MBW’s Stat Of The Week series is a series where we highlight a data point that deserves attention from the global music industry. Stat of the Week is powered by Cing Music Group, a technology-based record label, distribution and rights management company.
One of the most dramatic effects streaming has had on the record industry is the democratization of listening.
The logic goes like this: In the pre-Spotify past, consumers had to make a firm decision about the next record they wanted to buy. This buying and selling decision was narrow and largely controlled by the media and broadcast channels – the legendary “gatekeepers”.
No transactional purchase decisions are required these days. No consumer needs to ‘gamble’ their money with an untested new record – they just need to download it to Spotify/YouTube Music/Apple Music etc, press play and see if they’re into it.
If they like it, they can continue listening. If they don’t, they might just fly to another auditory treat.
Year after year, this phenomenon drastically reduces the total music listening concentration claimed by some of the world’s biggest megastars.
As a result, an increasingly large portion of total streams in any given year is moving away from the top 10 hits and toward the broader “middle class” artists with significant but not necessarily chart-exploding fanbases. .
MBW has debunked this stat several times this year, but it’s worth repeating: the top 10 audio streaming music in the US, according to our calculations of Luminate’s numbers H1 2022 was played cumulatively 1 billion times less than they are H1 2019 (2.74 billion against 3.81 billion).
The impact of streaming on live business
This phenomenon is not unique to the record industry.
In an upcoming interview Music Worldwide Business 2022/2023 YearbookJay Marciano, CEO and chairman of AEG Presents, notes that the democratization of listening on streaming services has had a significant impact on his company’s “bars and theaters” business — venues that typically hold hundreds of tickets rather than thousands. the owners.
“A club that did 100 shows a year in 2012 is now doing 180 shows a year,” says Marciano. “This is a direct result of having more talent [with a viable fanbase] is available. It’s a great product of the benefits of streaming.”
“In 2012, the club was doing 100 shows a year, now it’s doing 180 shows a year.”
Presented by Jay Marciano, AEG
He adds: “What’s new is the frequency with which the fans go [these] shows: A stat quoted years ago was that the average concertgoer attends 1-point shows per year.
“According to our experience, at the level of clubs and theaters [today]where the audience is mainly 22-32 years old, this is equal to eight times a year.”
Warner’s “portfolio” strategy
All this, in turn, influenced the A&R strategy of major music companies.
You’ll recall that back in September, outgoing Warner Music Group CEO Steve Cooper noted that, thanks to streaming, his company was moving toward a “portfolio” A&R strategy.
“What we have done in recent years is to reduce ourselves [financial] addiction to superstars. Reducing this dependency has allowed us to continue to strengthen our approach to A&R, which is long-term artist development.”
Steve Cooper speaks in September
This strategy, Cooper explained, means that WMG is now spreading its A&R budget across a wider range of artists, thus reducing the company’s financial “reliance on superstars.”
Or to put it another way: Warner invests a smaller portion of its ever-increasing A&R budget each year on a select few global stars, and a larger portion of that budget on artists not yet in the Top 5. Billboard Hot 100.
A key new data point to play with
Speaking on Warner Music Group’s calendar Q3 earnings call on Tuesday (November 22nd), Cooper gave us an important statistic that reflects the commercial reality of the above trends.
Cooper revealed: “Ten years ago, our Top 5 artists generated more than 15% of our recorded music physical and digital revenue. In 2022, they gained just over 5%.
To give you another look at that: The top 5 best-selling artists at one of the major record labels, as a subgroup, have seen their overall share of revenue at that major label drop by two-thirds over the past 10 years.
Where did those two thirds go? We’ll come back to that – because it’s a bit more nuanced than “all lost to the ‘middle class’ of artists MBW keeps talking about”.
“Ten years ago, our top five artists generated more than 15% of our recorded music physical and digital revenue. In 2022, they gained just over 5%.
Steve Cooper, speaking this week
For now, let’s keep our eyes on the prize, sift through some SEC filings, and run the numbers.
According to Warner Music Group’s annual financial statements, WMG’s recorded music physical and digital revenue (i.e. a combination of CDs, vinyl, downloads and streaming royalties) 3.868 billion dollars In fiscal year 2022 (the 12 months to the end of September this year).
The equivalent figure at WMG ten years ago, in fiscal year 2012 (12 months to the end of September 2012) 1.830 billion dollars.
(Take a moment, please, to marvel at this figure under the direction of Steve Cooper doubled (After 10 years at WMG… and let’s get back to math.)
Below, you can see how the estimated percentages Steve Cooper revealed this week – RE: Warner’s top 5-year artist in FY 2022 and FY 2012 – look like in (i) real money terms and (ii) in pie chart form. [Click on the chart to view numbers.]
The basic package?
According to MBW’s calculations of Steve Cooper’s numbers, Warner Music Group’s top 5 recorded music acts in fiscal year 2012 are likely to be a total of one a larger amount annual digital and physical royalties (≈$274.5 million) of WMG’s equivalent Top 5 artists created in fiscal year 2022 (≈$193.4 million).
It’s not just a reduction share it from income; is a decrease actual income generated.
Remember, this represents a ten-year period in which WMG’s total recorded music royalties more than doubled ($1.83 billion In fiscal year 2012 vs $3.87 billion in FY 2022).
Warner’s “expanded and deepened” artist list
Steve Cooper took time out Tuesday to explain some of the reasons why Warner’s Top 5 artist revenue share has declined over the past decade.
He noted that in addition to losing share to “mid-range” artists as described above, the valves of today’s biggest superstars are also fighting for share of listening. (i) artists from more countries than ever before and (ii) artists of different eras.
Point (ii) distributed by Warner Music this year Run up that hill By Kate Bush, officially the world’s number one hit on Spotify this summer after appearing on Netflix Stranger Things.
Point (i) This is summed up when you look at the big league stars from around the world who have signed to Warner labels in the last few years. Anita (Brazil), nominated for a 2023 Best New Artist Grammy, as well Nose Boy (Nigeria), twice (South Korea) and Paulo London (Argentina).
“Ten years ago, we were an Anglocentric company. Today, we are a truly global music entertainment company.”
Steve Cooper, WMG
Indeed, just this week Warner announced a global deal with Dalia Mubarak, described by WMG as one of the “most influential female superstars in the Middle East”.
“Our revenue mix has evolved as we’ve expanded and deepened our artist roster and prioritized a global approach to local music… We’ve also proven once again that music can come from anywhere and resonate everywhere,” Steve Cooper said on Tuesday’s earnings call. We develop not only Anglo blockbusters but also superstars in their home regions.
Cooper added: “Ten years ago we were an Anglocentric company. Today, we are a truly global music entertainment company operating in more than 70 countries.”
Cing Music Group’s repertoire has earned Grammy awards, dozens of Gold and Platinum RIAA certifications, and numerous No. 1 chart positions on various Billboard charts. His repertoire includes Bad Bunny, Janet Jackson, Daddy Yankee, TI, Sean Kingston, Anuel and hundreds of other heavyweights.Music business in the world