Mexico and Brazil are experiencing a streaming-fuelled boom for music, with other countries in Latin America also seeing encouraging growth.
How can independent labels from the continent and beyond make the most of this trend? A panel at AIM’s Indie-Con conference in London today provided some useful advice.
The panel included Delira Musica’s Luciana Pegorer; Believe Digital’s Stephen King; Cooking Vinyl’s Anette Collins; Navigation Partners’ Peggy Dold; Oliver Restucci from Discos Rio Bueno and IMI Chile; and Mark Kitcatt of Everlasting Records. The moderator was WIN’s Charlie Phillips.
Pegorer kicked off with some figures. The population of Latin America is now over 600 million people, with nearly 400 million internet users in the region. Of those, 93% have smartphones, and there are more than 300 million Facebook users in Latin America.
“This is the fastest growing region in the global music industry in 2015, according to IFPI,” she said, while citing Merlin stats on how fast the Brazilian market has been growing in particular – with its 200 million population.
“You really cannot work with the region as one region, one way of going to the market. Because Brazil is very separate from the rest of Latin America. Brazil speaks Portugese and the rest of the region speaks Spanish. And it’s weird that we trade more with Asia, Europe and North America than we do with the South American countries!” she said.
“It’s really difficult for Spanish-speaking music to get to the Brazilian market, but for English-speaking music it’s really common. We listen to English and Portugese-speaking music.”
Dold talked about the variety wihtin Latin America. “Argentina and Mexico you have a very robust rock market, but you also have local music and international market. Then if you go to the Caribbean you have tropical music, then if you go to Columbia you also have tropical music, but it’s different from the Caribbean,” she said.
Collins said that “rock bands work extremely well across the region: if you’ve got an indie band it’s tougher, but if you’ve got a rock band, it’s easy!.. If you have a rock band, you have the interest there and you have the audience there. And when you have the interest, you will also get touring, which is crucial… You have to have an artist that is able to go there.”
King gave Believe Digital’s view. “It’s a really tough region. You’ve got to look at the region and say ‘what do you want to achieve?’ and you’ve got to realise that the digital income coming from Latin America is about a third of what you make in the UK, so that sets the perspective. And then you have the different countries to deal with, the different languages, you’ve got rights societies that work in a different manner…”
He added that the region in general has had “quite poor” sales for international music, with 85% of sales across Latin America consisting of local content: “Local to the country, not even to the region”. King said that Believe looks at Latin America very carefully, and tries to export content from the region to other parts of the world.
“In the last two weeks, one of our Brazilian labels has earned $20,000 streaming in China, which we’re still trying to find out why! We can’t claim all the credit for it necessarily. We think we did something really good, but we’re still trying to find out.” A sync? “Well, it would have to be an illegal sync, as we didn’t clear it!”
Latin America is fairly digitally advanced now. “It’s growing. Let’s use ‘growth’ as a key word. That is what makes it so encouraging as a market: there is so much room for growth,” said Dold, pointing to the IFPI figures on the increasing revenues in 2015.
“Brazil, Argentina and Mexico are the top three income generators in the region. When Spotify added Mexico, within a year it was, if not in one of their top five markets globally, close. And I have read that it is about to eclipse Germany, certainly in numbers,” she continued.
“We’re looking at a very young population that over-indexes in social use, and 93% of the internet users in Latin America use YouTube. We’re dealing with very large numbers, and yet we still only have about 56% of the population on the internet, so it’s by no means saturated. We’ve got a tremendous amount of growth ahead.”
Restucci talked about millennial behaviour in Chile. “The most important thing is they are not using piracy any more,” he said. “Piracy was really a big problem there, but streaming is letting people pay for music consumption now.”
He also said that sizing the respective markets can still be tough. “We don’t really know for sure that Brazil is bigger than Mexico for example, the market size. For us, Mexico is the biggest market in the world, but the numbers are impossible to catch!”
Collins said that streaming has brought welcome transparency to Red Essential’s business in Latin America in terms of reporting and payments. The panel agreed that it can still be tough working with local collecting societies, for various reasons, before returning to the days of widespread piracy in the region.
“Piracy was a positive for us in the first place,” argued Kitcatt, citing the example of one artist – El Guincho – whose videos and music were reaching audiences in Argentina, Mexico and Chile through piracy, even though his label at the time wasn’t doing much promotion in Latin America.
