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You possibly can take heed to the most recent MBW podcast above, or on Apple Podcasts, Google Podcasts, Spotify, Stitcher, iHeart and many others. by way of this hyperlink.
Welcome to the most recent episode of the Music Enterprise Worldwide Podcast. The MBW Podcast is supported by Voly Music.
On the most recent Music Enterprise Worldwide podcast, one of many business’s sharpest minds, Will Web page, joins MBW founder Tim Ingham in dialog (hear above).
Collectively they cowl a spread of matters together with pricing, streaming, royalties – and why the worldwide music business is definitely extra native than ever.
Web page is the ex-Chief Economist of each Spotify and UK assortment society PRS For Music.
Today he’s a marketing consultant and creator of the e book Tarzan Economics (aka Pivot), which presents compelling rules for enterprise house owners going through unsure and disruptive instances.
Web page can also be the co-author of a brand new paper printed by the London Faculty of Economics and Political Science that focuses on the ‘Glocalization’ of music.
In different phrases, music has by no means been extra international as an business, but whenever you dig into the preferred tracks in particular person markets, they’ve a decidedly native really feel.
Hearken to the total interview above, or learn an abridged and edited abstract of key components of the dialogue beneath…
We’ve seen ‘Glocalization’ in markets resembling Italy, the place the highest tracks of a given yr are sometimes ALL (OR NEARLY ALL) DOMESTIC. The large query to ask about music’s ‘Glocalization’, then: Why is that this occurring? And why is it occurring in an growing variety of markets, particularly throughout Europe?
Effectively, an economist might give a typical economist reply right here, which is to have a look at provide and demand. However it’s actually for the sociologists, the anthropologists, the business executives down on the bottom so as to add taste to this.
Right here’s my greatest stab at [explaining] the forces of provide: again when [recorded music] was a CD market, you had prohibitive prices of producing and distributing CDs, and that will have favored international stars over native ones. Now these prices have disappeared; anybody could make music, anybody can get it onto platforms. Possibly that enables for [more] native funding.
It’s early within the day as we report this podcast, Tim, but when we go to alcohol for a second, there is likely to be a parable. We used to have international breweries, now we’ve native craft beers, as a result of the price of manufacturing and distribution has fallen.
Let’s additionally take into consideration knowledge science: prior to now, report labels would take a look at their radio performs three months after the occasion. Now you’ve bought knowledge science exhibiting what’s been truly consumed proper now, and that [information may lead to record company investment] going extra native.
“Somewhat than trusting linear radio and TV reveals to inform them what they need, European streamers at the moment are selecting what they need, which as a rule is native artists performing of their native mom tongue.”
One other factor on the provision aspect is the way in which that international report labels, giant and small, can have their international precedence lists.
We did a few research right here. Each month, there are possibly 10 songs which might be prioritized by [a record company’s] international headquarters for native advertising and marketing. However after we appeared throughout these 10 songs – or these 120 songs throughout the calendar yr – we might solely rely 8, 10, or 12 completely different artists.
In a world the place we’re seeing 100,000 songs a day being on-boarded to streaming [platforms], that’s not plenty of [bandwidth] to, over the course of a yr, try to break these 8/10/12 artists. Particularly as a result of, each week, the native places of work of Common in Germany, or Sony Music in Spain, or Warner in Sweden are going to have native bands knocking at their door, wanting native assist.
One very blunt issue right here: it was once that linear broadcast and radio instructed you that you simply have been going to take heed to this track, right now, on this breakfast present. Now we’ve all been empowered to decide on by streaming – as you’ve documented over time in Music Enterprise Worldwide.
Somewhat than trusting linear radio and TV reveals to inform them what they need, European streamers at the moment are selecting what they need, which as a rule is native artists performing of their native mom tongue.
What does this imply for the blockbuster international music enterprise? Is it a menace?
I feel it casts a cloud.
I used to be taking a look at headcount at report labels in native [markets] over the previous 5, seven years – and headcount at these places of work has doubled. That hasn’t occurred on the international headquarters; [headcount at these HQs] has grown, however it hasn’t doubled.
So we’re seeing devolution, at label degree, of energy transferring away from international headquarters right down to native places of work to match this localized pattern.
“How do these British/American/Canadian acts get on pageant payments in these European markets, which have skilled this impact of glocalization? It’s an enormous cloud that hangs over the business’s head [in traditionally powerful markets] now.”
