As SVP of digital strategy and business development at Universal Music Group, Jonathan Dworkin is playing a significant role in how the biggest major label wants to steer the digital music world in the years to come.
His speech at the Slush Music conference in Helsinki this morning focused on ‘the globalisation of the music business’ at the end of a year that has seen UMG benefit from the biggest-ever breakout hit from Latin America: ‘Despacito’.
“I’m not actually going to talk about the music business. I’m going to talk about the history of the shipping container,” he said. “You think I’m kidding?” He wasn’t.
Dworkin talked about the days of wooden crates being heaved on to ships, crossing the Atlantic, then being loaded on to trains: a pair of rubber boots – he was playing to an audience well aware of Nokia’s roots in footwear – might take three months to travel from Helsinki to Los Angeles.
“The world was lumpy. It was uneven. It was segmented. it was bespoke. It was highly local,” he said. “It was much easier for goods to stay closer to source than to travel. It wasn’t until 1956 when the McLean shipping container standardised the shipping container, that the international shipping of goods became truly sustainable.”
You can probably spot where this was going. “In 1905 somebody who was in Madison, Wisconsin was probably wearing clothes that were made in Madison, Wisconsin, or somewhere in the middle of the UNited States. They certainly weren’t wearing clothes from Italy… in the same way that somebody in China wasn’t wearing clothes from Madison, Wisconsin,” said Dworkin.
Now that has all changed, and the physical shipping of products of all kinds is much faster and easier. Cue the pay-off: “Consider this phenomenon not dissimilar from what’s happened in the recorded-music business in the last 20 years,” said Dworkin.
“Today Apple Music is available in 116 countries. Spotify is available in 61 countries. YouTube is available in nearly every country in the world… What we’re really talking about is the vast interconnectedness of the internet, and the complete frictionless nature of media in a modern world… How long did it take Elvis Presley to reach 100 million fans, and how long did it take Lady Gaga to reach 100 million fans?”
He continued: “It is staggering to consider how rapid, how scaled and how global our music ecosystem has become. In 2009, 53% of streams came from the US. Today, it’s only 36%… it’s not because the US is getting smaller. The US is getting larger, but the world is getting larger also. We’re experiencing a completely new paradigm: truly global charts, where Luis Fonsi, a Puerto Rican singer with a successful 20-year career, can drive the number one record in the world.”
Dworkin pointed out that English-language stars are also benefitting, as markets like the Philippines and several Latin American countries drive huge stream volumes for their music. “Places that weren’t previously identifiable by any American record executive on a map… And brand new music economies are developing in places like China, where we’re likely to see a music emerge that looks nothing like anything else in the world. It will be eclectic, it will be creative, it will be massively-scale, and it will be unique.”
He talked about Brazil and Mexico having catapulted themselves to become two of the biggest music-streaming markets by volume, playing a crucial role in the success of ‘Despacito’ in 2017.
“I truly believe that Despacito is more than just a hit. I think it’s the harbinger of something truly new,” he said. “The underlying dynamic helping Despacito to a global hit is the new, rapid, interconnectedness of the music world, where it’s no longer American radio that defines a global hit, but the connected, democratic community – in this case driven by Spanish-speakers across the globe – who get behind a great record.”
“Mark my words, we will see more non-anglo global hits as streaming services continue to proliferate, and as the next wave of growth comes from markets previously completely disconnected from the global music ecosystem.”
Dworkin also hailed what’s been happening in China over the last two years.
“With the support of the Chinese government, local partners have completely reimagined the Chinese music ecosystem. Music piracy, while perhaps not eradicated in China, is certainly no longer the dominant form of consumption, and this is a trend we see in many markets across the globe,” he said.
“A file is a file, whether you buy it or you steal it. But a streaming music product is an experience, it’s superior, and it’s differentiated from what you could get for free. The number one reason music consumers stop pirating music is the availability of high-quality, ad-supported licensed services.”
Dworkin cited recent milestones: NetEase Cloud Music’s 400 million active users, and Tencent Music’s 700 million active users across its services as examples.
“Viewed through this lens, China must be the most rapidly-transformed digital music ecosystem in the world. But it’s not just about China, it’s about every market. And more and more it’s about developing markets,” he said.
“And it’s not only the global services that are driving transformation, for all the talk about Spotify and Apple and Google, who are incredible partners. But it’s about an interplay between global and local that gives consumers the great choice that drives innovation.
Universal Music now licenses more than 400 music services across the road, said Dworkin. “Local services are always going to excel at catering to local tastes, style, culture. Global services are always going to have a product advantage, having road-tested their products at scale and with diverse populations.”
“What’s best for consumers is going to be the competition between local and global… This exchange between local and global is going to create a new level of excellence and make our global music ecosystem deeper, richer and more diverse.”
Dworkin cited the rollout of cheap smartphones and affordable data plans to billions of people across the emerging world as “our equivalent of cheap shipping containers” and suggested that ‘Despacito’ is just one of the first big hits to break through as a result.
“Where will the next global hit come from? This summer it was a Spanish-language hit from Puerto Rico. Will the next global hit be in Hindi? Mandarin? Finnish? Indonesian?” he said.
“We’ll see more non-Anglo hits with increasing frequency,” he predicted. “We’re going to see the digital ecosystem populated with services grown in Sweden, in the US, in Japan, in China, In India and beyond. We’ll see a music business touching more consumers than ever before, thanks to accessibility, product innovation and services that deeply understand local cultures.”
Dworkin finished by hailing an “explosion of creativity”, albeit one based on quantity rather than quality metrics. “In the last six weeks alone – six weeks! – Spotify added 1.7 million tracks, or an average of 40,000 tracks per day,” he said.