The Ledger
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The old saying that any publicity is good publicity isn’t always true in the music business. And this year, Sean “Diddy” Combs is proving that listeners and corporations alike have limits.
Near the end of 2023, Combs was enjoying the momentum of the September release of The Love Album: Off the Grid, which spent seven weeks on the Billboard 200 albums chart and peaked at No. 19 on the Sept. 30 chart week. Meanwhile, album single “Another One of Me” by Diddy, French Montana & The Weeknd featuring 21 Savage peaked at No. 87 on the Billboard Hot 100.
However, those numbers would start dropping quickly. In November, the Bad Boy Records founder was the subject of three separate lawsuits by an ex-girlfriend, Cassie, and two other people with various allegations of sexual and physical assault. While his weekly streams and radio plays — composed of various solo recordings under names including Diddy, Puff Daddy and P. Diddy — could be expected to experience some decay as the weeks passed after the album’s launch, the controversies arguably accelerated Combs’ downturn with listeners.
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When Combs stepped down as chairman of digital media company Revolt a week later, his streams fell 22%, while his radio spins fell 36%. Two weeks after that — when brands severed ties with Combs’ e-commerce company, Empower Global, and Hulu scrapped plans for a reality show involving Combs — his radio plays fell another 55%.
That’s not to say that being in the news always hurts an artist’s streaming numbers. After Combs was arrested on Sept. 16 after being indicted for allegedly running a federal sex trafficking and racketeering conspiracy, U.S. on-demand streams of Combs’ music jumped 37% in the week ended Oct. 3. That Combs’ music benefitted from negative publicity isn’t a surprise — heavy media coverage, whether due to a death or a high-profile lawsuit, tends to influence what listeners seek out on streaming platforms. But the post-arrest bump was short-lived. Three weeks after Combs entered the Metropolitan Detention Center in Brooklyn, his streaming numbers had fallen to pre-indictment levels.
Diddy
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Radio is a different story. While many listeners continued to stream Combs’ music, radio programmers, who risk losing advertisers by playing controversial artists, quickly abandoned Combs. In the first quarter of 2023, well before any public signs of impropriety, Combs’ music was getting played on U.S. radio anywhere from 800 to 1,000 times per week. But the March 25 FBI raids on Combs’ homes in Los Angeles and Miami coincided with a 27% drop in weekly radio spins. By the time a video of Combs assaulting Cassie in the hallway of a hotel surfaced at CNN in May, weekly spins of Combs’ songs were down to 352 — 94% below where they were when Cassie filed her lawsuit seven months earlier. By June, his weekly radio plays had dropped below 200.
Radio’s interest in Combs’ music reached a nadir soon after. The week after his arrest on Sept. 16, Combs’ weekly radio spins were down 25%, and radio programmers have largely refrained from playing his music ever since.
Combs’ experience at the hands of music streamers and radio stations echoes that of R&B singer R. Kelly a few years earlier. Long hounded by allegations of sexual abuse, Kelly managed to avoid accountability until the Washington Post ran a story titled “Star Treatment” that detailed how the music industry overlooked his deeds. In the wake of the article, Spotify and other streaming platforms decided in May 2018 to deemphasize Kelly’s tracks in algorithms and editorial playlists, and his average weekly U.S. on-demand streams dropped 10%. Radio programmers had an even bigger impact: Kelly’s weekly U.S. radio plays dropped 29% following the article’s publication.
Kelly’s arrest in February 2019 didn’t lead to an immediate drop in his streaming numbers; throughout 2019, his weekly on-demand streams consistently hovered around 15 million to 16 million. But radio programmers began abandoning him; by the time Kelly was arrested and charged by the state of Illinois in February, his weekly radio plays had already bottomed out at just over 100, down from about 2,000 a year earlier.
Over the next few years, streams of such songs as “I Believe I Can Fly” and “Ignition” would gradually and consistently decline. In 2020, Kelly’s tracks were doing roughly 9 million to 10 million streams per week. The next year, weekly streams fell to roughly 8 million, then 7 million.
Following a guilty verdict in September 2021, Kelly was given a 30-year prison sentence in June 2022. Like with Combs’ September 2024 arrest, media coverage of his sentence resulted in a small, single-digit gain in weekly streams, but the numbers showed a clear damage to his reputation. A week after the verdict, Kelly’s U.S. on-demand streams stood at 8.8 million per week — down 40% since the Washington Post article ran in 2018.
R. Kelly’s music seems to have reached a plateau, however, and interest in his catalog on streaming platforms has remained steady since his sentencing. Over two years later, Kelly’s weekly on-demand streams remain unchanged at roughly 9 million per week, though radio remains disinterested in playing his songs. This suggests that Diddy’s music could perform better online than at radio as his saga plays out.
Despite the music business nearing a decade of consistent annual growth, thousands of people have exited music companies in the last two years in the biggest wave of layoffs the industry has seen since the early 2000s. Spotify, Universal Music Group, Warner Music Group and BMG, to name just the biggest examples, have undergone organizational changes that restructured the companies and will collectively save them billions of dollars annually.
But the wave of layoffs of the ‘20s are vastly different than the cuts music companies made two decades earlier. The most obvious difference between then and now is the direction the industry was headed in the early ‘00s. From 1999, the year Napster introduced the world to peer-to-peer file-sharing, to 2003, the year Apple debuted the iTunes Music Store, U.S. recorded music revenues fell 18.5% from $14.6 billion to $11.9 billion, according to the RIAA. That’s a stark difference to the health of today’s business. In the last four years, the U.S. market has increased an astounding 54%.
The post-Napster years were “a matter of survival,” says Matt Pincus, co-founder/former CEO of music publisher SONGS, who at the time worked in EMI Music’s corporate development division. “That was a one-time elevator drop in the economics of the business caused by a technological innovation that fundamentally disrupted the way that people used our product.”
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The sudden arrival of both file-sharing applications and widespread internet access caused CD sales to plummet, creating a vicious cycle of layoffs, consolidation and more layoffs. Take EMI, which laid off 1,800 of its 8,000 staffers in 2002. Still reeling five years later, EMI was acquired by private equity firm Terra Firma in 2007. Terra Firma’s restructuring of EMI resulted in another 2,000 layoffs in 2008. As industry revenues continued to decline, Terra Firma was unable to keep up with its obligations to lenders. Citigroup ended up taking EMI and selling its parts to Universal Music Group and a Sony Corp.-led consortium, resulting in even more layoffs.
Continuously falling revenues created a need to cut expenses through consolidation. When labels acquired competitors or merged companies to help stop the financial bleeding, the elimination of redundant jobs created the desired cost savings. BMG laid off hundreds of staffers in 2003 when it acquired Zomba Music Group, for example, and another 50 people when it integrated J Records and RCA. The same year, UMG laid off 75 MCA employees as part of the label’s merger with Geffen Records.
