The Ledger
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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.
At the midway point of 2024, the recorded music business is in fine form. Streaming is growing, physical purchases remain strong and download purchases are so few that any declines are barely noticeable amidst streaming’s success.
Billboard has already reported the major takeaways from Luminate’s midyear report — you can read a main article here and a follow-up article with more observations here — but a document filled with so much data, augmented by market research, merits another story. Below you can find five additional insights from the report (which you can download a copy of here).
Putting Digital Into Perspective
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Digital’s share of the market rose slightly to 95.3% of equivalent album units (EAUs), up from 95.2% at midyear 2023, 92.3% at midyear 2022 and 91.2% at midyear 2021. If that seems higher than some other figures you’ve spotted at Billboard, don’t worry. Because Luminate tracks only sales and purchases, comparing its data to other available data is like comparing apples and oranges. Public companies that report recorded music revenues have a lower digital share than Luminate’s consumption-based numbers. At Universal Music Group, digital’s global share was 69.8% in 2023, while at Warner Music Group it was 67.0%. Those companies’ digital shares are lower than what’s found in the Luminate report for a couple reasons. First, both companies get more than 10% of their recorded music revenue from physical sales globally (16% for UMG, 11% for WMG). Second, music companies group record labels with merchandise, various licensing revenues and expanded rights revenues — things not tracked by Luminate
Luminate’s digital share is also higher than the RIAA’s widely observed industry numbers, which had digital at 86.4% of recorded music revenue in the U.S. in 2023. But the RIAA tracks a few things that Luminate doesn’t. That includes SoundExchange collections (encompassing satellite radio and cable music services such as Music Choice and Stingray), which last year accounted for 5.8% of total revenue; and synchronization royalties, which accounted for 2.4%.
Long Live the Album
Not many years ago, the album was declared dead and some people predicted single-track releases would become standard. Sure, the album has been forever unbundled, and artists tend to release individual tracks ahead of an album’s release. Yet the format continues to thrive. At the midway point of 2022, four albums had more than 1 million equivalent album units. Last year, five albums had surpassed that threshold by June 30. And this year, seven albums topped 1 million EAUs.
As Billboard’s Dan Rys noted earlier this week, this year’s top album, Taylor Swift’s The Tortured Poets Department, did especially well, boasting 2.6 times as many EAUs as the No. 2 album, Morgan Wallen’s One Thing at a Time. To be fair, though, One Thing at a Time has had incredibly longevity: It was the No. 1 album in the first half of 2023, and its 3.31 million EAUs in that period were only 29% less than TTPD’s 4.67 million units in the first half of 2024.
Notably, sales are a major part of the consumption pie for some of the top albums. In the case of TTPD, more than half (53%) of total EAUs came from purchases. Beyoncé’s Cowboy Carter, the No. 4 album, got 23.3% of EAUs from purchases.
Catalog Didn’t Kill Current Music
Catalog’s share of total EAUs was 72.8% — exactly equal to the prior-year period. This ends a run of increasing catalog market share that led to much — and some might say unnecessary — handwringing over the popularity of current music being released by record labels. By comparison, catalog’s share was 72.4% at midyear 2022 and 69.4% at midyear 2021. (Luminate classifies catalog music as being more than 18 months old.) Not all catalog music could be considered “old,” of course. Swift’s 2019 album Lover, which was No. 10 overall and No. 5 in album sales at the midyear mark this year, falls into the catalog category. So does her 2020 album Folklore, which ranked No. 8 in album sales. SZA’s SOS, released in December 2022, reached catalog status in June even though it was the No. 5 album on the midyear 2024 chart with 1.06 million EAUs. These are examples of “shallow” catalog that have achieved a degree of longevity, not “deep” catalog such as reissues and golden oldies.
Latin Music Has a Chart Disadvantage
Latin music streaming is 32% ad-supported, far below the 19.6% average for all genres and less than half the 12.9% of country music. That matters for both chart position and industry revenues, as premium streams produce greater per-stream royalties than ad-supported streams. In addition, premium streams are weighted more heavily when determining chart position. To compare albums and tracks that are consumed in a variety of formats — physical albums, downloads and streams — Luminate converts streams into EAUs, and ad-supported streams convert to EAUs at a lower rate than premium streams do. It makes sense: Ad-supported streams produce lower per-stream royalties than premium streams. Given Latin music’s relatively high percentage of ad-supported streams, that’s bad news for the genre, whose streams convert to EAUs at about 1,500 streams per EAU — much higher than country and pop, which have the lowest genre conversion rate at about 1,360 streams per EAU. Latin’s high proportion of ad-supported streaming also matters because it tends to under-index in terms of sales: No other genre has lower digital track sales, digital album sales and physical album sales as a percentage of EAUs.
