How times have changed.
The IFPI Global Music Report launch used to be a bit of a “moan-fest”, admitted CEO Frances Moore. Not any more: the global biz has recorded its fourth consecutive year of growth thanks to the streaming boom.
“The growth is driven by great artists but also the commitment and the passion in the companies,” said Moore at the Soho Hotel launch event in London.
Here, Music Week looks at the hot topics from the event with key insights from industry execs from the majors and indie sector…
“It starts to look like a pattern rather than a one-off,” said Moore of the latest set of numbers.
With paid streaming alone worth $7 billion (£5.4bn) in 2018, the biz can now feel confident about the transition in major and emerging markets.
“It means there’s a whole lot more joy in this room,” said Stu Bergen (pictured), CEO, international and global commercial services, Warner Music Group. “There is definitely an air of confidence returning to the business – but that is confidence without complacency.”
Of course, with the global industry’s total market value of $19.1bn (£14.6bn) still some way short of the 2001 figure of $23.9bn (£18.3bn), no one is getting carried away just yet.
This one is a counter-intuitive trend of the global streaming era where you might expect the biggest acts to clean up everywhere.
The late Johnny Hallyday is an artist who illustrates the strong emergence of domestic repertoire in the global industry, particularly in Europe and Latin America. His album Mon Pays C’est L’amour was so successful in France that it made No.5 on the IFPI’s global rundown for 2018.
Adam Granite, EVP, market development at Universal Music Group, said: “We are seeing a growth in local repertoire everywhere in the world. It’s fuelled by investment but also the increased ability of artists to connect with fans.”
Stu Bondell, EVP, business and legal affairs, international at Sony Music Entertainment, said that strong domestic repertoire can also travel. BTS and J Balvin are recent examples of acts building from regional strength.
“We’re seeing now in a streaming world that the global consumer is open much more than ever before to non-English language repertoire,” he said. “Today a hit can really come from anywhere.”
For Bergen, an “artistic cultural exchange” between artists from different territories can help create those global opportunities. Dua Lipa’s collaboration with Blackpink might be one such Warner Music cross-cultural model…
What the labels can do is help the artists cut through the clutter in a very crowded environment
It looks like there’s a subtle geographic shift going on in the global music industry, with the rise of China and surging growth in other emerging markets.
“What we are seeing is that Latin America and Asia & Australasia are really on the rise,” said Moore, who noted that four of the Top 10 markets are now from Asia & Australasia (Japan, South Korea, China and Australia).
The IFPI is gradually improving its market data on Africa, but it’s already clear that the region is making inroads thanks to the penetration of smartphones and rise of domestic talent in countries such as Nigeria and South Africa.
“We’ve opened affiliates in the Middle East, Latin America, as well as partnering with major independents in Turkey and Nigeria just recently,” said Bergen. “We’re trying to continue to extend the reach for our artists, as well as open up new markets to tap into creative talent all over the world.”
Bondell said there has been good streaming progress in markets that were previously under-monetised, including China and South America.
He said: “The good news is that we now have foundations in place for legitimate markets in many places of the world. The task for the industry now is to move consumers in the high-potential markets to licensed services, and the licensed services need to reflect the local, economic and cultural conditions in each market.”
Put your money where your mouth is
In the years of decline up to 2014, labels got lean and did their best in a declining business. But growth brings new opportunities for acquisitions, partnerships and investment. In the past few days, Warner Music Group has made a pact with Nigerian indie Chocolate City, following acquisitions including Uproxx, Songkick and merch firm EMP.
“One way we have tried to stay vigilant with fuelling this growth is re-investing some of the increased revenue back into the business,” said Bergen. “We feel it’s the only way of future-proofing the business.”
Warner’s investment targets three areas – new music, new territories and new models.
“We’ve increased our signings everywhere in the world, both in numbers and in dollars,” added Bergen. “We use the success to fuel the next creative cycle.”
Labels of love
The global reach of Spotify, Apple Music and other DSPs means that artists in 2019 can choose to self-release or partner with artist services companies rather than going for a more traditional deal. But the execs at the IFPI launch were confident about the importance of record labels for long-term, global success.
Granite noted that in the past year major artists including The Rolling Stones, Taylor Swift and Sir Elton John had re-signed to Universal, in part because the major could provide deals that “extend beyond recorded music”.
“This is our role, we discover the greatest talent, we invest in them, provide unique expertise and help them grow not only a local following but also help them seek audiences in other markets around the world,” he said.
Glen Barros, COO, Concord, had a checklist of that support and strengths, as well as the “passion” that a label can provide.
“A great deal goes into connecting an artist’s recordings with the widest possible audience and handling all the business around that,” he said. “It involves creative support, production services, data management and optimisation – which is more important than ever in today’s market – product strategy, promotion, publicity, marketing, direct-to-consumer sales, clearances…The reality is that all these services can be hired, but just like a sports team it’s not just about assembling the best athletes. It’s about having them work together as a team. I think that’s what labels do, they offer the whole package.”
Bondell added: “There are virtually no barriers to entry for DIY artists. [But] what a record company can do is create an artist career, hopefully on a global basis. What the labels can do is help the artists cut through the clutter in a very crowded environment. Whether that’s utilising all the services that might be available at a label, or utilising some of the services from a global distribution platform like The Orchard, either way the key is to offer highly tailored solutions for the artist. What’s clear is that we’re no longer in a one-size-fits-all relationship between the artist and the label.”
The music market in Europe let the side down with just 0.1% growth. The paid streaming increase of 29.2% was strong, but performance rights revenue was down 6.7%. Part of the European problem this time around was down to big performance rights settlements in 2017 that meant the latest figures suffer in comparison.
“It’s very mixed,” said Moore of the continent’s performance. “There are some countries that grow and continue to grow quite strongly. I don’t think we can say that for Europe [as a whole] there is stagnation – it depends country by country. There is some strong growth in digital in some of the European markets.”
So Europe should be fine – unless Brexit changes everything…