Retail was being purged, too. In 2003 alone, at least 600 chain stores and 300 K-Mart stores — accounting for 5% of the prior year’s album sales — closed their doors, and Best Buy sold the 1,100-store Musicland chain to a leveraged buyout firm. Retail’s problems sent shockwaves through already struggling record labels. When Tower Records went out of business in 2006, Universal Music Group Distribution (UMGD) had to immediately lay off a dozen people, says Jim Urie, former president/CEO of UMGD.
It seemed like the job cuts would never end. When Universal Music Group cut 1,350 jobs — 11% of its workforce — in 2003, CEO Doug Morris was open to cutting more if necessary. “It depends on how fast the [digital] market gains traction and how fast the CD market continues to erode,” Morris told Billboard at the time. “If [one] doesn’t gain traction and the other erodes faster, we’ll keep trimming, because you have to run a company that way.”
Two decades later, the music industry is in a vastly better position. Many companies with solid revenue growth were still forced to reduce their staff, though, after over-hiring during the pandemic as digital platforms exploded in popularity. “People got drunk during COVID,” says one former major label executive. Digital businesses “started to have this burst,” he adds, “and we kind of caught a hangover across the business.”
Public companies — in music but also technology leaders such as Meta and Google — facing investor expectations opted to thin down. UMG, which went from an average of 8,800 full-time employees in 2020 to just under 10,000 in 2023, began laying off staff in March as part of a restructuring that will save an estimated $270 million annually. Likewise, Spotify ballooned from about 5,600 in 2020 to 8,360 in 2022 before laying off about 25% of its workforce in 2023.
Aside from the need to reduce bloat, recent layoffs reflect the normal course of business that sees companies constantly expanding, shrinking and re-tooling, says Pincus. “The music business goes through consolidation cycles where it becomes more fragmented, and then it consolidates, and then becomes more fragmented, and then it consolidates. We happen to be in a consolidation cycle at the moment. That’s the normal cyclical behavior of the industry. What was going on in the Napster time was not cyclical.”
Recent layoffs are also about positioning labels “to move forward,” says Urie, “and there are new skill sets involved.” Bob Morelli, former president of RED Distribution, agrees. “As technology has changed, [the business is more about] social media and targeted advertising,” he says. “And now with AI coming in, and it’s harder to get bigger tours, these companies are going to make staffing adjustments.” When Warner Music Group announced in 2023 it would cut 4% of its workforce, new CEO Robert Kyncl described the layoffs as necessary “in order to evolve” and position the company for “long-term success” by hiring for tech initiatives and “new skills for artist and songwriter development.”
Labels have also revamped how they discover new artists. The stereotypical A&R rep that scours clubs looking for the next big thing has been replaced — or at least augmented — by data experts. “Most of the A&R departments are more like a data analytics thing,” says David Macias, president of Thirty Tigers, an early adopter of the distribution and label services model. “They’re scrubbing data to find spikes that they can justify chasing.” The way labels and distributors pitch music to streaming services has also changed, Macias notes, from a people-focused process to one driven by automation. “How people find the music is going to have to do less and less with people with special relationships.”
The Atlantic Music Group restructuring may reside in a different category. “That seems like a house cleaning,” says Urie, “because they blew out a lot of people that are perfectly capable.” That’s a sign of a youth movement happening at the label, says another former executive, rather than a reaction to over-hiring or a natural business cycle. Elliot Grainge, the 30-year-old founder of the label 10K Projects, took the CEO role on Oct. 1. Longtime label leader Julie Greenwald announced her resignation five days after Grainge was named CEO. Atlantic ended up cutting roughly 150 jobs — many of them experienced executives with long tenures at the company.
Regardless of the era or business cycle, music executives — and the CFO making the strategic decisions — must answer the same questions, says Morelli. “What is my company going to look like? Are we going to go after developing artists? Are we going to go after legacy artists? Are we going to do a small amount? Are we going to win with volume? And how do you accommodate getting this message out to potential fans and consumers?”
The thousands of people laid off by music companies in recent years face better prospects than music professionals faced two decades ago. Back then, many executives and artists were still viable but needed the proper infrastructure around them, says Macias, who co-founded Thirty Tigers in 2002 after being laid off from Arista Nashville. Digital startups and the burgeoning digital distribution business gave some people a way to remain in music. But the post-Napster years were followed by another decade of industry contraction as downloads replaced CD sales.
If the majors aren’t hiring in 2024, the growing independent sector could provide a refuge for the recently unemployed. In recent years, investment in independent music companies has exploded as entrepreneurs in streaming, digital distribution and social media loosened the major labels’ grip on the industry. The current No. 1 song in America, Shaboozey’s “A Bar Song (Tipsy),” comes from an independent, EMPIRE.
“It’s going to be independent labels, like it always has been, that figure out the new way to get new records in the hands of an audience that doesn’t know they like it yet,” says Pincus.
News that Bytedance will shut down its 18-month old TikTok Music on-demand music streaming service might have come as a surprise to some people. After all, TikTok has over 1 billion monthly active users globally and singlehandedly redefined music discovery by turning generation of smartphone users onto music-based, short-form videos.
But TikTok Music’s demise was entirely predictable. Building a sustainable on-demand music streaming service is incredibly challenging. The digital music graveyard is littered with streaming products that didn’t last — remember Rdio, Boinc, Guvera, Turntable.fm or SpiralFrog? Not even a well-funded platform from a corporate giant is guaranteed of success. Sony’s Music Unlimited didn’t last. Nor did Microsoft’s Zune. Xiami, founded by Chinese e-commerce giant Alibaba, shut down in 2021 after 12 years.
Bytedance’s uphill road was made more difficult when it took on a different role with TikTok Music. TikTok was an insurgent that built itself without the typical constraints facing typical streaming services. The app created a new use case for music in the same way the download succeeded the CD and streaming succeeded the download. TikTok Music, on the other hand, was constrained by the licensing terms that govern on-demand services.
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As a result of those rules, Bytedance built something more like Spotify than TikTok because it didn’t have any other choice, says MIDiA Research’s Mark Mulligan. “TikTok Music had massive potential to be these so many things that didn’t look anything like any other [digital service provider],” he says. “But they still ended up having to make something that looked pretty much like any other streaming service.”
That TikTok Music resembled every other music streaming service was a problem, Mulligan argues, not a solution for a new market entrant. On-demand music has become a well-functioning utility like water service, he explains, but one that doesn’t build communities, drive fandom or create conversion — things TikTok does well and TikTok Music couldn’t. “We all really value the water that comes out of our taps, but we rarely go down to the local bar and talk to our friends about how great the water is that comes from taps,” says Mulligan.
