Analysis

Global music streaming: ‘We are just on the tip of the iceberg of what this will become’


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“I think it’s good that we have a lot of players in the market, because it means we all get better… The streaming landscape, and particularly for us the audio landscape, will continue to grow. We are just on the tip of the iceberg of what this will become.”

Cecilia Qvist is global head of markets at Spotify, tasked with overseeing the streaming service’s continued expansion into new territories, as its content continues to spread beyond music.

She was also the opening keynote at NY:LON Connect, the music industry conference that Music Ally co-runs with the Music Business Association (Music Biz), as part of its track on ‘global streaming’. Qvist was interviewed on-stage by Music Biz president Portia Sabin.

Qvist talked about how Spotify approaches new territories. “We don’t normally put the team on the ground until we decide that we move in. But before we move into a market there’s a lot of research,” she said.

“Also for me it’s a lot about finding the right people. At the end of the day, what makes culture so unique is exactly that: the culture… We are really passionate about getting the right team on the ground. The right managing director, the right head of content and the right head of marketing, to make sure they really understand the cultural narrative.”

Podcasts loomed large in Qvist’s keynote, as they have done for Spotify over the past year. “Last quarter we saw a 39% podcast audience growth quarter-on-quarter,” she said. “We had about 1.5bn hours of podcast consumption on the platform in 2019.”

What’s driving this growth for Spotify? “To me it’s formats. What resonates with users here in the US is not the same as what resonates with users in India. Much shorter formats, different kinds of genres… That is the exciting part, to continue to develop this fairly nascent industry both in terms of format but also in terms of content,” she said.

Later in the keynote, the conversation would come back to this point. “One of the things we haven’t seen too much about is the formats. That’s where the innovation will come. You have audiobooks, you have podcasts. We call it podcasts but it’s actually a lot of things going in to that,” she said.

“It can be news, it can be educational. One of the things I personally think we will see more in this space is health. How the world is developing. Mindfulness. I think those genres will grow.”

In 2019, Latin America was one of Spotify’s fastest growing regions in terms of podcast listening. “Which is nothing short of amazing for us, because that was one of the bets that we took… so we will continue to innovate on format and different types of content”.

Qvist has a watchful eye on some of the local genres that are making waves globally, such as K-Pop. “A lot of the acts that are coming out of that genre are actually local acts tha are making it internationally in their own language, which I think is amazing,” she said. “BTS are the second-largest streamed band after Queen on our platform.”

Africa is another region that has this potential, she thinks. “What I am excited about most is Africa. The rich culture that is coming out of Africa… is nothing short of amazing,” she said, citing Burna Boy as one of her favourite new artists. “I discovered him because he was doing collaborations with other artists… I would be on the watch out for Africa, I think there will be some great stuff coming out of Africa as those markets continue to mature.”

On that continent, Spotify is only currently available in South Africa, plus the countries included in its Middle East and North Africa (MENA) launch in November 2018. For now, sub-Saharan Africa remains on the to-do list.

Spotify will “take a little bit of a more business-development approach to those markets” in Africa according to Qvist. “I do think there is really untapped potential in that region, so I am excited to see what that will become over time.”

This excitement and optimism was a theme that Qvist would return to regularly in her keynote.

“10 years ago we all had an industry in decline. It didn’t matter what we did in the value chain, we all had a hard problem to solve. Here today, I have a much bigger optimism about what the next 10 years will bring for us as an industry,” she said.

There were nods towards some of the problems that Spotify has encountered: for example, Qvist’s reference to “as we sort out who licenses publishing deals so more people can participate” in the light of Spotify’s recently-settled dispute with publisher Warner Chappell in India, or past songwriter lawsuits in the US.

Qvist’s focus is on how “we as an industry can continue to take the next steps to develop the next billion users”. She noted that “there’s almost five billion devices. India as an example, 150 million people are streaming, that is doubling down next year, so that is an opportunity for us all to participate.”

She also talked about creating “a fair marketplace… for sure, market expansion will be one thing for us, but it’s also fixing the friction in the system that we have all learned about”.

