Why Music is a $40+ Billion Industry

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Today’s memo and episode tackle a big question: how much money does the music industry generate annually? It’s not as straightforward as it may seem. Each year, former Spotify chief economist, author, and friend of the podcast, Will Page, answers this question in his annual report. He joins me and Tati Cirisano from MIDiA Research on the show to talk about the report and major trends in music.

You can listen to the episode or read a few highlights below.

the true value of music

A quick Google search of the music industry’s annual revenue will likely show a number around $26 billion. But that’s only for the recorded music side of the industry. It doesn’t account for publishing, collective management organizations, and other areas that generate revenue whenever music gets played.

Will Page’s annual report on global music copyright paints a more complete picture. It places the 2022 value at $41.5 billion. Recorded accounts for 63% of that figure, while songwriters, publishers, and their CMOs get 37%.

The report is a reminder of how fragmented music is. While the major record labels do own several music publishing companies, both sides are still invested in maximizing their own turf. This fragmentation extends to live music and merchandise, which are also led by different companies.

Let’s compare music to the NBA, where ticket sales, broadcast rights, merchandise, and sponsorship all account for the league’s $10 billion in annual revenue. If people only focused on broadcast rights revenue, which brings in over $5 billion, then the perception would be that the NBA is as valuable as La Liga, the second most popular pro soccer league in the world.

For better or worse, perception matters. Policymakers, investors, and executives make decisions based on top-line numbers. For an industry like music, which is heavily influenced by narratives, there should be a collective effort to push the hell out of Will’s reporting.

You can listen to the full episode here or read below for more highlights.

content purchased but not consumed

The vinyl sales boom is strong thanks to the 50% of vinyl consumers who don’t own a record player. But of the 50% who do own a player, a majority of them still don’t play those records. This is often framed as a generational shift, but it also tracks historical consumer behavior patterns of ownership and access.

The reasons people buy vinyl are broad, much like the decision to buy a book, magazine, DVD, or even an e-book.

It may be for consumption, but it may also be for projection. Some people want to be seen as the type of person who reads The Economist, The New Yorker, or The Atlantic. They’re displayed on coffee tables primarily for the display! These purchases can also be for self-expression. For instance, The Miseducation of Lauryn Hill is a landmark piece of culture that influenced a generation. People want to display it in their homes like a piece of art, even if they listen to the album on streaming and never open up the vinyl.

The same is true for movies. A movie buff may buy Pulp Fiction on VHS as a collector’s item, but still primarily watch it on one of the video streaming platforms. These purchases can also be gifts for others or to show support for the artist, author, or filmmaker.

Music, like most forms of entertainment, thrived on the wide range of reasons people bought albums. Consumption was the intended goal, but consumption did not impact revenue.

Music streaming flipped this dynamic. Streaming is a utility that generates revenue solely on consumption. Those broad use cases that apply to content ownership are largely gone.

There may be some connection consumers have with individual streaming services. U.S. based hip-hop fans may enjoy Apple Music due to its initial focus on rappers like DrakeSpotify Wrapped is an annual moment that may attract users to the service so they can share their own results. And in Tidal’s early days, it attracted some fans who wanted to support Jay Z, Black-owned business, and the higher payouts for artists compared to alternative platforms. There are differences, but it’s still a different consumer purchase than buying an album or any other form of media.

“back catalog” needs a rebrand

Songs older than 18 months are considered back catalog. They account for over 70% of music consumption, and that number has grown steadily through the streaming era. But that segment is largely driven by “shallow catalog,” songs that are just a few years old.

Will’s report showed the Luminate breakdown of music consumption by decades.

A large majority of the back catalog is songs that came out in the past 13 years. Streaming over-indexed on millennials. They are streaming SZA’s CTRL (2017). They are streaming Kendrick Lamar’s Good Kid, m.A.A.d city, which has stayed on the Billboard charts for 11 straight years.

The decades’ breakdown is much more valuable, especially since we’re a few days away from Harry Styles’ Harry’s House being labeled as a back catalog.

Listen to the rest of our episode with Will and Tati for more on:

– why publishing will continue to grow

– why “back catalog” is misleading

– how to speed up vinyl production


Dan Runcie [00:00:01]:

This episode tackles an important question in the industry. How much money does the music industry make on a regular basis? It’s not as straightforward as it may seem. You look at some reports, they’ll tell you what the industry makes from the recorded side of the business, but that doesn’t account for the publishing side of the business and some of the other areas that collect revenue for the business, too, to give you the over overall perspective on the global value of music copyright. And that’s where will Page comes in. He’s been a guest on this podcast before. He’s a former chief economist from Spotify. He’s the author of Pivot, Tarzan Economics and other books. And he broke this down in the annual report that he’s been putting out since 2014 on the global value of this copyright.

Dan Runcie [00:00:45]:

And this year he puts that number at $41.5 billion. This is the first year that that number has a four at the beginning. So we talk about why, we talk about where the industry is now, how will went about this calculation and more. I’m also joined by Tatu Sirisano from Media Research. She’s also been a familiar guest on this podcast. And the three of us came together and we talked it out. It was the perfect combination of each of us sharing our own perspective on things. We talked about streaming vinyl, AI and a whole lot more.

Dan Runcie [00:01:16]:

So if you enjoy a lot of these breakdowns, I think you’ll enjoy this conversation, too. And it’s also important that people see and realize how big this industry is and how much bigger it’s going to continue to get. So listen up and I hope you enjoy this one. All right, today we have the dream team with us. The brain trust is here. We have will page, who is Bird of the midnight oil, to join us on this one. And we also have Tati Sierra Sano from Midia Research. Welcome, both of you.

Dan Runcie [00:01:41]:

This is exciting.

Tati [00:01:42]:

Thanks, Dan.

Will Page [00:01:43]:

Great to be part of this three way conversation.

Dan Runcie [00:01:46]:

I’m actually kind of surprised that this is the first time we’re having one of these. There’s so many topics that we both talked about. We both had our respective areas where we talked about it. We both had one on one conversations where we talked about it. And Will, I do have to give you credit because I feel like this annual piece that you put out is a cornerstone. It’s a good opportunity to talk about it each time you put it out. It ties in a lot of the topics that we’ve talked about both on and off record. Topics that both Tati and I have talked about as well.

Dan Runcie [00:02:15]:

So thank you for releasing it. Is it in the 9th straight year that you’ve done this? Because you started at 2014 and now it’s 2023, right?

Will Page [00:02:22]:

Yeah. Coming up for a decade, by which point it may have doubled, but, yeah, it’s important because you come out of the Bat cave after doing this work for a whole month. You present it, you don’t know whether it’s going to get lost in long grass or hit the headlines, but to have both of you on this show, not just what makes trapped all so unique, but especially Lady T on this show, is to get a pulse behind all of this. It’s great talking numbers, rows and columns, but at the end of the day, it’s artists and songwriters we’re actually digging into here, and I want to get that perspective from this work as well. So I’m grateful that we’ve got three brains on the case as opposed to just one.

Dan Runcie [00:02:55]:

So nine years in the first time you put it out. I’m sure part of this is you seeing this discrepancy, seeing an opportunity from a high level. People that are listening at this point, based on the intro, know that you see there are different areas and different sources that are capturing the amount of revenue that this industry is generating and the overall value of copyright. You’re bringing it together. I’m sure the first time you did it, there was some intrigue to see. Okay, what’s the response going to be like beyond just the headlines? Hopefully seeing some tangible output. But now you’re doing this nine years in a row. I’m sure there’s likely some value that you see on the other side.

Dan Runcie [00:03:33]:

But what are those things? What are the things that keep you going with this? What are the things that make you see? Yes, this is worth me going up in a bit of a hole to drill down and make sure that this is as strong as it can be in British politics.

Will Page [00:03:45]:

We’re looking at labor coming into power next year, and the former Labor prime minister Tony Blair used to say, education, education. That was his manifesto. And when I first did it, that was motivation. I just love education. I love teaching, be it CEOs, be it students, be it high school kids. If you’re going to enter this business, you’re going to have to understand this business. And at the heart of Spotify, back then, in 2014, 2015, the frustration for me was we were always measuring our contribution to the business by doing some basic arithmetic. How much did we pay? Labels.

Will Page [00:04:18]:

How much does the IFPI say labels are worth? One over the other, we’re this much part of their business. But the story doesn’t end there. Spotify, Apple, Amazon, YouTube pays labels, publishers and collective management organizations huge amounts of money now. So we’re going to measure the contribution from the digital service providers who are, by the way, the people who engage with customers. Very important to make that point clear up front, we need to measure all of their contribution to copyright, not just some.

