Streaming
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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.
TikTok has proven its success at renewing widespread interest around old songs countless times over the past several years. 2022 was no exception, as the short-form video platform announced Swedish Sadboy rapper Yung Lean’s 2013 track “Ginseng Strip 2002” was its most popular track of the year thanks to a trend of users singing along for about 10 seconds and then kissing at the end.
The nearly decade-old track was used in almost 11 million videos across the app in 2022, and while TikTok royalties are notoriously low to music rights holders, the upside proposition has been established that a viral hit there will drive streaming elsewhere. With “Ginseng Strip 2002,” that was most certainly true.
Since the “Ginseng Strip 2002” TikTok trend started to take off around the turn of the new year, its impact is relatively easy to compare year-over-year. And it’s considerable. As of Dec. 1, the track had been streamed more than 71 million times on-demand in 2022 in the U.S. That’s a 780% increase from the full year prior, and up over 1,070% when compared to the same 48-week period (Jan. 1-Dec. 1). To date, the track has over 206 million global streams on Spotify.
The viral success has undoubtedly been a pleasant surprise payday for Lean as well as his label, Swedish indie YEAR0001, and publisher Sony Publishing. Based off U.S. streams alone, the different rights holders have earned about $350,000 so far in 2022. Split up, that’s about $260,000 for the master recording to the label and artist, and $62,900 to the publisher and co-writers Yung Lean and Yung Gud, based on Billboard‘s estimates.
This is actually the second time “Ginseng Strip 2002” has gone viral. The casually hedonistic track that came together by accident during a microphone sound check, according to producer Yung Gud, first took off on YouTube in 2013. That quick success on YouTube caused Yung Lean some anxiety, as he told Beats 1 Radio in 2017. “I was kinda scared at one point that it was just gonna be a couple million views and some viral hit, and there wasn’t going to be anything else,” he said. “I was just trying to figure out my place and everything. I didn’t want to be a one-hit wonder.”
Yung Lean and YEAR0001 had not responded to a request for comment for this story at the time of publishing.
Apple Music users will soon be able to sing along to their favorite hits right inside the app.
On Tuesday (Dec. 6), Apple announced the launch of a built-in karaoke function on the streaming service, which will be available to all Apple Music subscribers worldwide later this month. Dubbed Apple Music Sing, the feature will be accessible on iPhone, iPad and the newest model of the Apple TV 4K, with tens of millions of songs available at launch.
Apple Music Sing is similar to a typical karaoke player, highlighting the streamer’s onscreen lyrics beat by beat. Additional functionality includes the option to adjust a song’s vocal levels; the separation of background vocals from main vocals to make the lyrics easier to follow; and a “duet view” that places lyrics from multiple vocalists on opposite sides of the screen to make multi-singer tracks easier to navigate.
Along with the new feature, Apple Music will additionally be launching a suite of more than 50 thematic Apple Music Sing playlists grouping songs together by genre, decade and more.
“Apple Music’s lyrics experience is consistently one of the most popular features on our service,” said Oliver Schusser, vp of Apple Music and Beats, in a statement on the launch. “We already know our users all over the world love to follow along to their favorite songs, so we wanted to evolve this offering even further to enable even more engagement around music through singing. It’s really a lot of fun, our customers are going to love it.”
Ginseng Strip 2002,” a casually hedonistic track by the Swedish rapper Yung Lean, initially went viral on YouTube in 2013. Nearly a decade later, lightning struck again on a different platform when the single became wildly popular on TikTok. This song — a series of druggy snapshots narrated in an uninterested monotone — was used more than any other on the app in 2022, according to the year-end report TikTok shared Tuesday (Dec. 6).
While “Ginseng Strip 2002” was used in nearly 11 million videos, the Mexican singer Kim Loaiza enjoyed the most viewed artist account with 70.5 million followers. She was one of five Spanish-language acts among the top 10 most-viewed artists, including superstars like Bad Bunny (29.7 million followers) and Rosalia (27.5 million).
