🎵 Spotify Down, Record Music Revenues & TikTok's Distribution Gig
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Happy Monday everyone!
If you’re as hopelessly addicted to the right parts of the Internet as we are, you would've noticed that last week, Spotify and Discord suddenly went down for millions of users worldwide 🌎
While Spotify never confirmed what exactly the problem was, it is believed that the outage was related to problems with their servers hosted on Google Cloud, which is believed to have had the knock-on effect on Spotify.
While it did go back up in a few hours, the Internet did it’s thing and we couldn’t help but curate a collection of the best memes on our Instagram page 😂👇🏻
While it was all fun and games on Twitter, many users pointed to the fact that how music streaming means that no one really ‘owns’ their music anymore, and simply just rents it from the database of music streaming platforms like Spotify/Apple Music/YouTube etc.
All your painstakingly curated playlists over the years could be taken away from you, and to think of it- you wouldn’t be able to do shit 🤷♂️
While DSP’s have made it easy to access 60 Million plus songs at your fingertips, the truth is that as a user, you’re just streaming it off a centralised cloud server, and even if you download the song for listening to it offline, you can have it taken away from you if you stop paying the subscription fee/the service goes down.
Compare that to CD’s and Vinyls or even digital downloads from services like iTunes, for which you actually pay a fixed price per song/album; while you don’t technically own the IP of the music, no centralised entity like Spotify can take it away from you.
If all this sounds fuzzy to you, here’s a simple breakdown of three main types of electronic transmission of music:-
⏯ On-Demand Streaming
Services like Spotify, Apple Music, YouTube Music etc which lets users stream songs on demand, in exchange for a fixed subscription fee/make them listen to ads.
In 2021, almost 83% of the total revenues raked in by the RIAA were under this bucket of streaming, something we’ll cover in a bit.
📲 Digital Downloads
Services like iTunes that let users outright purchase individual songs/albums for a fixed amount, with the music downloaded onto their local devices/smartphone forever for offline consumption.
In 2021, this contributed to 4% of the total revenues of the recorded music industry.
📻 Non-Interactive Streaming & Satellite Radio
Non-interactive streaming means you can listen to only what the programmer decides to play (as opposed to making your own choices).
The biggest example of this is Pandora Music, which for the longest time was exclusively non-interactive streaming, but recently introduced on-demand streaming as well.
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For Record Labels, it’s time to party like 1999 🕺
The Recording Industry Association of America (RIAA) released its yearly report for the state of the Recorded Music Industry and boy do the numbers look tasty 💰
After having struggled with piracy for over two decades now, the full effects of music streaming seem to be in full effect, as the American Recorded Music Industry notched up $15 Billion in total revenues for 2021, the highest amount ever.
While this isn’t adjusted for inflation, it’s still a sharp 25% increase from the previous year, with streaming contributing to a mammoth 83% of the total pie.
While this just covers the American Record Music market, the numbers are usually taken as a proxy for the state of the global music industry.
While the peak of the music industry remains 1999 after adjusting for inflation, streaming has clearly picked the music back up from its piracy ridden lows of the 2000’s.
However, the structural inefficiencies of the industry are far from being fixed 🥱
Artists are still into deals with Record Labels, who serve nothing more than being funding and marketing tools for artists in a world, where technologically it is possible for them to own their distribution and even raise funds directly from fans.
We at Incentify are building a platform that helps artists distribute and monetise their content directly from their fanbase.
If you’re reading this and interested to know more, DM us on Instagram or Twitter!
TikTok’s Music Distribution company: SoundOn
At the start of the year, we wrote a piece on how social media and TikTok in particular are literally changing how artists approach their craft 👇🏻
The fact that music discovery has blown up on TikTok is no secret 🤷♂️
And Bytedance- the parent company of TikTok has set its sight on capitalising exactly that, and moving up the value chain ⏫
How exactly? Ole Obermann- the Global Head of Music at TikTok explains 👇🏻
“In short, we’re making it easier for independent artists to get their music on TikTok, and we’re going to work with them to much better understand how to reach their audiences on TikTok.”
“Through SoundOn we’re going to organise the ecosystem of unsigned artists in a way that doesn’t exist today and has never existed before.
“I think that’s going to make it easier for artists to find their fans. And then for labels and publishers to find those artists.
TikTok says that SoundOn pays out 100% royalties to music creators in the first year and 90% after that and provides a range of promotional tools and support.
I think one thing is pretty obvious from this, the traditional structure of the Big 3- Sony, Warner and Universal Music; despite raking in record revenues today, might not be as defensible of businesses as everyone thinks they are.
TikTok has built distribution with its viral format, and now with a dedicated artist management and music distribution channel, this could be their shot to move up the value chain and strengthen their position as a leading platform for creators to drop new music.
How will this actually pan out for the music industry and artists in particular?
Only Time Will Tell ⌛️
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