Tati [00:04:45]:

And it’s an industry that hasn’t historically been very transparent in anything like having these numbers, I think is the more the better. I think it’s so important, this research. And by the way, I got to start using Lady T. That’s my new Twitter handle.

Will Page [00:04:58]:

I think it has to be. But yeah, I mean, we don’t do a very good job of explaining it and we hide ourselves in acronyms. That’s a weird thing. Like if you’re a high school student thinking about studying music and you get hit with ASCAP and BMI, well, there’s two acronyms too many, okay? And then you add them all in, just little things which are not consumer friendly and understanding. So I want to give credit to my copy editor, a chap called Sam Blake, based out there in Los Angeles, who takes my Scottish gobbledygook and makes it coherent prose, but he really did an amazing job. And every year that I’ve done this, trying to edit the piece so everyone can read it, not just the experts like yourselves and your audience, but just the novice, the layman, the journalist who’s been given the music industry to write about and has to file a copy by 09:00 at night. How are they going to understand this world? So there’s a lot of effort gone in backstage to take this number and make it coherent to a broad church of an audience.

Dan Runcie [00:05:52]:

And I have to imagine that hitting that balance has some challenge in it as well. After reading the report, obviously we follow and track what you’re trying to say. There’s a chance that others may not, but you don’t necessarily want to dumb down the information because obviously that leads to some of the challenges we’ve had in terms of what’s been reported. If it’s too high level and too academic, then it just goes right over everyone’s head. So the same way that you’re talking about policy, having seen you giving testimony and speaking at different bodies and stuff like that, I know that the same way that you have to be thoughtful in terms of how are you communicating things you’re trying to advocate for, what language are you going to use. How do you address that? And I’d like to hear how that comes through and shapes the report. And are there any big areas of the report, maybe one or two that you think specifically about? Okay. I needed to be very particular about how I communicated this section.

Will Page [00:06:47]:

Yeah, there’s a five letter word which you may have spotted in the report, which is there. So if you look at how I group one side of the business, I say it’s songwriters, comma, publishers, and their T-H-E-I-R collective management organizations. Now, in that five letter word, you’ve got a story, because CMOs are in the large part membership governed. Would anybody bother with the spelling of that word? Probably not. It matters because ASCAP is owned by its members. PRS is owned by its members. VMI, bizarrely, is owned by the broadcasters. But just about every other CMO in the world, it belongs to songwriters and publishers.

Will Page [00:07:27]:

So that’s an example of a nuance in the writing of the report which might matter to nobody, skimming it on their phone as they’re rushing from meeting to meeting, but matters a hell of a lot to me to make sure we’re actually getting this linguistically correct. This is a complex business, and we got to remind ourselves those collective management organizations are owned by the songwriters and.

Dan Runcie [00:07:45]:

Publishers that sit on their board, and the songwriters, too. I think that is a big piece of this. And I should say songwriters, publishers, and their CMOs. That was a big piece of the narrative here, because compared to last year’s report, they had an increase in their overall share of the revenue that they were getting. When you look at the broader picture that you have, and this is something that has been talked about for a while, we know that there’s a lot of investors that are interested in seeing that number get bigger. There’s a lot of the people that work for the music publishers and the collection agencies that are interested in seeing that number get bigger. So what was it like to see that? Can you talk a little bit about that and talk specifically about it growing from 36% to 37%?

Will Page [00:08:27]:

When we go back to the. When I first did this, what, eight, nine years ago, it was pretty much a 50 50 split. And that’s really important. The first time I did this, you came up with this big figure, and half, just over half went to the record labels and the artists, and just under half went to the songwriters, comma, publishers, and th eir collective management organizations. Then it starts to move. Why? Because what’s hit this recovery is consumer led revenues. Consumer led revenues from streaming favor labels over publishers. If Spotify gives the record label and the artist a dollar, they’re going to give the publisher, the songwriter, and their collective management organizations $0.30.

Will Page [00:09:06]:

So you see the imbalance here. So that’s tipped the scales towards two thirds, one third. Then you have to say, well, okay, we’ve got a reversal of that fortune now. As the publishers have clawed back a little bit of share, why? The obvious one is they’ve bounced back from the pandemic. Public premises were closed for a year and a half across the world. If you can’t exploit music, you can’t pay your pro. When they open up, guess what? That money bounced back. That’s the obvious reason.

Will Page [00:09:30]:

Digital is another reason, too, in terms of just the presence of digital revenues in these CMOs. If you think about how labels might license Peloton first, it could be the publisher that licenses it. Second, labels might get in there and hit TikTok first. Publishers would typically come second. And publishers are coming into these new formats not with a standard Spotify Apple type arrangement. There could be a sync fee involved in that deal, which means they get an even higher share. Maybe Peloton gives a label a dollar and the publisher 40 or $0.50. So they’re coming in second or more favorable terms.

Will Page [00:10:01]:

But there’s a bit more of a complicated answer to give you both for not just this year, but for next year as a CRB decision. Now, I went through the CRB, and boy, you Americans love your litigation. I did deposition, I did cross examination, I did written testimony and written rebuttal. I got dragged through the calls of all of that stuff. But that was a long time ago. That was 2017. The decision was appealed. That sort of pay increase to publishers won in that decision is really going to hit the accounts this year.

Will Page [00:10:34]:

So when I go back into the Batcave next year to work out what happened this year, I think we’re going to see the publishers and songwriters get even bigger gains in the split of the pie. Back to the top of your question. What does this mean for investors? Go fishing where the fish are. Publishing rights are going to be a very, very fruitful place to place your bets.

Tati [00:10:50]:

I have sort of even more future focused question about this, because that section was really interesting to me because we’ve been looking at how, for example, with what we call non DSP streaming on social and fitness and gaming and those sorts of platforms, the split is already more favorable to publishers, and that’s like a very fast growing area of the business. But then you also start to think about all these other emerging use cases that seem to me like they’ll also be a bit more favorable to the publisher. Like if we’re in this world where everyone is sort of a creator, music has been more and more about repurposing something to make something new. Like my colleague Keith Joplin has written about music songs as many industries today. Because if you own the publishing, it doesn’t matter if it’s the original song or the COVID or an interpolation that becomes the hit. And that’s increasingly, I feel like, where the way that consumers engage with music is going. So sure, maybe this isn’t going to be a huge revolutionary thing where suddenly publishers get a way bigger share, but I’m wondering if that will also continue to tip the scales a little bit more back towards publishing.

Will Page [00:12:02]:

Yes, and not just saying this as you’re on the show, but I think this is where media deserve credit for doing more homework than most. There’s a lot of trajectory logic out there by the people who are buying into the industry, buying up these catalogs, where they apply a ruler, a Northeast gradient, and say that’s where the market’s going to go, but that’s not how the market’s going to go. The composite of that next dollar this business is going to generate is going to be different from how it worked in the past dollar. And I think that next dollar is going to be much more publisher favorable than that dollar from yesterday. And that’s an important, how would you say, an economics nonlinear break almost in the data set, which is as these new sources of revenue come in, the composite makeup of it and how it gets paid out changes from that old source of revenue used to pay out. It’s a bit of a technical poinT, but it’s basically saying, stop applying rulers in Northeast gradients and saying, I can predict the future. If that’s what you’re doing, get a job in a shoe shop because you shouldn’t be in this game. It’s much more nuanced than that, right?

Dan Runcie [00:13:00]:

Everything just can’t be growth that’s up and to the right. It may be that way, but there needs to be.

Will Page [00:13:06]:

NBA qualifies you to say up and to the right.

Dan Runcie [00:13:10]:

It’s like that WeWork chart, the one where that from the pitch deck where the arrow just goes up and up and up. That’s now infamous given the fact that the company filed for bankruptcy.

Will Page [00:13:21]:

My favorite one was somebody who worked in the live music industry, I should say, came up to me and said, will, what you’re doing with economics at Spotify is amazing. It’s digestible, it’s understandable, it’s really clear that data science pioneering work. But let me tell you how it works in my world. You give me 1 bar that’s bigger than another bar and I can sell the shit out of it. I was like, okay, so it all comes down to bar charts. Up and to the right and bar charts.