The growing commercial importance of sped-up and slowed-down remixes of singles was also reflected in TikTok’s year-end report. Sped-up hits included new versions of Michael Buble‘s “Sway” and Cat Burns‘ “Go;” an uptempo rework of Demi Lovato‘s “Cool for the Summer” helped the track crack the top five on the platform. It trailed only Nicky Youre and dazy‘s “Sunroof,” Willow’s “Wait a Minute,” WZ Beat’s “Beat Automotivo Tan Tan Tan Viral,” and of course, “Ginseng Strip 2002.”
“Ginseng Strip 2002” came together almost by accident, according to the track’s producer Yung Gud. “‘Ginseng Strip 2002’ was just a sound check — he was just checking to see if the microphone was working,” the producer told The New Yorker in 2014.
The track’s initial success on YouTube caused Yung Lean some anxiety. “I was kinda scared at one point that it was just gonna be a couple million views and some viral hit, and there wasn’t going to be anything else,” he told Beats 1 Radio in 2017. “I was just trying to figure out my place and everything. I didn’t want to be a one-hit wonder.”
While “Ginseng Strip 2002” was the most-used track globally, it ranked third in the U.S. behind “Sunroof” and Luclover’s “L$d.”
SiriusXM is planning cost-cutting measures for the new year — including, potentially, job cuts, the satellite radio service told staff during a company-wide Zoom meeting this week.
SiriusXM CEO Jennifer Witz said the company is reviewing “where there is room for improved efficiency,” as it weighs how to handle macroeconomic challenges like declining advertising budgets and auto manufacturer delays while still investing in a near-total rebuild of its technology infrastructure.
“The results of this review will highlight the other areas where we may need to reduce spending, and it may indicate the need for staff reductions,” Witz said on the Nov. 28 call, according to notes from the call reviewed by Billboard and verified by a spokesperson.
“In the meantime, we need to closely evaluate our hiring needs and be purposeful in prioritizing roles that align with our strategic initiatives.”
This comes amid a wave of music companies announcing layoffs, including Spotify, SoundCloud, BMI and Anghami, as all prepare for a possible economic downturn.
SiriusXM said its cost-cutting review is currently underway. While it has not finalized any decisions on how many jobs would be cut or from what divisions, Witz said the results of the review are expected in the new year.
During Witz’s roughly two years as CEO, SiriusXM has hired about 1,500 new employees, bringing the company’s total headcount to just under 5,700, according to filings.
SiriusXM reported last month that profits fell in the third quarter from a year ago due to a slowdown in Pandora subscriber revenue and higher expenses from investments in podcasting and technology. Third quarter revenues were up overall, as the company’s total subscribers rose to 34.2 million.
The company is in the process of updating the back-end technology and user-friendliness of its SiriusXM app, Witz said during a presentation at the investor day for SiriusXM’s parent company Liberty Media on Nov. 17. Updating the app’s infrastructure so that the company can bring new products to the app quickly is a key part of the company’s growth strategy.
“[The new app] takes the ease and connection we have in-car and extends it everywhere our subscribers go while inviting new listeners in as our standalone streaming business continues to grow,” Witz said at the investor day. She also acknowledged the “challenging macroeconomic environment where we are seeing headwinds in both the ad market and auto industry,” and said those issues are forcing the company to run leaner in certain areas in order to prioritize investing in growing SiriusXM’s audiences.
Years ago, when the music business was at its low point, devastated by online piracy and struggling to sell one-dollar downloads, tech pundits used to ask why the major labels hadn’t just started their own online store. There are a few answers: They did (anyone remember PressPlay or MusicNet?), and a more serious effort would have outraged other retailers, which were still generating considerable revenue. Besides, consumers would have been reluctant to embrace a service with a limited selection, and getting too many labels together presented logistical issues (who would run it?) as well as legal ones, in the form of potential antitrust concerns. The result has been a business where technology companies have more control than rightsholders would like over pricing, promotion, and relationships with consumers.
