75% of music is streamed on services like Spotify and it’s only getting bigger

In the space of a few years CDs have moved to the rear-view mirror and the world is streaming music online, streaming like crazy.

Music streaming is the popular way for people to listen to music all around the world and it has been for years now. In 2016 a report revealed that 50% of music was listened to by streaming it online, and now 2 years later that percentage has shot up by a half to 75%.

Nielsen’s Mid-Year Music Report revealed the figures as the music industry hit’s a record height for revenues since 15 years ago in what they’re calling a music “growth spurt”. According to their report, On-demand music streaming is up a massive 45% with 268 billion songs streamed so far this year. On-demand video streaming also counted towards the figures, for example music videos on YouTube, which is seeing a similarly impressive 35% growth so far in 2018.

So far this year American’s have streamed 403 billion songs across all streaming platform. That’s for only 6 months, and in 2015 Americans streamed almost 100 billion less songs for the whole year. Additionally, in 2015 music streaming accounted for half of the US music revenue meaning that the impact of music streaming is massive on the increasingly booming industry.

Nielsen music report streaming video songs stream

In many places around the world music streaming services are now the place people go to when they want to listen to music. CDs are dying however the physical music market isn’t being wiped out in a disc-shaped genocide as vinyl record sales have been incrementally rising year-on-year as people retain the physical satisfaction side of music with the most romantic listening format.

China’s biggest music company Tencent is going public on the US Stock Exchange

China’s media giant are looking over the water for a public offering of their music company Tencent Music Entertainment in the US.

Tencent have revealed their plans to put their music service Tencent Music Entertainment (TME) on the US stock exchange. The company runs the biggest music services in all of China but are looking elsewhere for trading their company’s stocks, saying to investors they will float on “a recognised stock exchange in the United States through a registered public offering”.

Tencent Music, who own massive Chinese music services like QQ Music, Kuwo, and Kugou, have submitted their proposal to the Hong Kong Stock Exchange who have accepted the Chinese company’s entry onto the US Stock Exchange. A Chinese news report last week wrote that TME expect to earn a public valuation of around $30 billion following their Initial Public Offering (IPO) in the US.

Following Spotify’s recent IPO Tencent Music Entertainment expressed interest in going public. The two music services then invested in each other shortly after, before Tencent revealed their plans for an IPO in the US. China is one of the quickest growing markets for music as Asia catches up to the streaming revolution of recent years happening in the West, led by streaming giants like Spotify and Apple Music.

Their spin-off proposal reads:

The board of directors (the “Board”) of Tencent Holdings Limited (the “Company”)
is pleased to announce that the Company has submitted a proposal to The Stock
Exchange of Hong Kong Limited (the “Stock Exchange”) pursuant to PN15 in
relation to the proposed spin-off by way of a separate listing of its online music
entertainment business operated by its majority-owned subsidiary, Tencent Music
Entertainment Group (“Tencent Music”), a leading online music entertainment
platform in China, on a recognized stock exchange in the United States through a
registered public offering (the “Proposed Spin-off”), and that the Stock Exchange
has confirmed that the Company may proceed with the Proposed Spin-off.

The terms of the Proposed Spin-off, including offering size, price range and assured
entitlement of Tencent Music securities for shareholders of the Company, have not
yet been finalized. Further announcement(s) will be made by the Company in relation
to the Proposed Spin-off as and when appropriate.

The Proposed Spin-off is subject to, among other things, the obtaining of
approval(s) from the relevant authorities in respect of the listing of, and
permission to deal in, securities of Tencent Music, and the final decisions of the
Board of the Company and the board of directors of Tencent Music.

Shareholders and potential investors of the Company should be aware that there
is no assurance that the Proposed Spin-off will take place or as to when it may
take place. Shareholders and potential investors of the Company should
therefore exercise caution when dealing in or investing in the securities of the
Company.

The world’s favourite smart speakers Sonos are going public

Sonos have set the standard in smart speakers for the past decade-and-a-half and now they are entering a new phase by filing their company for a public offering.

On Friday Sonos officially filed for a public offering, a big step in pushing the company towards profitability as their income leaps up each year. They will trade on the Nasdaq Global Select Market as ‘SONO’ and wish to use any funding towards marketing and development, though they haven’t said how much they hope to earn.