Dan Runcie [00:13:45]:

One question I do have, though, this is about the relationship between the songwriters, the publishers in that share, and the record label side. I think there’s a few things that happened with the shift, and we’ve talked about this on past episodes, but one of the reasons that those two sides are much more equal when you first did this analysis is because streaming was a much smaller share of the pie and physical digital downloads were still the largest bucket of revenue, at least from what comes into the industry. Now it’s flip, where streaming is a much larger piece of that, and that’s a lot of the piece. But the other thing I think we’ve seen over the past 20 years is a lot of the major labels have acquired a lot of the publishers, too. So even with some of those considerations there, I do wonder that, yes, we’re seeing the pie shift and we’re seeing the growth. For the publisher side, as you and Tachi mentioned, there’s a number of tailwinds in this direction that may continue to see that grow. But is there a ceiling that exists just because of the nature of one of these organizations owning the other?

Will Page [00:14:49]:

Well, we had a three year inquiry in the UK into music streaming economics. That question was front and center of a CMA investigation, and they argued no. So we’ve been dragged over the coals on this one. And the conclusion was there was not, how would you say, a distorted market through the ownership of these companies. That’s important, because I could argue the opposite, but I’m not the CMA and I didn’t spend a year investigating this market. I think the other thing to remember is, yes, it does look lopsided when we think about streaming. But one thing I bring into this year’s report is a quick lesson in history. I’ll use round numbers, but if you think about a download, a publisher got 8% of that revenue in the UK, at least in streaming, they’re getting 16.

Will Page [00:15:34]:

So as the markets change, it’s changed in their favor vis and vis the good old days. And something I really wanted to tackle in this year’s report was to hit nostalgia on the head and give it a TKO blow like Joe Fraser did to Muhammad Ali. Absolutely. Knock this out. If you go back to 2001, how much were publishers seeing from the consumer revenues generated by selling CDs, the occasional CD or vinyl? On top, there’s about two and a half billion. And if you look at it today, they’re getting well over 5 billion. So they’re doing better in unit terms, a higher Rev share than previously, and they’re doing better in aggregate terms. They’re seeing more cash come through than previously.

Will Page [00:16:12]:

So in that. In terms of, are they getting such a bad deal? Well, that’s for them to argue. We can get into fairness, it’s an abstract concept, but to be clear, they’re getting a better deal than the past, which is quite often where they reflect on and say, that was the good old days. No, these are the good old days.

Dan Runcie [00:16:29]:

Why do you think there’s a disconnect there, then, specifically, on the publisher side, I know the recording side is something different, but on the publishing side, yeah, as you put it, we’re more than two X larger from what the songwriters, publishers and their CMOs are getting from the label share.

Will Page [00:16:46]:

When you start to whittle it down, in terms of as the money is paid through the value chain, when it comes down to the actual individual writers, then you can see the discrepancy. So let’s just play around with some math here. So a million streams might get you $5,000. $5,000 on a 20% relative is $1,000. If there’s four members in a band and a manager, that’s $200 pretax each for a million streams, that’s not a lot of money. Then you have to slash that by a quarter a third to work out what’s left for the songwriter as well. I think that’s where the problem is. That’s not an easy one to solve, and we can go deep into why that problem exists and where solutions might be, but it’s not an easy one to solve in terms of where else is there with room for there to be more money? We will come to that.

Will Page [00:17:32]:

But I think the other thing is just to stress. What I’ve stressed throughout our three year inquiry in the UK is a simple sentence which summarizes a dilemma. We’re making more money. 41 and a half billion is more money, but we’ve got way more mouse to feed. It just comes to that basic anomaly of the supply side explosion. In the UK, at least the population of songwriters since Spotify launched in 2009 has trebled How’d you feed all these mouse? It’s a positive problem. I love the fact that we have three times as many songwriters than we did back in 2009. That’s great.

Will Page [00:18:03]:

That’s great for copyright. That’s great for creativity. Feeding them. That’s a different question.

Tati [00:18:07]:

So there’s also this disconnect between. We can report, yes, $40 billion, great big number for music copyright as a whole. But when that trickles down to individuals, it’s a very different story. So there’s kind of two revenue stories.

Will Page [00:18:22]:

Yeah. And I was thinking preparing for capital. And trust me, I Treasure this podcast. You guys have got something super special here and should become a double act. I’ll just say that on the record. But if I can talk about the most boring subject in the world, taxis, as in T-A-X-E-S not Ubers taxis. I think there’s an analogy we can draw here. If you think about how the tax system of America, the IRS, UK, HMRC, works, we both have what was called a personal allowance.

Will Page [00:18:48]:

You’ll have your own terminology. But in the UK, what we say is you can earn up to 13,800 pounds a year, and that’s your money. It’s too low to even be taxable. Once you earn above that figure, I’m taxing you. I’m hitting you hard on 20% and then 45% and onwards and upwards. So you have this kind of irrelevant sum of money you’re allowed to earn without even being of worthy of the tax system, whatever that figure is in America, you can translate. And I want to take that observation of how a tax system holds itself together. You tax the rich people more, you tax the poor people less, and you allow this kind of basin at the bottom, which is, do what you want.

Will Page [00:19:24]:

You’re not worthy of my interest. Ask yourself this question. Of all the ISRC codes on the platforms today, of all the artists, to you, lady T, the people with the pulses out on the system today, how many sit in that personal allowance earning meaningless amounts? I did a little calculation for the show based on luminate data, which was, I think it’s 99.78 9%. Now, as an economy, should I be alarmed? Should I be worried? Or is that just how it is? But how much time, effort, money is spent sending meaningless amounts of money to artists who probably wouldn’t notice the difference. And that’s where you’re starting to see this issue of thresholds kicking into the conversation. It’s incredible when you start to think about how many artists earn less than, let’s say, $50 in a calendar year from streaming.

Dan Runcie [00:20:13]:

Such a timely conversation right now with everything happening. You’ve mentioned the tax code piece and it’s almost exact opposite, where if you don’t earn a certain amount, then we’re not going to take anything from you. Streaming is the opposite situation now, where you need to have enough streams for us to even send you money.

Will Page [00:20:31]:

Yeah, we’re taxing the poor to give to everyone else. It’s a little bit back to front. It’s what we call tail snapping. But I have to know. Yesterday I was at an event with all these CEOs, music publishers and CMOs saying, we are hearing Spotify is introducing thresholds. We are hearing the streaming services are going to bring thresholds in. Excuse me, the pros have had thresholds for centuries. Indeed.

Will Page [00:20:55]:

When Spotify licensed YouTube in 2007, we said, and you can look at the Financial Times headline, we’re going to snap the tail and not pay anyone below a threshold. And it’s a hugely controversial thing. There is a collecting society in America that doesn’t pay artists, songwriters for anything less than 200,000 streams. Nobody seems to talk about it. When the streaming services do it, it’s headline news. So I want to be clear for your audience, you got to be on point here. There are thresholds throughout the food chain. What we’re now seeing is thresholds in the kitchen where the food is made.

Will Page [00:21:28]:

And it’s controversial, but it’s nothing new.

Tati [00:21:32]:

My thing is with it. The only reason that it arguably makes sense, because these artists aren’t really taking home any money anyway, they’re not going to notice, is because of the Prorata model that’s underlying it. Right. The problem is probably still the underlying model than anything, and all we’re doing is kind of moving money around. It doesn’t feel to me like this is really solving all that much except moving around the money rather than actually adding more money to the pie.

Will Page [00:22:09]:

Yeah, it’s certainly not. When you hear a language like double boost or quadruple boost. Quadruple boosting. Not a lot of money isn’t much of a boost in the first place. So that ain’t going to move the needle. It may move the needle in terms of the operational cost of these companies, the content operations teams, the royalty accounting teams, the unsung heroes of the streaming machine, which never get enough resoUrces, never get the praise that they’re due. Label side publishing, side, streaming side. They might see this as a way of making their systems more efficient, but it’s interesting.

Will Page [00:22:43]:

You step back and think about distrokid. Responsible for what, one third of all new music released last year on Planet Earth Company with less than 100 headcount. Of all the people who give distrokid $20 a year fixed fee, how many expect to recoup it? How many would give you $20? Even they had no intention of recouping that $20. They’re paying for a badge to say, Mum, Dad, I’m on Spotify. Is that worth more than $20? Charge them $200 if it’s worth more than $20. So the valley this kind of finds itself landing in is, can you partition a market between those who are serious and those who are hobbyists? Something that Lady T and the media team. You’ve written about this a lot. It’s very controversial to go down there, but when you think about that calculation, 99.78 9% of ISRC codes have not broke $100 for the year.

Will Page [00:23:34]:

It’s a weird economy. If you think about that personal allowance analogy I gave you at the top.