It will get fairly fascinating whenever you issue within the aggressive benefit that [artists from] Britain, America, and Canada used to have by performing within the English language, as a result of I don’t suppose that’s holding sway anymore.
Let’s say you’re a German pageant promoter, and you may fill your invoice this summer season with German bands performing in German language – nice.
However what if I’m an enormous US, UK, or Canadian act who desires 1,000,000 {dollars} to headline your pageant? You’d be proper to show round and say to me, ‘I can’t generate any extra worth by your look; I’ve offered all my tickets, I’ve crammed my pageant. How about you pay me to get on the invoice?’
Twenty years in the past, the German charts have been only a carbon copy of British and American tradition. In the present day, they’re all German acts.
So how do these British/American/Canadian acts get on pageant payments in these European markets, which have skilled this impact of glocalization?
It’s not essentially a foul information story – possibly [the aforementioned nations] – simply had it too simple prior to now. However instances have positively modified.
One factor that we should always positively tackle is the impression of hip-hop world wide. That style’s story for thus lengthy, and understandably, was all in regards to the USA, the place streaming lastly mirrored hip-hop’s true reputation and its dominance of the market. The subsequent step that many individuals anticipated to see was the biggest North American hip-hop superstars would dominate a number of markets globally. That began to occur a couple of years again. However now, if I look across the European nations – the UK included– it’s truly native language hip-hop that appears to be most prevalent in lots of these end-of-year charts.
It’s fascinating. Take Poland, for instance. The Prime 10 [acts there today] are Polish, the Prime 40 is just about all Polish – however they’re Polish acts doing hip-hop, which is an American style.
So we’ve seen the localization of the [artists], however the globalization of the style itself. How do you work that out?
“Should you take a look at the hip-hop artists that got here out of America final yr, they didn’t hit their [expected global] numbers – that’s well-known.”
Going again to your earlier query, this poses some thorny points for the Canadian/US/English markets.
Should you take a look at the hip-hop artists that got here out of America final yr, they didn’t hit their [expected global] numbers – that’s well-known.
So these are huge releases, with huge advertising and marketing pushes, however they’re not fairly making it on the worldwide stage as a result of the style is touring, however the acts aren’t.
I can’t have you ever on this podcast with out asking you about a few different matters. One is streaming pricing – together with the habit at your former employer, Spotify, to that $9.99 month-to-month worth level! What’s your commentary?
I might chew your ear off until subsequent Tuesday about my points with pricing.
I at all times prefer to stress this level: on December 3, 2001, that’s simply after 9/11, [music streaming service] Rhapsody bought its $9.99-per-month license on the premise that it mirrored the price of a Blockbuster video rental card.
I’m at present podcasting with MBW in mid-2023, and take a look round: Whether or not Pound Sterling, Euro, or US Greenback, the standalone natural [music streaming subscription] worth stays at $9.99.
I’m simply flabbergasted that we appear to have supplied increasingly however, in actual phrases, charged lower than much less for it.
“I’m simply flabbergasted that we appear to have supplied increasingly however, in actual phrases, charged lower than much less for it.”
I’ve coined this time period ‘herbivores’ and ‘carnivores’: We’ve not solely had 20 years of $9.99, however 20 years of herbivore habits – the place all of the streaming companies are rising, and so they’re not invading one another’s patch.
That may change after we hit saturation level [of music subscription growth in large markets] and I’m seeing alerts that it’s occurring now. That’s after we go from ‘herbivores’ to ‘carnivores’ – the place the one means I can develop my enterprise is by stealing a few of Tim’s prospects.
We’ve bought to have an clever dialogue now about what that chapter would possibly seem like. We’ve by no means had it earlier than, and we’re in uncharted waters.
You possibly can have [in the ‘carnivore’ world] what telcos sometimes do, which is to compete on worth – so [music streaming] worth might truly go down versus up. Or you might compete on options.
Apple Music, to their credit score, rolled out Spatial Audio; I’m an enormous appreciator of it. Should you haven’t listened to Rocket Man by Elton John in Spatial Audio, you’re lacking one thing very particular.
So that you’re seeing upward competitors on worth primarily based on options there. However equally, it might go the opposite means.
For all my rants about $9.99, it might worsen [with prices going down, not up] because the ‘herbivores’ flip into ‘carnivores’, and the competitors kicks in.
Simply to be very anecdotal right here, I began off paying Netflix at $7.99 [a month]. I checked my financial institution assertion this morning: it’s now $15.99. And I’m watching it much less. Clarify that!