“So we could tour there, we did very well touring,” said Kitcatt. “And that’s now carried through to where you’re seeing action with Spotify.”
Kitcatt reiterated that while there are similarities with the way streaming is taking off in Brazil and other Latin markets, culturally Brazil must be considered alone within the continent. Pegorer talked about the independent sector there.
“Many of the mainstream artists are independent. They use the majors for marketing and distribution sometimes, but as the physical market goes down, they are becoming more independent,” she said, although she said that independent publishers still find Brazil a tougher market. Pegorer also said Brazilian indies are ripe for collaboration with their peers around the world. “There are lots of partnerships to be done to trade music in and out,” she said.
Dold talked about her work with Universal Music and Sony Music in Latin America, suggesting that access to the media is one way the multinationals punch their weight in the region.
“Who controls the media? Who has most access to the media and how much does the media cost? At the end of the day, we’re still dealing with the need for a bank. Who funds this… who has the money? The reality from my perspective is that I’ve worked very closely with the multinationals in that region for those reasons,” she said.
Dold also talked about the touring opportunities outside the biggest markets in Latin America, suggesting that labels and managers should not ignore countries like Peru. “I had one band that went to Peru, they thought they’d sell 500 tickets, but 10,000 people turned up!” she said. “It’s not just Iron Maiden then,” quipped Phillips.
The conversation turned to artist development and business models. “In those countries, you tend to do a bespoke 360 model, so we tend to be looking after booking rights, publishing and recording rights,” he said. “Different artists have different strengths: some still do well selling physical records, and some are more about touring… In some situations, you’ve got to accept you’re almost giving the music away in order to drive the touring.”
King joined in. “The average revenue per people who actually interact with digital in Latin America is only $4 a year, so you’re starting with a really low base,” he said. “I can’t give music away. I don’t care what people think. If you give music away you might as well endorse piracy.”
But he returned to the difficulties of working with neighbouring rights bodies and collecting societies in the region. “They’re all corrupt. They all have an inability to share money. They all have a lack of resources. They all have crap data. They all protect their own artists. It’s a really horrible thing we all have to deal with,” said King, before addressing another problematic area.
“Telco companies generally exploit a lot of content without having the rights to do it. That’s something we’re now attacking aggressively… we go after the telcos for settlements, and tell them to pull down their offers that are illegal… We did it first of all in Mexico, we’re doing it in Brazil, we do it in Columbia a lot. We’re winning some battles and joining with local publishers to find friends to do it,” he said.
Pegorer gave her views on why indies should be positive about Latin America. “First, a very young population. Next, the streaming platforms: iTunes took seven years to get to Brazil and they still don’t accept local credit cards! But now we have all these legal ways of digital consumption that we didn’t have before,” she said. “And those platforms are working really hard to get people to convert. That’s why we’re growing so fast.”
And YouTube – does that count as free or paid music? “It depends whether you’re a label that knows how to monetise it,” said King. Dold said that YouTube is working hard to start monetising videos better in Latin America. “We are considering it paid music, because people are very good at monetising it,” said Pegorer.
“I think that the region is prepared to pay for music. Piracy has been left behind because of the streaming services, at last,” said Restucci.
Does the growth of Spotify in Mexico and Brazil, and the way that service’s global charts work, mean we’ll start seeing more acts from those countries breaking in to its Global Top 50 – through weight of streams in their home countries alone – and thus finding an international audience?
Not yet, said King. “I recently looked at the top 500 streamed artists in the world, and predominantly they were from the UK, the US, France and Germany,” he said.
“So actually those artists aren’t getting there yet. Part of my job is to take those artists out of those countries and make them more effective on streaming and playlists. We’ve got a long way to go yet,” he said, before suggesting that if and when Spotify launches in China, it may be Chinese artists who benefit from this kind of dynamic more.
Finally, Pegorer was asked about iTunes and its credit-card problem: will Spotify face the same problem? “Yes, in Brazil it’s a big problem. I’ve been discussing it with them, and they just say they’re trying to figure it out, and it’s complicated. And it is complicated,” she said.
“We have a huge market for smartphones, so the lower economic classes consume digital music through their smartphones, which helps a lot. but if you see iTunes and Apple Music and how many people subscribe to them, it’s very low because of that: because of international credit cards.”
King weighed in with an alternative theory. “It’s because Apple wouldn’t cut a deal with the Brazilian government to pay tax…”