Tati [00:23:40]:

Because we’ve calculated that based on our creator survey, it could be roughly a third of self releasing artists. So not all artists, but those who self release onto Spotify, who actually aren’t trying to earn money at all, they’re just doing it. Like you said, mom, dad, I’m on Spotify. Or just because it’s their passion project, they probably haven’t even noticed this change.

Will Page [00:24:00]:

And it’s tricky because that’s a stepping stone onto greater things. That hobbyist artist might become the next Travis Scott or Little Uzi Ver. You never know. That’s how artists start out. And to apply rules that discriminate upon those artists is, for me, it’s a little bit touch and go. I mean, if you think about one of the proposals that are out there, I’m not going to name any names here, but the one thing that penalizes is an unknown artist who gets lucky on a playlist. Is that fair? It’s interesting, right? I ain’t got any fans, but some curator, one of the big Four streaming services, said, I’m having that and I’m sticking it on this playlist. So it’s not actively searched.

Will Page [00:24:39]:

Think about that. But it’s like with taxation, there’s going to be winners and losers wherever you look. It’s a lopsided market. It’s a supply side explosion that nobody expected. There’s no textbook on the shelf or MBA course you can do for studying it. The podcast Capital serves its purpose in trying to navigate this discussion, but we’ve got to be clear on what are the intentions. But we also can’t be naive to the unintended consequences.

Tati [00:25:02]:

I’m curious how this will impact the next generation of creators in terms of those who already have their music on Spotify right now and now are getting cut off from this threshold. It’s not like they’re all going to go and take their music off. I don’t think that’s going to happen. But I do wonder, five years down the line, this new generation of creators, do they still see Spotify as their natural starting point, or do they just start releasing their music elsewhere? So that’s what I’m kind of curious.

Will Page [00:25:28]:

I think there’s an answer which comes from the United States here, which is.

Tati [00:25:32]:

It all comes back to the US.

Will Page [00:25:34]:

Yeah. Because your country is so mashed up crazy. You have two collecting societies whereas everyone else has one. In fact, you’ve got four now as well. But if you think about the paper that I wrote with David Safir back in 2017 was called Money in, money Out. And I remember David Safir well into the 70s, now a walking encyclopedia on this topic of how to allocate and distribute a fixed pot of cash. He said to me, currently 2017, 2018, everyone obsesses about who did the deal. Did Dan do the TikTok deal? Did Lady T do the Peloton deal? Who got the money in? He said, you watch, in five years time, everyone will obsess about the money out.

Will Page [00:26:13]:

I don’t care about the money coming in. I care about the distribution. Now ask EP and BMI compete on distribution. If Latin American repertoire is looking hot in America, you know what BMI will do? They’ll rob Peter to pay Paul and give a bonus to Latin American repertoire. Distribution rules, you might say that’s criminal. That’s insane, that’s absurd, that’s corrupt, that’s warped. That’s competition, baby. Because they’re competing away.

Will Page [00:26:35]:

Latin songwriters who are previously members of ASCAP and ASCAP will play the same game, perhaps not as aggressively, their membership governed, but it’s warped system. But it is competition at work. What you might see in the streaming world is something similar playing out where we start seeing competition on the distribution rules. Maybe streaming service A has got favorable distribution rules to hip hop and streaming service B has got favorable distribution rules to rock genre, and they’ll compete on both. I personally would think that’s regrettable. I think walled gardens are a bad thing. But you can visualize how this could potentially play out where we compete, not on the cash coming in. Lady T gives me $10, then runsy gives me $10.

Will Page [00:27:15]:

But how do I pay that money out? It goes to the other side of the fence.

Dan Runcie [00:27:18]:

The other thing, too, that I think about with this is the narrative and the perception of who is the person making the decision. Because the headlines say that it’s the DSP. But I think each of us know that it’s the major record labels that have been pushing on the DSPs to do this. And I don’t know how much of that changes things or if people perceive that or even something will. You said earlier about how there are other thresholds that exist in the industry, but because the largest DSP’s name is associated with it, everyone’s up in arms in a way where the general public and the general consumer that doesn’t know what a pro is isn’t going to raise their hand when one of them exerts their threshold.

Will Page [00:28:02]:

Let’s just unpack a few things here. Firstly, it’s not for us on a podcast to pray around the commercial relationships between DSPs and our label partners. But I have heard that there are label partners of one DSP who are getting notified saying, we’re going to change the rules. BUT first we want to hear what you think about it. That’s how the question has been framed. It’s interesting. The train’s leaving the station. Are you on or are you off? Okay, I guess I’m on again.

Will Page [00:28:32]:

Secondly, maybe just take a quick lesson from how ASCAP do things. The greatest rule that ASCAP has in distribution is how they distribute TV money. And you will have many TV composers listening to your podcast. So let’s say plausibly, ASCAP’s got $100 million of TV money to shove out the factory gate and pay songwriters and publishers. They impose a rule which says a minimum of 85% of that $100 million goes to music used in the TV programming. Therefore, a maximum of 15% goes to music used in the commercials. And you can see what they deem is fair there. They’re saying, I don’t want TV commercials to pollute the value of music used in the OC or Grey’s Anatomy or whatever the show is you’re watching now.

Will Page [00:29:17]:

That’s their rule decided by a membership governed board. Now, if Dan’s a TV commercial composer and you’re looking at rules saying, damn, I’m getting shortchanged here, I should have got 20% of that pot, not just 15. You know what Dan does? He gets himself voted onto the board of ESCAP and Campaigns for a change in a distribution of the rules. Democracy in action. Come on in. So that is one way of thinking about rule setting. The third and final example to this question, and it’s a really important question. This is a real time question.

Will Page [00:29:45]:

These things are happening right now inside the boardrooms of these companies. So let’s hit it hard, is to think about one model, which I discussed with you last time, Dan, which is duration. So in the UK, the BBC bases a big fat check to PRs and ppl to play the labels and the artists and the songwriters and the publishers. Those bodies then apply duration to the distribution of that money. The BBC has no idea that it’s paying Bohemian Rhapsody twice what they pay. You’re my best friend because it lasts twice as long. They just gave a check, but they gave the log sheets the data to allocate that check differently. So they’re agnostic to these rules.

Will Page [00:30:25]:

Let’s say Spotify is agnostic to these rules, or Apple Music is agnostic to these rules, but they give the data. So the rights aggregator, the label, the publisher, the Fuga, whoever can distribute that sum of cash differently. And that’s a really important distinction of who’s setting the rules and who’s applying the rules. It’s not always the case that it’s the consumer facing property. The streaming service that does it could be somebody in between.

Dan Runcie [00:30:51]:

That makes sense. That makes sense, and that’s helpful. And I know this is a topic that we could go on and discuss, but I am glad that we were able to touch on it here. For the interest of time, though, I do want to dig into some of the other insightful things you have in this report here. And I want to talk about vinyl because that was a big piece of the report as well. You cited Travis Scott, Utopia, and that album and the many vinyl sales that. That had. We obviously.

Will Page [00:31:16]:

311,000. 311,000. The tour is yet to kick in.

Dan Runcie [00:31:21]:

Which is so impressive. We’ve seen that. We’ve seen Taylor Swift rereleasing vinyls from albums that came out almost ten years ago and that continuing to push. And you think that both are doing.

Will Page [00:31:31]:

Different versions as well? Both with different versions, different colors, different covers. Versioning is kicking in on vinyl now.

Dan Runcie [00:31:37]:

So where does this continue to go? What do you see for the future of vinyl?

Will Page [00:31:40]:

I named Check the company pressing business, which was working on Travis Scott, and I got a fairly unique insight into how that project went down. And again, I don’t want to pick winners here. There are many other usual suspects in the vinyl production space. But I can talk coherently and qualified to talk about what pressing business are doing. Bill Hymn Heim Legend of the business has been in this business since the 70s. Set up Ada knows the ropes and he was looking at the vinyl production business. It’s not easy to produce vinyl. It’s not like you set up a factory and this stuff pours out the conveyor belt.

Will Page [00:32:14]:

It’s a lot of expertise. So he set up a huge pressing plant in Poland with the expertise to take on that additional capacity and get the queue time for doing vinyl down. So for your audience who are planning vinyl releases to go out, perhaps queue times 30 40 days, it should be below 20. Realistically, you’re ready to go? Go. We’re going to put the album out next month and we want vinyl to go with it. We need to have that type of time frame to our conversation. But they’ve also solved one stop shop distribution as well, so they can hit seven regions on the planet with one phone call. Now, again, there’ll be other players doing this, too.