These aren’t just any utility companies TikTok Music has been competing against. Market leader Spotify, with its $76 billion market capitalization, is far smaller than the next three companies, Apple, Google and Amazon. These four companies, and even smaller ones like them, have spent years pouring resources into building products and features that keep people listening to music, podcasts and, in the case of Spotify, audiobooks.
TikTok is great at creating engagement, too, but getting people to listen to full songs is different than feeding them a never-ending series of 15-second video clips, says Vickie Nauman, founder of CrossBorderWorks, a music tech and consulting and advisory firm. “You can’t necessarily translate that to something else.”
Things might be different if TikTok Music could differentiate itself on catalog by offering music not available on other music platforms. That’s how it works with on-demand video streaming. But global music services have, more or less, the same catalogs. Offering the world’s music has long been part of the music subscription service’s value proposition. So, music streaming services instead compete against one another on their user experiences.
On-demand services “had to make [the user experience] so elegant, so intuitive, and really, really customize it to consumers,” Nauman explains. In her experience, people underestimate the difficulty of creating a great product and executing the technology that underpins it. “It’s incredibly challenging,” she says. “Not only the user experience,” she continues, but the technology required to manage many tens of millions of tracks. “I think a lot of companies just really misperceive it.”
Changing consumer habits was always going to be a problem, too. It would be presumptuous to think anybody with a TikTok app would become a TikTok Music subscriber. Not every iPhone owner subscribes to Apple Music even though Apple offers a free trial to new iPhone owners and bundles the music service into a money-saving package, Apple One. Even though Alphabet owns both the Android operating system and YouTube, not every Android Phone owner subscribes to YouTube Music.
“To some extent, I’m not surprised” by TikTok Music’s failure, says MusicWatch principal Russ Crupnick. When MusicWatch surveyed American TikTok users about their interest in a standalone TikTok streaming service, the reaction was “surprisingly low” and “very lukewarm,” he says. (TikTok Music never launched in the U.S.) “Getting most people to switch [subscription services] at this point is a bit of a challenge. You’re more likely to get people to use multiple services.”
In the U.S., self-pay subscribers — not including free trials — have an overage of 2.3 music subscription services, according to MusicWatch. That includes Amazon Prime, which online shoppers buy mainly for free shipping, as well as satellite radio service SiriusXM. Asking people paying for multiple services to pay for one more music subscription plan is a tall order for a newcomer like TikTok Music. What’s more, MusicWatch found that Spotify ranks behind only Amazon Prime in terms of subscriber passion. When the economy gets rough, Spotify users are relatively unlikely to cancel their plans.
Zoom out and the demise of TikTok Music reveals something else about the music streaming market. In 2024, the number of global platforms may have reached a steady state and new entrants are unlikely to appear (and, like TikTok Music, any attempts will be unsuccessful). Experts who spoke with Billboard don’t foresee there being another company with both the funding and the stomach to take on the demands of licensing and administering rights for a huge amount of music.
“We’re at a fork in the road where all of these broad catalog licenses are kind of exhausted,” says Nauman. Gaming companies have the money but don’t need to license entire catalogs, she adds. Fitness companies that had licensed large catalogs now “want simpler solutions.”
If new entrants are going to find success, says Mulligan, it could be in “regional hubs” in which streaming services can license a smaller amount of local music and focus on markets where Western repertoire is less important. In China, for example, a market dominated by local music licensed by local rights owners, Tencent Music Entertainment has 117 million subscribers and Cloud Music had 44.1 million at the end of 2023 (the last figure the company made available). But regional services are being threatened by the bigger global companies. In some populous markets such as India and the Philippines, dominant Western companies have pushed aside local players.
In the end, Bytedance doesn’t need TikTok Music to be an influential force in music. Mulligan thinks it’s possible that the “majority” of music activity — not revenue — will happen on TikTok within three to five years. Younger people want to create, not just consume, he says, and TikTok could become a self-contained ecosystem that captures more of its users’ time — at the expense of the kind of on-demand streaming business that Bytedance is now abandoning.
Despite having to pay more for everyday goods and services, Americans feel like they’re in a better place financially than earlier this year. How they choose to increase and cut back their spending, though, varies from music to vacations to groceries.
The data show consumers are generally in a good place. The latest numbers from University of Michigan’s survey of consumers released today (Sept. 13) show consumer sentiment is the best since May and 40% above its June 2022 low. Deloitte’s financial well-being index rose for the third straight month in August and has risen from 95.9 to 102.6 over the last year, which suggests that consumers are feeling good enough about their finances to increase spending on a range of products and services.
Listen to travel and leisure companies and you’ll get the impression that inflation-weary, cash-strapped consumers are holding close to their wallets. In August, Airbnb missed earnings and warned of slowing demand, while Booking.com told investors that it expected slower growth in the number of nights booked by customers. Disney’s theme parks are seeing softer demand. Comcast’s Universal theme park revenue fell 11% in the most recent quarter after having a record 2023.
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The concert business, though, doesn’t share the malaise of theme parks and vacation rentals. “We don’t see [a slowdown],” Live Nation CEO Michael Rapino said Tuesday (Sept. 10) at the Goldman Sachs Communacopia & Technology Conference in San Francisco. “And you almost hate saying it, because everyone else is saying it, but we do think we have a very unique product.” Live Nation, the world’s largest concert promoter and ticketing company, had a record second quarter with total revenue of $6 billion, up 7%, and expects 2024 will be a record year.
Concerts have the advantage of creating a more visceral reaction than other types of entertainment. And because it’s in-person and live, Rapino explained, it’s a unique experience with a competitive advantage. “[Fans] want to connect with that artist,” he said. “There’s no digital duplicate replication here. You cannot watch that show at home. You do not get goosebumps when you watch it on Apple TV.”
Live music isn’t totally immune to economic woes, of course. Numerous tours — including The Black Keys and Jennifer Lopez — have been cancelled due to poor ticket sales. Festivals ranging from Desert Daze in California to Beale Street Music Festival in Memphis pulled the plug in 2024 due to economic reasons. And as Billboard has documented in recent years, the financial strain of touring artists following the pandemic has been very real. Higher costs for transportation, fuel and food have forced artists to economize and cut back on expenses to turn a profit.
Fans are still spending dearly on a small number of superstars, though. Surge pricing used in the Oasis on-sale inflated the cost of primary tickets beyond many fans’ comfort zones. Sphere in Las Vegas has drawn high-spending fans to residencies by U2, Phish and Dead & Co., and The Eagles’ upcoming shows should do similarly well. Prices to Adele’s final residency performance at The Colosseum at Caesar’s Palace in Las Vegas before an indefinite hiatus soared beyond $17,000 for top-tier seats.
