Speculations have gone high this week! From BMI to the next steps towards developing AI as a tool for artists, a lot of insights are coming out, just what we need for this first day of September.
#1. What would an acquisition of BMI mean?
The potential acquisition of BMI by private equity firm New Mountain Capital (NMC) has raised questions about the future of BMI's vast songwriter membership. You may have heard about it, it’s been one of the biggest rumors this week!
BMI is one of the dominant PROs in the US, but faces limitations due to Consent Decrees established by the Department of Justice decades ago. These limitations prevent BMI from negotiating better royalty rates for songwriters and from selectively withdrawing music from specific radio stations. Private, for-profit PROs like Global Music Rights (GMR) have been able to negotiate higher rates by leveraging superstars' music and avoiding Consent Decrees.
With BMI possibly becoming a for-profit entity under private equity ownership, concerns are starting to be heard that a cull of low-earning songwriters from its membership could occur, mirroring the strategies of GMR and SESAC. Such a move might be seen as a way to free BMI from certain Consent Decree restrictions and increase profitability, but it would also impact its historical open-door policy for songwriters.
#2. Should we think about the limits of algorithms?
There’s no surprise there; the entertainment industry is currently marked by hyper-personalization, where AI-driven algorithms tailor content to individual preferences. We talked about the recent partnership between Universal Music Group and YouTube for an "AI incubator" which aims to explore how AI can empower artists responsibly.
However, this trend raises the question of whether extreme hyper-personalization could lead to a world where each user receives a slightly different version of every song release, blurring the line between intentional art and arbitrary content. While this approach has potential benefits, like enhancing user experiences and driving fandom, there's also a concern about isolating listeners and saturating streaming platforms.
#3. AI Music is not only about how it’s created
On the occasion of MUTEK Festival, media artists Yotam Mann and Sarah Rothberg are taking some time to go over the multifaceted relationship between AI-generated music and listeners. They tackle the intriguing question of whether AI can produce "amazing music" and emphasize that the assessment of music's quality is subjective, rooted with listeners' emotional connections and their capacity to communicate through the art.
The supposition ends up here: AI might evolve into a tool utilized by artists, akin to past technological shifts in music production. All the while emphasizing that the ultimate determination of musical excellence resides within the realm of the listeners' judgment.
#4. Goldman Sachs’ views on the future of Music
Lisa Yang, Managing Director of Media & Internet at Goldman Sachs’ Global Investment Research, sheds light on her bullish outlook for the future of music streaming. As the lead analyst behind Goldman’s report ‘Music In The Air’, Yang highlights their forecast that the global recorded music industry will generate over $50 billion by 2030, fueled by an anticipated 1.2 billion paying streaming subscribers worldwide. Indeed, every year, global music streaming subscribers have grown beyond expectations, even amid challenging global circumstances. Yang believes that while the growth rate might moderate, streaming will continue to gain traction.
Yang also discusses the potential for growth in the music industry and how streaming services can leverage the artist-fan relationship. She points to the immense potential of tapping into superfans, who have historically exhibited a willingness to pay more. She cites examples from Asia, such as Japan's history of monetizing superfans through merchandising and events. India, in particular, captures Yang's attention as a commercially game-changing market. The combination of increasing smartphone penetration and unique market dynamics make India a promising territory for music streaming expansion.
Finally, Yang touches on the need for more sophisticated royalty payment models in the streaming industry, advocating for a shift towards models that align more closely with the value generated by songs or artists. While recognizing the complexity of negotiating new models with major labels and DSPs, she highlights the industry's commitment to tackling streaming fraud as a first step towards aligning monetization with consumption.
#5. Universal is working their Middle East and North Africa presence
Universal Music Group (UMG) has acquired UAE-based music company Chabaka Music, known for digital distribution and artist services in the Middle East and North Africa (MENA) region. This aligns with UMG's global strategy of expanding into dynamic music markets, fueled by MENA's 23.8% YoY growth in recorded music revenues in 2022.