That was then. It’s still hard to imagine any label creating its own mainstream streaming service – the kind that would compete with Spotify or Apple – but what about a smaller one, focused on a particular genre? It would be a tough sell now that consumers are used to getting all their music in one place, but the payoff – in profit, information about consumer preferences, and control of a direct marketing channel – could be significant.
As it turns out, there actually is such a service. On Nov. 21, Universal Music Group’s Deutsche Grammophon launched Stage+, which for $14.90 a month offers music from the label’s archive and that of sibling Decca Records, plus video programming and a new live performance every week. In terms of popularity, Stage+ can’t compete with mainstream platforms, but it’s not meant to – and it doesn’t even need to. It could make money with a number of subscribers in the low six figures, partly because it costs more than other services, and it gives Deutsch Grammophon a way to market other products directly to consumers.
Stage+, which was developed by Deutsche Grammophon president Dr. Clemens Trautmann under Universal Music Central Europe chairman and CEO Frank Briegmann, faces any number of challenges – consumer disinclination to subscribe to multiple services, existing specialist streaming platforms, even a rumored new project from Apple. But the product looks great, and it’s worth thinking about how a genre-focused, label-owned service might develop – and the issues it raises for the streaming model that has relatively quickly come to dominate the music business.
Right now, Stage+ only offers Universal Music content. But there’s no reason other labels couldn’t license it music. (Trautmann says he’s open to this, although he’s not seeking it out now.) Presumably, Sony Music Entertainment and Warner Music Group would be reluctant to license their classical music repertoire to a service run by their rival. But it might make financial sense to do so, since the subscription price for Stage+ would imply a better payout. Perhaps just as important, the Stage+ policy of dividing royalties according to listening time is fairer to classical performers than the standard number-of-tracks model. If you had spent decades mastering an instrument, how would you feel about hearing that your 20-minute recording was only worth a tenth as much as 10 two-minute pop songs that played for the same total amount of time.
This model could also work for other genres, which is where things really get interesting. The obvious candidate is jazz. Like classical music, it appeals to aficionados, many of whom might be willing to pay a premium price for a well-curated service that offers high-fidelity audio and video. As it happens, Universal has a substantial market share there, too: It owns Decca, Blue Note and Verve (which controls Impulse! Records) and has distribution deals with ECM Records and Concord Records (which owns the catalogs of the Prestige and Riverside labels). That’s far from everything – Sony has the important Miles Davis recordings, for example – but it would be one hell of a start. After that, who knows? Could there be room for an Americana platform, a service for independent punk, even one for jam bands?
The truth is that subscription streaming saved the music business, but the dominant model just isn’t great for some genres. Neither are the dominant services, which offer a mind-blowing selection of music but are aimed at a general audience. That has helped the music business grow, but it hasn’t always served fans focused on specific genres. Classical aficionados want better metadata to find specific performances of classic compositions, for example, while jazz devotees could use more information about which musicians play on certain recordings. Jam-band fans might want help figuring out the coolest versions of “Dark Star.”
These kinds of services probably won’t cost mainstream services many subscribers, but they could put a bit of pressure on them to reconsider some of the rules that favor pop at the expense of other genres. Why don’t services double-count songs that are more than 10 minutes long, for example, or create an easy and reliable way to search for albums based on the musicians that play on them instead of just the named artist? For the last few years, the music streaming market has been extremely competitive based on marketing and discounts – all the mainstream services offer the same music for about the same price, with a fairly similar experience. What would help record labels, as well as creators, is more competition in terms of business models, where services that offer different features face off against others that are aimed at different audiences. And who better to spark that competition than the labels themselves?
For the Record is a regular column from deputy editorial director Robert Levine analyzing news and trends in the music industry. Find more here.
As streaming became the dominant mode of music consumption, fraud and “fake streams” have been regarded as a minor nuisance — generally acknowledged but seldom worried about. Most industry executives tend to see this activity as a way for aspiring acts to inflate their numbers, and thus their commercial potential, or as an avenue for grifters to steer money into their pockets by running up plays of white noise or rain sounds.
