million cash and an undisclosed amount of equity, according to the financial release. SoundCloud believes Musiio allows it to “further leverage its vast data to identify what’s next in music trends and talent” and create playlisting tools for the music industry.
The Ledger is a weekly newsletter about the economics of the music business sent to Billboard Pro subscribers. An abbreviated version of the newsletter is published online.
If the 2010s were the decade that established streaming as the de facto way that most people enjoy music, the 2020s will be the decade the platforms’ royalty rates took a leap forward.
For much of streaming services’ existence, the industry has tried to gently balance the need to foster growth with the need to generate something close to subsistence-level income for creators and rights holders. If rights holders squeeze too tight, they could strangle the life out of the companies they depend on to carry them in a post-CD, post-download world. Too loose a grasp on streaming platforms would mean the spoils of technological disruption would remain with tech companies.
The process requires patience. With social media apps, licensing deals start small, with lump-sum payments rather than percent-of-revenue royalties while the fledgling platform builds a sustainable business model. Because licensing deals are renewed every three years, rights owners endure long waits to secure better terms that will result in more royalties. It will take a few cycles for a platform to generate meaningful royalty income for its label partners.
This year, there were numerous developments that point to better royalty rates in 2023 and beyond. They have different degrees of certainty, however. Higher subscription prices are sure to move the needle and result in higher payouts to artists and labels. Whether artists and labels will finally get paid for terrestrial radio play in 2023 is less certain, although the mood in Washington D.C. seems favorable. And with the authors of Chokepoint Capitalism, Cory Doctorow and Rebecca Giblin, currently making the media rounds, and the Federal Trade Commission cracking down on companies that take advantage of gig workers, the plight of creators in today’s digital economy is getting mainstream attention (my colleague Rob Levine brought attention to tech companies’ value destruction in his book, Free Ride, a decade ago).
Congressional Bill to Get Artists & Labels Paid for Radio Airplay Clears Critical House Vote
12/09/2022
Music subscription price increases
Artists have wanted a raise from streaming services for years. Part of the problem is how royalties are calculated — a pool of money is split according to the number of times the tracks were played. That puts album-oriented artists at a mathematical disadvantage to mainstream artists in popular genres like pop and hip-hop. Another common complaint is that streaming services have barely raised their subscription prices for more than a decade. With prices flat, the best way to improve streaming royalties is to attract more subscribers. Keeping subscription fees relatively affordable, especially when Netflix and other video streaming services routinely hiked their prices, ensured customer acquisition would continue. Affordable family plans, which cover up to six people for 50% more than an individual plan, helped attract customers and reduced churn — but didn’t help artist payouts. Finally, this year Amazon, Deezer, YouTube Premium (which includes YouTube Music) and Apple Music announced broad price increases to individual and family plans. Spotify has hinted it will follow with price hikes of its own in 2023. The financial impact could be massive: A modest increase of $1 per month for individual plans and $2 per month for family plans in mature markets — less in developing markets with lower prices — would easily generate many hundreds of millions of incremental subscription royalties, which totaled $12.3 billion in 2021, according to the IFPI.
A TikTok subscription service
TikTok doesn’t pay much in royalties, but it plays an outsized role in cultural trends — the app has over 1 billion active users and is especially popular with Gen Z consumers. That has changed the balance of power in music streaming. “The major streaming platforms are reacting to culture now rather than driving it,” Tatiana Cirisano, music industry analyst and consultant for MIDiA Research, recently told Billboard. In that light, news that TikTok is working to expand its Resso subscription service (it’s available only in Indonesia, Brazil and India) is a big deal. Currently, TikTok creates impressions and demand for music that has downstream effects on other platforms — see a TikTok video, listen to the entire track at Spotify, YouTube Music or Apple Music. But if TikTok owned both the short-form video platform and the subscription platform, it could better convert that initial interest into downstream listening while eroding the influence of the Spotifys and Apple Musics of the world. More importantly, a TikTok subscription service would help change TikTok’s status as a royalty underperformer.