Consumers continue to spend on recorded music, too. According to the RIAA’s mid-year report, the parts of the business that involve direct consumer spending — subscriptions, physical formats and digital downloads — rose 4.7% in the first six months of 2024. Subscription revenue improved 5.1% and surpassed 60% of total recorded music revenue. Spending on physical music formats fared even better, rising 12.7% on the strength of a 17.0% increase in vinyl sales. Download spending, an increasingly inconsequential part of the business, fell 15.8%.
Segments that don’t represent consumer spending — ad-supported streaming, synchronization royalties and SoundExchange royalties — rose just 0.9%. Ad-supported on-demand streaming, the biggest component of the non-spending segment, rose just 1.7%. (SoundExchange royalties include ad-supported streaming in addition to satellite radio royalties, which stem from direct consumer spending, and cable radio stations, which do not.) Synchronization royalties — it reflects the money flowing into advertisements and TV and film production — dropped 9.8%.
Elsewhere in the entertainment business, spending is mixed. U.S. movie ticket sales were down to $3.6 billion from $4 billion, though the pop culture sensation of Barbie and Oppenheimer in the summer of 2023 made for a tough comparison. U.S. video game revenue is expected to rise about 2.2% to $47 billion in 2024, according to market research firm Newzoo.
While consumer are looking to splurge on entertainment, they’re much more price conscious about everyday items. According to the consulting company McKinsey, people are cutting back on spending on essentials — especially gasoline and fresh produce — as well as home improvement and domestic flights.
During a 1980 presidential debate, Ronald Reagan posed a now-famous question: “Are you better off than you were four years ago?” In 2024, many Americans feel they were better off in 2020 — even though the economy was crippled by the pandemic that year. The music industry is better off today than four years ago. And although recorded music growth has slowed this year, 2024 will be better than 2023, too.
If investors and music companies want high streaming growth rates, they should look beyond the suddenly sluggish U.S. market.
Of the few countries that have released midyear recorded music industry figures, the U.S. has the lowest growth rate for streaming — by far. Japan, Brazil, Italy, Germany and Spain each easily bested the 3.8% growth rate mustered by the U.S. in the first half of 2024, though they are far smaller markets.
In Brazil, the ninth-largest market in 2023, streaming revenue improved 21.1% to 1.442 billion BRL ($284 million) in the first half of 2024, according to the country’s trade group, Pro-Música Brasil. Subscription revenue rocketed 28.4% to 995 million BRL ($196 million) while ad-supported streaming rose just 6.6% to 436 million BRL ($86 million).
Streaming accounts for 99% of total revenue in Brazil, a market that was early to adopt streaming platforms. (Pro-Música Brasil did not include synch and performance royalties in the midyear numbers. In 2023, those two segments accounted for 12% of Brazil’s total revenue.) The former internet radio service Rdio — acquired by Pandora in 2015 — launched in Brazil in 2011. Muve Music, acquired by Deezer in 2015, launched a partnership with leading mobile carrier TIM in 2013. Deezer still powers TIM’s music streaming platform and extended that partnership in January.
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Important markets in Asia and Europe also delivered impressive streaming gains in the first half of the year. Spain nearly matched Brazil with 19.1% streaming growth and a 16.6% improvement in total revenue. In Italy, recorded music revenue jumped 15.1% and streaming revenue, which accounts for 80% of the total market, grew 18.1%. (Figures in currency were not provided by Italy’s trade group, FIMI.) The world’s second- and fourth-largest markets, Japan and Germany, had streaming gains of 12.7% and 9.0%, respectively.
In aggregate, the five ex-U.S. markets grew 12.2% compared to the first half of 2023, with the smallest markets having the highest streaming growth rates. Brazil’s market is less than 3% the size of the U.S., while Spain and Italy are 3% and 4% the size of the world’s largest market, respectively. Germany’s market is 15% as big as the U.S. Japan is just a quarter of its size.
What the U.S. lacks in momentum it makes up for in size. Based on total market revenue for 2023, the U.S. was more than twice the size of the five ex-U.S. markets combined — $11.04 billion to $5.47 billion, according to IFPI figures. In fact, the U.S. is so large that a 3.8% streaming gain was worth $404 million — more than the entire Spanish recorded music market ($355 million) and nearly as big as Italy’s ($477 million). To reiterate, that’s not just streaming — we’re talking about those countries’ entire market revenue.
The rate of streaming growth underpins much of the money flowing into the music business. Investors and companies are betting the global market can generate nearly double-digit growth through the end of the decade. The latest Goldman Sachs “Music in the Air” report, a standard reference point for gauging the potential of music as an investment, forecasts that global streaming revenue will grow at a 10% compound annual growth rate through 2030. That would turn last year’s $19.3 billion streaming market into $37.8 billion by the end of the decade.
But the enormity of the U.S. market, which accounted for 42% of global streaming revenue in 2023, according to the IFPI, means other markets will need to continue those rapid paces for the global market to maintain that 10% streaming growth rate. The five ex-U.S. markets’ 12.2% growth rate is nearly halved to 6.4% when their $5.47 billion total value is combined with the U.S. market, which is worth $11.04 billion.
Developing markets certainly have the potential to contribute to global growth, but many of the most populous countries — India, Indonesia, the Philippines — are relatively small and based more on advertising than high-value subscriptions. For the math to work, the global market needs a strong U.S.
Anyone who has bought a vinyl record or a CD in recent years knows full well that physical music products aren’t exempt from the inflation that has plagued U.S. consumers.
In fact, the price of a vinyl record in the U.S. rose 25.5% from 2017 to 2023, according to Billboard’s analysis of RIAA data — slightly more than the 24.3% increase in the consumer price index over the same time. CD prices fared a bit better, increasing just 20.4%.
However, while music subscription prices are rising, consumers can probably expect physical music prices to remain somewhat level going forward: Insiders who spoke with Billboard say vinyl prices are remaining steady in 2024 after the COVID-19 pandemic created supply chain problems and raised the costs of everything from raw materials to labor.
As one music distribution executive put it, those supply chain problems are “flattening out.” As a result, turnaround times have improved drastically as manufacturers worked through their pandemic-era order backlogs. “I feel like the prices will flatten, too,” says the executive.
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“Our manufacturing prices have been stable for quite a while,” says Bill Hein, CEO of Pressing Business. Freight costs can be improved if a buyer books with flexible dates, Hein says, and reliable sea freight is being used for more of its U.S. deliveries. “Generally speaking, both air and sea freight are more predictable now than they were during the lockdown era, and prices are generally better.”