Big Populations, Small Revenue
Developing markets have huge populations but relatively little revenue. India, which has a population of 1.4 billion and 659 million smartphone users, has the lowest proportion of premium streams in the 49 countries tracked by Luminate: Just 9.7% of all on-demand audio and video streams in the country are premium streams, which means 92.3% of all streams come from ad-supported streaming. With a population of 275 million, Indonesia is the fourth most-populated country worldwide, but in terms of music streaming, the country has the second-lowest proportion of premium streams at 15.5%. Globally, the average premium share is 57.5% and is highest in European countries, including Norway (93.5%), Iceland (92.9%), Sweden (89.6%), Netherlands (87.6%) and Denmark (87.1%).
It’s earnings season once again, with Spotify the first music company set to report second-quarter earnings on July 23. Which is fitting — not only is the Swedish streaming giant the most valuable publicly traded music company by market capitalization at $60.4 billion, it’s also an important bellwether for much of the music business.
Music subscriptions will continue to be the driving force for Spotify, other streaming companies, record labels and music publishers. Subscriber gains mean more money flowing through to creators and rights owners, while rising prices are benefitting streaming services and could flow down to creators and rights owners, too — although analysts have mixed opinions on whether price increases have those downstream benefits or simply pad streaming companies’ bottom lines.
Another giant of the music business, Universal Music Group, is up next, with its earnings slated to drop the day after Spotify’s (July 24). Believe and SiriusXM earnings are due the following week (both Aug. 1), while Warner Music Group is set for the week after (Aug. 8). Follow Billboard‘s list of upcoming industry events for more earnings release dates once they’re announced.
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On the touring front, for all the hullabaloo about weakened consumer demand and canceled tours and festivals, the live music market is likely to have produced another banner quarter. While everyone’s eyes will be on Live Nation to gauge the health of the business, the concert giant has yet to announce its earnings release date; CTS Eventim, which will report earnings on Aug. 22, is the only promoter to have announced so far.
Here’s what to expect in the upcoming slew of earnings reports.
Subscription gains — but without churn?
The recorded music market is having its cake and eating it, too: subscription prices are increasing, and customers don’t appear to be leaving in droves. Music subscription services are benefiting from price increases — namely Spotify in 2023, with some additional price hikes in 2024 — with little churn. Higher prices and continued subscriber growth will lead to gains in total revenue and average revenue per user (ARPU); Spotify expected 245 million subscribers at the end of June, which would be 6 million net additions in the quarter and a whopping 25 million greater than the 220 million subscribers it had on June 30, 2023. Watch out for any indications that higher prices negatively affected Spotify’s churn rate, however — although the company does not release specific churn data, it will likely warn investors if subscriber losses were greater than expected and are headed in the wrong direction. So far, however, any consumer complaints have been more bark than bite. In another good sign, streaming activity has been healthy, too. U.S. audio streams — by count, not by dollar value — were up 8.1% in the second quarter, according to Luminate.
Payoffs from price increases and cost-cutting
Spotify expects to have operating income of 250 million euros ($273 million) in the second quarter, which would be a nearly 500-million-euro ($545 million) improvement over the 247-million-euro operating loss it saw in the second quarter of 2023. If attained, that big shift from loss to profitcould be chalked up to r Spotify’s decisions in 2023 to raise prices and drastically cut back on its headcount (including a 17% workforce reduction in December). Those moves quickly produced benefits: Gross margin increased to 27.6% in the first quarter of 2024, up from 26.7% in the fourth quarter of 2023 and 25.2% in the first quarter of 2023. The reduced expenses from layoffs also helped operating margin improve to 4.6% in the first quarter — a big gain from the -2% and -5.1% margins it saw in the fourth and first quarters of 2023, respectively. Additionally, Spotify’s second-quarter guidance of 3.8 billion euros ($4.1 billion) of total revenue would be a 19.6% improvement from the prior-year period revenue of 3.18 billion euros ($3.47 billion). ARPU also increased 7% in the first quarter and is likely to improve again in the second quarter.
