Hello, I hope y'all are doing well this week. Originally I was going to write about a company (*cough* YouTube *cough*), who was rumored to announce a new streaming service at Google I/O, because *cough* these stories make it clear something is a foot over there *cough*. *Clears throat* Also this Verge headline: "A YouTube Music refresh is slowly rolling out to some user". *clears throat*
That didn't happen, so everything I wrote is on hold and thus scrambled a bit for this week's newsletter, so apologies there. The usual spiel applies shoot any inquires, questions, or thoughts to firstname.lastname@example.org.
Sorry to make this intro long, but if you do enjoy the newsletter my only request is that you share it with a friend, one-to-one recommendations are great! My other note is if anyone know anything about Latin pop / Latin trap on the digital side of the music business, I’ve got a few questions for you. Anyway let’s dive into some recent music streaming news.
Sell Sell Sell on Spotify
On Monday it was reported that Warner sold 75% of their stock in Spotify or roughly about $400 million. A move that from the outside might imply that Warner along with Sony who sold their investment in the Swedish music service for $750 million must know something else that Wall Street investors didn’t. Well, maybe not. Tim Ingram at Music Business Worldwide persuasively argued that the major labels selling Spotify stock makes sense any way you sliced it.
On the one hand, there’s a very good reason to believe Warner CEO Steve Cooper when he says: “This sale has nothing to do with our view of Spotify’s future.” Both Warner and Sony are not institutional investors by trade, and both know they have an accounting headache ahead of them when it comes to distributing these proceeds amongst artists and partner labels. So long as the price is right (and it definitely was), the sooner they sell stock, the less administrative pain they are bound to plunge themselves into.
That’s a win-win situation for major labels. Either they cling onto their shares with the expectation to cash out when Spotify is the ultimate market leader or sell now and imply that perhaps going all in on Spotify isn’t a great move. If you’re a record label who is now starting to swim in cash and are looking to make someone money on a nearly ten year investment why hold out any longer.
The other issue is fairly simple: Don’t trust Wall Street. When Spotify announced their Q1 earnings, the company weren’t too off of their estimated goals and still watched their stock stumbled nearly 10%. A Financial Times piece laid out a pretty good explanation that Spotify set the correct expectations, but that isn’t what the public markets wanted was reasonable expectations. Again finance isn’t my specialty, but I’m not shocked major labels aren’t just going keep waiting everyday and watching that stock go up and down.
What happens if Spotify announces subscriber stagnation or doesn’t appear to be able to out run how they’ll always own record labels. Majors invested in Spotify early as an insurance just in case music streaming was indeed the future of the music industry. And turns out they were right and see no reason to wait in collect their cash now. Okay that’s as much stock talk as I wanna do, so going to shift to a company, at least for now, completely out of the music game.
Instagram is Ready to Enter the Music Space
Last week Instagram announced Spotify integration into their stories feature. On the mobile app you can select a song from Spotify and upload a screen of it to your Instagram story page. I’ve written around this topic before, but Instagram, especially in genres like rap, is such an underrated music platform.
Artists constantly post content, tease new songs, hint at future collaborations, engage with fans on the live streaming feature, and generally connect with their audience in way not offered by any other music streaming service. Though this Spotify Instagram integration doesn’t heighten any of these user generated modes of communication it does show that Instagram, especially in it’s stories mode, is more invested in exploring this space.
[Side Note: When Snapchat first introduced the ability to upload screenshots to stories was that people would post what song they were listening to. Now that it’s officially integrated into Instagram is cool, but gotta give a bit of credit, where it’s due.]
Earlier this week Tech Crunch got a scoop on a Instagram developing “stickers” that one can use to show what music their listening to or potentially play songs in their stories—the actual function isn’t quite clear. The feature isn’t live, but jumping off from what I was just saying earlier Instagram is already an app where a lot of music discovery takes place. The more ways that it allows for music interactions could start to open up new doors for how music can be consumed that’s outside of people consuming music from an infinite musical cloud. This is an early hint that Instagram, similar to voice assistant devices, could be opening a new door for how music is contextualized.
Instagram stories are already filled with plenty of content of people, and celebrities, listening to music and artists playing and performing their own songs, so what is the world where all of that content is now added into the overall music ecosystem. Notable Josh Constine of Tech Crunch mentioned that getting more people to listen to stories could also be a boon for advertisers who want users to not just swipe through their ads but to also listen and engage. That’s what’s interesting to me is that in a way this functionality could quickly leapfrog past Spotify’s own idea of contextual listening not only in scale, but integration. No longer is it sleep playlists, but artists potentially getting royalties anytime someone posts a story with a clip of their music alongside it.
When I wrote about Twitch a couple months ago I should’ve stressed this particular potential rethinking of music consumption. Where in Twitch videos music consumption is passive, because it’s in the background of someone playing video games, but potential form could be in the background of a walk in the park or just hanging with friends at a party. A Instagram is posted with you tagging Drake’s “God’s Plan” and a check eventually will make it to Drake’s doorstep. Well potentially maybe. I fell down a bit of rabbit hole here, but this is the type of spitballing that’s fascinating to me in envisioning a music ecosystem that aims to monetize every point of consumption.
6 Links 2 Read
The Daily Beast reported on how John Amato repeated held pieces on for Republic Records executive Charlie Walk in both Billboard and Spin. I know this hold nothing about about music streaming, but as a writer who cover a lot of the music industry that a executive of a media company would engage in such behavior is disgusting. Well to be fair the Billboard-Hollywood Reporter Media Group appears to be making this a common tact lately for their coverage of important disgraced men. Anyway nice to see media conglomerates allegedly trying to weird their many arms to obfuscate wrong doings.
The slow death of the bloated festival ecosystem is long overdue. On the other hand, where will one go for brand activations?!
Not be a sour mood for all these links, but I don’t think this piece is honestly too great. I wrote a lot about these 24 / 7 YouTube channels a few weeks back, but I would’ve hoped Bromwich got more into the legally mess space of these channels or perhaps traced the evolution of YouTube music connect, but nah nope that didn’t happen. O well, I’m sure the Paper of Record will get em next time.
This story just broke this morning so I don’t have all my thoughts together. A Norwegian newspaper, Dagens Næringsliv, alleges that Tidal not only faked the streaming numbers of The Life of Pablo and Lemonade. I doubt this will be the last I mention of this article.
I’ve been asked a number of times to dive into the world of Spotify playlist services and sadly I just haven’t carved out the time for such exploration. Thankfully this blog post takes a good examination to show while Playlist Push isn't a scam, it might not be the best way to spend your dollars.
The answer to the title statement is that eventually revenue will start to decline once mass market penetration is reached. Now how that’ll happen in other countries where Spotify Premium never quite caught on and how that’ll affect the ad space is the type of stuff I’ll continue to write about as Spotify’s investors ask the same questions.