MBW Reacts is a sequence of analytical commentaries from Music Enterprise Worldwide written in response to main latest leisure occasions or information tales. MBW Reacts is supported by JKBX, a know-how platform that provides shoppers entry to music royalties as an asset class.
For a minimum of the previous yr, music business leaders have voiced unease in regards to the flood of tracks hitting streaming companies.
Some fear that, underneath streaming’s dominant pro-rata royalty system, skilled and common artists’ share of the royalty pie is being diluted by funds going to low-quality tracks.
Others are involved that high-quality artists will merely be drowned out by this tidal wave of latest materials – a worry heightened by information final yr that an estimated 120,000 new tracks are being uploaded to streaming companies each day.
Such concerns have now impacted the insurance policies of main streaming companies – not least Spotify.
One very related query, then: Simply what number of tracks on streaming companies at present are receiving fewer than 1,000 performs per yr – and what number of are getting no performs in any respect?
The reply, in accordance with a brand new report from market monitor Luminate, is a heck of lots.
That quantity quantities to a whopping 82.7% of the 184 million music tracks that Luminate measured on audio streaming companies on the shut of final yr by way of ISRCs (Worldwide Normal Recording Codes).
Much more tellingly, a complete of 45.6 million tracks obtained zero performs in 2023. That represents 24.8% of the 184 million tracks obtainable on audio streaming platforms.
Yup: practically 1 / 4 of streaming companies’ total obtainable music catalog wasn’t streamed even as soon as final yr.
Luminate has beforehand reported that roughly 38 million (37.9 million) tracks obtained zero performs on streaming platforms in 2022 – so this determine rose by 20% YoY in 2023, or by 7.7 million.
Nevertheless, the whole variety of tracks on streaming platforms additionally grew final yr, up 16.5%YoY.
Based on Luminate’s knowledge, a complete of 152.2 million out of a complete of 184 million obtainable tracks have been streamed fewer than 1,000 instances every in 2023
Certainly, the overall quantity of music within the international audio-streaming ecosystem soared in 2023.
The 184 million audio tracks on streaming companies counted by Luminate on the shut of 2023 was up by 26 million vs. the 158 million tracks that Luminate measured on the shut of 2022.
To place it one other method: There have been round 2.17 million recent tracks uploaded to streaming companies per 30 days final yr.
The brand new Luminate report calculates that there was “a mean of 103,500 new ISRCs [tracks] delivered to streaming companies every day in 2023, which is up 10.8% from 2022 when there was a mean of 93,400 delivered every day.”
The related slide within the new Luminate report
As you’ll be able to see above, 79.5 million tracks – simply over 43% of all tracks obtainable – obtained 10 or fewer performs on all audio streaming companies in 2023.
This type of stat helps to elucidate why audio streaming companies have begun to maneuver in the direction of ‘artist-centric’-style cost fashions, which generally favor artists with bigger numbers of streams, and search to de-monetize unpopular tracks which might be every solely incomes small quantities of royalties per yr.
First out of the gate with an ‘artist-centric’ mannequin was Deezer, the Paris-headquartered music streaming service.
In October, it launched a brand new cost system in France underneath which artists who’ve a minimal of 1,000 streams per 30 days and a minimal of 500 distinctive listeners obtain a so-called “double enhance” to royalty funds.
Underneath that system, artists additionally obtain one other “double enhance” of their royalty share if they’re actively looked for by listeners.
Thus far, Common Music Group and Warner Music Group have each signed up for Deezer’s new cost mannequin in France. (UMG Chairman and CEO Sir Lucian Grainge and WMG CEO Robert Kyncl have been among the many two most vocal proponents of a change to the streaming cost mannequin.)
“Within the coming months, I consider you will note extra platforms adopting these rules. Why? As a result of it’s the proper factor to do each for artists and for the broader music ecosystem.”
Sir Lucian Grainge, Common Music Group
Later final yr got here the actual seismic shift, when the grand-daddy of music DSPs, Spotify, introduced it was altering its cost mannequin as nicely.
Along with de-monetizing tracks with fewer than 1,000 streams within the earlier 12 months, Spotify’s new mannequin (once more, launching this quarter – Q1 2024) additionally requires every observe to obtain a minimal variety of distinctive listeners to grow to be eligible for royalty payouts.
Thus far, Spotify is remaining tight-lipped on what this minimal variety of distinctive listeners is as a result of, it says, it doesn’t wish to give this info to “unhealthy actors”.
In the meantime, Spotify says that “99.5% of all streams” on its platform at the moment “are of tracks which have a minimum of 1,000 annual streams”, and that “every of these tracks will earn extra underneath this coverage”.
In a latest New 12 months observe to workers, UMG’s Sir Lucian Grainge predicted that extra streaming companies would quickly undertake ‘artist-centric’-style payout fashions.
“[I]n only a matter of months, a number of international platforms, together with the world’s largest music platform, have already adopted artist-centric rules that can remodel the way in which artists are compensated for his or her work,” Grainge wrote.
“Within the coming months, I consider you will note extra platforms adopting these rules. Why? As a result of it’s the proper factor to do each for artists and for the broader music ecosystem.”
Whereas the brand new cost fashions at Spotify and Deezer definitely tackle the difficulty of low-play tracks, they don’t essentially remedy the difficulty of zero-play tracks.
In any case, underneath the traditional pro-rata cost system, a observe with zero performs will get zero share of the royalty pool.
The amount of un-streamed tracks is more and more an issue for streaming companies.
MBW has estimated that Spotify’s minimal doable annual price of “cloud computing companies and extra software program licensing charges” jumped from €35 million in 2019 to greater than €130 million in 2022.
And whereas these numbers embrace extra than simply the price of music storage, we will make sure that a superb chunk of the rise is linked to the speedy improve of songs obtainable on its platform. (Once more, these are minimal doable prices primarily based on restricted info revealed by Spotify – the actual figures are doubtless a lot increased.)
In March of final yr, Deezer CEO Jeronimo Folgueira addressed this concern on earnings name, telling analysts that “there’s a variety of content material getting uploaded to our platform each week… it places a variety of content material in our servers that we now have to pay for. There’s a price to having a unending rising catalog.”
“There’s a variety of content material getting uploaded to our platform each week… it places a variety of content material in our servers that we now have to pay for. There’s a price to having a unending rising catalog.”
Jeronimo Folgueira, Deezer
As a part of its announcement of an artist-centric cost mannequin final September, Deezer mentioned it could “exchange non-artist noise content material on the platform with its personal content material within the useful music area, which won’t be accounted for within the royalty pool” – clearly a transfer in the direction of shrinking the ever-growing catalog of tracks.
All of which leaves us with some massive questions:
Is the speedy improve within the variety of tracks being uploaded to streaming companies financially sustainable?
Will streaming companies like Spotify need to take additional steps to handle the rising prices of internet hosting this burgeoning quantity of music?
And can extra radical strikes – like charging distributors for brand new tune uploads, or purging non-performing tracks from the catalog – ultimately show essential?