If you read the music business press Spotify numbers are a step in the wrong direction, if not a veritable disaster, a wake-up call. But if you read the business press…
“Spotify’s Crown Lies Heavy, but It’s Still the Streaming King – Latest results trip up expensive stock, but the company still has growth opportunities to tap”
Here are the money quotes:
“The Swedish company is on top of the streaming world, with 696 million monthly active users at the end of the second quarter, compared with 310.5 million people subscribing to Netflix’s various tiers of service.”
And:
“The same survey highlighted Spotify’s stickiness, with the lowest percentage of customers saying a $1-a-month price hike would compel them to cancel their subscriptions.”
Spotify won the war, it’s only disgruntled musicians and their poorly informed fans who don’t acknowledge this.
The labels LOVE Spotify. It’s their number one account.
As for the Street…
Well, here’s one more quote:
“Yet even Tuesday’s slip leaves Spotify’s market value nearly double what it was a year ago. At around 50 times forward earnings, the stock is also still twice as expensive as the multiples commanded by Universal Music and Warner Music—labels that together control about half of the market for recorded music.”
And why is Spotify’s multiple so high?
Because investors see potential, i.e. growth. Whereas the labels? I won’t quite say they’re moribund, their catalogs keep them alive, but as for giant leaps in revenue?
The labels have squandered opportunities for twenty five years. Universal tried to tap television with Jimmy and Doug’s Farmclub and although Iovine sold Beats to Apple and is a billionaire he got squeezed out of the fruit company because he’s a hustler and that just doesn’t work in a world of ones and zeros. Any efforts at building distribution platforms was so hobbled by a perceived need to preserve the past as to fail.
So now we hear all this mumbo-jumbo over AI potential and superfan tiers… And so far, nothing has materialized. As for superfan tiers… How much of a business will there be? Well, right now no offerings of any consequence have been proffered other than superior audio quality on Spotify, fans need incentives bigger than just lining the pockets of acts and their attendant distribution companies.
In other words, there’s no innovation at the labels, and furthermore they can’t break a record! The traditional recording business has been beaten at its own game. By the influx of indies who can do it by themselves using internet tools that continue to flummox the labels who continue to focus on old means of promotion. Now even the late night video performance slot is dying…how can the major label advance my career other than by giving me a big check? It’s hard to see.
As for Spotify… It’s amazing to see the company eat its competitors’ lunch.
Apple owned podcasting, after all, they call it a PODCAST, but has squandered its lead. Spotify has gone into video podcasts while its competitors have been asleep. Spotify is nimble because its survival is dependent upon it. There is no other business propping up the company, akin to the steady catalog sales which require no investment that fund the bad business of new music creation. At what point does some hedge fund or other entity buy Universal or Warner and turn them into licensing houses? Blackstone now has a deep penetration in copyrights via its acquisition of Hipgnosis…
The world modernized, and the major labels did not. They’re still operating like it’s the pre-internet era, wherein soft skills are everything and muscle/intimidation will deliver profits.
But that’s not the ethos of the technological era.
And who are you going to subscribe to, with Spotify’s multifarious offerings for the same price. A place where all your friends are, akin to the incredible penetration of iPhone usage in America, especially by youngsters. Sans the Apple halo, Spotify would have even more marketshare. And going forward… Who are you going to subscribe to, the innovator or the company with a fading brand name like Cadillac?
If anything, the labels have contributed to the decline of music’s importance in the culture. Not developing acts of consequence, but purveying trifle pop stars and cartoon hip-hoppers. If the labels were so smart they’d grow their businesses from within, instead of trying to purchase indie distributors. But they don’t know how to do this. There’s no vision. And little upward mobility to boot. Go to work in tech and the sky’s the limit. Go to work at a label and you’ve got to wait your turn for old fart boomers to retire before you can make any real money. For a fluid business, it’s amazing how moribund it is.
We’ve got a content problem. Sure, brain dead youngsters are buying multiple vinyl versions of the same product, but the overall cultural impact… Let’s not forget, all the noise about Taylor Swift concerned the gross, the money she made, not the underlying music.
What we’ve got here are uneducated nitwits who are creating fodder for the ignorant. And if you think that’s a recipe for growth… Let’s see, “The Sopranos” built HBO, “House of Cards” built Netflix… Where is the concomitant artistic endeavor that has blown up not only music, but the label responsible for it? NONEXISTENT!
As for disruption, TikTok and YouTube and Netflix have disrupted the music business, because that’s where the innovation is and there are only so many hours in a day.
As for the concert business… The population has swelled by a hundred million since the heyday of the seventies but the venues are still the same size. Don’t be so thrilled that they’re full. Having said that, the story of the summer is how poor ticket sales are for acts other than a few superstars. The legends like the Who and Cyndi Lauper… You don’t see this covered in the music business press because everybody’s so busy shucking and jiving, stroking each other whilst living elevated lifestyles, that they can’t see it or won’t cover it or want it pushed under the rug.
But the audience knows… How much to see this act that’s been on the road regularly? Are you KIDDING?
Spotify keeps adjusting. Getting into podcasts and then lowering costs, figuring out what works and what doesn’t. What do we get from the labels and the musicians? COMPLAINTS! Somebody is screwing us, we just need to figure out who and get the money we deserve.
Well, why do you deserve it? People need to eat, not listen to music, and they certainly don’t have to listen to YOUR music!
Now I’m raining on your parade…
No, see this as a wake-up call.
Music’s power exceeds everything but sex, but it’s been abdicated. If the music says something, if it’s innovative and necessary, it not only generates revenue, but changes the culture. In the days of yore EVERYBODY was a music fan. Today?