Outside of the music business, rising prices on everyday necessities have been a fact of life. Tired of the inflation that has eaten into their paychecks, Americans are pushing back against the high cost of staples, and companies are responding with attempts to reduce prices.
In July, PepsiCo CEO Ramon Laguarta suggested consumers had grown tired of more than two years of rising prices. “Some parts of the [Frito-Lay] portfolio need value adjustment,” he said during a July 11 earnings call. Overall sales volume was down 4% in its most recent quarter, and North American beverage sales for the company dipped 3%. PepsiCo will respond, Laguarta said, by offering better deals and increasing advertising. For some consumers, Laguarta added, “we need some new entry price points.”
Companies across the economy are sharing PepsiCo’s experience with price-fatigued shoppers. Walmart is offering more short-term discounts. Target lowered prices. Fast food giants McDonald’s, Wendy’s and Taco Bell are courting customers through low-cost bundles and value-oriented menus. And because it’s an election year, Vice President Kamala Harris, the Democratic nominee for president, has floated a federal ban on price gouging in the grocery and food industries.
Since vinyl prices are based heavily on manufacturing costs, there’s little to prevent prices from creeping up without sellers losing profits. Vinyl retailers set prices based on wholesale costs and their need to cover overhead and other expenses. Artists on record labels must pay the wholesale price for their physical goods and don’t have control over pressing and printing costs, says Paul Steele, executive partner at Triple 8 Management. “Physical prices for our roster of nearly 30 artists have mostly stayed the same for a decade, with small inflationary increases here or there,” he says.
But aside from run-of-the-mill inflation, there are other factors that could push the average sale price higher. Physical music is increasingly a luxury good — a high-priced collectible item with packaging to match. Artists frequently release multiple variants of LPs with colored vinyl. And albums released today commonly have the expensive gatefold packaging that was common in the ‘70s.
The way music is released in the streaming era also drives up prices. Artists take advantage of the unlimited shelf space on streaming platforms by stuffing albums with more songs at no extra cost. As Billboard noted last year, the top 10 albums’ average number of songs rose from 13.2 in 2014 to 19.1 in 2022. A double album on a vinyl record is more expensive, and as one executive notes, putting more songs on an album will often — but not always — require paying more mechanical royalties to songwriters and publishers.
Indeed, some of the most popular vinyl records of the moment are double- or triple-LPs. Post Malone’s 18-track, two-LP album F-1 Trillion sells for $45.89 at Amazon and more at other retailers. Zach Bryan’s 34-track American Heartbreak has three LPs and a $44.98 list price. And that’s not to mention the more extravagant reissues, such as a 2-LP/2-CD/1-Blu-ray package for Van Halen’s For Unlawful Carnal Knowledge that carries a $99.98 list price.
Despite the increase in vinyl prices over the last several years, sales have yet to abate. Will that continue? The answer to that question will likely lie with younger consumers who have less disposable income. Michael Kurtz, co-founder of Record Store Day, says vinyl being a premium, collectible product is toughest on younger consumers. While Record Store Day succeeded in helping turn a new generation on to vinyl records, younger people don’t have as much money and are cutting back on their purchases. “A young customer 18 months ago would come to the counter with two or three records,” says Kurtz. “Now they come to the counter with one or maybe two.”
Catalog titles are often the more affordable option and help offset frontline price creep. Michael Jackson’s Thriller can be had for under $25. Fleetwood Mac’s perennial top-seller Rumours is offered in both affordable and more deluxe versions. Rhino Records’ Now Playing series of compilations for artists ranging from The Stooges to Gram Parsons to John Prine are priced at $19.99.
The good news — for all consumers — is that price growth is reverting to historical norms. The average monthly U.S. inflation rate reached 4.7% in 2021, 8.0% in 2022 and 4.1% in 2023. This year, the average monthly increase in the consumer price index (CPI) is just 3.2% through July. If vinyl prices seem like they’re continuing to creep upward, the packaging and the increasing prevalence of the double album are likely to blame.
The shine on the music industry, a darling of Wall Street in recent years, appears to have lost a bit of its luster.
Record label and publisher stocks that boomed in 2023 are mostly down in 2024. Universal Music Group (UMG), riding high until two weeks ago, is down 14.0% through Thursday (Aug. 15). Warner Music Group (WMG) is off 21.0%. Reservoir Media is up 2%, although it has declined 15.0% since July 26. K-pop companies have fallen off a cliff.
Not that business is bad — far from it. But as companies released earnings results over the last couple weeks, good results have occasionally been overshadowed by a financial metric — namely, subscription growth — that either missed expectations or is headed in the wrong direction. In some cases, the results were simply disappointing.
Ever since UMG produced weaker-than-expected subscription growth in the second quarter, analysts and investors have been revisiting their forecasts, wondering if they set their expectations too high and trying to figure out if UMG’s results reflect the broader market. The company’s recorded music subscription revenue rose 6.5% in the quarter, about half of analysts’ expectations.
Although UMG executives warned against reading too much into the results from any one quarter, investors did exactly that. UMG’s share price, which had been among the better performers in its label-publisher peer group in 2024, dropped 24% in a single day despite UMG posting a 10% increase in revenue and better margins than a year earlier.
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Subscription growth isn’t the only facet of the modern music business, but it’s probably the main reason most investors bought into music companies. As Billboard wrote in March, the music business is increasingly reliant — perhaps too much so — on subscription revenue. In the U.S. in 2023, subscription revenue accounted for 59.3% of recorded music revenue, up from 57.8% in 2022 and far above 47.3% in 2018, according to the RIAA. With ad-supported streaming stagnant, subscriptions take on even greater importance.
Subscription revenue was on everybody’s mind when WMG released earnings a week later. The company’s streaming revenue didn’t show signs of UMG’s slippage, though, which suggested the reaction to UMG’s quarter may have been overblown. WMG’s recorded music subscription revenue was up 7% while ad-supported streaming revenue was unchanged. The streaming market, said CEO Robert Kyncl during the Aug. 7 earnings call, is “diverse,” “healthy’ and has more room for subscriber growth. While analysts’ opinions varied, investors seemed happy enough, as WMG’s share price gained 2% that day.
Sony Music had similarly positive streaming results in its latest fiscal quarter. Total recorded music streaming revenue improved 6%, suggesting subscription revenue exceeded 6% to compensate for a small decline in ad-supported streaming.
Often overshadowed by UMG and WMG, Reservoir Media has delivered consistent growth since going public in 2021. The company’s latest earnings results delivered more of the same: Revenue was up 8% and operating income before depreciation and amortization jumped 27%. While there was a decline in recorded music revenue, it couldn’t be attributed to a stubborn streaming market. Rather, Reservoir was riding high a year earlier from the reissue of De La Soul’s catalog, which it picked up in the 2021 acquisition of Tommy Boy Music. Even so, its share price is down 11.9% since its quarterly earnings release while the S&P 500 is up 2% over the same period.