Will Page [00:32:49]:

I don’t want to disrespect anyone else in the vinyl production space, but that level of know if you’re a US label, Travis Scott, you want to do vinyl out of Poland and you can hit Britain without Brexit issues, you can hit America without Customs issues, you can hit Latin America without taxation. Mean we can talk about capacity. You’ve done that on many previous podcasts. I’m talking about bureaucracy. What I’m seeing now is the vinyl production space is it’s leapfrogging the bureaucracy that previously held this format back as well. So I think I put some terrible pun about vinyl ain’t going to stop spinning anytime soon. I apologize. It’s my bad day.

Will Page [00:33:26]:

But it really is like, the more you break down the production capacity barriers, the more you break down the bureaucracy barriers. Like getting vinyl from Europe into Britain, post Brexit, that stuff is hard. No American label or manager wants to deal with it. We’re getting around that now. So I really do mean there’s going to be a supply side expansion in what we can do in vinyl, and we got to start thinking about it more. You got a million fans streaming your song for like a month, two months, three months, a new album. You get 18,000 to buy the record. You’re netting off the same easily.

Tati [00:33:59]:

I am wondering what you’re thinking, though. What’s driving the demand side for this as well? Because one of the thoughts that I had reading this, and I know others share it. Is. Are people buying vinyl these days because they’re playing it, or are they buying it kind of as a merchandise item, like something to put up in their home?

Will Page [00:34:18]:

Well, we know, at least in the UK, and it’s been consistent. Anecdotal survey, 60 ish percent of the vinyl buyers don’t own a record player. And of those who do, and this is where it gets really important. So that 40%. How many have bothered to open the record? Maybe half. So that takes us to the point where 80% of what’s being sold isn’t being consumed, which, by the way, is how the book industry works. The book industry works off a rule of thumb that 80% of books that are sold are not consumed by the reader. They’re a gift.

Will Page [00:34:47]:

They sit on a glass table, they get dusty on this shelf here. I look at the shelf of books in my office. I ain’t read 80% of them. I bought that book so I could pretend to be as clever as my brother and sisters. I’m going to read it. It’s too hard. So there is a long history of selling content that’s not there for its consumption. It’s fallen into that bucket.

Will Page [00:35:05]:

But I do also look at sort of the merchandise angle. I think there’s something in that, too, which is if you’re willing to spend 65 pounds on a weekend tour T shirt at the London Stadium. 65 pounds? That’s half a year of all the Wells music on the streaming service. 65 pounds. Then how much are you willing to give for a vinyl record? 50 could be the new sweet spot. It seems to be going that way. Travis has done 311,000 times $50, and it only costs $6 to make.

Tati [00:35:33]:

Yeah. And I also wonder if this says anything about Gen Z wanting to have some experience of owning music that they have never had, because I don’t think that, say that you sold a version of this that wasn’t actually a vinyl record. Like, maybe it’s some sort of poster or something that would be more along the merchandise lines and didn’t actually contain the music itself. I don’t think it would sell in the same way. I think there is maybe something there about Gen Z. Grew up in an age where there was no concept of ownership of music. And maybe this is something that people crave.

Will Page [00:36:13]:

I think you’re onto something, T Bug, and here’s a way of adding it together. Maybe it’s Gen Z wanting to own something that we use the acronym Bomad bank of Mum and Dad. Maybe it’s Gen Z wanting to own something that Beaumad approves of. So I want to buy a T shirt. That’s a ripoff. You can’t pay that for a T shirt. Can I get the vinyl record? Oh, I love the idea of vinyl records in our house. Go on, take my credit card.

Will Page [00:36:33]:

Go to races and buy it. Maybe it’s something like that, too. But also, I mean, I remember when we first did the podcast, Dan, and we talked about intimacy a lot. Maybe holding that thing is just a way of getting intimacy that pressing a glass screen for 285 milliseconds does not. And people are craving for that, too. Harry Styles, I think a third of his income on the first month of release was orange gatefold. Vinyl records. I don’t think any of them have been opened.

Tati [00:36:58]:

I have vinyl records sitting over there that I have not played, that I just have. But it’s special to me to have them, and I do have a record player for the record.

Will Page [00:37:07]:

Does it have a needle and does it spin at 33 and a third? Is it a functional record player?

Tati [00:37:12]:

It is functional, and it does not look like a suitcase.

Will Page [00:37:17]:

Tell you a funny story.

Tati [00:37:18]:

It’s not one of those Urban Outfitters. No, it is a real record player.

Will Page [00:37:23]:

I got 212 ten s, two technic 1210s that I blagged off Edmund University because I persuaded the university in the late 90s, revealing my age. Here they were refurbishing the year university union. And I said, you’re giving this union a paint job? We’re going to paint the union. I said, well, you’re going to have to replace your equipment. What do you mean? Well, you have to replace your technics every year. Everyone knows that. Really? Well, what do you do? Them. I’ll take them off you.

Will Page [00:37:46]:

So I got these 1210s for free. They’re still the same 1210s. Then I got them repaired. I didn’t know that you could open 1210 turnTables. You can open them up. And the repair shop opened them up, and they found drugs, condoms, all 20 pound banknotes. And that’s obviously where DJs stashed their kit, right inside the turntables. So it’s not just record players they’re useful for.

Will Page [00:38:08]:

They’re also useful smuggling drugs. I shouldn’t say that on a podcast. I learned so much on drugs. I don’t know if those drugs would have worked. They must be, like, 30 years old drugs by now. But we found them.

Dan Runcie [00:38:23]:

Amazing. See? Well, this is what you bring to the podcast. Who else could have spoken about the constraints of vinyl and then have it lead to smuggling drugs through record players.

Will Page [00:38:36]:

You’re a DJ, you’re on the road. You got to keep busy. Makes sense. Hide it in your 1210. Don’t put it in your socks. They always look there.

Dan Runcie [00:38:44]:

Amazing. One thing I do want to go back to, because I agree with both of you on the self expression piece, Gen Z, having that to be able to tap into with vinyl. I think even millennials to an extent, and even how a lot of us grew up with, a lot of us had CDs or tapes or movies and DVDs as well. And I think you saw it as well with magazines. How much of New Yorkers and Atlantics being sold to Coastal elites? Just have them on the coffee table to look intellectual and things like that. So I agree that that piece has been there. The piece I’m interested in. You talked a bit about this.

Dan Runcie [00:39:18]:

Will was the bureaucracy and the supply chain piece. I did want to touch there just to see where we are, because there was a lot of discussions about the supply chain challenges during the pandemic. You talked a bit about the bureaucracy piece. I think there’s been less discussion there. But do you think that we’re at a place where vinyl production and vinyl distribution is being held back in the same way? Meaning that if an artist wanted to push the release to this, and they say, hey, let’s not just save all the vinyl. Limited capacity for the superstars, can everyone have access? Where do you think we are with that right now?

Will Page [00:39:52]:

I think the one thing of my limited knowledge of Travis Scott situation and my dream, by the way, I’ll just say this off the top, is to bring Travis onto Trapital and go through it in detail. But he took the risk, so it wasn’t put out in streaming. If the appetite’s there, follow up with some vinyl and some merch. He took the risk up front and pressed up all those copies of vinyl and had them secretly ready for dispatch on the day of release. Now, if that’s a sign of the times, if being in quotations, if that’s a sign of the times, then we’re going to need a shit ton more capacity going forward, because all we’ve had just now is vinyl is on. This crazy resurgence making up $1 every ten in the British American business for indie labels can be up to 25%, but it’s happening in a retrospective scale. Get the album out on Spotify day and day. Whack it out.

Will Page [00:40:45]:

Apple, Amazon, YouTube. Do all your promotional stuff. And if the appetite say, go vinyl, if Travis is what we’re talking about, then vinyl is going to be day and day part of the launch strategy. And that’s a game changer.

Dan Runcie [00:40:57]:

That makes sense because I feel like looking at some of the pandemic sales numbers and how the top line number, which ties back to this conversation, the top line number is what gets so much of the attention. You look and you break down the sales of Harry Styles, Harry’s house, or Adele releasing 30 or even Taylor’s albums. So much of that was vinyl. Travis Scott’s another big one. So if more artists have the opportunity to experience that, and like you’re saying with Travis, if they’re willing to take the risk, maybe it’s not 300 units, maybe it’s 50K. We’ve seen artists like Tyler, the creator, and I think even Kid Cuddy has done stuff like that. So hopefully we see more of that being fronted, because clearly the demand is there.

Will Page [00:41:37]:

And if I flip it to TC for a second, if it becomes part of the release strategy, like a genuine part of, here’s how we’re going to make bank. That also raises questions of fandom. Right? Which is how many people do I think of my fan base? I’ve got X million followers on Spotify are actually going to cough up 40, $50 for this stuff.