The company reported in their S-1 filing that, as of March 31st, they have sold 19 million products in around 6.9 million households around the world. It’s not just evidence of the company’s booming popularity but also shows that people love their products – based on the household to product sales numbers it looks like customers have roughly 3 speakers to a home. This shows people who buy Sonos love the product and come back for more – a very appealing prospective to potential investors.

Sonos’ S-1 filing read that:

We intend to use the net proceeds from this offering for working capital and other general corporate purposes, which may include sales and marketing activities, research, product development, general and administrative matters and capital expenditures. We may also use a portion of the net proceeds for the acquisition of, or investment in, complementary businesses, products, services, technologies or assets.

Speaking publicly, the company said: “Short-term fluctuations and uneven product cadences are built into our business model. This means we won’t be right for every investor. But if you share our desire to achieve long-term success, our commitment to being open, our dedication to doing the hard things and our excitement about the potential of the Sonic Internet, then we invite you to join us.”

Sonos saw $992.5 million of revenue income in 2017 which was a decent 10% increase on 2016 for the smart speaker makers. Despite their rising sales the company didn’t make a profit for the year and suffered a net loss of $14.2 million for the fiscal year.

Spotify nab new CCO from Condé Nast for all of their partnerships

Spotify have announced their new Chief Content Officer who will now be heading all of their content partnerships in music, audio, and video.

Dawn Ostroff joins the Spotify team as their new Chief Content Officer to take charge of all of the music streaming service’s partnerships. Ostroff brings with her years of experience in television in film as Spotify and other music streamers start looking into video production and content.

Ostroff will join Spotify’s New York Office on the 1st August after co-founding Condé Nast in 2011 and serving as their President of Entertainment where she managed film, TV and digital products from the brand’s many renowned entertainment publications. Condé Nast CEO Bob Sauerberg praised Ostroff and her impact on their video content, saying: “I am extremely proud of what Dawn and the team at CNE have accomplished and we are in a great position to continue this growth trajectory long into the future.”

Ostroff’s experience and impact in video content is likely a big factor in her appeal to Spotify as they look towards the future of their service. Spotify have had a patchy history with videos, releasing an entire video section for their service in 2016 that offered short cartoons, news clips and various other programming.

They have also explored original programming but didn’t get very far. A recent foray into video saw Spotify try exclusive video artwork for certain releases, though this seems to be in testing only for the moment. Recently they launched The Game Plan, a video series which shows artists how to get the most out of being on Spotify.

Condé Nast CEO, Bob Sauerberg said in his full statement:

“It is with mixed emotions I share the news that Dawn Ostroff, President of CNE, will be leaving at the end of July to take on a new role as global chief content officer for Spotify.

I first talked to Dawn back in 2011 about joining Condé Nast to establish our video business when it was no more than an idea we sketched on my white board. In short order, she built Condé Nast Entertainment, a thriving digital and social video business that reaches an average of 50 million unique viewers, generating more than 1.1 billion views per month, and a burgeoning TV and film studio.

Simply put, our video business is one of the most important assets to our company’s future, recognized by our audiences and advertising partners alike. It is the fastest growing revenue stream here at Condé Nast and we are committed to tripling it in the next few years. I am extremely proud of what Dawn and the team at CNE have accomplished and we are in a great position to continue this growth trajectory long into the future.

Sahar Elhabashi, the chief operating officer, will serve as interim head of CNE and lead our video strategy until we name Dawn’s replacement.

Please join me in both congratulating Dawn on her new global role at Spotify and thanking her for the innumerable contributions she made to Condé Nast. You can read more about Dawn’s new role here.

Bob

India’s top streamer Saavn grew profits by 3x in one year

India is falling in love with the joys of music streaming and their native service Saavn is reaping the profits as the country goes digital for their tunes.

Indian music streaming service Saavn have had an incredible year as the country catches up to the worldwide love for music streaming. As the world’s favourite streamer Spotify prepares it’s launch in India they will have to go up against Saavn who have just reported incredible growth for 2017.

Saavn have reported that their revenues for 2017 grew to a massive 459 million Rupees (roughly $6.8 million). That’s a 16% rise from 2016, whilst their post-tax profits for the year saw a massive increase. Saavn reported a tripling in profit from 2016, bringing in 32.2 million Rupees – a vast increase on the 10.8 million Rupees made the year before.

These are massively impressive numbers but only represent Saavn’s operations in India and not their work in the US. That said, data collectors App Annie say that 90% of Saavn’s app users are based in India so this represents the big picture for their profits and income. The company said last July that they expected to be profitable around the world by the end of this year after revenue had increased 4x since 2014 thanks to their 22 million monthly active users at the time.