Subscription streaming rates
Publishers and songwriters will get a slight raise in subscription streaming royalty rates over the next five years due to a settlement reached in August by the National Music Publishers’ Association, the Nashville Songwriters Association International and the Digital Media Association. The headline royalty rate will go from 15.1% of revenue in 2023 to 15.35% in 2027. That’s not a huge gain, but it’s an improvement. The settlement could help in other ways, too. Streaming services were able to get favorable terms for bundles and free trials that allow them to get more subscribers into the ecosystem. That would help songwriters and publishers by increasing the number of subscribers — the major driver in streaming royalty growth — as they enjoy modest annual increases in royalty rates.
Inflation adjustments to noninteractive streaming rates
Each year, the rate paid by noninteractive streaming platforms in the U.S. is adjusted to account for inflation over the previous year. In 2023, artists and labels will get a raise due to inflation rates that reached a 40-year high in 2022. (The rates increased 7.1% for subscription plays and 9.1% for ad-supported plays.) In years past, noninteractive streaming services such as Pandora were a more significant part of artists’ and labels’ incomes. That gave extra weight to the decisions of the Copyright Royalty Board and changes in the per-play streaming rates. Now, on-demand services like Spotify and YouTube dominate the streaming landscape and noninteractive webcasting has diminished in value and relevance. Still, Pandora’s ad-supported listening hours fell only 5% year over year in the third quarter of 2022 — to 2.75 billion — and it paid out $921 million in royalties in the first nine months of the year. Above all, a raise is a raise.
Terrestrial radio royalties
Legislation that would pay artists and labels for airplay on U.S. terrestrial radio was passed by the House Judiciary Committee on Wednesday (Dec. 7). With only a month left in the current Congress, Rep. Jim Jordan, ranking member of the House Judiciary Committee, said he’s confident the bill could make it through the next Congress (that could be 2023 or 2024). While this isn’t the first legislation to address the lack of a performance right, the AMFA arrives at a time when lawmakers — in D.C. and elsewhere — have taken an interest in creators’ ability to make a living in the streaming age. Outgoing House Judiciary Committee chair Jerry Nadler has shown concern about a “race to the bottom” in streaming royalties, for example, and U.K. lawmakers examined the equitableness of streaming royalties paid to artists in that market. Passage of an AMFA-like law, or a settlement with radio broadcasters, would be a huge coup for artists and labels who get only promotion from radio airplay while radio stations are obligated to pay songwriters and publishers. In fact, U.S. radio royalties would be two — not one — new stacks of money. That’s because the lack of a performance right for broadcast radio in the U.S. means European countries withhold royalty payments from American artists for performances on their soil, SoundExchange CEO Michael Huppe explained in a recent Billboard op-ed.
A new R. Kelly album titled I Admit It was uploaded to streaming services Friday (Dec. 9), but it didn’t come from Kelly’s team or his label.
While the release credits Sony Music’s Legacy Recordings as the label, a rep for Legacy Recordings said the company was not involved in the project. Furthermore, sources at Legacy say the album came as a total surprise and they are inquiring with streamers such as Spotify, Apple Music and Amazon Music about how the album was delivered to them.
The album was uploaded by Universal Music Group-owned distributor Ingrooves, leaving involved parties scrambling to figure out what went wrong. Once Ingrooves executives learned of the release, according to a source familiar with the situation, they set about requesting that streaming services pull the release. By 3 p.m. EST on Friday it was down.
Now, the source says, Ingrooves is in the process of investigating what went wrong internally and is severing a relationship with the label Real Talk Entertainment, which released the album on a sub-label called Legacy Recordings — the same name as Sony’s imprint. Real Talk could not be reached for immediate comment.
In January 2019, Sony and Kelly agreed to part ways days after Lifetime released the Surviving R. Kelly documentary that detailed sexual misconduct allegations against the three-time Grammy-winning singer. Sony still represents Kelly’s catalog of music, however, including his early recordings under Zomba/Jive and then later RCA, both of which are Sony-owned imprints.
The 13-track project arrives as the disgraced R&B singer (real name Robert Sylvester Kelly) is serving a 30-year prison sentence after he was convicted of racketeering and sex trafficking charges in a New York trial last June. In September, during another trial in his hometown of Chicago, Kelly, 55, was convicted of several child pornography charges.
