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Understanding the music industry a little better - WR #186
Weekly Roundups
November 3, 2023

Understanding the music industry a little better - WR #186

This week, we’ve seen a lot of efforts towards growing a better understanding of the digital transition of our industry; from royalty payouts calculations to new features to release tracks more safely, let’s dive in!

#1. Kolbat drops more than $700 Million on Catalog

Kobalt is to invest heavily in music copyrights through a partnership with Morgan Stanley Tactical Value, planning to allocate more than $500 million (or potentially more than $700 million) over several years. Kobalt, former owner of AWAL, will manage various aspects of these rights, with the support of Goldman Sachs. The agreement was welcomed by both parties, underlining confidence in the long-term potential of the music industry. Kobalt is expected to announce its first acquisitions soon. This initiative comes at a time when other companies are also expanding their music rights portfolios.

#2. Can Deezer’s new model really change the streaming landscape?

As you know, Deezer has unveiled its "artist-centric" model, which includes a 1,000-stream monthly listenership cap for calculating royalties. Deezer's CEO, Jeronimo Folgueira, explained that this cap was set after analyzing years of music consumption data, as most users typically listen to between 400 and 600 tracks per month. Streams beyond 1,000 would count at a reduced rate to prevent abuse.

It's important to note that similar models, like SoundCloud's fan-powered/user-centric system, have had unintended consequences on artist compensation, and this should be considered as Deezer explores this new royalty model. Other platforms, including Apple Music, are also making changes, while Spotify is reportedly considering a system that pays for streams only on tracks with a certain number of annual plays. Critics argue that such measures may pose entry barriers for emerging artists. Additionally, the rise of TikTok Music and TikTok's promotion-focused deal with DistroKid could further impact the music industry landscape.

#3. TikTok and Distrokid enable indie artists to distribute their tracks  

Speaking of, TikTok and Distrokid have reached an agreement to make music distributed by DistroKid available on TikTok Music, CapCut and TikTok’s commercial music library. This opens up new opportunities for independent artists by offering them personalized recommendations,  instructions for advancing their careers and incentives to promote their music on a regular basis. The partnership strengthens their existing collaboration since 2019 and expands the availability of music from artists distributed by DistroKid on TikTok Music. 

In addition, TikTok has entered into a multi-year licensing agreement with Warner Music Group, aimed at expanding the availability of Warner Recorded Music and Warner Chappell Music repertoire on its various platforms. The Chinese app's new functionality is now available in several countries, and success stories show how the social network can help emerging artists build their audience. This extended partnership aims to make music more accessible and reach new audiences.

#4. United Master launches "Blueprint" 

UnitedMasters, headed by Steve Stoute, has launched "Blueprint", a personalized artistic development support function via its app. It offers independent artists tailored advice, instructions and reminders based on their specific needs. This can range from personalized recommendations to help them achieve their professional goals, to educational content based on the artist's career stage and activities on the platform.

David Reich, President of UnitedMasters, sees this feature as revolutionary in an industry where artistic development is often overlooked. UnitedMasters has recently established partnerships with SymphonyOS and Groover, in addition to launching Beat Exchange for the buying and selling of beats. The company is valued at $550 million since a fundraising round in 2021, and boasts partnerships with Snapchat and Coinbase.

#5. Billboard now calculates payouts across Spotify and Apple Music

Billboard now offers a royalty calculator for Spotify and Apple Music to help the music industry and its creators. The calculator, created in collaboration with music industry law firm Manatt, Phelps & Phillips, is based on US direct payer data.

The algorithm combines several important data points. There are a number of streams generated by a song or album, and the application provides the total payment, the sound recording payment to the copyright owner, mechanical royalties for the music publisher and performance royalties paid to PROs such as ASCAP, BMI, GMR and SESAC.

Payment totals are based on Spotify and Apple Music subscription and advertising fees, as well as the number of listens, and are updated monthly. The calculator enables artists to better understand the value of their streams.

Spotify generates lower rates because the platform paid labels and publishers more in the first six months of 2023 due to its larger subscriber base. This means that despite lower per-play rates, the volume of plays on Spotify is higher than that of Apple Music.

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