They’ve doubled the value, however my consumption has halved… and I’m proud of the proposition. So I do suppose music’s missed a trick.
Let’s speak royalty fashions: Sir Lucian Grange kicked off 2023 with an enormous story, saying Common Music Group desires streaming payouts to maneuver in direction of an ‘artist-centric’ mannequin and away from the dominant ‘professional rata’ mannequin. We don’t 100% know what ‘artist-centric’ is but. However finally it seems to be like it could borrow some components of ‘user-centric’ and likewise could incorporate some components of upselling shoppers into additional-cost premium tiers. The place do you sit? What’s the logical and greatest subsequent step for each music rightsholders and streaming companies to take?
This one’s going to run and run and I’ve been deep within the weeds of nearly each new mannequin. There are a few actually huge factors to make.
Remind your self that the accumulating societies – 100-year-old startups like ASCAP or BMI – have by no means, ever handled music prefer it all has the identical worth. That’s actually necessary.
When ASCAP was based, they’d two distribution pots: one for classical music, and one for music they didn’t deem to be classical. They made that distinction means again then.
They didn’t have knowledge scientists or software program builders – I nonetheless don’t suppose they’ve knowledge scientists and software program builders now!
“The problem that we’re now going through is the strain of introducing capitalism, to communism. How will we nudge the business away from what’s communism – the place each track is price the identical?”
We’ve had 22 years of $9.99 cash coming in [each month in music streaming], and 22 years of ‘professional rata’, the place each track is price the identical.
I feel the problem that we’re now going through is the strain of introducing capitalism, to communism. How will we nudge the business away from what’s communism – the place each track is price the identical?
You’re seeing points of it: [Spotify’s] Discovery Mode is an fascinating rabbit gap you might discover on a future podcast [whereby some songs are paid less than others].
What of the ‘user-centric’ or ‘artist-centric’ or ‘artist progress’ fashions? My largest fear is that [changing to one of them] might collapse the royalty accounting techniques at DSPs.
There’s additionally a contractual headache there: how will we negotiate all these [artist/rightsholder] contracts? And there’s an auditing headache: How are you aware that $40,000 examine was actually $40,000?
My foremost concern is already right here: [the royalty structure buckling under the] strain, on the provision aspect, from the explosion in AI music being launched. How do you resolve that?
What do you plan?
I’ve give you a ‘fourth means’ and I assumed we might rapidly sow a seed.
For the reason that Eighties, when the BBC pays [UK collection societies] PPL and PRS for taking part in songs by Queen, they’ll pay twice for Bohemian Rhapsody [versus] what they pay for You’re My Greatest Buddy. Why? As a result of Bohemian Rhapsody lasts twice as lengthy.
Is there a job for [track] length within the royalty calculation mannequin? And will that assist us deviate from the ‘professional rata’ mannequin in a secure and innocent means?
My four-in-the-morning-scribble-down-your-thoughts second was, slightly than measure time of consumption, or time of observe, what a few threshold on completion?
Songs which might be accomplished of their entirety are price greater than songs which might be incomplete or skipped midway by. There’s good economics to justify this.
We’re competing for consideration; in case you write a very nice track, I must be there for the entire journey, so let’s reward you for writing an incredible track and [achieving that].
“They stated: ‘It’s TikTok mate. No one listens to full songs anymore.’ I dropped my pint glass, which as a Scotsman is uncommon.”
The unique inspiration for this concept of ‘let’s worth length extra by way of completion and penalize lack of length or incompletion’ was a marriage I went to.
Once I go to weddings, I put on my kilt, that’s an incredible factor, and I say hello to the bride and groom, then I drift off and converse to the band.
So this band performs Celebration by Kool & The Gang for the bride and groom, they knock out one other tune for the dad and mom to hitch. After which they do a 2-hour-15-minute medley.
They’re superb – the band are tight. However afterwards, I requested them: ‘What are you doing a 2-hour-15-minute medley for?’ They usually stated: ‘It’s TikTok mate. No one listens to full songs anymore.’
I dropped my pint glass, which as a Scotsman is uncommon. However I used to be identical to, What did you say?!
That is what’s occurring to consideration spans; we simply need snippets of songs.
Possibly, by factoring in length and track completion, we might take this business ahead and begin to depart from the ‘professional rata’ mannequin. It’s served us nicely for 22 years, however it’s clearly creaking underneath the pressure.
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