Tue. Jan 31st, 2023

In his annual letter to the corporate’s employees, Common Music Group Chairman/CEO Lucian Grainge has taken goal on the present mannequin for the music-streaming financial system, saying it has turn into outdated because the format has grown and “must evolve.”  

Amid many different updates within the letter, dated Jan. 11 and obtained by Selection, he writes, “What’s turn into clear to us and to so many artists and songwriters — growing and established ones alike — is that the financial mannequin for streaming must evolve. As know-how advances and platforms evolve, it’s not stunning that there’s additionally a necessity for enterprise mannequin innovation to maintain tempo with change… Underneath the present mannequin, the vital contributions of too many artists, in addition to the engagement of too many followers, are undervalued.”

He’s addressing in no unsure phrases the mannequin by which creators are paid in streaming, whereby a service locations the entire music streams into one huge pile and pays creators primarily based on their share of that pile, which is why streaming pays tens of millions to prime creators like Taylor Swift and Drake and far much less to non-superstars. It’s also a significant cause why songwriters are getting the brief finish of the stick within the streaming financial system: Publishers are paid on common 25% of streaming income whereas recorded music receives 75%, and contemplating the big variety of songwriters credited on hit songs as of late, that’s a really small slice of the pie for the individuals who truly create the songs.

Grainge additionally says that the “user-centric” mannequin, whereby every consumer’s subscription cash goes solely to the songs that they’ve performed (versus the percentage-of-the-whole mannequin described above) isn’t the reply both, because it creates a special set of imbalances.

Whereas he doesn’t suggest an answer within the letter, he guarantees that Common — the world’s largest music firm — “can be engaged on the innovation that’s completely important to advertise a more healthy, extra aggressive music ecosystem.

“We’d like an up to date mannequin,” he writes. “Not one which pits artists of 1 style towards artists of one other or main label artists towards indie or DIY artists. We’d like a mannequin that helps all artists — DIY, indie and main. An revolutionary, ‘artist-centric’ mannequin that values all subscribers and rewards the music they love. A mannequin that can be a win for artists, followers, and labels alike, and, on the identical time, additionally enhances the worth proposition of the platforms themselves, accelerating subscriber development, and higher monetizing fandom.”

Within the letter, he additionally slams the algorithms that streaming platforms use to direct customers to music, generally with less-than-artistic motives. He additionally reiterated his alarm on the huge quantity of music being uploaded to platforms, which may exceed 100,000 songs per day.

“Customers are sometimes guided by algorithms to generic music that lacks a significant creative context, is cheaper for the platform to license or, in some circumstances, has been commissioned instantly by the platform,” he writes. “For instance, simply witness the 1000’s and 1000’s of 31-second monitor uploads of sound information whose sole objective is to recreation the system and divert royalties. The outcome? A much less fulfilling expertise for the buyer, diminished compensation flowing to artists which might be driving the enterprise fashions of the platforms, and fewer cultural moments that followers can collectively share, all of which undermines the creativity and growth of artists and their music that the platforms have been, partially, designed to foster… customers are more and more being guided by algorithms to lower-quality useful content material that in some circumstances can barely move for ‘music.’”

He concludes, “Attaining such a profound change will current challenges in addition to alternatives. I’m assured, nonetheless, that our lengthy and deep involvement with music and artists will allow us to soundly and profitably navigate our means ahead via the business’s subsequent huge shift.”

Learn his letter in full under.

Expensive Colleagues,

Blissful New Yr! I wished to jot down to you to welcome you again and as promised, offer you my ideas concerning the yr forward. It’s exhausting to imagine that just a bit greater than a yr in the past, UMG turned a freestanding public firm. It was a watershed second in our historical past. And but, in some methods, in relation to what we do day-after-day, we simply stored doing what we’ve all the time accomplished: carry nice artists and their music to the world; break efficiency information of every kind all over the place; and drive the business ahead although creativity, strategic investments and innovation.

And that’s precisely what we plan to do that yr.

Now, with 2022 within the rearview mirror, I’d prefer to share with you just a few ideas about what was a rare yr for UMG and likewise categorical my gratitude to all of you for making the yr so outstanding. I’ll have one thing to say as nicely concerning the very actual challenges and alternatives that lie forward for us in 2023, however first let’s take a short victory lap to replicate on what we achieved final yr.

Starting with some accomplishments I’m notably pleased with, listed below are only a few examples of how, as soon as once more, you and our artists confirmed up huge time to make our communities stronger and assist these in want:

— Serving greater than 20,000 meals world wide;


— Constructing group gardens all through the US, Europe and Australasia;
— Engaged on very important schooling campaigns with organizations corresponding to Psychological Well being Coalition; and


— Extending our packages to profit our artists previous and current together with aiding tons of of artists in saving tens of millions of {dollars} in healthcare prices via our partnership with Music Well being Alliance within the U.S.