Saavn have been expanding their business through major partnerships in the past year. Last November Saavn announced a partnership with Amazon that saw their music streaming service come pre-enabled on Amazon Echo speakers. Earlier this year Saavn made a massive business move when they partnered with rival Indian music service JioMusic creating a combined music superpower in India.

Look out major labels, Apple are moving into music publishing

Apple’s world domination spreads further as reports claim they are looking to get into music publishing through their streaming service Apple Music. 

According to people involved in the matter Apple are expanding their spot in the music biz with a new music publishing division. Sources say that the new global division will be led by Elena Segal who has before worked as the legal director for iTunes International.

According to Music Business Worldwide’s sources Segal will lead the internal division between offices in London and the US. The new music publishing team at Apple will be the first big initiative from Oliver Schusser who started his new role as head of Apple Music in April after serving as vice president of iTunes.

One of MBW’s sources, regarding Schusser, said: “Oliver is well aware that much of the most important artist discovery happening in the music industry today comes from the publishing side of the business. He is also aware that record labels and artists are well served by industry relations teams at streaming platforms – they are in and out of those offices every day – but that publishing hasn’t yet enjoyed that kind of direct relationship.”

Whilst it’s a great business move for Apple, the implications of the tech giant encroaching on another industry has it’s threats. With a publishing division Apple could take ownership over some of the biggest music coming out today and we all know how Apple love exclusives. As the division seems to be closely linked to Apple’s music streaming service Apple Music it could easily lead to exclusives, especially with how competitive streaming has become between Apple and Spotify.

When the sources tell MBW: “Oliver wants to underline the importance of publishing and songwriters to Apple. That’s what this move is all about.”, it’s hard not to think a grander scheme could be at play here. But we all know by now that Apple’s conquest is to take over the world so we may as well sit back and see how they do with music publishing.

Universal name the new president of Island Records

Following their president’s departure for Sony Music, Universal Music Group’s Island Records have named their new president.

David Massey exits his role as the president of Island Records on the 1st of June and will join Sony Music a month later on the 1st of July. Island’s parent company Universal Music Group have now confirmed that Darcus Beese will take on the role as president of Island Records.

Beese began his career at Island Records all the way back in 1989 where he started as an intern at the British-Jamaican label. He has worked his way up the label through numerous roles including a stint as A&R director and working with Amy Winehouse and Florence Welch of Florence and the Machine. Beese was named co-President of Island Records UK in 2008 after signing Amy Winehouse who became a breakout star.

Universal Music Group chairman and CEO Lucian Grainge says: “Few in the music industry have Darcus’ track record of creative and commercial success. I’ve had the pleasure over the years of working closely with Darcus, who has impeccable creative instincts and takes a long-term view of artist development. I’m thrilled he is taking on this new role and I’m excited to support him in signing, developing and breaking many more artists.”

In 2013 Beese was named the singular President of Island Records UK in which he has worked with numerous global stars including PJ Harvey, Robbie Williams, U2 and new stars like Ben Howard, Disclosure, Jessie Ware and more. In 2014 Beese was given an OBE, being honoured in the Queen’s Birthday Honours list as an Officer of the Order of the British Empire.

Beese says himself: “Island Records was founded nearly 60 years ago by Chris Blackwell to serve as the home for boundary-defying and maverick artists with the ability to move popular culture. To this day, that mission continues to define and drive island, whether in the UK or US, and I couldn’t be more proud to play a role in carrying on that legacy.

“I’m grateful to Sir Lucian for this oportunity and I’d like to thank my UK boss and friend David Joseph for his generous support through the years. I’m looking forward to working closely with Michele Anthony, Monte Lipman as well as Eric Wong and the excellent team at Island.”

Sony will own 90% of EMI publishing after a $2.3 billion deal

Sony are taking a massive controlling stake in major music publishers EMI after acquiring a giant 60% share on top of their existing 30%.

Sony Corporation are making a massive investment to take over a majority controlling stake in EMI Music Publishing in a consortium deal with Abu Dhabi based investment firm Mubadala. Their $2.3 billion offering will give Sony an overall 90% stake in EMI from their original 30%, making Sony the largest music publisher in the world.

The deal will require a legally binding memorandum be signed by both parties before Sony can take control of publishing assets that earned $1.334 billion in revenues last year. Whilst Sony will take a majority stake ownership in EMI the remaining 10% will stay in possession of the Michael Jackson Estate. The deal will also see Sony take on EMI’s debt which, as of March 31, 2018 totalled $1.359 billion.