K-pop is a different story altogether. While these South Korean companies are riding the genre’s success to aggressively expand globally through partnerships, joint ventures and acquisitions, they’re showing signs of growing pains. Year-to-date through Aug. 15, the four main K-pop companies’ share prices had dropped an average of 35.5%.
Second-quarter results explain part of the decline. Three of those K-pop companies had an average decline in net income of 84%, while the fourth saw its net profit turn into a net loss. At JYP Entertainment, home to Stray Kids and iTZY, revenue dropped 37% and net profit plummeted 95%. SM Entertainment managed a 6% increase in consolidated revenue — the main SM Entertainment segment fared far better than its subsidiaries — but net profit still dropped by 70%. HYBE’s revenue increased 6% and set a quarterly record, but its net profit slipped 86%.
The South Korean companies’ relatively small rosters and lack of diversity help explain a quarter-to-quarter shortfall. JYP Entertainment, for example, was missing its most popular artists from its second-quarter album release schedule — a problem for a K-pop label dependent on fans’ tendency to buy CDs. (albums accounted for 49% of total revenue a year earlier). With an 82% drop last quarter, albums’ share of revenue fell to just 14%.
There’s plenty of opportunity for companies to regain their luster. UMG CFO Boyd Muir insisted the company will consistently deliver high single-digit revenue growth. WMG’s Kyncl insisted that “streaming dynamics remain healthy” and the company sees “plenty of headroom for subscriber growth” globally. K-pop labels won’t go two successive quarters without priority releases to pad sales figures. Any single quarter may have a hiccup, but the long-term trend lines are still pointing in the right direction.
If your last name is Grainge, you probably oversee a large chunk of the U.S. music business.
Following Elliot Grainge’s promotion to CEO of Atlantic Music Group effective Oct. 1, the Grainge family— Elliot and his father, Lucian Grainge, chairman/CEO of Universal Music Group (UMG) — will control roughly 37.6% of the U.S. recorded music market, according to Billboard’s analysis of data from Luminate.
The younger Grainge, whose record label 10K Projects was acquired by UMG competitor Warner Music Group in 2023, will lead a record label group with about 7.9% of the U.S. market’s equivalent album units (EAUs). That includes Atlantic Records, which had a 5.3% share through Aug. 1, along with the remaining labels that comprise Atlantic Music Group — 300 Elektra Entertainment (which includes the labels 300, Elektra, Fueled By Ramen, Roadrunner, Low Country Sound, DTA and Public Consumption) and 10K Projects — with an estimated 2.6% share.
Led by Republic Records’ 10.5% share and Interscope/Geffen/A&M’s 10.0% share, UMG-owned record labels have a 29.8% share of the U.S. market’s EAUs. Other labels under UMG’s umbrella are Island Records, currently basking in a string of hits by Sabrina Carpenter and Chappell Roan, and Universal Music Group Nashville, a collection of labels that are home to Chris Stapleton, Luke Bryan and Carrie Underwood, among others. UMG also distributes labels it does not own, although for these purposes, Billboard is comparing market share of owned labels only. Billboard estimates that UMG’s distributed labels have an aggregate market share of 8.8% of EAUs.
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The Grainge’s father-son CEO dynamic is unprecedented even for an industry that often sees the offspring of heavy hitters follow a parent into the business. There have been many family businesses run by successive generations — music publisher peermusic, for example — but never in modern history have a father and son been CEOs of a global music company and a major label music group simultaneously.
Grainge, age 30, will ascend to CEO of Atlantic Music Group as WMG restructures its organizational chart and Atlantic retools to market music to digital natives (a.k.a. young people). CEO Robert Kyncl is “excited by the prospect of taking Atlantic’s culture making capabilities and adding the 10K Projects founder’s digitally native approach into the mix,” he said during Wednesday’s earnings call.
As Billboard reported in February, Atlantic laid off about two dozen staffers with the intention of “bringing on new and additional skill sets in social media, content creation, community building and audience insights,” with the goal of “dial[ing] up our fan focus and help[ing] artists tell their stories in ways that resonate,” Julie Greenwald, the company’s chairman/CEO, said at the time. Greenwald was to assume the new role of chairman upon Grainge’s promotion but announced her resignation on Tuesday (Aug. 6). She will officially step down at the end of January 2025.
The music business is seeing the results of doing more with less.
The slew of earnings reports over the past two weeks have revealed that companies achieved better margins and greater profitability — even in cases with lower revenue or disappointing growth in some areas. And nearly all these companies share one important thing in common that boosted their latest earnings results: layoffs.
Universal Music Group’s share price fell 24% the day after its second-quarter earnings showed recorded music subscription growth had slowed to 6.9%, down from 12.5% in the prior-year period. Investors are interested in music companies because streaming has transformed the industry, bringing growth in the wake of falling CD and download sales and opening new markets around the world. So, when the industry’s most attractive revenue stream stumbles, investors are going to take notice.
But despite the hiccup that wreaked havoc on its share price, many of UMG’s financial metrics showed the company is headed in the right direction. Revenue grew a hearty 9.6%; adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 11.3%; and adjusted earnings per share rose to 0.44 euros ($0.47), up from 0.42 euros ($0.45) a year earlier. Setting aside the main reason investors want to own UMG shares — the global music subscription business — UMG’s earnings had a lot of positives, some of which undoubtedly had to do with the layoffs that occurred in February. According to the company’s 2023 investor presentation, that round of job cuts is expected to save 75 million euros ($81 million) in 2024 alone.
In other earnings news, Spotify — which cut roughly a quarter of its global workforce in three rounds of layoffs in 2023 — had an incredible turnaround in the second quarter, posting an operating income of 266 million euros ($286 million) — a 513 million-euro ($552 million) improvement from the second quarter of 2023. Despite the much smaller staff, the streaming giant’s revenue grew 19.8% to 3.81 billion euros ($4.1 billion) while its gross margin rose to 29.2% from 24.1%. Spotify’s share price jumped 12% after the release and had almost increased another 2% through Thursday (Aug. 1).
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Spotify’s latest layoffs in December, which affected 17% of its staff, attracted criticism —“Spotify is screwed,” Wired proclaimed — but they made a large and immediate impact. In the second quarter, total operating expenses dropped 16.5% as every component had a double-digit decline (general and administrative expenses were down 23%, sales and marketing fell 16.3%, and research and development expenses dropped 16.5%). When Spotify announced the staff cuts, CEO Daniel Ek admitted the scope of the layoffs would feel “surprisingly large” but was steadfast in the need to become “relentlessly resourceful.” At the time, he said, “We still have too many people dedicated to supporting work and even doing work around the work rather than contributing to opportunities with real impact.”
