Independent artists are taking over as global music grows $1.4 billion

Streaming continues to revitalise the music industry as new reports show one-and-a-half billion dollars of growth globally last year alone.

The latest report from Midia Research shows a monumental year of growth for the worldwide music industry last year. Global recorded music revenues in 2017 reached $17.4 billion, up from $16 billion in 2016 which represents 8.5% of annual growth and $1.4 billion for the year.

This continues a trend of continuous growth within the music industry in recent years, aided massively by the giant rise in music streaming. This resurgence in music revenues follows around 20 years of declines in profits but with last years growth music industry revenues are just slightly below where they were 10 years ago in 2008 ($17.7 billion).

Midia’s report show that streaming is growing 39% year-on-year, adding a whopping $2.1 billion in revenues for a total of $7.4 billion in streaming revenues worldwide. Streaming revenue is so large that it now makes up almost half of the total industry revenues, representing 43% of the global industry’s earnings.

On the other hand physical music (ie. CDs) and digital download sales have been dropping, with a decline of $783 million in 2017. Fortunately the success of music streaming is heavily offsetting that reduction. Whilst CDs continue to plummet not all physical music is in dire straits as vinyl record sales continue to soar upwards as the format finds new life in collectors and hipsters alike – and genuine music lovers too.

Independent Artists Reign

Our favourite section of the report shows that label-less music is booming. Independent music was the fastest growing section of the music industry with 27.2% year-on-year growth for music going directly through distributors like RouteNote and independent platforms like Bandcamp. Revenues for artists without a label representing/managing them have been properly included for the first time in a global recorded music revenues report as their collective earnings now stand at almost half a billion dollars.

For 2017 independent labels and artists represented 30.3% of the global recorded music revenues. Whilst major labels still have a strong grip on the industry, more and more people are realising the opportunities available without a big record label. We can see in pop culture today the dramatic difference in how artists are getting famous and releasing their music, whereas just 10-20 years ago you’d be unlikely to hear of anyone not signed to a major without going underground.

Independent music is making it’s mark, and you can too by getting your music on to all the top stores and streaming services online completely for free – and no-one takes ownership over your music but you.

Find out more at www.routenote.com.

Hi-res streamers Qobuz set their sights for the US as they name new CEO

European based music streamers Qobuz are setting sail for the Americas as they expand under new management.

High resolution music streaming service Qobuz are set to launch their services in the US this summer, expanding them beyond Europe. They will make their voyage across the North Atlantic ocean will be lead by newly named CEO Yann Miossec, who most recently served as EVP of Warner Music France for 12 years.

Qobuz president Denis Thebaud said: “Yann is a digital music visionary and a well-regarded industry statesman. Qobuz is entering a very exciting phase. With his keen business sense and music-industry experience, Yann Miossec is the best individual to successfully lead us through these crucial endeavours.”

Thebaud also talks on the future of Qobuz, including a possible IPO, saying: “In addition to our planned U.S. launch, the recent listing of Spotify on the New York Stock Exchange shows that the market is becoming more mature. The market is becoming segmented which widens the opportunity for specialised players with a strong music presence and personality – like Qobuz. After our third round of fundraising ends in June, we too will likely begin considering our own IPO.”

Miossec himself said of his new position: “Working with this brand, promoting its projects, is my dream challenge. I look forward to joining these talented, creative individuals in further developing Qobuz’s presence around the world.”

Beatport have bought DJ streamer Pulselocker to build their streaming service

DJ store and streaming service Beatport have just bought a rival music streaming service to tap the resources for their own.

The purchase of Pulselocker, Inc. by electronic music marketplace giants Beatport has been confirmed. Pulselocker is a creator focused streaming service which integrates into software like DJ production programs allowing users to access a virtual ‘locker’ of music instantly within their software, a big pull for Beatport’s creator community.

The acquisition will allow Beatport to integrate the two services with each other with their own catalogue of music and Pulselocker’s tools. It will also allow Beatport to expand beyond their store into the world of music streaming. They did not disclose the terms of the deal.