Tati [00:41:56]:

It doesn’t seem to gel with the way that so many artists release music today, where it’s not like you have your album ready six months in advance and you make sure you get the pressings and whatever. It’s. They’re workshopping songs on social media and they’re releasing things kind of off the cuff. I’m interested in how that plays out, and maybe it’s that continued focus on vinyl, or vinyl at least. Being part of the equation is keeping music from just being a totally, like, no holds barred situation where people are releasing things without really a structure. Because I think that the album has become more and more unstructured over time.

Will Page [00:42:36]:

That’s interesting. So if streaming disaggregates the album, it’s like that famous statement about business where James Barksdale said, the future of business is either bundling or unbundling. If streaming unbundled business, is vinyl going to bundle it back up again?

Tati [00:42:49]:

Right. And even, like the Travis example is so interesting to me because he strikes me as an artist that is constantly changing his mind, switching things around, deciding suddenly to do something. It doesn’t feel like there’s that he seems to thrive on not planning. So it’s interesting to me that he was one of the artists that really, as you said kind of took advantage and made sure to have the vinyl ready secretly so many months in advance.

Will Page [00:43:17]:

He’s a real.

Tati [00:43:18]:

He is a genius when it comes to again, merchandise.

Will Page [00:43:21]:

Go back to virtual merch. Back with Fortnite. What was it? $23.6 million in virtual merch. Do you know what the bottom line of $23.6 million of virtual merch is? It’s $23.6 million. That’s insane. And then maybe just to toss up their TC, one last point there is flip it back to the publishing equation. Remember that in streaming, you only get paid if you’re consumed in vinyl. Everyone gets paid equally.

Will Page [00:43:45]:

My favorite example is greatest vinyl record seller of all time, Saturday Night Fever. Track 21, Calypso struck by Ralph McDonAld, got the same mechanical royalty as staying alive by the Bee Gees, who even knew that song was there? So if you got a filler track on a vinyl, you’re taking home some serious garbage.

Dan Runcie [00:44:04]:

Travis Scott’s also a really good example for this, too, because you both mentioned how you need someone that’s willing to take the risks. I’m going to put 300K vinyls out myself and see what happens. That risk happens. Great. We have a short release window to try to get this Fortnite show out. Let me get it out. Okay, great. I want to perform at the Pyramids of Giza in a week and a half.

Dan Runcie [00:44:27]:

And then it’s like, oh, I guess that’s a little more difficult. But it’s almost the same way with Kanye as well, where how Kanye is kind of like, oh, no, we’re going to go to Mars, right? It’s those crazy batshit ideas. But yeah, every once in a while there’s one that’s like, what the hell is that guy thinking? But that is also how you get some of these things that clearly do.

Will Page [00:44:48]:

Work, and you get the novelty value, which is worth at least 100,000 of those album sales on their own.

Dan Runcie [00:44:53]:

Indeed, the other piece of the report that I think we should probably talk about, you touched on it a little bit. But in terms of the value of music, copyright and how it compares to other areas, how do you think that impacts things from, whether it’s a policy perspective or people understanding and taking the space as serious as they should, especially looking at other forms of multimedia and entertainment?

Will Page [00:45:18]:

There’s that cringeable expression in the Canary Nicole mine. But music is always the first to suffer, first to recover from disruption. You saw that with AI right away. And having this report hopefully helps policymakers pay more attention to what happens in music, so they can understand where it could happen elsewhere. From the fake Drake track, which we discussed last time on the know, shock horror Gaffe’s fake Drake song lands on Spotify raises all sorts of questions. My favorite one being, is there anything stopping me calling myself Drake and putting a song out on Spotify and see if I can game the. I mean, you have that element, but I just think for policymakers, you’ve got to pay heed to what happens in our world to work out what’s going to happen in others. My best example I can give you, Dan, is my latest.

Will Page [00:46:02]:

If you want to impress friends at dinner parties this weekend, check this out. I’ve worked out how to use chat GBT to get around newspaper paywalls. Well, what do you know? What does that do to the entire future of the written press now that chat GBT can navigate a New York Times paywall? That’s interesting. I’ll throw that seed and see if it takes root. But we were there discussing this last year. Now you’ve got another huge media vertical journalism staring down a barrel of a gun as well. So I hope the report draws attention to what happens in our world, because it’s coming to their worlds anytime soon.

Dan Runcie [00:46:43]:

And then thinking about the part where you’re looking at gaming, you’re looking at the box office and you’re looking at SVOD and other areas there. Do you think that those industries get taken more or less serious because of the numbers that are there? It’s interesting with gaming because gaming is something that in size is still four to five times the size of even the number that you’ve shared in this report here. However, I still feel like gaming is still looked at as this. Oh, yeah, it’s this thing that’s big, not this thing that in some ways still gets the same gravitas as even video or music.

Will Page [00:47:21]:

Yeah, it’s a strange one. Gaming just kind of slips off the radar of the people writing the headlines. I worked with IDG Consulting, based out there in San Francisco, where you are, Dan, great company, Yoshi and the team, and we kind of worked out that music does in one quarter what gaming does in one year. Now, we used to say music does in one year what gaming does in one month. Now, music does in one year what gaming does in one quarter. You can see how we’re converging slowly on that gap, but it doesn’t get the headlines that music gets. And I think something you’ve written about Tatiana, is how gaming just focuses on engagement first and monetization second, we focus on money 1st, 2nd, 3rd, 4th, 5th, 6th, 7th, 8th, 9th, and maybe engagement 10th. And I just think there’s something in there in terms of you go fishing where the fish are.

Will Page [00:48:09]:

If you get the engagement, you get the cash. One other thing on gaming, which I learned in researching the pieces, a lot of that top line revenue in gaming is Asia. So you might think a lot of the revenues in music is Western markets, Europe, North America. In gaming, it tips the other way in Asia. So you might have some interesting lopsided developments there in terms of where the future of gaming is going to be and where the future of music is going to be as well.

Tati [00:48:30]:

I was just going to add, I think it’s know everybody listens to music. Everybody. Not everybody is a gamer. So sometimes maybe that’s why it doesn’t get, I guess, the shine. Although I think that’s changing a lot. And I’d be remiss if I didn’t mention that we just published our games forecast at media. So if you are interested in that, check it out.

Will Page [00:48:50]:

And what’s the number that you put on gaming? Go and stum me with the number of zeros that sits behind this business.

Tati [00:48:56]:

It was 300 billion by decade.

Dan Runcie [00:49:00]:

Yeah, solid a lot.

Will Page [00:49:03]:

Well done, Will. You’ve done a great report that shows that we’re a chump change.

Dan Runcie [00:49:09]:

I think the other thing that often stands out about gaming too, is there are so many distinct areas of it that stand in their own right. Because you have the engagement piece, which Tati has written about and we’ve discussed before, just in terms of whether it’s your Fortnite and your Roblox, and how you’ve been able to monetize these things that don’t help you necessarily win or go to the next level. But it’s a feature that is accessible, that works. But you still have the side of the business where people are paying 60, 70, $80 for Call of Duty, Modern Warfare or whatever, the PlayStation Five, or Xbox Game or whatever that is, or the PC game. So that business is still a tens of billions of dollar business there. And I think in music it’s where obviously your report does a big piece of this will. But so much of it’s focused on streaming vinyl. We clearly see the potential there as it continues to grow.

Dan Runcie [00:50:05]:

And assuming that the bureaucracy and capacity are no longer constrained, that could continue to expand. But if music is really learning from gaming in that type of way, I think it’s continuing to make sure that there are sizable chunks that each of them could stand and be own mini industries in their own right. Viral. Like in music, vinyl is big. I think it could get there potentially, but we’re not there just yet. And maybe with some dollar increases and things like that and just more artists taking advantage, it could get there. But in music, there is primarily one main thing in town, and everything else is somewhat derivative of that. Versus gaming is a bit more fragmented.

Will Page [00:50:45]:

Yeah. And the best thing about trapital is it makes you think aloud. Excuse me while I do that with a microphone in front of me, but what you both have inspired me to think about is if you step way back from just media and you look at the app economy, all those gazillions, bazillions of apps that sit on your iPhone or Android phone, there are two which are considered the hottest property in the app world, two which stand above in terms of conversion metrics, usage metrics. If you ever do app analysis, you have to triangulate the download numbers with the user numbers, with the session count numbers. Did you get the app, did you use the app? And how often do you come back there? That’s the three boxes you got to tick when you’re on set. Apps. The two apps that stand above everything else that I’ve seen are Strava for running and Duolingo for language. And they both gamify their disciplines.