Qvist batted back a question about where Spotify will launch next, saying merely that “we have made it no secret that we want to be available everywhere”. She had a little more to say about how Spotify itself will evolve as a service.

“One of the things that I do believe will be a challenge is how do you create meaningful content and serve that at the right time of the day?” she said. “We do a lot of studies on what people consume and when they consume, because one of the things is you don’t want people to be flooded… You have to listen, and earn their trust all the time. Relevance will become a key word for all of us in 2020 and beyond.”

She finished by looking to wider industry issues. “I’m very passionate about the dynamic when it comes to male/female. I still think we have, not an issue in the industry, but we’re getting better. I still think we need more equality in the industry.”

next billion listeners

Qvist’s keynote was followed by a panel discussion about ‘the next billion listeners’, exploring which territories and demographics might drive the next round of streaming growth, and what the music industry and its digital partners can do to best support that growth.

The panelists included Columbia / Epic SVP of international marketing Melissa Thomas; Kobalt EVP of global digital partnerships Bob Bruderman; The Blueprint Group / Maverick head of digital strategy and biz dev Bryan Calhoun; and Mdundo CEO Martin Nielsen. FUGA’s SVP Americas Anna Siegel moderated.

“What’s interesting is there are obviously a range of services and DSPs, local and global, and there’s no passport control any more. We’re seeing fans talking in real-time over a range of social networking and streaming services, and you can react and pivot your strategy,” said Thomas.

“With fans these days you have to be able to understand that you can’t control what and how and when they listen to things. Digital is real-time, and we have services like TikTok where we see records that we’re not focusing on, initially, popping up. Sometimes we have to pivot our campaigns based on those conversations.”

Calhoun said he’s pleased that DSPs are putting more focus on enhancing the relationship with fans, rather than simply paying royalties to rightsholders. He cited Pandora’s tools for artists to message their fans and drive traffic, as well as YouTube facilitating merchandise and ticket sales, as examples.

“Increasing the ability to do that type of thing makes us want to work more with the DSPs that are doing those types of things. As the products are enhanced, it will increase other listeners, because there’s more of a reason to choose a streaming service: you’re getting more than just the ability to listen to the music.”

The panel talked about the landscape in the US, where Bruderman admitted that terrestrial radio “has had much more longevity than I thought… I thought the transition would happen a lot faster”. He praised the fact that streaming services are “trying to differentiate the products” from one another, with features, content and (in Amazon’s case) multiple tiers of subscription.

“We’re still in that early stage of the differentiation on the product,” he said, before delivering a warning. “The overall licensing landscape is still a bit slow to allow experimentation, especially for the incumbent services out there who want to try those new tiers, experiences and price points.”

(He would later come back to this point: “It pains me some days that it takes so long for some very large companies to roll out new features, often because of those publishing issues.”)

With Cecilia Qvist having already talked about Africa, the continent was fresh in the NY:LON Connect audience’s mind as a driver for the next billion music streamers. Nielsen offered the perspective of a DSP, Mdundo, which operates in that region.

“There’s around a billion people living there… out of these billion people around 300 million of them are on the internet, so there’s growth potential throughout the continent,” he said, although he did not shirk the challenges in achieving this.

“The content market in Africa is extremely fragmented. There is not much label or distribution structure, so most artists are by definition independent. Licensing that as a DSP is a challenge,” he said. “We work directly or have direct agreements with 60,000 artists across the continent, and that is the most popular content.”

Nielsen described the three key trends that will fuel growth in Africa: getting more people connected to the internet; growing the advertising industry in order to make money from free listeners; and solving some of the billing challenges so that more people can start paying for music streaming.

“Those three things around us are all growing in the right direction, and we are part of that growth,” he said. For now, Mdundo is an ad-supported service, with billing complexity not the only reason.

“The reality is billing is a huge challenge. Most of the billing formats are domestic: [you have to work] country by country, so it’s very hard to scale a billing platform over the whole continent. But also on the flipside, realistically what people would be willing to pay for the service is not where we think it should be yet,” he said.

Nielsen thinks that the western model of streaming may not dominate the African market. “We are in a market where there’s extremely many different user segments. A service like Spotify might be applicable for 5-10% of the market, which is still 100 million people… but in its current shape, it will not actually work for the majority of the actual market,” he said. “So it is important when we draw general conclusions around the continent, to understand that it’s extremely segmented.”

