MBW’s Stat Of The Week is a series in which we highlight a single data point that deserves the attention of the global music industry. Stats for the week powered by Music group Cinqa technology-based record label, distribution and rights management company.
One of the most powerful effects that streaming has had on the record industry has been the democratization of listening.
The logic goes like this: In the previous stageSpotify Previously, consumers would have to make a commitment decision about the next record they wanted to buy. The decision to buy under that deal is very limited and largely guided by the media and media – the legendary ‘gatekeepers’ – who are limited in the number of artists they can feature. for the great unwashed.
These days, no purchase decision required. Consumers don’t need to ‘bet’ their money on a new, untested record – they just upload it to Spotify/YouTube Music/apple music etc, click play and see if they like it.
If they like it, they can keep listening. If not, they can simply switch to some other auditory pleasure.
Every year, this phenomenon is significantly reducing the concentration of total music listening that some of the world’s biggest superstars claim.
As a result, in any given year, an ever-larger percentage of total streaming is moving away from the Top 10 biggest hits and towards a much broader array of ‘middle class’ artists. save’ with a sizable fanbase, but not necessarily a chart-topping explosion. .
MBW has give this statistic a few times this year, but it’s worth mentioning: According to our calculations of Luminate’s metrics, the top 10 US streaming tracks in second half of 2022 has been accumulated play more 1 billion times less than they were in second half of 2019 (2.74 billion versus 3.81 billion).
The impact of streaming on live business
This phenomenon is not exclusive to the record industry.
In an upcoming interview in Global Music Business‘SYearbook 2022/2023Jay Marciano, CEO and President of Gifts AEGnotes that democratizing listening on streaming services has had a significant impact on his company’s “bars and cinemas” business – i.e. venues that often have hundreds , instead of thousands, people buy tickets.
Marciano said: “A club that was going to do 100 shows a year in 2012 is currently doing 180 shows a year. “It’s a direct result of having more talent [with a viable fanbase] available. It’s a great byproduct of the benefits of streaming.”
“A club that was going to do 100 shows a year in 2012 is currently doing 180 shows a year.”
Jay Marciano, Gift of AEG
He added, “What’s new is the frequency with which the fans will come [these] shows: The statistic cited, many years ago, was that the average concert audience would see performances 1 point in a year.
“In our experience, at the club and theater level [today]where the audience is mostly 22 to 32 year olds, it’s like eight times a year.”
Warner’s ‘portfolio’ strategy
All of this, in turn, has impacted the A&R strategies of major music companies.
“What we have done over the years is reduce [financial] relying on superstars to reduce that dependency has allowed us to continue to strengthen our approach to A&R, which is the long-term development of artists.”
Steve Cooper, speaking in September
This strategy, Cooper explains, means WMG is now allocating its A&R budget to more artists, thereby reducing the company’s “financial dependence on superstars”.
In other words: Warner is investing a smaller percentage of its growing A&R budget each year on select global stars, and betting a larger percentage of this budget on artists who haven’t yet. entered the Top 5 of the billboards Hot 100.
An important new data point to play with
On Tuesday (November 22), speaking on Warner Music Group’s scheduled 3rd quarter earnings call, Cooper has provided us with a key metric that reflects the commercial realities of the above trends.
Cooper revealed: “A decade ago, our top 5 artists generated more than 15% of our recorded music digital and physical sales. In 2022, they generate just over 5%.
To guide you again: Top 5 best-selling artists at one of the major record companies, as a subset, have seen their cumulative percentage of sales generated at that big record company has fallen by two thirds in the last 10 years.
Where did those two-thirds go? We’ll get back to that – because it’s a bit more nuanced than ‘they all disappear into the ‘middle class’ of artists that MBW keeps raving about’.
“A decade ago, our top five artists generated more than 15% of our recorded digital and music sales. In 2022, they generate just over 5%.
Steve Cooper, speaking this week
For now, let’s keep an eye on the prize pool, sift through some SEC filings, and do the numbers.
According to Warner Music Group annual financial statementsWMG recorded digital and music physical sales (that is CD, vinyl, downloads, and streaming royalties combined) of up to $3.868 billion in 2022 (12 months to the end of September this year).
A decade ago, in fiscal year 2012 (12 months to the end of September 2012), the equivalent at WMG was 1.830 billion USD.
(Please take a moment to marvel at the fact that, under Steve Cooper’s leadership, this number has exceeded duplicated 10 years at WMG… and let’s get back to the math.)
Below, you can see what Steve Cooper’s approximate percentages this week – RE: Warner’s Top 5 Annual Artists for FY 2022 and FY 2012 – look like in (i) ) in real currency terms and (ii) in pie chart form. [Click on the chart to view numbers.]
Key drawn?
According to MBW’s calculations of Steve Cooper’s numbers, Warner Music Group’s top 5 recorded musical artists in fiscal 2012 appear to have accumulated a larger amount annual digital and physical royalties($274.5 million) compared to the equivalent WMG top 5 artists created in fiscal year 2022 (≈$193.4 million).
It’s not just a decline in repost of revenue; it’s a decline in really revenue is generated.
Remember, this represents a ten-year period when WMG’s total recorded music royalties more than doubled (1.83 billion dollars in 2012 compared to 3.87 billion USD in fiscal year 2022).
Warner’s ‘expanding and profound’ list of artists
Steve Cooper took the time on Tuesday to explain some of the causation behind the decline in Warner’s Top 5 artists’ revenue share over the past decade.
He notes that, in addition to losing market share to ‘middle class’ artists – as described above – today’s biggest group of superstars are also vying for market share with (I) artists from more countries than ever before, and (ii) artists from different eras.
The point (ii) was summarized this year by Warner Music-distribution Run up that hill by Kate Bush, is officially of the world most popular hits on Spotify this summer after appearing in Netflix‘S Strange Things.
The point (I) summed up when you look at the wide range of major league stars from different parts of the world who have signed to Warner studios over the past few years – including anitta (Brazil), who was recently nominated for the 2023 Best New Artist Grammy Award, as well as hot boy (Nigeria), Twice (Korea), and Paulo London (Argentina).
“Ten years ago we were a UK-centric company. Today, we are a truly global music entertainment company.”
Steve Cooper, WMG
Indeed, just this week, Warner announced a global agreement with Dalia Mubarak, described by WMG as one of the “most influential female superstars in the Middle East”.
Steve Cooper said on Tuesday’s earnings call: “As we expand and deepen our roster of artists, while prioritizing a global approach to domestic music, the revenue component of we’ve grown… Once again we’ve also proven that music can come from anywhere and resonate everywhere. We’re not just developing Anglo blockbusters, but we’re also developing superstars in their home region.”
Cooper added: “Ten years ago we were a UK-centric company. Today, we are a truly global music entertainment company, operating in more than 70 countries.”
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