Will Page [00:51:37]:

Strava, you’re sharing runs with your colleagues, you’re sharing routes with strangers. Duolingo, it’s championing you on league tables and seeing whether you want to beat that person that’s above you. So they take that ethos of engagement and gaming and apply it to running and language learning, and they’re knocking out the park. And it makes me think I’m using Duolingo right now for learning Spanish. It makes me think of, like, disruption here or tars and economics. All those language experts across the decades who have managed to teach a small minority of the population a language, but largely failed to teach the majority. Duolingo comes off the blocks, endorses the ethos of gaming, and has got gazillions of people learning multiple languages tonight. Right now, it’s jaw dropping, but it happens from the ethos of gaming.

Will Page [00:52:23]:

I’m in a league table tonight, and I want to get to number one in Spanish in my classes. Vamos, let’s go. As soon as this podcast is down, I’m back into that Spanish language lesson. I hated learning languages at school. I love gaming with languages on Duolingo.

Tati [00:52:36]:

I think you’re totally right with that. The question for me is how to actually translate that ethos well with music. Because with things like playing a game or learning a language or going on a run, it’s sort of like inherently competitive. Like, you want to do better and better, you want to beat other people, you want to win the game. But with music fandom, it’s not really something that’s inherently competitive. I mean, I guess maybe it could be if you want to show that you’re the biggest fan. But we’ve also seen that sometimes when you introduce competition to fan bases, it goes very awry. You end up just having fans get mad at the person who actually won the game.

Tati [00:53:17]:

Or if there’s someone who’s awarded the top fan, everybody suddenly hates them. And it sort of sows discord in the fan base. So I think definitely there’s a way to apply that ethos to music, and it’s something that we’ve written about many, many times. But how to do that without sowing negativity in the music fan base is kind of an open question for me.

Will Page [00:53:40]:

Tati, what you’re saying, if I hear you correctly, is if you try and introduce this gaming culture to music, you end up with a mosh pit.

Tati [00:53:48]:

Love that interpretation.

Will Page [00:53:50]:

I give you two companies where it could happen, and I think you’ve had one of them on your show already. Dan. One is called Makeit. M-A-Y-K it. They’ve spun out of YouTube and TikTok. And their basic ethos is, why is it that kids today don’t think twice when it comes to making video content? Ten year olds, twelve year olds, make video content all the time, but you have to think twice when it comes to making music content. They want to solve that. And then if you flip it over to audio shake and releasing the stems of songs, they’ve done some amazing stuff with Nina Simone recently.

Will Page [00:54:23]:

Jessica Powell, not to be confused with Jeremy Powell, who sets your interest rates. Jessica Powell, far more powerful. But what she’s doing now, you might get competition in the stands. There could be an avenue worth exploring there.

Tati [00:54:34]:

Yeah, I think that’s a great point.

Will Page [00:54:36]:

My remix beats tatties hands down. Does it help? Check this out.

Tati [00:54:40]:

We’ll have to find out.

Dan Runcie [00:54:42]:

One thing that I do want to talk about before we get too deep in the conversation is pricing, because that was another big part of the report. We’ve talked about this in past conversations, I think both of us separately on different times, just in terms of where streaming pricing is. Of course, since we’ve recorded the last time, a lot of the DSPs have raised their prices to 1099 in pound, dollar and sterling across the, across the board and euro as well. But I saw something interesting in Spotify’s Q three earnings that had said it had better than expected gross intake in markets that saw price increases. And this isn’t to talk specifically about Spotify or one particular DSP, but I was a bit surprised because that didn’t necessarily seem like a surprise. A lot of us thought that there was plenty of room to be able to continue to grow in terms of pricing, especially in the developed markets where streaming does have the highest prices right now. But I wanted to talk about that because that is something that I think proves that there is still plenty of room to grow there and you have customers that are willing to pay.

Will Page [00:55:52]:

Yeah, it’s a bit of an oxymoron, that statement. Inflation has jumped by 20% over the terms. You’ve raised prices by 10% and it was better than expected. You have a real term price cut. Do you want me to do the math for you? Yeah. So quarter report into the interpretation. We did a cheeky thing in the report, which was to take the 2001 price, which, as we announced on capital a year and a half ago in Spain, was devised to resemble a blockbuster video rental card. I just love, love that story.

Will Page [00:56:21]:

And then we ripped inflation out to the present day and you can see how it’s ripped about a third of the value. Key to that is a commoditization of music. Raps he had 15,000 catalog tracks for 999. Spotify, Apple. He got 100 million tracks for 999. It’s a lot more and we’re charging a lot less. What I wanted to get more into was a price per account user. So if there’s three people on a family plan at $15 a month, that’s a fiver each.

Will Page [00:56:49]:

I want to understand that. So in this attempt, what I did was I took the clock from 2016, where all three big streaming services had family plan in play in Market. And thanks to my colleague Nicholas Lidl, who I worked with for many years at Spotify, a real mathematical modeling genius, we were able to crank out an analysis of what’s the average cost per account holder? And once you’ve got that figure, what happens to that since 2016, when you rip inflation out and you factor in price increases after ripping out inflation of just the 999 price point? I worked with a colleague, Nick Lidel, who I worked with for many years at Spotify, a mathematical modeling genius, to say, hold on, how much is the account user paying for music. Three people paying $15 a month on a family plan, well, that’s five pounds each. How do we deflate and reflect that price over time? And we went to work on trying to calculate that across all the big streaming services, factoring the standalone users where price hasn’t changed, the family plan users where the composite has changed and the price has changed, and the student plan users where the demograph has changed and the price has changed as well. You have lots of moving variables here. And what we were able to show in the report was what’s happened in nominal terms to that price point, and what’s happened in real terms, where you’re now down to wards $6 per account user over time. That is to say, if you entered this world in 2016, which is entirely plausible, it’s when streaming was going bananas.

Will Page [00:58:20]:

Today, all Wells music, offline ad free on demand now costs less than a pint of Budweiser in a pub in Brooklyn. And we fact checked that. We went to many pubs in Brooklyn and made sure that checked out. So that’s really, really important in terms of how much are we actually charging per user? How much does it feel like to pay for music today? And it is cheap. And as I was writing it, and I believe we’ve got this in a footnote I haven’t checked, but Netflix emailed me as we were finishing off the calculation. Literally, it was like they got CCTV cameras in my room here. They emailed me saying, we’re raising your price to 1799 going forward next month. I started at 799.

Will Page [00:59:01]:

I’m now 1799, and I use Netflix less. It’s crazy how these two ships are passing each other in the night, and.

Dan Runcie [00:59:07]:

It’S something that just continues to compound. Right. We saw that Goldman Sachs report. Netflix revenue per hour streamed four X higher than Spotify’s. And that could even be higher now because that was released before the most recent price increases.

Will Page [00:59:21]:

Yeah. And in the report, I raised the issue of mental budgeting, which might sound a little bit geeky, but it simply says, do you, Lady T Dan Runsey, at the start of the year, have in your head how much you’re willing to spend on SVOD services and have somewhere in your head, I ain’t going to spend more than $1,000 on music this year. And if that is the case, if there is some sort of constraint, then those price increases by Netflix, by Disney, plus by Amazon prime, those price increases by Live nation and Ticketmaster, they take away money that was previously on the table for music, and that’s been happening for 22 years now. 22 years that we’ve been sitting flat and everyone else has been jacking their prices up. So how much wiggle room do you have left if the disposable income is already being spent on other media subscription goods?

Dan Runcie [01:00:09]:

The one thing that I do think about with streaming specifically and the price is that the price is so different in so many of these regions. Literally ten X where you look at Denmark, it’s over $15 a month. If you convert that to US dollars, you look at India, it’s less than a dollar 50 per month when you convert that over. And you can also get weekly and daily rates as well. So if we know that based on what will shared in his report, which I agree with a lot of the remaining users in the world, A, Android users, B less willingness to pay, therefore you may not be able to capture as much streaming revenue. Now, there could be other aspects of the industry that could be more lucrative, but at least for streaming revenue, that maybe is what it is. But when you have these more developed markets, the Nordics and Denmark and Scandinavia, Western Europe, US, your own Q three earnings clearly said that there’s better than expected growth there. Despite the price increases, I’m sure other DSPs would copy suit as well.

