MBW’s Stat Of The Week is a series in which we highlight a single data point that deserves the attention of the global music industry. Stat of the week is powered by Cinq music groupa technology-focused record label, distribution and rights management company.
One of the most dramatic impacts streaming has had on the record industry has been the democratization of listening.
The logic goes like this: In the pre-Spotify past, consumers had to make a binding choice about the next record they wanted to buy. This transactional buying decision was tight and largely guided by the media and broadcast channels – the fabled “gatekeepers” – who were limited in the number of artists they could recommend to the great unwashed.
Today, no transactional purchase decision is required. No consumer needs to “gamble” their money on an untested new record – they just need to load it up on Spotify/YouTube Music/Apple Music etc., click play and see if they like it.
If they like it, they can keep listening. If not, they can just run away to another listening pleasure.
Year after year, this phenomenon dramatically dilutes the concentration of all music listening claimed by a handful of the world’s biggest megastars.
As a result, each year an increasing proportion of total streams are migrating away from the top 10 greatest hits and toward a much broader range of “middle-class” artists with significant, but not necessarily chart-busting, fan bases.
MBW has pulled out this stat a few times this year, but it bears repeating: according to our calculations of Luminate numbers, the top 10 audio streaming tracks in the US are in H1 2022 were cumulatively overwritten 1 billion times less than they were in H1 2019 (2.74B vs. 3.81B).
Impact of streaming on live business
This phenomenon is not exclusive to the record industry.
In an upcoming interview in music business worldwideYearbook 2022/2023Jay Marciano, the CEO and chairman of AEG Presents, notes that the democratization of listening to streaming services has had a significant impact on his company’s “bars and theaters” business — meaning venues that typically hold hundreds of tickets instead of thousands . Holder.
“A club that was doing 100 shows a year in 2012 is now doing 180 shows a year,” says Marciano. “It’s a direct result of there being more talent [with a viable fanbase] available. It’s a great by-product of the benefits of streaming.”
“A club that would do 100 shows a year in 2012 is now doing 180 shows a year.”
Jay Marciano, AEG presents
He adds: “What’s new is the frequency that fans are going to [these] Shows: The statistic quoted years ago was that the average concert-goer per year goes to 1-point-something shows.
“In our experience, at club and theater level [today]where the audience is mostly 22-32 year olds, more like eight times a year.”
Warner’s “Portfolio” strategy
All of this, in turn, has impacted the A&R strategy of major music companies.
You may recall that in September, outgoing Warner Music Group CEO Steve Cooper noted that his company had transitioned to a “portfolio” A&R strategy — thanks to streaming.
“What we have done in recent years is ours [financial] Dependence on Superstars. Reducing this dependency has allowed us to further strengthen our approach to A&R, which is long-term artist development.”
Steve Cooper, speech in September
That strategy, Cooper explained, means that WMG is now spreading its A&R budget across a broader spectrum of artists, thereby reducing the company’s financial “dependence on superstars.”
In other words, Warner invests a smaller portion of its growing A&R budget each year in a select handful of global stars, and allocates a larger portion of that budget to artists who haven’t yet made the top five on the Billboard Hot 100.
An important new data point to play with
On Tuesday (November 22), on Warner Music Group’s Calendar Third Quarter Earnings Conference Call, Cooper provided us with a milestone statistic that reflects the commercial reality of the above trends.
Cooper revealed: “A decade ago, our top 5 artists generated over 15% of our physical and digital revenue from recorded music. In 2022 they generated just over 5%.”
To run you through it again, the top 5 grossing artists at a major record label, as a subset, have seen their cumulative share of generated revenue at that major record label fall by two-thirds over the last 10 years.
Where have those two-thirds gone? We’ll come back to that – because it’s a bit more nuanced than “they all just disappeared into the ‘middle class’ of artists MBW keeps babbling about”.
“A decade ago, our top five artists generated over 15% of our physical and digital revenue from recorded music. In 2022 they generated just over 5%.”
Steve Cooper speaks this week
For now, let’s keep an eye on the price, go through some SEC filings, and get the numbers.
According to Warner Music Group annual financial reportsWMG’s physical and digital revenues from recorded music (that is CDs, vinyl, downloads and streaming royalties combined) amounted to $3.868 billion in fiscal year 2022 (the 12 months ended September of this year).
A decade earlier, in fiscal 2012 (the 12 months ended September 2012), WMG enclosed the corresponding number $1.830 billion.
(Take a moment to marvel at the fact that, under Steve Cooper’s leadership, that number is more than doubled in 10 years at WMG… and back to math.)
Below you can see how the approximate percentages Steve Cooper laid out this week – RE: Warner’s Top 5 Annual Artists for Fiscal Years 2022 and 2012 – look like in (i) real monetary terms and (ii) pie chart form. [Click on the chart to view numbers.]
The key to take away?
According to MBW’s calculations of Steve Cooper’s numbers, Warner Music Group’s top five in FY2012 should have cumulatively generated a larger sum of annual digital and physical royalties(≈274.5M) than WMG’s corresponding top 5 artists generated in fiscal year 2022 (≈193.4M).
This isn’t just a decline Split of revenue; it’s a decline indeed revenue generated.
Keep in mind that this represents a ten year period during which WMG’s total recorded music royalties more than doubled ($1.83 billion in fiscal year 2012 vs. $3.87 billion in fiscal year 2022).
Warner’s “expanded and deepened” list of artists
Steve Cooper took the time Tuesday to explain some of the underlying reasons behind the decline in the revenue share of Warner’s top 5 artists over the past decade.
He noted that today’s clutch of the very biggest superstars is not only losing stakes in “middle class” artists – as described above – but is also struggling for shares in listening (I) Artists from many more countries than ever before, and (ii) Artists from many different eras.
Point (ii) Resumee was made by Warner Music distribution that year running up That Hill by Kate Bush, which officially belonged to the world most popular hit on Spotify this summer following his appearance on Netflix stranger things.
Point (I) It’s summed up by looking at the range of major league stars from different parts of the world who have signed to Warner labels in recent years – including anita (Brazil), who has just been nominated for Best New Artist Grammy in 2023, as well as Burna boy (Nigeria), Twice (South Korea) and Paul Londra (Argentina).
“Ten years ago we were an Anglocentric company. Today we are a truly global music entertainment company.”
Steve Cooper, WMG
In fact, just this week Warner announced a global deal with Dalia Mubarak, described by WMG as one of “the most influential female superstars in the Middle East.”
Steve Cooper said on Tuesday’s conference call, “As we grew and deepened our artist roster and prioritized a global approach to homegrown music, our revenue mix has evolved… We’ve also proven once again that music comes from everywhere and resonates everywhere.” can. We not only develop Anglo blockbusters, but also superstars in their home regions.”
Cooper added, “Ten years ago we were an Anglocentric company. Today we are a truly global music entertainment company, operating in over 70 countries.”
https://www.musicbusinessworldwide.com/10-years-ago-warner-musics-top-5-superstars-generated-15-of-its-revenue-today-that-number-has-been-slashed-to-5/ 10 years ago, Warner Music’s top 5 superstars generated 15% of its revenue. Today, that number has dropped to just 5%.
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