Recent staff cuts also appear to have benefitted SiriusXM, which laid off 8% of its workforce in 2023 and another 3% of its headcount in February. Though the satellite radio giant’s share price fell 6.4% on Thursday after the company announced it lost 173,000 satellite radio subscribers and 41,000 Pandora subscribers in the second quarter, net profit grew 1.9% to $316 million even as revenue fell 3% to $2.18 billion. Thanks to its cost-cutting efforts, general and administrative expenses dropped 31% and engineering, design and development costs fell 14.5%.
Not all companies reporting earnings over the last two weeks had to lay off workers to improve their margins. French music streamer Deezer, citing improved cost control and margin improvement through more favorable terms with record labels, improved its first-half adjusted EBITDA by 8 million euros ($8.7 million). The company also raised its target for full-year adjusted EBITDA by 5 million euros ($5.4 million).
Reservoir Media, which reported earnings on Wednesday (July 31), similarly improved operational efficiency without layoffs. The company’s share price fell by 8.8% in the two days after it announced quarterly recorded music revenue had dropped 7%, but the company’s publishing revenue improved 15% overall revenue grew 8% and adjusted EBITDA soared 25%. While investors found reason for concern, CEO Golnar Khosrowshahi struck an optimistic note on Wednesday’s earnings call. “We’re off to a good start in fiscal 2025 and remain on track to again hit our annual targets,” she said.
In addition to cost-cutting, streaming companies are also enjoying the benefits of price increases. Not only did Spotify raise its subscriber count by 26 million in the previous 12 months, but price increases pushed average revenue per user (ARPU) up 8.2%, or 0.35 euros ($0.38), per month. Even though Deezer didn’t gain subscribers over the previous year, its ARPU rose 6% for direct subscribers and 3.5% for subscribers gained through partnerships due to price increases it instituted last year.
Of course, music companies have their share of challenges that cost-cutting can’t solve. Streamers can’t raise prices too frequently and are dealing with ongoing sluggishness in ad-supported streaming. Record labels need to re-set expectations for their subscription businesses and continue to see sluggish ad-supported streaming revenue. And music publishers are getting a pay cut from Spotify’s decision to treat its premium service like a bundle in the U.S. Considering all this, their decisions to cut costs and focus on operational efficiency couldn’t have come at a better time.
In 2022, Will Page, the former director of economics at Spotify, encouraged a U.K. committee looking into streaming economics to consider how collecting societies have divvied up fixed pots of cash for more than 100 years. A fairer system for paying royalties, he said, might consider how long a person listens.
Page’s suggestion wasn’t a new, radical idea. Other royalty accounting systems already take listening time into account. In the U.K., collection societies such as PRS For Music and PPL apply a “value per second” rule to royalty payouts. So, Page explained, Queen’s “Bohemian Rhapsody,” which clocks in at 5:55, earns twice the royalty as “You’re My Best Friend,” which runs just 2:52. A similar approach is codified into U.S. copyright law: Songs over five minutes long receive a higher mechanical royalty than shorter songs.
But streaming platforms have long paid royalties using a “pro rata” method that treats every song equally. At Spotify, for example, any two songs by Queen are treated the same. But there has been a movement in recent years to make royalty payments fairer to non-superstar artists. SoundCloud adopted a user-centric approach that pays royalties from each listener rather than pool all listeners’ revenue. Deezer has a “user-centric” approach — adopted by Universal Music Group, Warner Music Group and Merlin — which rewards professional artists at the expense of “functional” music.
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Two years after testifying to the committee, Page has released a paper, “A Case for Completion,” that outlines how streaming platforms could reward songs that get streamed in their entirety. The idea is simple: For each stream, the streaming service asks whether the song was streamed to completion. If the song was skipped before the listener got to the end, a portion of the royalties are transferred to songs that were streamed to completion.
The financial model looks like this: Labels earn about 50 million pounds ($64 million) for 10 billion streams. Page estimates that 10% of the songs will not be streamed to completion. Of those songs’ 5 million-pound ($6.4 million) royalty pool, 40%, or 1.3 million pounds ($1.7 million), goes to the completed songs’ royalty pool. That in turn increases the completed songs’ pool from 45 million pounds ($58 million) to 46.3 million pounds ($59.6 million). On a per-stream basis, a typical 0.0048-pound ($0.0062) pro-rata royalty becomes either a 0.0035-pound ($0.0045) incomplete royalty or a 0.005-pound ($0.0064) complete royalty.
Importantly, Page believes this completion-based scheme complements the current royalty accounting system, whether it’s pro-rata, user-centric or artist-centric. “If we are going to depart from the pro rata model, which has served us since Rhapsody got its license in December 2001 — which is 23-plus years ago — then we need a baby step that doesn’t mess with royalty accounting,” says Page. Tracking duration would add too much stress to a royalty accounting system that encompasses trillions of streams annually, accounting experts told Page. In contrast, setting a threshold that creates a binary outcome — either a song was completed, or it wasn’t — is more feasible, he argues.
The proposal may run into naysayers who believe skipping is a critical aspect to streaming. On-demand services with hundreds of millions of songs charge for the right to skip through playlists and algorithmically created radio stations. In contrast, free, non-interactive streaming services such as Pandora don’t allow unlimited skipping. What’s more, decidedly unskippable formats such as terrestrial radio are losing listening time to platforms that give the listener greater freedom. Whether TikTok has reduced attention spans or listeners are impatient in a world of unlimited choice, skipping is simply a way of life in 2024.
But skipping, however prized by today’s music listeners, isn’t necessarily rampant. As Page explains in an interview with Billboard, he gained confidence in completion-based royalty accounting after learning that completion rates surpass 90% once a person has been listening longer than three minutes. To Page, this means shorter attention spans select shorter songs and people willing to listen longer will do so. “Sprinters enter sprints; marathon runners enter marathons,” says Page. “For the most part, people who want longer songs go for longer songs and stay the journey. Jazz and classical have got the highest completion rates from all the genres.”
Paying based on completing a song makes sense intuitively, because in streaming the business goal is listener engagement, and one sign a listener is engaged is how much a song gets heard. From that perspective, a stream that ends halfway through a song is less valuable to both the streaming platform and the rights holders than a song that somebody listens to all the way through. So, rewarding completion makes sense from this business point of view.