More advertising weakness
Music subscription services chose a good time to raise prices. Weak advertising revenues have been a recurring theme since music and tech companies began warning investors in 2022, and continued unsteadiness in the advertising market will impact ad-supported revenues for streaming companies, record labels and music publishers. On July 1, Guggenheim lowered its estimate for Universal Music Group’s recorded music ad-supported streaming growth to 10.6% from 11.1% “to better reflect more challenging comparisons” against the prior quarter, as Guggenheim analysts wrote in an investor note. However, that revision was still above the first-quarter estimate of 10.3% due to UMG’s renewal of a licensing agreement with TikTok in May.
Continued strong demand for live music
For all that has been written about fans’ lessened appetites for live music, public companies appear to be in stable conditions. In its first-quarter earnings report in May, Live Nation said that through mid-April, the percentage of large shows booked was up double-digits while concert margins had improved, too. “We are seeing no weakness,” said president/CFO Joe Berchtold, adding that artists who toured in both 2023 and 2024 are seeing better sell-through this year. And with fewer stadium shows in 2024 than 2023, Live Nation will have more concerts in the more profitable arenas and amphitheaters that it owns or operates. Analysts are still bullish on Live Nation in the wake of the Department of Justice’s antitrust lawsuit against the company filed in May: As of this week, 18 analysts have “buy” recommendations on Live Nation, four have “hold” recommendations and only one has a “sell” on the stock. CTS Eventim expects another solid year, too. In April, the German promoter and ticketing company reiterated comments contained in its 2023 annual report that predicted “further moderate sales growth” in 2024.
The Taylor Swift Effect
UMG’s financials will get a boost from Taylor Swift’s latest album, The Tortured Poets Department. Released on April 17 through UMG’s Republic Records, Tortured Poets has remained at No. 1 on the Billboard 200 album chart for 11 consecutive weeks since its April 19 release, with sales boosted in subsequent weeks by additional variants that helped it maintain chart position. In the most recent chart week, for example, two CD versions of the album that fans initially ordered through Swift’s webstore in early June were shipped. In all, Swift’s latest album topped the Billboard 200 for 9 of the second quarter’s 13 weeks and sold 2.4 million units in the U.S., with about 2 million of those coming from CD and LP sales, according to Luminate. That led Republic Records’ U.S. market share to reach an industry-leading 15.72%, up from 12.42% in the first quarter – greater than Warner Music Group. UMG’s total market share in the quarter was 36.37%, up from 34.48% in the prior-year quarter and well ahead of its 33.9% share in the first quarter of 2024.
Another piece of legislation in Washington, D.C., is making its way through Congress that would pay artists and record labels for plays at terrestrial radio. If that sentence sounds familiar, that’s because the issue has long been present on Capitol Hill without managing to win a presidential signature.
In 1988, Frank Sinatra sent a letter to Paul McCartney, Stevie Wonder, Ella Fitzgerald, Bruce Springsteen and about 20 other music luminaries about a decades-old inconsistency in music copyright law. There’s no reason why the writer and publisher should be compensated for radio plays but not the performer, he argued. Sinatra foresaw an expeditious end to his activism. “We are optimistic that with a united effort, we will be able to achieve successful results within a reasonable period of time,” he wrote. But 36 years and numerous legislative attempts later, other artists are still working on the task.
The latest artist to pick up the baton is country icon Randy Travis, who appeared before a House Judiciary subcommittee hearing on Wednesday (June 26) in support of the latest legislation to address the issue, the American Music Fairness Act. Artists helped build radio in the U.S. and should be properly compensated, said Randy’s wife, Mary Travis (Randy has had difficulty speaking since suffering a stroke in 2013). Passing AMFA, she told lawmakers, “would make many old wrongs finally right.”
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The safest statement of the afternoon, though, went to Subcommittee chairman Rep. Darrell Issa, who admitted the hearing was “a repeat of some things we’ve seen in the past.” In recent memory, lawmakers have introduced the Performance Right Act in 2007 and 2009; the Free Market Royalty Act in 2013; Fair Play, Fair Pay in 2015 and 2017; the Ask Musicians for Music Act (AM-FM) in 2019; and now the AMFA in 2022 and 2023.