Dan Runcie [01:01:06]:

There still seems like there’s plenty of room to be able to grow there. And even though we did miss this opportunity, I still think to myself, if we were starting from scratch, what would the right number be? I know that some of the major record label execs have put numbers out there, but I’m curious, from your perspective, will, I know that putting a number out there may be a bit precise, but what number would you put out there?

Will Page [01:01:32]:

So remember when you talked about Scandinavia? Norway raised prices, I think, in 2017. So there is evidence of price increases happening there. The first price increase I ever did at Spotify was Argentina, which was interesting. Inflation at 36%. YoU can put a zero behind that figure now, but we doubled the price and we tripled the subscriber base. Interesting. It’s Argentina. It’s a basket case economy, but still it’s happened.

Will Page [01:02:00]:

And I always quote a colleague who works at Sony Music Stockholm in Sweden, who said, We’ve just got used to growth being difficult, but it hasn’t stopped growing. So the definition of a ceiling was like moving the goalposts. They still have never failed to grow revenues in the Swedish economy, despite it being difficult for five, six years now. Every man, woman, cat, dog and pet Hamster’s got a Spotify account, but there’s still a mouse in the corner that hasn’t find that one. So there’s still growth to have on the emerging markets point. I think one key point to make is just to curb expectations. When you read volume reports from luminate about how much more streams there are this year compared to last, to what that means in value. My joke, and it’s not a joke, is it’s easy to confuse the RPU in America with the per stream in India.

Will Page [01:02:50]:

And it’s not a joke because it’s actually mathematically pretty much bang on. So you might have 20% growth in streaming volumes, but less than 2% growth in value because that volume is coming from emerging markets where the value translation is not that great. And something I’d love to do for the capital, maybe for your next report or a bulletin, is maybe build for your audience what we call in economics a trade weighted exchange rate where you can see these headline figures in volume and translate them into a meaningful figure in terms of value. It could be a nice little tool to give the capital audience to keep you guys ahead of the curve in terms of making sense of all this stuff. And then to wrap it up on this question, what is the right price? Well, we talk about vinyl was 20. I have no problem seeing vinyl becoming a 50 pound, $50 price. No problem at all. Add value into it, but you can get that price.

Will Page [01:03:41]:

Travis has told us you can get hundreds of thousands of people to meet that you meet you at that price. But, yeah, I do think a simple answer to say, why isn’t it $20 a month for all the Wells music? A more clever answer is to go back to my price per account user and optimize for that. Is it fair that in real terms, the user is paying $6 a month to get all the wells copyright? Is that fair in some way as ours? No, it’s not. So I think the wiggle room, the negotiation skills between rights holder rights users, how do we get that price per user up? I think there’s some clever ways we can do that. And remember, I’m arguing for it to go up. There’s lots of reasons for it to go down. You bundle music into Apple, $135 a month. Six people using music, six people using TV, six people using gaming, six people using iCloud.

Will Page [01:04:31]:

I’m not sure that six divided by six divided by six is going to produce anything close to $11 for music. So as bundling kicks in, I think the industry needs to have its case going forward of, like, how do we hold out price per account user and get buoyancy into that figure. If we get that right, then that rising tide is going to lift all boats.

Tati [01:04:51]:

As we sort of start to wrap things up, I have a bit of a spicy question for you, Will.

Will Page [01:04:56]:

I don’t eat spicy food. I got a sensitive gut. Well, I beg excuses.

Tati [01:05:02]:

I did want to touch on. At the end of your report, you mentioned that in reality, the figure could actually be a little bit bigger than 40 billion, because at media, our estimate for the global recorded music market was actually a bit higher than the IFPIs. And there’s a couple of reasons for that. Our founder, Mark, is better to speak to this, but I know we kind of include some things that the IFPI doesn’t report with DIY and different regions. But I guess I wanted to ask, why didn’t you use that number? And just what do you think about those different potential estimates?

Will Page [01:05:41]:

I think I started that paragraph off by saying, if you’ve got to this far down in the report, your studies or your profession depends on these numbers being correct. And that’s important. When I wrote my book, my book was dedicated to my parents. I took money out of my own pocket to pay for my fact checker. And she was so good, I paid her three X what she asked for because I didn’t want my mum and dad seeing that their son had published a book which got their facts wrong. It happened to Malcolm Gladwell. It’s happened with Rachel Reeves, our shadow chancellor over here. Know I take that stuff seriously.

Will Page [01:06:11]:

So are these numbers factually correct? Now, my job is to consolidate and integrate and mash together three primary pieces of researches. My job is not to do the primary research myself. I put the icing on top of the cake. I don’t make the cake. And that’s important because I’m not charging for this, I’m giving it away, if you like. But I want students at the universities and colleges around the world to be using this to help them get an A plus and a distinction in their studies. That’s what makes me happy. So I’m worried, genuinely worried, that what the IFPI’s measurement tactics are here are off.

Will Page [01:06:49]:

I want to praise media for perhaps shedding light on how far off they could be in a simple world. If you’ve got, let’s say, three major labels and you assume the market is 80% major labels, you do the arithmetic and you guess the 20 and that gets you to your figure, well, what if you’re wrong? Or what if you’re wrong on year to year what if you’re right in year one, but you’re wrong in year two? Then we got the wrong trend. We might be close to the right figure, but we’ve got the wrong trend. It might not be up and to the right. Then as you mentioned earlier on, it could be flat as a new up. So that’s one part. But what if we’re wrong in terms of the assumption of what that major label market share actually is? I put the figure closer to two thirds, which puts media in the spotlight as being much closer to the truth than what was previously perceived. And if that is true, then we do have a bit of a problem on our hands.

Will Page [01:07:41]:

Because in a country like Canada, north of your border, we could be missing 100 and 5180 million Canadian dollars of revenue. Hands down. That is not a rounding error. That would screw with all the investment banks models when they’re buying up these catalogs. So there is a cause for concern. And I do think media deserve more of the spotlight, even though it’s not the official source of figures for doing more of their homework. Understanding the artist direct market. Understanding the indie labels.

Will Page [01:08:14]:

Understanding the emerging powerhouses in Asia, like South Korea. Media shared the evidence to show that the major label share in South Korea is like 23%. Now imagine if the IFPI, if you were to find out, said it’s 80% and we top up the missing 20 wrong, it’s closer to 20% and you need to top up the missing 80 in this fast growing market. So we’re not just wrong today, we’re going to be even more wrong tomorrow. But I always have this philosophy in life, which is the closer you look, the more warts that you see. And that applies to numbers, that applies to people. And I’ve done my effort, went into the Batcave, had my flat, Coca Cola, my cold pizza, got it out. But it was great to kind of put the spotlight on what Midia are saying so people know there is another source of possible truth here.

Will Page [01:09:04]:

It is another different figure. It is another bigger figure. And I think it’s much closer to the true figure. So credit to you guys, that all makes sense.

Tati [01:09:12]:

I just kind of wanted to pose the question and Mark always know there are no facts about the future. Every time that we work on these forecasts, that’s always kind of the guiding. I would end. I would end with that there are.

Will Page [01:09:24]:

No facts about the future. Well, what do William Gibson say? The future is already here, but it’s not evenly distributed. What does William Douglas Page say? What do you want to change the future or the distribution.

Dan Runcie [01:09:34]:

Well said. Well said. Well, will appreciate you so much for sharing this and giving an honest take. I think there’s a lot of things in here, but I think at the end of the day, what the industry needs, like you said, we understand you’re the one that is taking the ingredients and you’re putting the icing on it. And I think you did it now for what would be your 10th report. And hopefully you continue to do this. And by you doing this, not only does it help the people writing their term papers, it also helps get the bodies themselves that do report on this to help capture and measure that growth. Because at the end of the day, this is a good.

Dan Runcie [01:10:08]:

There’s very few incentives here about who should be showing what and why. Ultimately, it’s all helping this industry grow, which is what we all care about so deeply, which is why we spent the time to talk about it here. So thank you for sharing it. And if anyone listening to it hasn’t read already, make sure you go and check for Will’s report in the show notes to this episode.

Will Page [01:10:30]:

Fantastic. Thank you. And if I can say, telling the industry that it now begins with a four, it’s a $40 billion business. And both of you know, had you said to your friends, I’m going to work in music ten years ago, the likely response is, why are you working with those dinosaurs? We ain’t dinosaurs anymore. This is a huge industry and hopefully this helps the readers of the report stand up tall a bit more.

Dan Runcie [01:10:52]:

There might be a five in front before we know it.

Will Page [01:10:57]:

Sooner than you think if you work with media. Thank you both.

Tati [01:11:02]:

This has been great. Awesome.

Dan Runcie

Dan Runcie

Founder of Trapital

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