Beatport have been able to monopolise on digital downloads, whilst their popularity continues to drop on other markets Beatport’s downloads have actually been increasing. Beatport say that their artist-centric, genre focused market of higher quality music than most other stores is what keeps their customers interested.

Beatport CEO Robb McDaniels told Billboard: “Pulselocker spent years developing an innovative solution that provides DJs with the flexibility to access the content they want when they want it – all through the DJ software they want to use – while providing copyright holders with the security and tracking mechanisms to calculate royalty payments. Beatport is committed to delivering the best tools to create a more seamless and inter-operable user experience for our massive ecosystem of DJs, and Pulselocker accelerates our timeline to deliver just that type of product.”

McDaniels says that it will take roughly six to nine months to integrate Pulselocker into Beatport’s systems. In late 2017 Pulselocker had to end their services due to the trouble integrating their large library into DJ software programs. McDaniels says that they had trouble making their operations work because “they were so far ahead of their time”.

Sonos following Spotify as a possible IPO approaches

In the same week that Spotify arrived on the New York Stock Exchange rumours are spreading that Sonos are now thinking of going public.

After almost 10 years Spotify began publicly trading their stocks this week which has seen their value soar up. Now Variety have reported a number of job listings at Sonos that suggest the WiFi speaker makers could be looking at going public with their shares potentially inspired by the success of Spotify’s IPO.

Their recent Job Adverts are looking for people with public company experience to fill “key legal and finance roles”. In one of the listings Variety note that they also mention preparing their financial reporting to be in line with the rules for public companies. A Sonos spokesperson declined to confirm anything but told Variety: “We like where our business is and an IPO is something all tech companies think about.”

A posting for a corporate controller, which would be a first for Sonos, says that they are looking for someone with “current public company experience as a controller or assistance controller”. Elsewhere they specify that they require “prior public accounting experience, preferably Big 4”, meaning the top 4 accounting companies: KPMG, PricewaterhouseCoopers, Deloitte, and Ernst & Young.

Sonos CEO Patrick Spence said last year in a statement, saying: “We are considering whether an IPO would be the next best thing. We are in a strong place, growing, profitable.” All the signs point towards an IPO on the horizon for Sonos however they’re still keeping quiet about it so as of yet nothing is set in stone.

Spotify’s value soars as they join the stock market for the 1st time

Spotify have made their debut on the stock market and it has rocketed their valuation skywards.

After rumours suggesting that Spotify were working towards an IPO for over a year they have instead just placed themselves on the New York Stock Exchange. Since arriving yesterday Spotify’s stocks and value have soared.

They opened on the NYSE with a stock value of $165.90 which instantly elevated their value from $19 billion to $29.5 billion. That’s an over $10 billion rise that nearly doubles their company’s valuation thanks to the price set by the market maker before Spotify went live for trading. Before they went onto the market the NYSE gave Spotify a reference price of $132 per share which put their valuation at $23.5 billion, a low estimate we now know.

Spotify’s direct listing on the stock market came as a surprise to many when their plan was revealed last month. It had been rumoured for a long time that Spotify were working towards an IPO (Initial Public Offering) which could have seen them raise billions more. Going for a direct listing on the stock market will however save Spotify potentially millions of dollars on banking fees as they can bypass investment bankers who would help them value the shares.

Despite potentially losing out on some gains going straight onto the NYSE Spotify’s sky high valuation currently makes them worth more than the 3 major labels; Sony, Universal, and Warner. Spotify’s position in the music industry cannot be understated and as their impact on the stock market cements itself with success Spotify will be looking to expand their business in new ways.

Rumours have been circulating, based on job adverts posted by Spotify themselves over the past year, suggesting that Spotify are moving into hardware. Spotify have been searching for new employees to lead the development of tech and have been testing their own voice search system lately, suggesting they’re looking into the Smart Speaker business.

SoundCloud say their revenues topped $100 million last year

SoundCloud’s bottom line is looking up as they reveal that they passed their revenue goals for 2017.

For a lot of 2017 there were worries that SoundCloud faced the imminent end of their era as funding dwindled and their subscription service SoundCloud Go failed to make the traction they hoped for. Now as we enter the fourth month of 2018 SoundCloud seem to have turned things around.