The album’s title track, “I Admit It,” was originally released as a 19-minute track on SoundCloud in 2018. It is now featured as three separate songs, each titled “I Admit It (I Did It),” at the end of the album which addresses the sexual abuse allegations against him over the last few decades and its virulent effects on his career.
Kelly’s attorney, Jennifer Bonjean, did not respond to Billboard‘s request for comment by the time of publishing. But she told Variety earlier Friday that the singer’s team is not behind the release and that he “is having intellectual property stolen from him.”
The last studio album Kelly released was a holiday album titled 12 Nights of Christmas on Oct. 21, 2016. It’s his final album on RCA Records before the label removed him in the wake of the Surviving R. Kelly doc.
This story is developing.
Not long ago, a placement on Spotify’s RapCaviar or Apple Music’s Today’s Hits playlists could ignite a single’s streaming numbers overnight. “Today’s Top Hits [32 million followers on Spotify] used to be the holy grail,” says one manager of several major-label acts. “Or even Pop Rising [2.7 million] — it was like, ‘If a song got on Pop Rising, it’s going to get to Today’s Top Hits and do 5 million streams a week.’ ”
But in 2022, the manager continues, “it doesn’t feel like that’s the case.” This realization is growing around the music industry. “The Spotify and Apple editorial playlists don’t have as much punch” as they did, agrees Kieron Donoghue, founder of Humble Angel Records and former vp of global playlists strategy at Warner Music Group. “The major streaming platforms are reacting to culture now rather than driving it,” adds Tatiana Cirisano, music industry analyst and consultant for MIDiA Research.
In a statement to Billboard, Sulinna Ong, global head of editorial at Spotify, countered that the platform’s “top five editorial playlists are followed by more than 80 million listeners — they’re wildly popular.” She added that the overall audience for playlists is larger than ever, “these listeners have increasingly diverse tastes, Spotify is meeting that consumer demand, and, as a result, more artists are being discovered.” A representative for Apple Music declined to comment for this story.
But managers sound nearly misty-eyed when they reminisce about the streams that some editorial playlists once generated. “There used to be a world where an unknown artist would get the cover of the Fresh Finds playlist [on Spotify] and they would get between 60,000 and 100,000 streams a week,” says one manager who works primarily with developing acts. “Now you’re looking at more like 15,000 to 20,000 streams a week.”
“Does Today’s Top Hits move the needle as much now as it did four years ago?” one senior label executive asks. “No.” The difference is especially stark, he adds, if you’re not near the top of the playlist.
Label executives say the change in firepower of marquee editorial playlists is caused in part by the increased emphasis on personalization, especially at Spotify, which encourages users to play music similar to what they’ve streamed — in essence, burrow deeper into their own tastes — rather than pushing all listeners to play the same tracks. The shift is also a reflection of the growing power of apps like TikTok in music discovery: “The pie of ‘discovery market share’ has become more fragmented,” according to Daniel Sander, chief commercial officer of music marketing technology company Feature.FM. The gatekeepers who program editorial playlists are ceding ground to user-generated content on short-form-video platforms.
There are exceptions: Managers say some of Spotify’s editorial playlists in Southeast Asia, for example, still have oomph, as does the phonk playlist, which launched earlier this year and caters to a rising subgenre of dance music popular in Eastern Europe. (Beneficiaries include dhruv, who has 7.5 million monthly listeners on Spotify, and Kordhell, with 12.7 million.) But executives maintain that many of the big-name editorial collections are not magnifying songs the way they once did.
Some of that decline is due to changes at the streaming services. In 2019, Spotify took playlists like Beast Mode and Chill Hits, which previously had been the same for all listeners, and personalized them “for each listener based on their particular taste,” according to a company press release. (This change did not affect playlists like RapCaviar, Baila Reggaeton, and Today’s Top Hits.)
Spotify found that this had two effects: Listeners tuned in to personalized collections for longer, and the streaming wealth was spread across more acts — raising “the number of artists featured on playlists by 30% and the number of songs listeners are discovering by 35%,” according to one 2021 announcement.
In her statement, Spotify’s Ong noted that “listener habits have become increasingly diverse, so our playlist strategy has expanded to accommodate that.” She says personalized editorial playlists are responsible for “a third of all new artist discoveries on Spotify.”
