Status — Streaming Music and royalties increase…

Spotify

Why should creators be concerned about Spotify’s long-term growth?
Shouldn’t the focus be on how much money they get for each play than how many users Spotify is losing to the competition (churn)? *
*Spotify does not reveal its current churn rate, but Citi analyst Jason Bazinet estimates it was about 4% in 2020, down from 7.7% in 2015, according to one of the company’s financial filings.
The average revenue per user (ARPU) has a direct relationship to royalties’ payments, which should be higher. In 2020, Spotify’s global ARPU was $5.25 a month, of which it paid out about $3.90 a month to rights holders.

That number is down 39.4% since 2015, when it was $8.66. When Spotify makes less per user, of course, so do creators.
Creators basically is funding the business strategy of Spotify, which is growth above all else. To be fair they are not making any money, YET!
Higher ARPU means higher royalties, while Spotify’s priority involves more subscribers staying with the service longer.
The recent increase in Spotify’s subscription plans will likely mean a little more royalties coming to creators.
The question is, will it be enough?

China’s music business
China’s music business is slowly moving away from piracy and into licensed streaming.

Over the past five years, China’s recorded-music business has grown at an unparalleled pace: up 278% from $209.4 million in 2016 to $791.9 million in 2020, according to IFPI, with streaming accounting for 90.5% of last year’s revenue.
Tencent Music Entertainment’s (TME) three platforms — QQ, Kuguo and Kuwo — controlled 77% of China’s monthly active users, according to QuestMobile, a Chinese research company.
However, after in the past two years, Universal Music Group (UMG), Sony Music and Warner Music Group (WMG) have decided to diversify their distribution and leverage intensifying competition for better deals offered by companies like NetEase Cloud Music. This creates churn for TME.
When my company The24Music (together with Artspages) was in China in 2006 (separate story) more than 99% of music downloads in China were pirated, according to IFPI. But in 2011 China punished leading search engine Baidu for providing illegal mp3 downloads and things got better.
According to the Global Music Industry Report, the world’s second-largest economy only entered the world’s top ten music markets for the first time in 2017. The Chinese digital music market growing in size from RMB 4.7 billion (605 million Euro) in 2017, according to iResearch, to a forecasted RMB 20.6 billion (2.6 billion Euro) in 2021.
Back in 2006 there was no way we could get any royalties out of China (and when I found I way I was kicked out). Today, it is possible.
However, it takes time and cost (a lot) in fees along the way.

Status!
“ The industry has taken a big hit and is down around 30 percent on last year [2020].

The pandemic has been especially hard on songwriters and artists. Pre-COVID, streaming was a way for artists to promote their live shows. Now, they’re in the same situation as songwriters and are finding it difficult to earn a living. COVID has really focused attention on the unsustainability of the music industry ecosystem. It is just not working for artists and songwriters and it has to work for all the players. […] The old CMO and music industry world will have to get used to the openness and transparency that technology enables. That’s where they made their money.

That is the future. The transformation is gradual, but it is happening.”

(Björn Ulvaeus — CISAC President / ABBA)
I did have a 2 hour Zoom with Björn Ulvaeus earlier this year and he is kept in the loop on our progress…
A user-centric alternative royalty payments is likely to take some time if we are to fully rely on major DSP changing their business model.

However, they are open to discuss “user centric”.

I think you all know what NIM can do: More money, faster — to copyright owners…
NIM are able to provide creators with up to 60% more in royalties and (average) 26 million times faster.
Especially out of China…

Originally published at https://newinternetmedianews.com on June 4, 2021.