AMFA is like its predecessors in numerous ways: It provides accommodation for small broadcasters that reduce their royalty obligations. It protects the royalties paid to songwriters and music publishers for the performance of musical works on terrestrial radio. Most importantly, the bill codifies a performance right for sound recordings.
But is anything different about AMFA? “The language of the bill hasn’t changed since [the Performance Rights Act in 2009,” says Linda Bloss-Baum, associate director of American University’s business and entertainment program. “And I’d say kind of the appetite on both sides to have a meaningful negotiation hasn’t really changed either.”
The radio industry’s opposition to a new performance right certainly hasn’t changed. “A new performance royalty could spell the end for many local stations,” Curtis LeGeyt, president/CEO of the National Association of Broadcasters, said during Wednesday’s hearing. After surviving an advertising slowdown from the COVID-19 pandemic and facing the rise of streaming platforms, radio stations are arguably in worse financial shape than in years past. “Local broadcasters across this country are operating on extremely tight margins right now,” LeGeyt added.
The AMFA attempts to go easy on small broadcasters while holding regional and national conglomerates to a higher standard. Mike Huppe, president/CEO of SoundExchange, believes bill makes better accommodations for small broadcasters than its predecessors. Under the AMFA, stations that earn less than $1.5 million in annual revenue (and whose parent companies make less than $10 million in annual revenue) would pay $500 annually. Small, non-commercial stations with annual revenue of less than $100,000 would pay as little as $10 per year. “In that sense,” says Huppe, “this is the best bill for small broadcasters that there’s ever been.”
Unlike previous bills, the AMFA also includes language that says the Copyright Royalty Board, which would set royalty rates payable by stations, could take the promotional value of radio play, and the fact that stations currently pay sound recording royalties for streaming on their digital platforms, when setting rates. But that’s unnecessary, says David Oxenford, partner at Wilkinson Barker Knauer. “The section of the Copyright Act that deals with royalties that are payable to SoundExchange already has this part of the consideration” in determining how royalty rates are set, he says.
The main differences between the AMFA and its predecessors might not be found in the actual language of the bill. Market conditions have changed. At Wednesday’s hearing, lawmakers seemed more impatient and fed up than in years past.
In his closing remarks, Issa used his bully pulpit to warn broadcasters that Congressional intervention would be more painful than a negotiated deal with record labels. “I will tell you that at least this chair and the ranking member of the full committee, we stand ready to negotiate fairly small amounts to change a principle to get this behind us,” Issa said to LeGeyt. “And if you don’t take that, [then] quite frankly you have to live with the consequences.”
Issa’s tone suggests the climate in Washington, D.C., has changed. Huppe believes streaming and AI have made people more aware of the “inequities” facing creators. Issa is among the subcommittee members to have sponsored legislation to protect intellectual property from the threat of generative AI. Rep. Adam Schiff, another subcommittee member, was one of a trio of lawmakers to send a letter to the Registrar of the U.S. Copyright Office out of concern that Spotify’s decision to take a discounted mechanical royalty rate for its music-audiobook bundle was not in the spirit of the Music Modernization Act.
What’s more, radio could get a big boost from the AM Radio in Every Vehicle Act, which would mandate all automobiles manufactured in the U.S. to have AM radio. The bill would mandate technology that benefits radio broadcasters; FM stations, too, would presumably be included in in-dash stereos. Logically, at least, that could strengthen artists’ and labels’ argument.
“We’re not necessarily against the [AM Radio in Every Vehicle Act],” says Huppe, “but we would say, how can you possibly do that and not fix [the performance right] at the same time?”
In May, Taylor Swift notched her 14th No. 1 album on the Billboard 200 with the help of 14 different vinyl versions of The Tortured Poets Department, which sold an astounding 859,000 units in the album’s debut week. She has now stayed atop the Billboard 200 for eight consecutive weeks by rolling out additional variants, proving the pop megastar has mastered the art of giving superfans what they want.