At least since this summer, however, SoundCloud has detected evidence of fraudulent streams or manipulation on multiple releases from both notable independent acts and major-label artists, including hitmakers with track records of successful singles, according to two sources familiar with the company’s operations who spoke on the condition of anonymity. And this is not unique to SoundCloud. This summer, Deezer executive Ludovic Pouilly told the French investigative publication Les Jours that it has become more common to see “artists in the top 200 who have millions of real streams” have fake streams as well.
Streaming services are increasing their effort to fight the fakes. In a statement, a spokesperson for SoundCloud said, “We take the issue of stream manipulation extremely seriously and make every effort towards identifying and mitigating inauthentic plays.” It’s not alone: Earlier this year, a Spotify spokesperson told Billboard, “Stream manipulation is an industry-wide issue that Spotify takes very seriously.” SoundCloud also works with a third-party company that “specialize[s] in bot detection” to fight stream manipulation, an executive said at a Music Biz panel in May. (The panel had a pointed title, “They’re Coming For Us: Fraudsters & How We Stop Them.”)
Streaming executives say there are a handful of ways to fraudulently boost an artist’s numbers, including harnessing bot networks or fake or stolen user accounts, and that this activity is becoming “more intense,” as Pouilly put it. At Music Biz, Napster senior vp and general counsel Matthew Eccles noted that fraud on the platform “increased over COVID.”
In fact, the current streaming business is rife with “very prevalent fraud and abuse,” according to SoundCloud vp of strategy Michael Pelczynski, who spoke at the same panel. This abuse has “cultural ramifications,” Pelczynski added: If fraudulent streams go “undetected and not policed, and [they] start influencing the way we measure the success of music, we are literally supporting inauthenticity.”
The level of fake streams detected varies by service and region. At one point, bots on Pandora were generating “a large, large fraction of spins,” according to George White, senior vp of music licensing at SiriusXM, “nearly equaling” the amount coming from human accounts. Pouilly told Les Jours that “7% of the volume of daily streams [on Deezer] is now detected as fraudulent.”
The Merlin Network, which handles digital licensing for many independent labels and distributors, used to send members a monthly report detailing the percentage of fraudulent streams from their releases on Spotify; this February, 2.5% of ad-supported streams and 1.2% of the plays from premium Spotify accounts were identified as fraudulent. (Asked about the issue, a spokesperson for the platform said that stream manipulation was “an industry-wide issue.”) The ad-supported number was nearly 10% at one point in 2020, according to one executive who received the report.
As evidence of what Pelczynski dubbed “prevalent fraud” grows, music executives worry that artists who are playing by the rules will start to feel pressure to pad their numbers in order to keep up with rivals — especially in an increasingly crowded landscape where it feels harder than ever to stand out. Paying for fraudulent streams “will become a marketing expense that everyone needs to employ if it’s left unchecked,” White warned at Music Biz.
Eccles from Napster worried that the music industry could enter a phase like professional cycling decades ago, when cyclists felt compelled “to dope” just to compete at a high level. It is “key,” Eccles stressed, “to avoid a situation where that happens in music.”
It’s the time of year — the mercury is diving (or soaring, for those of us in the south), holiday classics are ringing out in the stores, and Spotify unleashes its Wrapped campaign.
Today (Dec. 1), the music streaming giant unveils the songs that kept its 456 million listeners (with 195 million “paid” subscribers) plugged in.
Puerto Rican superstar Bad Bunny is No. 1 on Spotify’s most-streamed global artists list, with more than 18.5 billion streams in 2022. The rapper becomes the first artist to top the list three consecutive years, and also dominates Spotify’s annual albums chart.
Following the smash hit that was her tenth and latest album, Midnights, Taylor Swift comes in at No. 2 among Spotify’s most-streamed artists, while the top 5 is rounded out by international acts: Drake, The Weeknd, and BTS, respectively.
The biggest single of the year belonged to Harry Styles, whose chart-leader “As It Was” racked up more than 1.6 billion streams. Lifted from the British pop singer’s third solo studio album, Harry’s House, the single this year led the Billboard Hot 100 for a whopping 15 weeks, and reigned over the Official U.K. Singles Chart for 10 weeks.