TikTok, which now spurs a lot of music discovery, embraced personalization from the beginning. Users marvel at how well the app seems to anticipate their tastes: “Everything on TikTok feels like it was meant especially for you,” says one music executive.
Short-form-video platforms like TikTok have also fundamentally altered the timeline of a hit. “With the rise of TikTok, YouTube Shorts and Instagram Reels, artists can play song snippets or behind-the-scenes content and drive fans to take action — discovery is happening before your song would even be able to be put on an editorial playlist,” says Sander.
In addition, TikTok rejuvenates catalog tracks — ranging from Fleetwood Mac’s “Dreams” (released in 1977) to Thundercat’s “Them Changes” (2017) — and pushes them back on to the charts, defying many marquee editorial playlists’ emphasis on front-line releases. “The path of a hit has changed,” says one major-label executive. The major streaming platforms “haven’t built anything to adjust to that.”
As a result, the power of streaming-service gatekeepers has eroded. “You’re going to find the next curator on TikTok,” says one A&R consultant at a major label. The mantle of the editorial playlisters has been taken up partly by remix-focused accounts on TikTok, which release sped-up or slowed-down versions of sounds that millions of users incorporate into their own videos.
User-generated content is “what’s driving TikTok and driving the charts,” says Kuok Meng Ru, CEO of music technology company BandLab. “People feeling involved gets them more excited.”
And there’s no way to be involved with editorial playlists other than hitting the “like” button. “We’re seeing in consumer surveys how much Gen Z really does want to actively participate in music — not just listen and consume passively, but make their own videos, remix the song, create their own content on top of it,” Cirisano adds. “The major streaming services don’t offer that.”
After years of trying to clean up its act and shed its reputation as a major source of pirated music, Russian streaming service VK is allowing users to upload albums released on major record labels that exited Russia after the invasion of Ukraine.
A search by Billboard on Dec. 7 found that dozens of albums from major labels were were available to all VK users and could be found using the service’s search tool. They included Taylor Swift‘s Midnights, released by Universal Music Group’s Republic Records, and Red Hot Chili Pepper‘s Return of the Dream Canteen, a Warner Records Music release.
VK did not reply to Billboard‘s request for comment.
Global labels body IFPI in London did not immediately condemn the apparent copyright violations, nor confirm if they or its label members had issued takedown orders to VK in recent days. “We’re continuously monitoring the situation in Russia with regard to unauthorized services and will take appropriate action as necessary,” an IFPI spokesperson said.
Sony, Warner and Universal all declined to comment. “It’s disappointing and wrong but comes as no surprise considering [Russia’s] current lack of respect for rights or the rule of law,” one senior industry executive told Billboard.
Courtesy Photo
Just some of the pirated Taylor Swift music featured on VK.
Courtesy Photo
Launched as VKontakte in 2007 in St. Petersburg, VK offers music and other features of a social media platform. As of last month, it was the sixth most-popular web site in Russia, according Similarweb, a website tracking company. It is the second most-popular platform offering music in Russia after Yandex.Music.
In the first quarter, VK had 73.4 million monthly average users and a global audience of 100.4 million. The platform offers both an ad-sponsored model and a subscription service with 3.5 million subscribers, according to the most-recent data available. (Before pulling out, Spotify reportedly had 600,000 paid subscribers in Russia.)
VK’s history of piracy is well noted. When VK emerged as Russia’s response to Facebook, it had a feature that Facebook didn’t — a tool allowing users to upload music tracks that immediately became available to all other users.
That feature was, arguably, one of the reasons why VK quickly became popular with younger users. However, it also made the social network an archenemy of international major labels who accused it of facilitating online piracy.
A range of lawsuits were brought against VK, but the company stood its ground, claiming it had no technical capability to control user-generated content but was willing to remove any copyrighted content at rights holders’ request. The problem was that if a pirated music track was removed, another copy of it would be almost immediately added by another user.
For a while, courts accepted VK’s argument about its inability to control user-generated content, but an array of lawsuits eventually forced VK to sign licensing deals with the majors and the streaming platform got rid of user-generated pirated music a few years ago.