And our firm’s Activity Drive for Significant Change continued its groundbreaking work in a wide range of methods: funding packages to mentor the subsequent technology of Black artists and Black music business executives; preventing for felony justice reforms; investing in group violence intervention packages and coverage organizations; partnering with HBCU medical colleges to widen the Black practitioner pipeline; and serving to prove the vote within the U.S. elections by offering greater than 13,000 rides to and from the polls. Between the TFMC, our All Collectively Now Basis, and our Worker Matching Program, we’ve contributed to greater than 500 organizations in 2022 alone.

On the charts, the efficiency of our artists and songwriters remained stellar. So many artists from world wide contributed to 2022’s success, with standout performances from: Taylor Swift; Olivia Rodrigo; The Weeknd; The Beatles, Kendrick Lamar; Drake; BTS; Karol G; Luciano; Angèle; Glass Animals; Think about Dragons; Rammstein; Helene Fischer; ABBA; Ado; Elton John; Eminem; Justin Bieber; King & Prince; Lil Child; Billie Eilish; amongst many many others. Listed here are some examples:

— On Spotify: UMG had 4 of the High 5 Artists globally; 4 of the High 5 within the U.S.; 7 of the High 10 in Germany and Italy, together with No. 1s in each international locations; and the highest feminine artist in France;


— On Apple Music: Common Music Publishing Group had writer-interests in 9 of the High 10 most-streamed songs globally;


— On YouTube: UMG had 7 of the High 10 Songs within the U.S.;


— On Billboard: We had the No. 1 Track on the Scorching 100 year-end chart and seven of the High 10 Albums;


— On Deezer: UMG had the High 2 Artists globally, and 5 of the High 10;


— In Germany: The High 4 Albums and the High 3 Singles;


— Within the U.Okay.: 6 of the High 10 artists together with No. 1;
— In Japan: The No. 1 Artist on Billboard’s Yr-end Chart;


— On Vevo: The No. 1 World Artist


— And eventually, in China: Eason Chan’s “Gu Yong Zhe” (“The Lone Warrior”), turned the most-streamed tune in UMG China’s historical past after topping the charts on all main streaming platforms.

All that — and a lot extra — didn’t simply “occur.” To attain such astonishing success for each growing and established artists, and to take action yr after yr, in each conceivable style, typically in areas past their dwelling international locations, isn’t any accident. UMG’s distinctive artist-centric tradition accounts for that repeated success and is on the coronary heart of our firm’s two-fold mission.

Our first, easiest, and but most troublesome crucial is to find and break new artists after which maintain their careers over the long term. Not like so many different gamers within the music world, particularly the newer ones, UMG can by no means be considered merely a “checkbook and distribution” firm. Nor are we some convoluted monetary instrument that seeks to take advantage of the current development in our business. No, we’re completely different. Very completely different. As a result of for all of us at UMG, music and the artists who create that music comprise our very raison d’être. It’s what will get us up within the morning.

The second a part of our mission is to advertise a wholesome, sustainable and thrilling music ecosystem during which our artists can thrive for years and a long time to come back. We fulfill that aim by utilizing our ingenuity to drive the music business ahead as know-how and the world round us maintain altering. That’s the reason, at the same time as we diligently work, day-in and day-out, to interrupt our artists and songwriters, we’re additionally pursuing unexplored avenues of inventive and industrial potentialities and, at any time when applicable, taking the mandatory steps to show these potentialities into actuality.

One highly effective instance of a type of potentialities changing into actuality: immersive or ‘spatial’ audio. Seven years in the past, we launched into a journey to evolve the music listening expertise. We approached Dolby with a proposal: if our two corporations labored collectively, we might develop a brand new format that envelops the listener right into a 360-degree immersive surroundings that gives artists with a broader inventive palette on which to specific themselves. We believed that this may very well be one of the necessary developments within the recorded music listening expertise in a long time.

An advance as important as immersive audio was no straightforward feat. It required years of funding and innovation. Far more. We constructed state-of-the-art recording suites inside our community of iconic studios — Capitol Studios in L.A. and Abbey Highway Studios in London, to call simply two. We skilled a number of the world’s prime engineers in the best way to make the most effective use of the format. And we carried out an intensive marketing campaign to coach artists and artist estates concerning the limitless inventive alternatives that immersive audio gives.

We’re already seeing the outcomes. Practically half of UMG’s streaming consumption and 80% of our top-50 streaming artists’ music can be found in immersive (or Atmos) variations.

Who advantages from this landmark innovation? For starters, artists, after all. And by “artists,” I imply all artists, not simply UMG’s. Because of our efforts, the complete business has been releasing increasingly more music in immersive audio. And lots of platforms — together with Apple Music, Tidal and Amazon Music — are providing this far superior expertise to the opposite beneficiaries of immersive audio: music followers. Thousands and thousands and tens of millions of them world wide. They usually merely can’t get sufficient.

This yr followers will get much more. I’m assured that we’ll see important world development within the availability of immersive audio as increasingly more vehicle and machine producers introduce new merchandise designed to ship this tremendously enhanced musical expertise.