It does. And I think a key strength of the proposal, and I’ve road tested it with the great and good in music and tech — I’m very open on strengths and weaknesses and anomalies. I’m putting all my cards on the table here for this to be accepted and be a model to give people even more assurances. But the strength is it’s asymmetrical. I am not promoting completion. If Glenn Peoples does nothing with this listening experience, I do nothing with these royalty calculations. I must be absolutely clear here. I am only punishing incompletion. I take action when you show intent. If you do nothing, I do nothing. If you step in there and say, “I’m done with this song, move me on to the next one,” I’m going to do something with the royalty structure. That’s crucial in terms of the argument. It’s got a strong common-sense property, as you alluded to, but it’s asymmetric. And to be absolutely clear, streaming services don’t pay a penny more or a penny less. We simply reallocate away from the incomplete pool to the complete group.
The deterrence against fraud or gaming the system, whatever you want to call it, seems to be a strong argument. If some artists are making music based on this 30-second threshold, I don’t see how that’s good for anybody. The royalty model shouldn’t be influencing how music is created and released.
Drake had an album where there were like eight songs which lasted between 40 and 50 seconds — skits — and they’re going to get paid the same as a seven-minute jazz composition with McCoy Tyner? These are questions of fairness. The current model has unfair properties in it as well. We have to remember [that] nobody thought about jazz and classical when they invented the 30-second rule. [An on-demand stream earns a royalty if it is streamed for 30 seconds or longer.] Nobody argued for duration.
Now let me allow me to play Devil’s Advocate. As a user of a subscription service, I pay for the ability to skip songs. And if I skip a song 45 seconds in, it doesn’t necessarily mean that song is less valuable. It means that I enjoy that ability to skip songs. If I don’t want to skip songs, I’ll listen to SiriusXM. And the ability to skip songs is one of the best things about an on-demand service. So why should skipping be punished if it has so much value to me?
I respect that view. I would say that argument is weak because the majority of people are paying for the concierge service. In the vast majority of instances, the act of skipping is a negative signal by the consumer. And for a lot of people, the engagement they have with their music platform is approximately this: in the pocket it goes and that’s it for the day. I’m not paying so I have to skip songs. I’m not paying so I have to select songs. I’m paying to enjoy the music. If you can serve it up for me, I’ll pay, I’ll stay even longer. So I quote [intellectual property expert] David Safir in a piece where there was a heated debate at the NY:LON conference in London. David calmed the debate down by saying, “Hold on, we haven’t even decided who we’re defining fairness for. Is it the creator, the platform, or the consumer?” As the consumer pays for convenience, the act of skipping, or the act of even leaning in, could be a sign of inconvenience. That is negative for the consumer’s experience in terms of willingness to pay and willingness to stay.
When I skip, it’s to sample the big catalog of music. It’s one way to listen to more music — not all of which I’m going to go back and listen to again. But at least I hear it. Again, whether it’s an editorial playlist, or just bouncing around the app, skipping allows me to sample the catalog. And not skipping would really get in the way, I think.
I remember with [Spotify’s] Discover Weekly, we began to wonder whether the reason it was successful is you used to spend a bit of your time searching for music that could involve a lot of skipping, and a bit of your time consuming music. And as time became more precious, you didn’t have any time to search. Nobody went to record shops anymore, and therefore there was even less time to consume. And what Discover Weekly did was internalize the search cost, the experimental costs, the skipping costs, and it gave you exactly what you needed. In terms of what pays everyone’s bills in this business, it might be the skipping — I doubt it. It might be the searching — I doubt it. I think what drives it is I just pull out my phone and it delivers me music and I stay the course. I think it’s that.
The [U.K. Competition and Markets Authority] asked the four streaming platforms in the U.K. to reveal a source of streams and just how much is human editorial: not a lot, 5% back then, probably two and a half percent now. How much is algorithmic? Not a lot. The vast majority of listening is people-owned playlists. That was a bombshell. That shook the industry out of a rut because, wait a second, 85% of listening might not be platform directed.
So, you know, it’s interesting to just think about that context as well. If you’re skipping, and you look at that table, you look at all the evidence, I think that the evidence weighs towards skipping as a negative signal in terms of the attribution, the value, utility that person’s gained from their platform, as opposed to a positive one. People want to stay in the saddle of music. They want to complete.
Reading the paper, I sensed some undercurrents, perhaps, of criticism of how people, especially young people, listen to music these days. You quoted somebody saying that wedding bands only play two minutes of a song because TikTok has ruined its users’ attention spans. Is part of this about trying to get people to listen to an entire song, and get their attention spans back?
I really owe a long-time mentor of mine, Fred Goldring, for that quote. He told the story about a wedding band that played a two-and-a-half-hour medley because people don’t have the attention spans for full songs anymore. I was like, “Oh, my goodness! What has TikTok has done? Is that what the 30-second rule has done to our music? Is that where we’re at?” If I can expand on that, Arctic Monkeys are a very successful band. They played the Emirates Stadium [in London] twice last summer. The first night was predominantly die-hard fans in their 40s and 50s. The second night was teenage girls who had discovered them on TikTok, and they only knew 34 seconds of all its songs. If you stick around after the chorus, we’re going to sing another verse. It’s called a composition, people; we’ve had these things for a long time. Yeah, there is a concern there.
Now, the concern could just be misplaced. I think the concern is actually very real. Songs are getting shorter. Choruses have been moved to the front, and Swedish artists were doing this in 2013. Many artists are doing it now. But in an attention economy, any alteration to pro rata [royalty calculations] that helps music win attention, that creates incentives that compete for attention, has to be good. Because music is in competition with so many other distractions. Now, completion has a different agenda, but it’s going to help this industry think about, how does it compete for attention?
You noted in the paper that complexity could be the opponent of a successful royalty system. I’m wondering to what extent people, and mainly creators, will need to understand how this royalty system would work. You’ll understand it. Attorneys will understand it, as they must. But ostensibly, these new royalty schemes are to create more fairness for creators. Do you think creators would understand this well enough?
Is the consumer aware that under pro rata, that if I’m a light user, and Glenn Peoples is a heavy user, my money is being used to compensate Glenn’s consumption? Probably not. If they were, would they change your habits? Maybe. Maybe that user-centric property is interesting. But I’m not sure how interested the consumer is in the actual royalty model. If you surveyed them and said, “How many people know it takes 30 seconds before you get paid?” Less than 1%.
On the industry side, something as simple as a completion index, a third threshold, I feel fits the curve. Even drummers will understand this. That’s really important. Now, where it could get complex in that proposal is that Glenn’s completion of a two-minute pop song would be worth more than my incompletion after listening to six and a half minutes of a seven-minute song. Curb the concern, though, because I did go on to show that genre is not necessarily a driver of completion; neither is song length. That’s a reassurance.