Then in March, in support of Western sanctions to penalize Russia for Vladimir Putin’s invasion of Ukraine, Sony, Warner and Universal said they were suspending operations in Russia, and their new releases were no longer available on VK. That same month, Amazon, Deezer, Spotify and TikTok either closed their Russian offices or stopped trading in what was previously the 13th largest music market. (YouTube, for its part, suspended all monetization programs for users in Russia in March.) Among major global music providers, only Believe, the French music distributor, has continued to operate in Russia, saying in September that it was doing so “to support its artists, labels and protect its people’s safety as well as ensure access to music production and distribution.”
The pullout by the global music industry slowed the legal development of a market that Spotify, in particular, had targeted as a key country in its expansion into Eastern and Central Europe. Russia was the fastest-growing market among the global top 20 both in 2019 and 2020, when it produced $328 million in recorded-music revenue, a 58% increase over 2020, according to IFPI.
Some Russian officials have called for a regulation that would permit the use of music and movies whose rights holders have left Russia. The most popular proposal was that all royalties owed to foreign rights holders who left Russia would be held in a dedicated account in Russian rubles and then distributed at some point in the future. Nothing concrete has been done in that area so far, but the Russian government has authorized imports of products by companies which left Russia. They cannot be technically sold in Russia, but they are imported via third countries.
Under current Russian law, the use of music or movies without permission from rights holders remains illegal.
Additional Reporting By Richard Smirke
In a year historically high inflation has wreaked havoc on the costs of both touring and producing music, musicians and record labels received a bit of reprieve — thanks to high inflation.
The Copyright Royalty Board, which sets royalty rates for some streams in the United States, announced on Dec. 2 that per-stream rates for noninteractive webcasters’ streams will take a big jump in 2023: commercial webcasters will pay 0.3 cents per stream for subscription performances, up 7.1% from 0.28 cents in 2022, and 0.24 cents per stream for ad-supported performances, up 9.1% from 0.22 cents. Non-commercial webcasters’ per-stream royalty rate for 2023 is 0.24 cents for all digital audio transmissions in excess of 159,140 aggregate tuning hours in a month on a channel or station.
The CRB’s calculated the adjustment by multiplying the base rate by the percentage change in the CPI-U published by the Bureau of Labor Statistics before Dec. 1, 2022 (298.012), and the CPI-U for Nov. 2020 (260.229). In 2015, the CRB decided to add an annual cost-of-living adjustment to royalty rates paid for plays of programmed streams for 2016 to 2020. The rates for the current period, 2021 2025, are also adjusted annually. Previously, the CRB established a slate of increasing rates for a five-year period and did not revisit the rates annually.
Artists are ensured to feel the bump in royalty rates because webcasting royalties are paid by streaming services to SoundExchange, which distributes payments directly to performing artists from noninteractive webcasters such as Pandora. In contrast, on-demand services cannot operate under a statutory license and must secure licensing agreements from record labels. So, royalties from on-demand services such as as Spotify and Apple Music are paid directly to labels, which in turn pay artists according to the terms of the recording contract (or don’t pay artists if expenses have not been recouped).
A raise from noninteractive webcasters affects only a minority of an artist’s digital revenues, however. SoundExchange distributions – which also include royalties for performances by satellite radio and cable broadcasters — in the first half of 2022 declined 4.5% year over year to $464.9 million, according to the RIAA. That was about 7.2% of total streaming royalties, down from 34.4% in 2016. Today, most streaming royalties come from paid subscription services, which accounted for $4.5 billion of revenue in the first half of the year and are growing at nearly at double-digit rate.
Still, noninteractive streaming royalties have risen considerably over the years thanks to the cost-of-living adjustments. In 2016, a webcaster such as Pandora paid out 0.22 cents per stream for subscription plays and 0.17 cents for ad-supported plays. Low inflation meant the rates increased only once over the next five years. A new slate of rates for 2021 to 2025 brought the rates to 0.24 cents for subscription plays and 0.21 cents for ad-supported plays in 2021. The cost-of-living adjustments for 2022 took the rates to 0.28 cents and 0.22, respectively.