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 By Mariano Pereyra | Translation by Nadia Sol Schneider

 

The colossal amount of music uploaded to streaming platforms represents a challenge to big record labels.

 

According to data provided by Spotify, it’s popular knowledge that almost 80% of the artists that are currently part of the service have less than fifty monthly listeners. That 80% ratio represents around 6.3 million artists.

Assuming that every one of those 6.3 million musicians have at least 25 unique listeners —meaning that they do not listen to other artists between that realm of six million—  the total number of unique listeners climbs to 175 million a month.

Following this hypothesis, if we take into account that today Ed Sheeran is the biggest artist on the platform, having around 80 million monthly listeners, they represent almost half of those that have less than 50 monthly listeners.

This means that those 175 million listeners are a threat to record labels, specifically for the oligopoly composed by Warner Music Group, Universal Music Group, and Sony Music Group because of the impact they can have on earnings through these platforms, as they naturally do not cover such a large number of artists and music. In other words, those unknown artists listed on Spotify in individual terms are irrelevant, but as a whole, they are really powerful considering the enormity of the figure.

It is known for a fact, that in the first quarter of 2021, at least 60 thousand songs a day were added to the platform, this figure as of today is getting close to 70 or 80 thousand new songs added daily.  

Spotify’s annual report shows a great number of the total percentage of the music distributed by the aforementioned record labels and since 2017 a steady fall in the yearly earnings. In said year, the triad Sony-Warner-Universal managed to amass 87% of the total number of plays. By 2021, that rate fell to 77%, in just four years the market share corresponding to these labels dropped 10%, enough to make them alarmed.

Without thinking twice, the first company to take action on the issue was Sony. The record label giant distributes ¨quality music¨ published by indie labels through The Orchard ( A subsidiary company belonging to Sony based in America specialized in distribution, marketing, and sales).

Following the same guideline of ¨quality music¨ by independent artists via AWAL a record label and distribution company based in Britain whose standard agreement is in pursuit of the conservation of music and the creative rights of artists over their material and plays.

But, what is the concept of ¨quality music¨? Sony is not willing to respond for what they qualify as ¨ musical debris and waste¨ overflowing the platforms.

According to Sony’s CEO, Rob Stringer, The Orchard distributes music from 27.000 independent labels on a global scale. They plan to extend and deepen their network, to somehow catch more music into the Sony ecosystem. Otherwise, as Stringer states ¨ The company’s market insertion will be diluted by default, given the volume of songs uploaded to the platform¨.

For these big companies their presence in the streaming market is not only important in terms of earnings, it also affects the leverage of licensing agreement negotiations they make with Spotify, Apple or Amazon, among other services. The less quota share they have on the streaming market the less is the power they have when renewing licenses. Therefore, The Orchard and AWAL are online invitation services meaning that artists or labels can’t choose which music they want to upload to these platforms and have their recordings uploaded automatically  in streaming services, they first have to go through a selection and approval process.

Although there are services that allow artists to upload any kind of material to streaming platforms: DistroKid is a digital  and independent music distribution service that offers musicians and copyright owners the possibility to distribute, sell, and allow their music to be played in online music stores. According to their press documents, they own two million artists, adjudicating between 30% or 40% of all new music released currently. This means that Distrokid is distributing, in terms of volume, over a third of all new music released nowadays.

None of the three big companies mentioned before can compete with such a vast quantity of material, and that is something which will inevitably affect their participation on the market, especially considering that the great majority of the music owned by DistroKid are ¨debris and waste¨.

 The big question: How will the Warner-Universal-Sony triad deal with this situation?

 

In the current Spotify play model, every piece of recorded music in the world is worth the same. It doesn’t matter if it’s “Bohemian Rhapsody”, a movement of a Mahler symphony, or a person who recorded themselves burping. If you play it for more than thirty seconds, it gets the same amount of royalties.

Previously, Universal had its annex, Spinnup, with a similar working modality to that of DistroKid but they decided to modify their engagement in the industry in similarity with AWAL. This means, to put it simply, quality control.

The oligopoly composed by this triad agrees that this business model can work as long as the streaming companies acknowledge that —¨quality music¨— deserves a bigger percentage of royalties than what they consider ¨debris and waste¨.

And here comes the intricated and controversial topic on this issue:  Where does the philosophical subjectivity of the artistic concept lies, Would Spotify agree that not all music is worth the same, or that ¨Bohemian Rhapsody¨ is undoubtedly more valuable than a song of man burping extendedly?  The definition of ¨what is worth¨ in terms of artistic quality will be a guideline for the selection of material in the future. But it is clear that for us as individuals this is far more relative, a song can be great for you or me, while for other people it can be crap.

It’s true that these giants have arguments to hold their predominance in the streaming market, one being that their representatives namely, Dua Lipa, The Weeknd, or Bad Bunny have a great incidence in the subscription to the service whether is paid or not, and that’s undeniable

An (un)imaginable future

 

Recently, an AI app named Soundful has been released as beta.  This app can create music studio-quality through what is known as  ¨AI learning¨ that is, by merely pushing a button. And perhaps what’s their most important feature: every track produced by this app is unique and original.

Their creators define it as follows: “an app whose music theory-trained algorithms capture studio-quality tracks in your hands, which will make it possible to produce your new album, make a viral sound on Tik Tok or YouTube, or even amplify streams when it comes to video games.” The app promises to “create music at the speed of sound.”

This makes us think that those 80 thousand songs uploaded a day to streaming platforms could grow to millions. If this is the future, once again, the companies are at a loss in terms of hoarding new artists which will make the selection and rating of music essential —in their viewpoint — and the value of certain material above another.



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