Shares of Universal Music Group jumped on 21 September following a US$40 billion (£29.5 billion) floatation, prompting many to think the music business has a strong future. One of them, the company’s chief executive officer, Lucian Grainge, believes the expansion will be partly driven by changes in consumer habits and the exploitation of underdeveloped markets in some of the world’s largest countries.
With the music industry growing by 54% in total global revenue between 2014 and 2020, industry statistics seem to support Gringe’s optimism. After more than a decade of decline, the boom is being driven by online streaming, which now accounts for a healthy share (62% of total revenue).
The majority of that revenue ends up with the record label, and as one of the “Big Three” (along with Warner and Sony), Universal stands to reap substantial rewards from this position. In fact, the company’s double-digit revenue growth over the past year indicates the music industry’s strong financial health.
However, the streaming platforms themselves have so far struggled to become profitable businesses — partly because of the expensive licensing deals they have to pay record companies. Spotify has done a lot of damage throughout its existence. (Others, such as Amazon and Apple, use music streaming as part of their portfolio, making it difficult to identify its exact contribution.)
Meanwhile, musicians live in a precarious position, while the industry they work in is booming. In the UK, 62% of music artists did not earn more than £20,000 in 2019.
In the past, they were able to add whatever they made to streaming royalties – it takes about 250 plays on Spotify to make US$1 (£0.74) via live performances. But this has been severely curtailed by the pandemic, which has affected not only ticket sales but also merchandise and record sales at concert venues.
From this fertile soil of discontent has grown campaigns led by musicians such as Broken Record and Keep Music Alive, whose influence in the UK led to an official government investigation into the economics of music streaming in 2020.
One of the main recommendations of its recently released report is to set up a mechanism for the government.[equitable remuneration]”For musicians. The aim would be to give them something like a 50/50 split from royalties with the record label, as opposed to the currently estimated 55/30/15 split between label, platform and artist.
The UK’s competition regulator is now set to examine the power of companies that dominate the UK music industry. And while any recommendation would only pertain to the UK, as the world’s third-largest music market (after the US and Japan), it could still prove influential elsewhere.
a different tune
But big questions remain about the future direction of the music industry. The relationship between record labels and streaming platforms will need to be constantly investigated, especially where potential monopolies are concerned.
And while a fair distribution of revenue among labels, platforms and musicians will improve the status of artists, real change can only come from increased revenue. One answer to this problem would be to rethink how much money we are willing to spend on access to music.
Monthly subscription fees for some of the major streaming platforms hover around £9.99, which is pretty good value for access to most of the music ever recorded.
This price point has been maintained for over a decade, perhaps due to the general feeling that the “freemium” model, especially easy access to YouTube Music, placed a limit on the cost of subscriptions.
But the increase in sales of vinyl in recent years, coupled with the growing popularity of streaming platforms such as Sonestream and Bandcamp, which enable listeners to pay for their favorite artists directly, suggests the need to support consumer musicians. becoming more aware of.
Streaming is likely to continue to dominate the music industry. But there are changes driven by political scrutiny and consumer habits, which will hopefully establish a more equitable ecosystem, and provide artists with a fair way to get paid for their work. Whatever business model lies ahead for music, it cannot survive without providing proper financial support to sustain the creativity of the new musical talent.