Sony Corporations president and CEO, Kenichiro Yoshida said: “We are thrilled to bring EMI Music Publishing into the Sony family and maintain our number one position in the music publishing industry. The music business has enjoyed a resurgence over the past couple of years, driven largely by the rise of paid subscription-based streaming services. In the entertainment space, we are focusing on building a strong IP portfolio, and I believe this acquisition will be a particularly significant milestone for our long-term growth.”

Mubadala Capital’s head of private equity and chairman of EMI Music Publishing, Adib Mattar says: “EMI Music Publishing represents one of the world’s largest and most diverse catalog of copyrights with iconic songs that span every decade over the last one hundred years. The sale of our consortium’s interest in EMI Music Publishing represents a milestone for Mubadala and our private equity business.”

Jay-Z’s TIDAL streaming service responds to criminal fraud allegations

TIDAL’s CEO has responded to recent criminal allegations that they’ve faked streaming numbers and subscriber numbers.

Earlier this month Norwegian newspaper Dagens Næringsliv released their latest investigation of Jay-Z owned music streaming service TIDAL. This follows their investigation in 2017 that TIDAL had been exaggerating their subscriber numbers, deliberately misleading stakeholders, investors, and users.

Their investigation purports that they received a hard drive full of streaming data on TIDAL which showed questionable figures for Kanye West’s The Life of Pablo and Beyoncé’s Lemonade albums which released exclusively on TIDAL. TIDAL’s data suggests that some users had listened to Lemonade as much as 180 times in 24 hours.

TIDAL’s CEO, Richard Sanders has now responded to the allegations:

We reject and deny the claims that have been made by Dagens Næringsliv. Although we do not typically comment on stories we believe to be false, we feel it is important to make sure that our artists, employees, and subscribers know that we are not taking the security and integrity of our data lightly, and we will not back down from our commitment to them.

When we learned of a potential data breach we immediately, and aggressively, began pursuing multiple avenues available to uncover what occurred. This included reporting it to proper authorities, pursuing legal action, and proactively taking steps to further strengthen our stringent security measures that are already in place.

Additionally, we have engaged an independent, third party cyber-security firm to conduct a review of what happened and help us further protect the security and integrity of our data. We are proud of the hard work, devotion to our artist driven mission, and tremendous accomplishments of our over one hundred employees in Norway and fifty more in the United States. We look forward to sharing with them, and all of our partners, the results of the review once completed.

The first paragraph was emboldened by TIDAL themselves when they released their statement.

Independent music is now bigger than all the major labels

As digital music revolutionises the industry, independent artists and labels are taking over as they collectively earn more than the major labels for the second year.

A new annual survey of the recorded music and music publishing sectors by Music & Copyright shows rising revenues for the industry and great news for independent music. The combined market share of independent record companies is now bigger than that of even the world’s biggest major label, Universal Music Group.

Music & Copyright‘s survey found that in 2017 independent music made up 28.4% of the digital market share and a massive 39.2% of physical music sales. This amounted to a combined 32.2% of the entire music market for 2017, the same overall percentage they made up in 2016 as well. This represents the second year in a row now that independent music has surpassed major labels.

Music recorded market shares 2017 independent leading major labels

It’s interesting to see how the slowly diminishing market for physical music is where independent labels and artists are making their biggest gains. Online music has opened up the doors to many more independent entities and levelled the playing field in a lot of ways so it’s a surprise to see that their biggest boom isn’t currently in digital music on streaming services and downloads.

Whilst the world’s biggest major record label Universal Music Group saw growth with an increase in both digital and physical market shares they no longer represent the largest section of the music industry. In 2016 UMG’s share of the total market stood at 29% and last year represented a 29.7% share of physical and digital music combined.

Music recorded market shares 2017 independent leading major labels

Meanwhile the two other major labels sit firmly lower with Sony Music Entertainment losing market shares all round with a total of 21.9% overall in 2017. Warner Music saw a loss in their physical market share but gains in digital led to an overall increase from 15.8% in 2016 to 16.2% in 2017.

Independent music reigned in music publishing as well. Music & Copyright said in their report that: “Independent music publishers have long dominated music publishing and continue to compete well with the majors for major artists’ attention. Music & Copyright estimates that independent companies accounted for 41.2% of publishing revenue in 2017.”