At today’s Midem conference in Cannes, a pair of afternoon sessions at the event’s ‘Streaming Summit’ focused on some of the evolving trends around the music-streaming world.
The first explored the question of whether streaming services are “the new A&Rs” in terms of developing artists and hits, with a panel including Epidemic Sound CEO Oscar Hoglund; Playground Music Scandinavia A&R / label manager Patrik Larsson; 7digital deputy CEO Pete Downton and Mom + Pop Music co-president Thaddeus Rudd.
The moderator was consultant Lara Baker, and in truth, the conversation focused more on the way labels interact with playlist curators – and the impact of the latter’s growth in power on the careers of artists.
Rudd talked about the kind of feedback a label like Mom + Pop gets from streaming services. “In the last several years, the consolidation of the major editorial playlist curators for Spotify, Apple, Amazon and a couple of others in North America has been astounding,” he said. “There are 12 people who control the playlists that have global impact, and which have the most impact on new music being streamed on these services. I could name them!”
Larsson chimed in with his views on Spotify. “The playlists we are getting, when we do get them, it’s great. It all comes down to how well songs perform within the Spotify system. And if it performs well with low skip-rates, there’s a lot of big playlists that songs can be fed in to… Our biggest challenge is when you have a debut artist that performs well within the playlists that are quite frankly faceless… our biggest challenge is to develop the artist from that 10, 20, 30 million streams. Even though we have a huge amount of streams on Spotify, it doesn’t really translate into Facebook, Twitter, Instagram and so on.”
Rudd agreed. “Speaking for labels, but also booking agents, publishers… We’re only as good as our artists. If those artists become huge acts, we all win. So if we don’t do the work, meaning taking from an active song on a playlist… layering on things like radio, a live career, a press profile, a television career… All of that has to be done. Otherwise all you end up with is a song. And there’s no guarantee with a playlist… that the second or third songs that an artist puts out will be championed, or will perform to the same degree as that first song.”
Downton talked about the impact of playlist curators. “Just the reality of a handful of people having to exert editorial control means the human component is much smaller than it was in the old radio world… About 40% of consumption on streaming services is from curator playlists, but streaming is still a relatively small portion of all music consumption,” he said.
“The challenge is how do you make sure there’s enough human input, and enough local input into how those editorial choices are made. Radio used to be about the programme director not the radio DJ, and they would research to death the music that was being played… But what is missing on streaming services is the storytelling that comes alongside the music. That’s something we should all be working with the streaming services to bring in.”
Rudd cited Courtney Barnett as an example of an artist who might not seem like an obvious candidate for the big curated playlists on streaming services. “Think of all the great records through history, and think about the ones that will have singles that will survive in the Today’s Top Hits world… Difficult records, treasured records. Patti Smith! That’s going to be difficult,” he warned.
Hoglund said it’s important to look beyond the streaming platforms: its catalogue of production-music is used as the soundtrack for YouTube videos, which helps to drive interest and traffic back up to the streaming platforms, where the music is now available too. “We go around the playlists and go through the local content creators [on YouTube] to create hyper-local interest… We don’t see the playlists as the end goals, we see them as a means to an end.”
Larsson: “It’s really important in a really track-driven time, that we’re the opposite when we have a dialogue with Spotify. Even though it’s one single that’s going to be put out. They want to know the plan that we have around the artist… radio plugging, live, social media, everything we’re going to do around it. Instead of asking the question ‘what can you do for us’ we have to look at it as ‘look what we can do for you’.”
Downton praised Apple’s Beats Radio for doing a good job of “telling the stories around the music… it’s a fantastic way of discovering new artists… as you see these technologies come together, radio and streaming, you see the best of both worlds coming together… something that is truly immersive for the listener, versus just interruptive”. However, Rudd argued that the ease of streaming means “music discovery is being reignited” – that people are discovering new bands through playlists, even if they have to find out about those artists’ stories on other platforms.
Is radio now led by streaming? “The two influence each other now,” said Downton. “In the UK there’s a lot more attention given to what happens away from broadcast. Radio 1 may only have six or seven million listeners, but it has 10 million people touching its content through YouTube.”
Do independent labels and artists have the same access to big playlists and those key curators that major labels do, wondered Baker. “Occasionally, but not frequently over time,” said Rudd. “They need to depend on the local know-how from the playlist people,” agreed Larsson.
“But if you’re an artist that does really good stuff, chances are those playlist people will hear about you, because you work social media really well, because you have some videos up on YouTube: because you’re good at spreading the word about what you’re doing artistically”. Hoglund suggested that “there is a level playing field: small players such as us can get access as well. It’s totally random when you get picked up – we still haven’t cracked that code – but that’s why you have to have other strategies.”
Another panel at Midem this afternoon, titled ‘All Eyez on Stream’, focused on the expansion of local streaming services outside their home markets, and competing with the large global players like Spotify and Apple Music.
The panel included Venesa Hoffman, VP EMEA at Napster; Scott Cohen, VP International at The Orchard; John Rees, VP and head of strategy and business development EMEA at Warner Music Group; Tom Silverman, CEO of Tommy Boy; and Yann Miossec, CEO of Qobuz. The moderator was Billboard and Forbes journalist Cherie Hu.
Silverman kicked off, asked about his past prediction of a $100bn music industry fuelled by a billion subscribers. “There’s a lot of room for growth! There are 196 million paid [subscribers] already worldwide, 8.2% of the world’s smartphone population… So obviously people can’t stream music unless they have a smartphone. So smartphone penetration is a real key to us growing our business, and it’s happening anyway,” he said.
