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The Post Catalogue Era: How Streaming is Resetting the Recorded Industry"s Business Model

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Revenues from catalogue sales have long underpinned the major record label model, yet this framework is coming to an end. Until breaking a new act, A&R typically operated at a loss whilst catalogue represented a growth fund from which labels invested in future talent. The positive side of this was that it facilitated an appetite for risk in emerging artists, yet this model stands at a crossroads where catalogue sales, in the traditional sense, are going to fall.

Younger music consumers have not grown up buying albums and are spending less time both listening to albums and listening to individual albums multiple times. As a result, the foundations for deep diving into catalogue are not being set up for them, with streaming engendering audiences to focus on the new. Add Gen Z’s tendency towards consuming, at speed, larger volumes of (usually social) content, and what you have is the catalyst for a reassessment of how the economics of the entire recorded music business works.

Using proprietary MIDiA Research data, this presentation will take a look at how the old model worked and discuss how it is being threatened by streaming.

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The Post Catalogue Era: How Streaming is Resetting the Recorded Industry"s Business Model

  1. 1. MIDiA Research Zach Fuller May 2018 The Decline of Catalogue http://midiaresearch.com
  2. 2. http://midiaresearch.com 1. Introduction 2. Death of the Album 3. Impact on Catalogue The Decline of Catalogue
  3. 3. MIDiA Research is a research, data and analysis service focused on the intersection of media & technology. Our reports leverage proprietary consumer and market data (including quarterly Canadian consumer data I head up Media analysis at MIDiA Research covering monetisation trends and developments across digital media MIDiA Research clients pay a one-off annual fee to get online access to our research reports and data to get unique insight into the digital content and consumer technology marketplaces.
  4. 4. 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 Number of Disco songs in Billboard End of Year 100 Number of Disco Songs in Billboard Top 100, End of Year Global Album Sales (Volume in m) 2010-2017 Source: Billboard Charts
  5. 5. Donna Summer releases ‘I Feel Love’
  6. 6. http://midiaresearch.com 1. Introduction 2. Death of the Album 3. Impact on Catalogue
  7. 7. ‘I Let the Music Find Me’ – Julie Adenuga, Beats 1
  8. 8. %ofconsumers 10% 12% 13% 5% 2% 1% 7% 16-19 20-24 25-34 35-44 45-54 55+ Weighted Average Source: MIDiA Research Brand Tracker (09/17), US, Canada, Australia and UK n = 3,000 Younger Audiences are the Highest Consumers of Curated Playlists Playlist consumption on streaming service by age
  9. 9. 1133 1111 1041 951 859 795 672 587 2010 2011 2012 2013 2014 2015 2016 2017 Album Sales (Volume) Album Sales in Volume Has Drastically Declined As Streaming Rises Global Album Sales (Volume in m) 2010-2017 Source: IFPI
  10. 10. Music Fans are Abandoning New Artist Albums, With Older Physical Buyers Coalescing Around Old Favourites Selected Catalogue Metrics for Artist Albums and Streaming’s Contribution to Charts by Format, UK Only, 2016 and 2017 58.2% 60.5% 41.8% 39.5% 2016 2017 CATALOGUE SHARE OF ARTIST ALBUMS (ALL) % total revenues STREAMING CONTRIBUTION TO CHART TOTALS Source: MIDiA Research / BPI 58.2% 60.5% 41.8% 39.5% 2016 2017 35% 47% 82% 90% 2016 2017 Singles Albums CATALOGUE SHARE OF ARTIST ALBUMS (PHYSICAL) <24 months 24 months +
  11. 11. 134.8 71.5 30.5 24.9 18.8 10.6 9.7 2.9 2010-2015 2000s 1990s 1980s 1970s 1960s 1950s 1940s Revenue Streaming Revenue Per Decade Drastically Declines After the 2000s Revenue in millions (USD) of the UK Streaming Market Per Decade Source: BPI
  12. 12. http://midiaresearch.com 1. Introduction 2. Death of the Album 3. Impact on Catalogue
  13. 13. Superstar Catalogue 1% c.250,000 Core Catalogue 20% c.5,000,000 Full Catalogue 100% c.25,000,000 Frequent Catalogue 5% 1,500,000 Catalogue is a Superstar Economy Less than 1% of a label’s catalogue makes meaningful revenue Source: Spotify, RIAA
  14. 14. 10 2 CD Compilation, 2003 Spotify Most 5 Most Streamed Bruce Springsteen Compilation Revenue (m USD) in 2003 vs 5 Most streamed tracks on Spotify 2018 Premier Catalogue Struggles To Deliver What It Used To Source: Spotify, RIAA
  15. 15. Streams Required To Generate Equivalent Revenue From A Single Paid Download 137 334 Equivalent streams required to generate average artist royalty for a paid download Equivalent streams required to generate label revenues for a paid download Radio = 5,500 listeners Streaming Falls Short Against Retail Revenues But Holds Its Own Against Radio
  16. 16. Total $0.21 Label $0.17 Artist $0.03 Publisher $0.04 Songwriter $0.03 Streaming Does Not Directly Replace Retail Average Royalty Revenue Per Album Per Streaming User Source: MIDiA Research Streaming Income Model
  17. 17. Conclusions • The Catalogue Transformation Will Not Be Linear • Independent’s Will Feel This Shift the Hardest • Artists Must Look at What Replaces the Album
  18. 18. Contact: Zach Fuller Phone: +44 (0) 7944 56 38 57 Email: zach@midiaresearch.com Web: http://midiaresearch.com Blog: http://midiaresearch.com/blog Thanks!

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