Trying past the enlargement of immersive audio, our willpower to drive change will solely speed up this yr. Simply as we’ve accomplished so efficiently prior to now, we’re setting up the methods and sources to guide via each important technological advance on the horizon. And every such advance — from web3 and the metaverse, to new purposes for well being and wellness and medical music supply — will allow us to attach on to customers in ways in which have been unimaginable only a few years in the past and ship important long-term worth to these followers, in addition to to our artists, our staff and our shareholders.

That’s precisely the pioneering strategy we took on the creation of streaming. Early on, we noticed the potential inherent in streaming and subscription and jumped proper in. Although it looks like solely yesterday that we have been working with Spotify to allow their U.S. launch, that “yesterday” was means again in 2011. Whereas different corporations have been making an attempt to carry their floor at the same time as that floor was shifting beneath their toes, UMG leaned into what was probably the most profound enterprise mannequin shift the business had ever seen, redesigning our world group, changing into the primary to adapt to after which thrive within the streaming period.

But when historical past teaches us something, it’s this: each blazingly transformative technological growth inevitably creates new challenges for us to confront. So, it’s no shock that after virtually a dozen years of essentially remodeling the music enterprise, the way during which music is offered and consumed on streaming platforms has itself developed. And whereas that evolution has created huge alternatives and advantages for artists and customers — mirrored in elevated listening variety that originally comes with adoption of subscription — it has additionally created byproducts which might be more and more complicated and unfulfilling for them as the quantity of noise within the market has elevated. Right now, some platforms are including 100,000 tracks per day. And with such an unlimited and unnavigable variety of tracks flooding the platforms, customers are more and more being guided by algorithms to lower-quality useful content material that in some circumstances can barely move for “music.”

Let me clarify. To be able to entice customers to subscribe, platforms naturally exploit the music of these artists who’ve massive and passionate fan bases. However then, as soon as these followers have subscribed, customers are sometimes guided by algorithms to generic music that lacks a significant creative context, is cheaper for the platform to license or, in some circumstances, has been commissioned instantly by the platform. For instance, simply witness the 1000’s and 1000’s of 31-second monitor uploads of sound information whose sole objective is to recreation the system and divert royalties. The outcome? A much less fulfilling expertise for the buyer, diminished compensation flowing to artists which might be driving the enterprise fashions of the platforms, and fewer cultural moments that followers can collectively share, all of which undermines the creativity and growth of artists and their music that the platforms have been, partially, designed to foster.

Whereas this unsatisfying state of affairs is discouraging, it’s not stunning. Now that the business is rising once more — largely because of UMG’s technique, investments and innovation — new gamers in addition to some unhealthy actors who don’t share our dedication to artists and artistry have been swooping into the reinvigorated business.

Previously, music business battle was typically targeted on ‘the majors versus the indies.’ Right now, nonetheless, the true divide is between these dedicated to investing in artists and artist growth versus these dedicated to gaming the system via amount over high quality. The present surroundings has attracted gamers who see an financial alternative in flooding platforms with all types of irrelevant content material that deprives each artists and labels from the compensation they deserve.

What’s turn into clear to us and to so many artists and songwriters — growing and established ones alike — is that the financial mannequin for streaming must evolve. As know-how advances and platforms evolve, it’s not stunning that there’s additionally a necessity for enterprise mannequin innovation to maintain tempo with change. There’s a rising disconnect between, on the one hand, the devotion to these artists whom followers worth and search to assist and, on the opposite, the way in which subscription charges are paid by the platforms. Underneath the present mannequin, the vital contributions of too many artists, in addition to the engagement of too many followers, are undervalued.

Due to this fact, to right this imbalance, we’d like an up to date mannequin. Not one which pits artists of 1 style towards artists of one other or main label artists towards indie or DIY artists. We’d like a mannequin that helps all artists — DIY, indie and main. An revolutionary, “artist-centric” mannequin that values all subscribers and rewards the music they love. A mannequin that can be a win for artists, followers and labels alike, and, on the identical time, additionally enhances the worth proposition of the platforms themselves, accelerating subscriber development, and higher monetizing fandom.

Together with many others within the music world, we share deeply held rules concerning the worth of artistry and the artist-fan relationship. This yr, we can be engaged on the innovation that’s completely important to advertise a more healthy, extra aggressive music ecosystem, one during which nice music, regardless of the place it’s from, is definitely and clearly accessible for followers to find and luxuriate in. An surroundings the place nice music is just not drowned in an ocean of noise. And one the place the creators of all music content material, whether or not within the type of audio or short-form video are pretty compensated.

Attaining such a profound change will current challenges in addition to alternatives. I’m assured, nonetheless, that our lengthy and deep involvement with music and artists will allow us to soundly and profitably navigate our means ahead via the business’s subsequent huge shift.

I’m wanting ahead to being on this journey with all of you!

Our previous is prologue to a future the place the options we discover and the steps we take to implement them will contribute to a different period of development for UMG and the business at massive. I imagine there is no such thing as a higher group anyplace than the one we’ve proper right here at UMG.

Thanks as soon as once more for unimaginable 2022 during which our artists and our firm achieved outstanding issues.

I’m immensely pleased with all of you.

I’m excited for what can be an eventful and affluent 2023.

Lucian

By Admin

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