Speaking to Financial Times, SoundCloud CEO Kerry Trainor says that the open music platform surpassed their goal of $100 million revenues for 2018. He continues that whilst growth on their platform was slow in recent years that in 2017 they saw considerably more growth.

The Financial Times said in their article that Trainor said: “After being pressured to build it’s own subscription product, Mr Trainor says SoundCloud has switched gears an is no longer trying to mimic Spotify. Instead, the company wants to focus on its original market among the creators of music.”

Trainor goes on to say that SoundCloud have “significantly reduced the burn” of their cash which is helping move them into “cash flow positive months” recently. The piece by Financial Times also says that SoundCloud’s lacklustre subscription tier is not the priority for the music streaming platform despite plans to potentially make it their prime product. Midia Research suggest that SoundCloud’s subscription service SoundCloud Go has roughly 100,000 paying users.

SoundCloud seem to have taken a bit off a different direction this year after focusing on the listeners in recent years. So far this year SoundCloud seem to be prioritising creators again with the launch of new Premier tools, new promotional opportunities, and releasing statistics in real-time for the first time.

Saavn and Jiomusic join together to become India’s top dog for music

As Spotify prepare to start streaming in India the country’s biggest native music services have joined forces in a massive deal.

Saavn have just announced a major partnership with rival music service JioMusic that puts their combined value at over $1 billion. Indian corporation giant Reliance Industries Limited (RIL) were behind the giant deal and sees a potential music superpower created in India as reports suggest that Spotify plan to launch there later this year.

RIL have acquired a partial stake in Saavn for $104 million as part of the deal said the company in a statement. They have pledged to invest another $100 million into the new Saavn/JioMusic platform as well as $20 million upfront “for growth and expansion of the platform into one of the largest streaming services in the world”.

RIL said in a statement that the “integrated business will be developed into a media platform of the future with global reach, cross-border original content, an independent artist marketplace, consolidated data and one of the largest mobile advertising mediums”.

Saavn’s Co-Founder and CEO, Rishi Malhotra says: “The investment and combination of our music assets with Saavn underlines our commitment to further boost the digital ecosystem and provide unlimited digital entertainment services to consumers over a strong uninterrupted network.

“We are delighted to announce this partnership with Saavn, and believe that their highly experienced management team will be instrumental in expanding Jio-Saavn to an extensive user base, thereby strengthening our leadership position in the Indian streaming market.”

Director of RIL and chief of strategy at Jio, Akash Ambani added: “The investment and combination of our music assets with Saavn underlines our commitment to further boost the digital ecosystem and provide unlimited digital entertainment services to consumers over a strong uninterrupted network.

“We are delighted to announce this partnership with Saavn, and believe that their highly experienced management team will be instrumental in expanding Jio-Saavn to an extensive user base, thereby strengthening our leadership position in the Indian streaming market.”

Spotify CEO wants “one million artists to live off their work”

Daniel Ek has spoken on what he wants for the future of Spotify saying that he wants more artists to make a living from music streaming.

At Spotify’s Investor Day earlier this month Spotify’s CEO and co-founder Daniel Ek talked about removing the “gatekeepers” from music. He told audiences that he “doesn’t believe in gatekeepers” as he discussed Spotify’s mission to make even more artists even more money with the future of Spotify.

The music industry gatekeepers that Ek is talking on are the one’s making the music industry profitable for just a top 1%. Ek want’s to quash this imbalance through Spotify and has been making good progress. He told analysts at the Investor Day that the “top tier” earners on Spotify rose 28% in two years from 16,000 artists to 22,000 at the end of 2017.

Ek followed up with an ambitious statement, saying: “My goal over the next few years is to increase that number of [top tier] creators to hundreds of thousands that have material success on our platform.” He says he wants Spotify to become “an ecosystem to support artists that’s accessible, that’s transparent and that’s democratic… that’s about promoting opportunity rather than picking winners and losers.”

