Growth in music streaming ‘is fundamentally shifting the shape of the music business’, presenting huge opportunities for the independent sector, a Merlin executive has said.
Addressing delegates at the NY:LON Connect conference in London, Charles Caldas, chief executive of the global digital rights agency, said the growth is not only revolutionising the way music is consumed, monetised and distributed, it’s shifting the shape and construction of the market itself.
He added: ‘The traditional [market] view was that you had big major labels with global reach and hit repertoire, which they could drive through the middle of the mainstream, and make a huge profit based on controlling relatively few channels to market.
‘The market has changed and we need to realign our expectations of where the value, power and control sits now and how that develops going forward.’
Caldas referred to a 2016 survey of its 700 members, who represent more than 20,000 labels and distributors across the world. Its findings painted a consistent picture of both the streaming market and wider music business from the independent perspective.
‘The first thing we’ve seen is that independents in the streaming world perform far better than they ever did in the physical world, or even the download world,’ he said.
‘If you look within the streaming space at how we compare in the low-value, free streaming market verses the high-value market - our share increases another 24 percent between them. In a world where more people are paying for music, the more broadly and deeply they consume the sort of music we represent.’
Caldas said that in this new market dynamic, consumption patterns are significantly different - and the uplift is filtering out beyond just streaming.
‘Another statistic to emerge from our research is that, despite this shift away from the traditional market, more than two thirds of our members two years in a row have said their overall business is growing. So this shift in value from one market to the other is not sucking value out of these businesses,’ he explained.
He suggested the growth is aided by an increasing global audience, now reachable through the streaming market.
In the physical music marketplace, 16 percent of Merlin members earn more revenues outside their territory than within their home country. However, in the digital world, 40 percent of Merlin members said they now make more revenues outside their home territory.
Caldas said: ‘That’s not the way we’ve been trained as rightsholders to look at the market… Your accessibility to fans is no longer limited to marketing within your immediate environment.
‘For us, the evolution of the market is not just about reaching a healthy future and trying to rebalance where value comes from, it’s actually understanding that the architecture of this needs to be reanalysed, reassessed and relooked at.
‘How does this matter to the future of rightsholders and future of the business? I think it matters because this upturning of these preconceived notions about where commercially successful repertoire comes from, where the money comes from, whether you can have a global hit without a global infrastructure behind you, is really being turned on its head. Hits are no longer the exclusive domain of the biggest record companies. We’ve seen numerous examples of that over the last month.’
As previously reported, by the end of last year, the music industry recorded more than 100 million paying subscribers for premium services from Spotify, Deezer, Apple Music and others.
NY:LON Connect has been organised by Music Ally and the Music Business Association to bring together leading executives from the international music industry to discuss and debate key issues. The event will alternate between the UK and the US, and ran in London from 24 to 25 January 2017.
Addressing delegates at the NY:LON Connect conference in London, Charles Caldas, chief executive of the global digital rights agency, said the growth is not only revolutionising the way music is consumed, monetised and distributed, it’s shifting the shape and construction of the market itself.
He added: ‘The traditional [market] view was that you had big major labels with global reach and hit repertoire, which they could drive through the middle of the mainstream, and make a huge profit based on controlling relatively few channels to market.
‘The market has changed and we need to realign our expectations of where the value, power and control sits now and how that develops going forward.’
Caldas referred to a 2016 survey of its 700 members, who represent more than 20,000 labels and distributors across the world. Its findings painted a consistent picture of both the streaming market and wider music business from the independent perspective.
‘The first thing we’ve seen is that independents in the streaming world perform far better than they ever did in the physical world, or even the download world,’ he said.
‘If you look within the streaming space at how we compare in the low-value, free streaming market verses the high-value market - our share increases another 24 percent between them. In a world where more people are paying for music, the more broadly and deeply they consume the sort of music we represent.’
Caldas said that in this new market dynamic, consumption patterns are significantly different - and the uplift is filtering out beyond just streaming.
‘Another statistic to emerge from our research is that, despite this shift away from the traditional market, more than two thirds of our members two years in a row have said their overall business is growing. So this shift in value from one market to the other is not sucking value out of these businesses,’ he explained.
He suggested the growth is aided by an increasing global audience, now reachable through the streaming market.
In the physical music marketplace, 16 percent of Merlin members earn more revenues outside their territory than within their home country. However, in the digital world, 40 percent of Merlin members said they now make more revenues outside their home territory.
Caldas said: ‘That’s not the way we’ve been trained as rightsholders to look at the market… Your accessibility to fans is no longer limited to marketing within your immediate environment.
‘For us, the evolution of the market is not just about reaching a healthy future and trying to rebalance where value comes from, it’s actually understanding that the architecture of this needs to be reanalysed, reassessed and relooked at.
‘How does this matter to the future of rightsholders and future of the business? I think it matters because this upturning of these preconceived notions about where commercially successful repertoire comes from, where the money comes from, whether you can have a global hit without a global infrastructure behind you, is really being turned on its head. Hits are no longer the exclusive domain of the biggest record companies. We’ve seen numerous examples of that over the last month.’
As previously reported, by the end of last year, the music industry recorded more than 100 million paying subscribers for premium services from Spotify, Deezer, Apple Music and others.
NY:LON Connect has been organised by Music Ally and the Music Business Association to bring together leading executives from the international music industry to discuss and debate key issues. The event will alternate between the UK and the US, and ran in London from 24 to 25 January 2017.
