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A bit more fragmentation in the music industry could be a good thing - WR #187
Weekly Roundups
November 10, 2023

A bit more fragmentation in the music industry could be a good thing - WR #187

Music streaming kept making headlines this week, from rebranding to new royalties model. Social media platforms are getting ready to see more and more creators turning to them, especially early stage projects, while streaming is trying to make its way in the right direction. All while projections keep an optimistic eye on the future.

#1. You’ll need a 1 000 streams to see the money

Starting from Q1 2024, Spotify will require tracks to be played 1,000 times before they start generating royalties. The change initiated by Spotify is designed to cut their losses on low revenue streams, generating approximately less than half a dollar per month. Logically, these revenues would then be reallocated to bigger tracks on Spotify.

Critics, including Believe’s founder Ledegaillerie, believe that imposing a minimum threshold could discourage emerging artists, while supporters believe that it is a necessary measure to make the distribution of royalties fairer.

#2. Another (very) optimistic music industry valuation is out!

A recent analysis by Will Page, former chief economist at Spotify and PRS for Music, reveals that the global value of music royalties, excluding live performances, has reached $41.5 billion in 2022, up from $36.4 billion in 2021. Among other reasons for such an increase, the report also shows a growing share of direct revenues from publishing and CMOs, which account for 37.3% of the total value of copyright.

On a larger scale, 2024 will mark the first full year in which all major music streaming platforms will charge $10.99 per month for their individual plans in the US. Although the data does not take live performances into account, various sources still make optimistic projections for the growth of the music industry in the coming years.

#3. TikTok closes its Creator fund 6 months after launch

TikTok has officially ended its initial $2 billion Creator Fund, only six months after the Creativity Fund programme announcement. A few creators were eligible to apply for a share of the fund, which started with $200 million and eventually grew to the original $2 billion. This operation will come to an end on the 16th of December.

So why is that? The fund's average payout per view quickly declined, with some creators receiving as little as two cents per thousand views. In February, TikTok introduced the Creativity Programme to replace the Creators Fund. While further details on the closure of the Creators' Fund are awaited, various platforms offer revenue opportunities for creators in the current climate, including Instagram's revenue sharing programme and Twitter/X. TikTok’s Creator Fund couldn’t hold up against these.

#4. Streaming is soon to be a way more fragmented sector

Spotify's new royalty model aims to adapt to the evolving streaming market dynamics but may alienate long-tail artists. Although they’re not the only ones who looked at new models; Deezer has a more fan base focused model to move towards. While many artists will likely keep their music on Spotify for discovery, they might explore other platforms. This could lead to greater fragmentation in the streaming landscape, catering to various fan types differently.

The conversation in the music industry is shifting towards finding diverse remuneration models for different platforms based on their user bases. As the distinction between artist and music fandom becomes clear, platforms like TikTok, Spotify, and others could specialize in serving various artist and fan types, offering more opportunities for creators in a more diverse industry landscape.

#5. Would musicians concede to use AI in their music?

It appears so, according to a Pirate's survey (a network of studios, operating in the US, UK and Germany). What do we mean by “using AI”? 

About a quarter of the interviewees are open to using these AI-powered technologies to assist them in the creation process. So mainly to optimize and save some time. But one issue remains in all minds: the lack of transparency. As it has always been for new music creation tools, it takes time for them to make their place in the creation process.

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