Ek said that, especially as the biggest streaming service worldwide, their “need to nurture great talent is larger than ever before”. Continuing: “We believe that great music and artists in the future will come from specialised talent incubators like the labels of the past – [which] brings opportunities for the next Berry Gordy, Rick Rubin or Ahmet Ertegun.”

Spotify are certainly creating new opportunities for artists that may never have happened to them before the invention of music streaming. Their platform aids discovery and recommendations based on existing artists and popular playlists which put artists in front of sometimes millions of new listeners. Translating this discovery into profit is their next mission.

Music streaming creates second year of massive revenue growth in 2017

The music industry has been showing massive surges in growth in recent years and new reports show it’s only getting bigger.

Thanks to the meteoric rise of music streaming in recent years profits in the music industry are rising for the first time in decades, and dramatically. The Recording Industry Association of America (RIAA) have released a new report showing how considerable the growth is after 2017 saw the second consecutive year of growth.

The RIAA’s year-end music industry revenue report for 2017 shows that the American music industry grew by 16.5% in 2017. The total music revenues for the year were $8.7 billion which was in large part thanks to the music streaming industry which made roughly two-thirds of the profits – $5.7 billion.

2017 saw a massive rise in music subscriptions, which are much more valuable than ad-supported, free music streaming. A 56% rise in the number of American’s subscribed to music streaming services saw the total rise to 35 million paying users.

The RIAA still raise issues with the music industry as it stands, which last year they pointed to YouTube as the main culprit for underpaying artists. Now RIAA chairman and CEO Cary Sherman is looking to SiriusXM and broadcast radio for undervaluing music. He says:

Even as the shift to streaming powers the industry’s recovery, the digital migration also exposes the growing gap in our core rights – because, under current laws, not all platforms pay artists and labels fair rates reflecting market value for the use of their music.
This includes terrestrial AM/FM radio, which inexplicably pays artists and labels nothing for the commercial use of their music, and SiriusXM, which pays under a below-market rate standard set more than 20 years ago when Sirius and XM were mere start-ups instead of the merged, wildly successful satellite service it is today.

Elsewhere the industry isn’t showing quite the same levels of positive advancement with digital downloads falling 25% last year in the US. Physical music also decreased in revenue but with a less severe 4% decrease. Physical music’s survival is now largely aided by the resurgence of vinyl records which rose 10% last year for year-end profits of $395 million.

Pandora buy ads company used by rivals Spotify, Deezer, and more

Pandora are expanding their ad tech with the acquisition of AdsWizz, who happen to cater to some of their biggest streaming rivals.

Pandora have just revealed the acquisition of digital audio advertisers AdsWizz. The purchase comes as part of the music streamer’s move into advertising and sees them take ownership of their business which currently works with digital music competitors Spotify, Deezer, iHeartRadio, and TuneIn among others.

Pandora acquired the California based tech startup AdsWizz for $145 million in at least half cash and the rest in stock and officially announced the purchase on Wednesday. Whilst AdsWizz will continue to operate as their own independent company, helmed by CEO Alexis van de Wyer, they will be used to power Pandora’s digital audio ad sales which is a business they’ve become increasingly interested in.

Pandora’s new CEO Roger Lynch said in a statement: “Since I joined Pandora six months ago, I have highlighted ad tech as a key area of investment for us. Today we took an important step to advance that priority and accelerate our product roadmap.” Last year Pandora revealed that for the 4th quarter of 2017 their subscription service made $97.7 million whilst advertising funded listening generated $297.7 million

Lynch continued, saying: “With our scale in advertising and AdsWizz’s tech expertise, we will create the largest digital audio advertising ecosystem, better serving global publishers and advertisers while improving Pandora’s own monetisation capabilities.”

AdsWizz CEO, Alexis van de Wyer said himself: “For the last 10 years, our mission at AdsWizz has been to enable the global monetisation of digital audio by building innovative advertising technologies for music streaming services, digital broadcasters and podcasters. We believe in providing value to all stakeholders – brands, publishers and listeners – through engaging and well-targeted advertising experiences.”

Neither company have touched on AdsWizz’s business with Pandora rivals and it isn’t clear if they will continue to work together un-conflicted.