MBW Reacts is a series of commentaries from Global Music Business team. They are our analytical (and sometimes obstinate) responses to recent major entertainment news stories.
It’s been a curious week for those of us whose Twitter accounts are marked green.
When I say ‘we’ btw, I don’t mean ‘me’; My personal reasons for running away from the bully birdcage are numerous, but can basically be summed up in two chirping sounds:
- (I) I’ve seen enough footage of intrigue and contrived protest to recognize the ludicrous rules of Twitter’s number game. If I boost my evening cortisol with pointless interactions, I’d rather play PlayStation;
- (ii) In the end, I put food on the table for my kids with words, and I don’t want to get into the habit of using those words to enrich my Silicon Valley billionaire brothers (Jack, Elon)… get nothing.
So when I say ‘we’ I mean ‘we’.
As in, Global Music Businessand any other business with an online presence that continues to carry Twitter’s once prized blue verification shield.
You may have read in the media that Elon Musk is currently selling verify blue tick for a monthly subscription price.
What you may not have read is Musk’s take on this carrot: like a sly gangster, Twitter started stealing users’ technical privacy before, seconds later, offer to replace it… for a small sum.
On Wednesday (March 22), the MBW Team received the following email from Twitter informing that we Global Music Business Profiles no longer enjoy two-factor authentication.
(If you don’t know, two-factor authentication = receive a unique code every time you sign in to a service to make sure no one can hack into your account.)
Guess how to restore mobile two-factor authentication on Twitter? Yup: Start paying Elon for a monthly subscription.
Here’s how Musk plays tough: “How would you rate the security of your Twitter account? Are you willing to risk getting hacked and anonymous things being tweeted under your name? If not, pay.”
So reluctantly, we had to.
There’s a broader business lesson to be learned here: Elon Musk’s resolute decision to start selling an essential service benefit we’ve long grown accustomed to enjoying for free.
That idea, in turn, brought to mind the Good Ship Spotifyand a compelling slide from a specific presentation at SXSW in Austin last week.
Indicate the presentation comes from Rob JonasCEO of Luminate, the entertainment market insights and tracker formerly known as MRC . data and Nielsen Music. (You can listen to Jonas’ full SXSW presentation.) come here.)
The relevant slide in the Jonas press is the one you can see above, based on Luminate data. It provides some amazing information.
First of all, check this out: Yes 67.1 million won tracks that are available on music streaming services today, in calendar year 2022, have attracted 10 or less per thread globally.
That thing 67.1 million won representative figure is just under half (42%) of the entire catalog of tracks available on music streaming services worldwide as you read this (based on ISRC).
(The entire music catalog on these streaming platforms includes 158 million won total number of songs.)
Prepare yourself for the next statistical year: Nearly a quarter (24%) Later 158 million won tracks on music streaming services overseen by Luminate in 2022 attracted ZERO play that year.
It’s about 38 million won song. 38 million! Do not play!
Not a single sausage finger presses a forward-facing arrow below the artwork of any of these songs, on any streaming service, anywhere, at any time. any, during the 365 days of 2022.
It’s almost enough to make you cry.
Not me, though. It does I think about Spotify.
As our regular readers may recall, in November MBW publish one The article reveals some amazing statistics about how much Spotify pays Google per year to use its cloud storage facilities.
Spotify doesn’t release an exact figure for how much this Google cloud storage costs each year. But does SPOT publish, in its annual report filed by the SEC, annual currency increase in its corporate costs for ‘use of cloud services and additional software license fees’.
What this means: MBW can find out minimum the amount that Google’s cloud storage services (plus other software licenses) are costing Spotify every year.
To repeat it: The chart below shows minimum the amount Spotify spends on these services each year. The reality can be much more expensive (i.e. multiples).
(We were able to update the figures below for fiscal year 2022 when Spotify filed its latest annual report for last year, in Q1 2023.)
Question: If Spotify currently transferring a handsome nine-figure fee to Google per year for cloud storage, where does the revenue come from to cover that bill?
A: Currently, that revenue comes from Spotify’s only three income streams: (I) Advertisement; (ii) Register; and, to a much lesser extent, (iii) Marketing fees on the service are paid by the music industry.
In other words, these massive cloud storage costs are eating directly into Spotify’s profit margin at a time when analysts across Wall Street are calling for Spotify to increase… its margins.
But what if Spotify took a leaf out of by Elon Musk book RE: two-factor authentication?
What if Spotify also started ruthlessly passing the cost of a pragmatic tech benefit to its individual B2B customers (aka artists) – but this time, for the cost Cloud storage needed to keep music available in its library?
Especially if it starts paying directly, under the threat of a takedown, the millions of artists behind that stuff. 38 million tracks (still an unbelievable stat) attracted ZERO stream in 2022?
And, by extension, the artists behind 42% of the tracks that drew ten or less streams last year?
Don’t pay, don’t stay (unplay-ed).
Once everything is stable, it’s technically impossible for Spotify to do this, at least directly.
Its monetary relationship with the aforementioned B2B clients (nine million artists and counting) can only take place through middlemen, in terms of distributors and record companies.
What is the most important area, in terms of numbers, of those intermediaries? DIY distributors who upload themselves are responsible for much of the new music that makes it to the streaming service’s massive catalog (158 million tracks and counting).
If only there was a way for Spotify to have a direct distribution relationship with the artists, so that it could ‘Do An Elon’ and start paying the aforementioned acts, one by one, for essential B2B services weak.
Oh yes, yes: Spotify launching artist direct DIY distribution in 2018just to closed in 2019 under pressure from major record companies.
Since then, those who like sound cloud and – amazingly, in recent context – Sound of TikTok launched their own DIY distribution services for music artists.
Four years since Spotify last abandoned its own music distribution business, it’s time Daniel Ek and copper. to take a crack at this market?Global Music Business