“There are a lot of countries that have 20 to 30 percent smartphone penetration, but they’re growing really quickly. Countries in Africa like Nigeria… So first we need smartphones and reasonably-priced broad bandwidth connections. This is why we see Brazil and Mexico in the top five of Spotify when they weren’t ever in the top 25 of the music industry in terms of revenues ever before.”
Hoffman talked about Europe, which blends markets with high willingness to pay, and inability to pay – and high or low smartphone penetration. “It’s about finding a relevant service for those markets. Some African markets, the smartphone might not be the best thing to start streaming with… Who said that streaming services are exclusive to smartphones? Somehow it happened, but this was not by design!” So a local approach, based on the opportunities but also the restrictions of each country, is key.
Miossec gave Qobuz’s perspective, as a smaller service that’s expanding aggressively at the moment in terms of new countries. “We don’t see the other existing players as competitors. However, the way this business has spread could send other information… It’s true that so far, mostly thanks to these exclusive deals between the telcos and the streaming services, the way the business has been evangelised to the public has been a mass-market approach: there was one telco and one streamer,” he said. But Qobuz hopes there is room for new approaches that take a different tack. “The next step is to have the telcos providing a very large, very wide offer to their existing clients [customers]… but also more high-value offers with high-quality content. I think that’s the next step in the business.”
Rees talked about the local vs global question for streaming. “We’re huge fans of competition: competition in every industry has proved to drive innovation,” he said. “Everyone in the ecosystem of streaming has a role to play in that. The global services are doing their thing. Local services, we have seen in many markets, scale… very targeted at their own cultural demographic, either through business-to-business relationships that they have in that market… or a unique understanding of the consumers in that market. So we believe there’s going to be a vital role for them going forward.”
Cohen gave his thoughts. “I don’t think they’re mutually exclusive at this point… I also see the huge value in the local services. You could be in the Middle East and have Anghami, which is really important, because unless you’re putting all your metadata in Arabic, you’re going to have a hard time penetrating the market. Or you go to Russia and you have Yandex and VK. It’s really important right now to have local players in those markets, and they’re actually outperforming the big ones… We don’t want to allow the major players in each market to shrink down to just one or two.”
“Once they achieve big scale in their market, aren’t they targets to be bought by the bigger [global] ones?” asked Silverman. “It’ll be interesting to see how many horses can be in this race ultimately. We’re in a transitional period.”
Cohen warned that the growth of the global streaming services shouldn’t be taken for granted, reminding the Midem audience that this is how the industry felt about CD sales in the mid-1990s. He suggested the key isn’t just having more streaming services, but about having more ways to interact with music outside pure streaming – in ways that return royalties to creators and rightsholders.
“There will be things that fade away, we’ll learn lessons and move forward,” said Silverman. “Things will come and go, and we’ll iterate on those things… Things get better. We’re at $18bn a year now just about, we were at $21bn or $22bn in 1999 or 2000, and I think we’ll be past where we were there within a year or two years. And I think $50bn just for the recording side is something we’ll see in our lifetime.”
The conversation turned to differing needs of the major and independent communities when it comes to working with global versus local services. “How we treat a global and a local streaming service, I don’t see any distinction on a day-to-day basis in terms of repertoire,” said Rees.
Hoffman brought up the topic of smart speakers and voice assistants like Alexa, as well as having richer in-car music integrations, before the conversation turned to whether radio listening is holding up in the face of competition from streaming.
“I don’t believe the radio research! They ask these questions like ‘have you heard radio this week?’ Yeah. Okay, that person listens to radio. But ask a teenager. Ask a 14-year old ‘have you bought a radio, do you own a radio?’” said Cohen, stressing that these were his personal views. “They’re moving to streaming, I don’t care what the figures say. I don’t believe it! If you talk to a teenager, they don’t listen to radio: they’re on streaming services.”
Cohen then brought up YouTube. “I can tell you: love ’em or hate ’em, YouTube is in every fucking market. Everybody’s listening!” he said. Hu asked what the strategy should be: to try to convince people to pay on that kind of platform, or to find alternatives. “We take a territory by territory approach: it really depends on the market and the propensity of consumers to pay for streaming access. There’s definitely a role for ad-supported services, but there has to be a very clear funnel, ultimately, into a paid experience,” said Rees. “Getting people into an ad-supported funnel is a significant improvement on piracy.”
Cohen asked Rees for his views on YouTube’s chances of success at this upsell. “As they stated, they have a billion people using YouTube for music. And I think it really is about their ability to execute upon that and to convert those free users into paid, and to market to the free users, to educate them on the benefits of a paid subscription versus their current ad-supported functionality that they have,” said Rees, who declined to make a prediction for what kind of percentage might convert. “As big as possible!”
Silverman talked about the importance of having people’s credit-card details to make that funnel smoother: “Somebody from YouTube told me, they have hundreds of millions because of the Google Play Android store. So conversion will be easier for them,” he said.
Cohen talked about the big four global services: Spotify, Apple Music, Amazon and Google/YouTube, and challenged the rest of the panel to predict how that order will change in terms of their number of paid subscribers. “Do you think that all four can still be here, five years from now?” he asked.
“Typically the market matures then the price wars start. Here it was flipped,” said Hoffman. “So it’s super-hard to give you that prediction you’re looking for. I wish I could!”
“I think the battle will be between Amazon and Google/YouTube for third place,” said Silverman, who sees Spotify and Apple remaining first and second in that order, for the next year at least. “I think the thing we have to look at is what’s the upside potential in the music business?.. If we can reach 90% of the unique smartphones in America, that would be the maximum possibility, and that’d be about 180 million paid subscribers in America. At the current level, which is 86% smartphone penetration, that’s the maximum… It’s going to take 30 years for us to hit that number.”