Swift isn’t alone in upping her variant game. Luminate looked at the number of physical variants — defined as distinct UPCs per project — in the top 10 of the Billboard 200 albums chart each week since the beginning of 2019 and found that the amount has trended upwards since that year, when the average number of physical variants in the top 10 was 3.3 per week, according to data shared with Billboard. While that number fell to 2.8 per week in 2020 due to the COVID-19 pandemic and its effect on release schedules and supply chains — physical album sales also fell, from 73.5 million units in 2019 to 68 million units in 2020 due to a sharp drop in CD sales — the average number of physical variants in the top 10 has increased sharply in the post-pandemic years.
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Making albums available in different colors, formats and packages has proven to be a shrewd move for prominent artists aiming for the top of the chart. In 2021, Adele’s 30 debuted atop the Billboard 200 with a Target-exclusive CD, vinyl exclusives at Amazon and Walmart, and three items sold through her official webstore: a cassette and two deluxe boxed sets.
Like she did with The Tortured Poets Department, Swift has frequently topped the Billboard 200 with the help of physical variants. Her 2022 album Midnights had the biggest week for an album in nearly seven years. And in 2023, her 1989 (Taylor’s Version) had the biggest week in nearly a decade with the help of 15 collectible physical formats.
Also in 2023, Travis Scott’s Utopia reached No. 1 thanks to 84 variants, as the album was made available in three different track lists and multiple CD and LP variants including zine and merchandise bundles. The same year, Fall Out Boy’s So Much (for) Stardust had a whopping 116 physical variants, according to Luminate, although it reached only No. 6 on Billboard 200.
CD variants have helped numerous K-pop artists achieve high Billboard 200 debuts. K-pop fans have long clamored for collectibles from their favorite artists, and in South Korea, labels employ lottery-style marketing strategies and package CDs with merchandise — even though many fans don’t own a CD player. In March, With YOU-th by TWICE debuted atop the Billboard 200 with the help of 14 CD variants. “To the fans, it’s not just an issue of buying music,” Bernie Cho, the head of DFSB Kollective, a Korean music export agency, told Billboard in 2020. “You’re showing your loyalty.”
But physical variants aren’t the exclusive domain of albums popular enough to land in the top 10. “For certain records, multiple variants can support a chart position, but it’s not the main driver for Concord,” says Joe Dent, executive vp of operations at Concord Label Group.
“Fans want to support their favorite artists of course, but oftentimes they want to support a particular shop or webstore that they love as well,” Dent continues. “We strive to meet those fans wherever they are.” For example, Concord’s Rounder Records made vinyl variants of Sierra Ferrell’s Trail of Flowers available as exclusives to indie record stores, Magnolia Record Club and Spotify Fans First, while several other vinyl variants sold through her website and the Rounder Records webstore, says Dent.
AWAL, home to such indie artists as Laufey and JVKE, has a similar mindset. “The way we look at physical never starts with the commercial opportunity,” says CEO Lonny Olinick. “It starts with how the artist wants to express themselves and what the fans are likely to love. And what it really comes down to is how an artist can deepen the connection they have with their fans.”
Variants can also be a marketing strategy for catalog albums that aren’t likely to achieve a high chart position. “We use the variants as an opportunity to excite the market,” says Rell Lafargue, president/COO at Reservoir Music. “For example, if we have something that has been out of print for decades, we might want to do a color variant to reintroduce it into the marketplace as a new, distinct and fun physical product.” Reservoir’s Tommy Boy Records took this approach for the upcoming reissue of Afrika Bambaataa & Soulsonic Force’s 1986 album Planet Rock by opting for a limited edition pressing with a three-color splatter.
Each additional variant adds to the complexity of releasing an album. That challenge was exacerbated by COVID-related supply chain issues, leading to longer lead times and searches for alternate manufacturers. But while logistical challenges remain, says Lafargue, they aren’t as persistent. “While it can be challenging to manage multiple variants or exclusives instead of a singular version, it is worth the extra effort to expose the record to different retailers and get it into the hands of even more fans,” he says.
The proliferation of physical variants doesn’t come as a surprise. Streaming has made music both plentiful and easily accessible — almost to a fault. Some artists are now releasing physical albums a week or two before making them available on streaming platforms. So while chart position remains a big motivator for many, there’s also something to be said for the way physical variants can foster a feeling of closeness between artists and fans.
Artists “look to cut through the volume of digital music being released,” says Olinick. “Bringing that connection into the real world, whether through live shows or physical products, is hugely impactful.”