MBW Reacts is a sequence of remark items from the Music Business Worldwide staff. They’re our analytical (and generally opinionated) reactions to main current leisure information tales.
It’s been a curious week for these of us with a blue-tick Twitter account.
Once I say ‘us’ btw, I don’t imply ‘me’; my private causes for fleeing the bully-bird’s cage have been a lot, however can primarily be summed up in two chirps:
- (i) I’d seen sufficient sizzling takes and phony remonstrations to acknowledge the tawdry guidelines of Twitter’s numbers sport. If I’m to spike my night cortisol with interactive nonsense, I’d moderately accomplish that taking part in PlayStation;
- (ii) Finally, I put meals on the desk for my children with phrases, and I didn’t need to habitually piddle these phrases away to complement gazillionaire Silicon Valley bros (Jack, Elon)… for nothing.
So after I say ‘us’, I imply ‘us’.
As in, Music Business Worldwide, and another enterprise whose on-line presence continues to hold Twitter’s once-prized blue verification protect.
You’ll have learn within the media that Elon Musk is now promoting blue-tick verification for a month-to-month subscription worth.
What you won’t have examine is Musk’s persist with this carrot: like a canny gangster, Twitter has begun robbing its customers’ technical safety, earlier than, seconds later, providing to switch it… for a tidy sum.
On Wednesday (March 22), Crew MBW acquired the next electronic mail from Twitter informing us that our Music Enterprise Worldwide profile now not loved two-factor authentication.
(In case you weren’t conscious, two-factor authentication = receiving a novel code every time you go online to a service so as to guarantee nobody dodgy is hacking into your account.)
Guess how one reinstates cell two-factor authentication on Twitter? Yup: Begin paying Elon for a month-to-month subscription.
That is Musk taking part in hardball: “How a lot do you worth the safety of your Twitter account? Are you keen to threat being hacked and unmentionables being tweeted out in your title? If not, pay up.”
So, begrudgingly, we’ve needed to.
There’s a wider enterprise lesson to be realized right here: Elon Musk’s stone-hearted determination to begin promoting an important service profit that we’ve lengthy grown accustomed to having totally free.
That concept, in flip, has delivered to thoughts the Good Ship Spotify, and an interesting slide from one specific presentation at SXSW in Austin final week.
Stated presentation got here from Rob Jonas, CEO of Luminate, the leisure market monitor and insights supplier that was as soon as generally known as MRC Data and Nielsen Music. (You’ll be able to take heed to Jonas’s full SXSW presentation through here.)
The related slide inside Jonas’s presso is the one you possibly can see above, based mostly on Luminate knowledge. It delivers some jaw-dropping info.
To start with, examine this: There are 67.1 million tracks sitting on music streaming providers right now that, within the 2022 calendar 12 months, attracted 10 or fewer streams apiece, globally.
That 67.1 million determine represents just below half (42%) of your complete catalog of tracks obtainable on worldwide music streaming providers as you learn this (based mostly on ISRCs).
(The complete catalog of music on these streaming platforms is comprised of 158 million tracks in complete.)
Put together your self for the following statistical haymaker: Almost 1 / 4 (24%) of the 158 million tracks on music streaming providers monitored by Luminate in 2022 attracted ZERO performs that 12 months.
That’s roughly 38 million tracks. 38 million! Zero performs!
Not one single sausage finger pressed a forward-facing arrow beneath the art work of any of those songs, on any streaming service, wherever, at any time, within the entirety of the twelve months of 2022.
It’s virtually sufficient to make you cry.
Not me, although. It made me consider Spotify.
As our common readers could recall, in November MBW published an article that exposed some startling stats in regards to the sum of money Spotify pays Google annually to be used of its cloud storage services.
Spotify doesn’t publish a exact determine for what this Google cloud storage prices it yearly. However SPOT does publish, in its annual SEC-filed report, the financial yearly improve in its firm prices for ‘utilization of cloud computing providers and extra software program license charges’.
What this implies: MBW is ready to determine the minimal quantity that Google’s cloud storage providers (plus different software program licenses) are costing Spotify yearly.
To repeat that: The beneath chart represents the minimal quantity Spotify is spending on these providers annually. The truth is probably going far (i.e. multiples) costlier.
(We’ve been in a position to replace the beneath figures for FY 2022, as Spotify filed its newest annual report, for final 12 months, in Q1 2023.)
Query: If Spotify is now shoveling a good-looking nine-figure charge over to Google annually for cloud internet hosting providers, the place is the income coming from to cowl that invoice?
Reply: proper now, that income is coming from Spotify’s three sole earnings streams: (i) Promoting; (ii) Subscriptions; and, to a a lot lesser extent, (iii) On-service advertising and marketing charges paid for by the music business.
In different phrases, these hefty cloud internet hosting prices are immediately consuming into Spotify’s margin at a time when analysts throughout Wall Road are baying for Spotify to extend… its margin.
However what if Spotify was to take a leaf out of Elon Musk’s ebook RE: two-factor authentication?
What if Spotify additionally began ruthlessly passing on the price of a utilitarian technological profit to its particular person B2B purchasers (aka artists) – however this time, for the cloud internet hosting prices required to maintain music obtainable in its library?
Particularly if it began immediately billing, beneath risk of takedown, the hundreds of thousands of artists behind these 38 million tracks (nonetheless an unbelievable stat) that attracted ZERO streams in 2022?
And, by extension, the artists behind the 42% of tracks that attracted ten or fewer streams final 12 months?
No pay, no keep (unplay-ed).
As issues stand, Spotify can’t technically do that, no less than immediately.
Its financial relationship with mentioned B2B prospects (nine million artists and counting) can solely happen through middlemen, by way of distributors and document corporations.
An important sector, volume-wise, of these middlemen? DIY distributors, whose self-uploading purchasers are accountable for almost all of latest music pushed onto streaming providers’ huge catalog (158 million tracks and counting).
If solely there was a means for Spotify to have a direct distribution relationship with artists, in order that it might ‘Do An Elon’ and begin billing mentioned acts, one-to-one, for important B2B providers.
Oh yeah, there’s: Spotify launched a direct DIY distribution product for artists in 2018, solely to shut it down in 2019 beneath stress from the main document corporations.
4 years on from the final time Spotify deserted its personal music distribution operation, is it time for Daniel Ek and co. to have one other crack at this market?Music Enterprise Worldwide