Styles leads an all-international top 5, ahead of Glass Animals’ “Heat Waves;” The Kid Laroi and Justin Bieber’s “Stay;” and Bad Bunny tracks “Me Porto Bonito” and “Me Porto Bonito,” respectively.
The former One Direction artist’s third album Harry’s House went to No. 1 on both sides of the Atlantic, and around the world, and came in at No. 2 on Spotify’s most-streamed global albums list, behind Bad Bunny’s irrepressible Un Verano Sin Ti, which dominated the Billboard 200 in 2022 for 13 weeks.
Also, Spotify drills into its data for insights into those acts whose music is most shared (Taylor Swift), the most-shared lyrics (“Heat Waves”) and most popular podcasts (The Joe Rogan Experience, which Spotify exclusively licenses).
The streaming platform’s annual chart splurge is the entre for its Wrapped experience, which eligible users can access and share from today from Spotify mobile app (iOS and Android).
“This year’s Wrapped is both a celebration of a year gone by and an invitation to join in on the fun,” reads a statement, accompanying the year-end lists.
In addition to the annual rundown, this year’s Wrapped includes a creator experience for podcasters and artists. And Artist Wrapped, now in its sixth year, rolls out with several new features including “Your Artist Messages,” a dedicated Wrapped video feed, personalized to each listener; and a “Spotlight” on merchandise and ticketing which, for the first time, sees personalized offerings integrated into the Wrapped Hub and promoted to top fans via in-app notifications and other channels.
From Dec. 1, the likes of Jack Harlow, Elton John, NIKI, and others will promote Wrapped exclusive merch to their top fans.
Launched in 2017, Artist Wrapped is now available in 36 languages.
Spotify 2022 Wrapped Global Top Lists:
Most-Streamed Artists Globally
Most-Streamed Songs Globally
“As It Was” by Harry Styles
“Heat Waves” by Glass Animals
“STAY (with Justin Bieber)” by The Kid LAROI
“Me Porto Bonito” by Bad Bunny feat. Chencho Corleone
“Tití Me Preguntó” by Bad Bunny
Most-Streamed Albums Globally
Un Verano Sin Ti, Bad Bunny
Harry’s House, Harry Styles
SOUR, Olivia Rodrigo
=, Ed Sheeran
Planet Her, Doja Cat
Most Popular Podcasts Globally
Most Viral Artists Globally
Most Shared Lyrics Globally
Spotify 2022 Wrapped U.S. Top Lists
U.S. Most-Streamed Artists
U.S. Most-Streamed Songs
“As It Was” by Harry Styles
“Heat Waves” by Glass Animals
“Bad Habit” by Steve Lacy
“Me Porto Bonito” by Bad Bunny feat. Chencho Corleone
“First Class” by Jack Harlow
U.S. Most-Streamed Albums
Un Verano Sin Ti, Bad Bunny
Harry’s House, Harry Styles
Dangerous: The Double Album, Morgan Wallen
Midnights, Taylor Swift
SOUR, Olivia Rodrigo
U.S. Most Popular Podcasts
U.S. Most Popular Audiobooks
LONDON — The U.K. competition regulator has ruled out making further interventions in the music business and says that low returns from streaming, which songwriters and artists have expressed concerns about, are not being driven by the major labels’ dominance of the market.
In its final 165-page report into the U.K. music business, published Tuesday, the Competition and Markets Authority (CMA) says, however, that it is a matter for policymakers to determine whether current streaming revenue splits are “appropriate and fair” and if “wider policy interventions are required.” To that end, the regulator says it will share its final findings with the British government.
The CMA’s final 165-page report into the U.K. music business shows that consumers have greatly benefited from streaming, with the monthly price of streaming subscriptions falling by more than 20% in real terms between 2009 and 2021 due to not keeping pace with inflation. The monthly cost of an individual subscription to Spotify has remained £9.99 ($12.00) for the past decade.