Outside Africa, the panel talked about new user experiences that may help bring more people to streaming.

“It’s looking at offering different content as well, and how we bring different people into the funnel. Podcasting, premium content… It’s pulling people in with other forms of content besides audio,” said Thomas. “But it’s also working with partners on the ground locally and investing in local talent. We see looking at the charts around the world, they’re dominated by local artists… so it’s being sensitive to the fact that there are different stories.”

Calhoun talked about the opportunities of new platforms, citing social music app Triller in particular as one of the most exciting new spaces for his artists. “It’s crazy [the way] kids are engaging with the platform… When you see what their growth is and the engagement with that platform, it is really, really exciting.”

The panel were also enthusiastic about the increasingly borderless music industry, and the implications for companies operating within it. Bruderman sang the merits of local expertise for an operation like Kobalt’s AWAL.

“You can’t beat that: to have those relationships. You have to understand what’s happening on all these platforms… It’s increasingly difficult to not have that global footprint and those subject-matter experts around the world,” he said.

Thomas hailed the knock-on effects of this. “We’re seeing music move outside of its native markets. Afrobeats is super-exciting, excited to see that keep charting around the globe. Latin music… the amazing thing is that the more DSPs that get turned on, we have more opportunity for music to travel around the world than ever before.”

The fact that artists don’t have to sing in English to travel is also a trend worth celebrating, she said, citing Spanish artist Rosalía’s breakthrough, as well as K-Pop. “BTS did a collaboration with Lil Nas X, they’re singing in Korean and he’s rapping in English. That’s exciting,” she said. “I think it [cross-language collaborations] will continue. I look forward to having it continuing in the Latin space, K-Pop, India, Afrobeats… the sky’s the limit!”

Calhoun warned that these collaborations will always need to make creative sense, rather than just marketing sense. “I’m sure there’s going to be some horrible failures in this. People have still got to be authentic,” he said. “When you force artists together to do something that they really don’t want to do, it’s usually a recipe for disaster… If you don’t really know what you’re doing, man, it can be bad!”

The conversation ended with some praise for the music industry’s willingness to support innovation by streaming services.

“For us, I feel like we find that today, pretty much no matter what we want to do, they are quite keen on trying it out. ‘Let’s try and see what happens’ – both with global and established entities, and local entities. So I do feel there’s a shift in that, and that helps when you’re trying to adapt what’s happening globally to a local setting,” said Nielsen.

That includes DSPs arguing that labels may need to be patient when it comes to turning free streamers into paying subscribers in regions like India and Africa, he suggested.

“It has been easier to come to the table and say: ‘Let’s be realistic around the market’ and saying you won’t get someone to pay five dollars or ten dollars for music who doesn’t even spend two dollars on their cellphone bill,” he said, suggesting that five years ago, this argument fell on deaf ears within labels. Now, according to Nielsen, labels are less likely to take the view that “this is what we know is working [globally] and we want it to also work here [in markets like Africa].”

The final session in NY:LON Connect’s global streaming track offered an artist’s perspective, courtesy of Indian singer/songwriter Prateek Kuhad – fresh from one of his tracks being included in former US president Barack Obama’s ‘Best of 2019’ playlist. He was joined by his manager Nicole Barsalona, director at Everyday Rebellion and president of Women In Music, to be interviewed by Pitchfork editor-in-chief Puja Patel.

The relevance to the track’s wider themes was this: that an independent artist from India, largely through streaming, has found a growing audience in the US – presidents included.

Kuhad and Barsalona have been working together since 2016, when she saw him play at the SXSW festival in Austin, Texas. He was in the early stages of switching from a job as a corporate consultant to a professional artist.

“It was very organic fan-first strategy,” remembered Barsalona. “Everything was about the fans. It was house concerts, making sure the fans had the music before anyone else. It was very newsletter-focused… and this translated into superfans who were obsessed with Prateek and with the music.”