At the same time, there’s been a huge rise in the amount of music that is available to consumers, from both paid subscription services and free ad-supported streaming, making it increasingly harder for all but the most popular artists to reach large audiences and earn a decent income.
In 2021, more than 138 billion music tracks were streamed in the U.K., yet less than 1% of all artists achieve more than one million streams per month, according to the CMA’s research. That level of streams would earn an artist around £12,000 ($14,500) per year after record company and streaming service deductions, says the regulator. The CMA found that over 60% of streams were of music recorded by only the top 0.4% of artists.
“We heard from many artists and songwriters across the U.K. about how they struggle to make a decent living from these [streaming] services,” says Sarah Cardell, interim chief executive of the CMA. Despite empathizing with creators’ “understandable concerns,” Cardell says the watchdog’s findings show that low returns for the majority of artists “are not the result of ineffective competition” between the three major record labels — Universal Music Group, Sony Music Entertainment and Warner Music Group – which make up 75% of the U.K.’s recorded music market (independents account for the remaining 25%).
As a result, further intervention by the CMA “would not release more money into the system that would help artists or songwriters,” says Cardell. Therefore, the watchdog will not carry out a ‘phase 2’ full market investigation of the U.K. streaming business over competition concerns, which could have lasted up two years. Instead, it will share its findings with government policy makers for them to consider whether “additional action is needed to help creators,” says Cardell.
The regulator also warned that it may be forced to intervene in the future if the streaming business changes in a way that harms consumers’ interests. Determining factors identified by the CMA include mergers or acquisitions that could lead to a “substantial lessening of competition,” music companies prohibiting innovations that would benefit music fans and significantly higher streaming subscription prices.
The conclusions released Tuesday were a follow-up to an interim report released in July, in which the CMA said that streaming was working well for consumers. The regulator examined the integral role that services like Spotify and YouTube play in the booming music economy — and how those spoils are shared with creators. Just under 50 parties submitted written evidence to CMA officials as part of the study, including all three major labels, Google and independent music companies Believe, Beggars Group and Merlin.
Responding to artist concerns around how little they earn from music streaming, the CMA says its analysis of the market found that “neither record labels nor streaming services are likely to be making significant excess profits that could be shared with creators.”
According to its most recent earnings report, Universal Music Group’s revenue grew 13.3% to 2.66 billion euros ($2.75 billion) at constant currency in the third quarter of 2022. The world’s largest record label reported growth across all segments, including a 10.1% rise in recorded music revenue. UMG’s total revenues for 2021 were 8.5 billion euros ($10.1 billion) with net income of 1.271 billion euros ($1.51 billion) on an adjusted basis.
Sony Music reported on Nov. 1 that its quarterly revenues had risen 5.9% year-on-year to $2.58 billion (¥359.3 billion), with recorded music revenue up 14.2% to $1.62 billion (¥224 billion) in the same period, driven by growth of its subscription streaming income. Last week, Warner Music Group announced its quarterly revenues rose 16% at constant currency (9% as reported) to $1.5 billion in the fiscal fourth quarter ended Sept. 30.
Despite the concentrated nature of the market, outcomes for artists as a whole seem to be improving, the CMA says. Between 2012 and 2021, the average gross royalty rate increased from 19.7% to 23.3% and artists now have far greater choice over the type of deal available to them, ranging from traditional label deals to DIY distribution or artist and label service type deals. The CMA report also notes that the proportion of record contracts where labels own copyright of recordings in perpetuity fell from 66% to 26.4% in that same nine-year period.
Reaction among U.K. music trade groups to the CMA’s final report was mixed. A spokesperson for labels trade body BPI welcomed the regulator’s decision not to proceed with a full market investigation and said the study reinforces its view that the future health of the music industry is dependent on labels continuing to invest in artists.
Graham Davies, chief executive of songwriters and composers group The Ivors Academy, took an opposing view, saying that the current music streaming business “is concentrating earnings to an unsustainable extent” and “rewards few music creators.” He said government intervention is needed “to fix streaming.”