“It all started in India, and it was just very step-by-step,” added Kuhad. “I had no idea how the music industry worked, I had no friends in the industry, and even my manager at the time had no idea. So we did very simple things, step by step. Fan-first is something that a lot of people forget, I think.”

There have been some bumps in the road both in India and in the US, because Kuhad does not conform to people’s assumptions. In India, he remembered having to make it clear that he was ‘indie-folk music’ rather than ‘Indian folk music’ – “completely different genres!”

In the US, meanwhile, some of the early interviews saw journalists asking Kuhad whether he played the sitar and other questions driven by their assumptions about Indian artists and music.

Interestingly, some of these assumptions were also made, in the early days at least, by the recommendation algorithms on streaming services.

“It’s based a lot on what artists people are listening to. My fans would be listening to a lot fo other Indian artists, because that’s where my career started… but a lot of them are artists whose music is not very much like mine,” said Kuhad.

Barsalona, meanwhile, grimaced at the memory of trying to speak to a human at the DSPs about this problem. If a radio programming director filed Kuhad under ‘world music’ she could talk to them to try to explain that this was wrong. “At streaming companies I have 16 different levels to go through to get that change made, algorithmically… getting put into those buckets is really tough!” she said.

Over time, the problem has eased. SiriusXM put Kuhad’s music on one of its coffee-house stations, while Spotify featured it on the Fresh Folk playlist, putting him in front of audiences who were more likely to enjoy his music.

Streaming data has also played a role in Kuhad’s growth in the US. His first tour of the country was based on picking five cities – Chicago, Los Angeles, San Francisco, New York and Boston – where his Spotify stats suggested there’d be an audience willing to see him live. “We didn’t really have to guess whether anyone was going to show up,” said Barsalona.

Kuhad also talked about changing music habits back in India, which he said has fuelled interest in his music there.

“What people don’t realise is that the current demographic in India, the people who are actually becoming music fans, they have streaming, and they listen to music from all over the world,” he said. “Everyone’s pretty bilingual: they listen to a lot of English music, and a lot of Hindi music. [It’s about] is it a good song?”

“Prateek is now a symbol of this new generation coming up, which is really globally-minded,” agreed Barsalona. “There is this boom of art and fashion and culture and music, and this incredible young audience. And they are feverish to get their hands on it. Anything Prateek sells, they want.”

Treating these superfans well has become a key part of Kuhad’s rise, as he explained. “It’s doing little things and sticking to some basic ideas: playing shows, doing a good job at your shows, being nice to people, replying to people online! When any fan says something nice, I try to say thank you… And just having a good work ethic in general.”

This relationship with fans even extends to making his music available to them first, through his newsletter, before it goes on general release.

The conversation turned to genres, which Kuhad sees as increasingly irrelevant boxes into which artists can be shoved.

“There are actually no genres in India. People categorise everything into Bollywood music, which literally 99% of the country listens to, and then the other music… It’s just going to be some other way. It cannot be based on that. I think genres in general globally are going to become more and more irrelevant. It’s not as pigeonholed any more as it used to be. It’s a lot more fluid,” he said.

At the start of 2020, Kuhad and Barsalona are mulling the best way to respond to the new listeners and attention driven by the Obama playlist: “Making sure that ‘cold/mess’ [the track included on that playlist] has another six-month cycle, so that the people who saw the Obama list and hadn’t seen it [the track] before have time to sit with it for a while” as Barsalona put it.

How did Obama discover the song? “We don’t know!” said Barsalona. “I’m guessing streaming had something to do with that. He’s a smart cool guy, so he finds cool stuff on his own I’m sure.” Kuhad hasn’t really been pushed to traditional radio stations in the US yet: SiriusXM and streaming have been his main platforms there.

The session finished back in India, with a question about how Kuhad thinks the streaming market will evolve there, and specifically whether more people will pay for streaming subscriptions, in a country where it’s predicted that within three years there could be 600 million streamers.

“The numbers are so massive that the only way you can monetise is is probably advertisements… but the people paying is not going to be 600 million for a while… There will always be somebody offering it for free. It will take a while,” he said.

“It’s also about mindset. People just don’t want to pay for stuff. So if they have the option of not paying for something… they’ll still go for that basically.”

Stuart Dredge

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