The following MBW column comes from Stef Van Vugt (pictured), founder of Fruits Music, a record label and playlist company that has racked up tens of billions of plays on Spotify and other services. Netherlands-based Fruits Music is home to playlist brands such as Dance Fruits and LoFi Fruits, and is represented by its famous Melon brand identity.
Hello. It’s been a minute since I last commented on MBW. Those of you who may have read this column about artificial intelligence or this column about royalties will know that I try to observe what’s going on around me and always speak my mind. So here I am again.
Artificial intelligence music startups like Suno, which just raised funding $125 million On the money side – making music that sounds better than most of the newly released faux songs on music streaming services.
There. Doesn’t it feel good to see someone tell the truth?
(To qualify this statement, it is not as controversial as it first appears: around 120,000 mostly man-made tracks It’s being uploaded to streaming music services today. Today, of the more than 100 million tracks on these services, about 25 million have not been played even once in the past 12 months.
This indicates a “New Normal” It has taken over the music industry today and will define the music industry tomorrow.
for Largest traditional music rights holder Thriving in this “new normal”. However, with many threats to its dominance, the balance of power in global corporations is irreversibly changing.
In fact, I predict that new rights holders—especially Artificial Intelligence Powered Music – Will continue to capture market share from the largest music rights holders in the coming years.
Threat One: Platforms, not labels, are becoming music’s primary influencers (and content owners?)
The music and entertainment copyright industry, like most things in life, follows repetitive patterns.
How many times have we seen this story:
- New innovation companies develop equity monetization products to benefit users;
- Traditional rights holders license their content at high prices for short-term gain;
- New innovative companies diversify their offerings (perhaps creating their own content) to reduce dependence on traditional rights holders;
- New innovative companies continue to grow in size and strength and begin to make profits;
- Traditional rights holders withdraw their rights to the new innovative company’s products and/or attempt to renegotiate again;
- By this point, the new innovative company has built the necessary reach and diversity to thrive without traditional legacy rights holders;
- Traditional copyright holders are scrambling to catch up. Late to the party, they try to copy the product of an innovative company.
this aptly describes Netflix and disney That’s what’s going on in the film and television world right now.
I predict this won’t end well disney…because they were late for the party.
Will a similar scenario happen soon? music industrywhen it comes to digital platforms versus large rights holders?
Well. let’s talk Spotify.
Spotify has more control over its audience than you think
Now, Spotify We’re in the “Year of Efficiency,” a period of maximizing profits, and in the pursuit of efficiency it will inevitably reduce human influence on playlists and streaming outcomes.
Meanwhile, many in our industry continue our collective addiction to Spotify “Exploration mode” Also known as “algorithm discovery”.
If we “choose” to participate Discover patterns ——This is not a “choice”, if Spotify makes it necessary to increase the audience – this may increase Daniel Ek’s Effective profit from music ~30% To a materially higher place.
Such a move will gradually usher in “New normal”.
One of the salient elements of this “new normal” is: Pro-rated royalty pool The algorithm will discover that sources are spread more sparsely among more participants. The past “narrowband” consumer influence on music is over.
“Spotify’s ‘Year of Productivity’ will inevitably reduce human influence on playlists and streaming results.”
This is similar to what we have already experienced with social media platforms, e.g. Tik Tokthere is no “mainstream” music there.
talk about Tik Tok…
I have always liked this sentence “Timing is a funny thing, and the most interesting thing is the most likely outcome.”
January 2024 Age Make dramatic statements to defend copyright owners Tik Tok. On the day of the statement, I pointed out that if “Taylor Swift fans band together and force this, as they always do, there will be an interesting outcome. [the powers that be] Reviving her song on TikTok.
Guess what happened next?
(As a wise man said to me recently: “TikTok is like a movie; it remains entertaining with or without music.
This all raises one big question:
What needs to happen now before music streaming services like Spotify can take on big tech giants like ByteDance and music rights holders?
It can be said that the amount is not large. have a look Spotify Increasing control over its key consumer influence tools: Playlist.
Spotify’s playlist dominance
Some background before I get into the data: I still firmly believe that the so-called “fake artist”. This is a description that irritates me. A human songwriter with multiple fictional alter egos is still a human songwriter.
but I Do Worry about how these “fake artists” have built billions of traffic online Spotify First party playlists.
There is no public evidence that content production experts in this field (some of the largest independent streaming rights holders today) come from pop sound arrive Firefly Entertainment and catfish recordall conveniently based on Sweden —Has signed “backdoor” agreements with the following companies Spotify.
There is no public evidence that such “backdoor” transactions can facilitate Spotify Fill their playlists with songs from these companies while benefiting from higher DSP profits compared to other music.
However, even if you think these ideas are conspiracy theories, you have to admit two things: (I) PRO does not charge performance royalties epidemic voice content. If the content is popular enough, this could potentially save Spotify profits; and (two) Spotify is definitely still evolving Your own key playlist sum algorithm Along with this music The more the better.
do you realize how to control Spotify Playlist/algorithm full audience?
Below you will find a summary of ago~25 Spotify remains the world’s most consumed playlist for the fourth week in a row 2024ranked in order of global streaming media based on my research.
I color coded it like this:
- blue: five algorithmic playlists;
- Yellow: nine background music playlists, the vast majority of which contain content from the aforementioned vendors (i.e., “fake artist” companies);
- Red: Six playlists featuring mainstream pop songs primarily from latin america, where traffic per listener is said to be greater than the rest of the world. Logically, this results in lower payouts per stream.
Do you see what I see?
Correct: no more Top 25 most popular third-party playlists Spotify Playlist.
All of these playlists, each of which presents a business model threat to professionals (response: color coding), are owned and/or controlled by: Spotify.
Threat 2: Music generated by artificial intelligence further dilutes market share
As MBW readers know, traditional copyright holders have struggled to fend off both threats. ‘noise’ and artificial intelligence generation content from their share of the streaming royalty pool.
Most notably (and perhaps surprisingly, given my business in music to date) I favor the new 1,000 streams payment threshold exist Spotify and Demonetization of “noise” content Less than two minutes in length. (In fact, in this column, I proposed some alternative and better measures to make royalty payments more equitable.)
we also saw common Insist on “protecting” the music copyright pool to prevent the music copyright pool from being diluted by tracks generated by artificial intelligence, such as Tik Tok.
However, such measures are ultimately insufficient to solve the ultimate problem of artificial intelligence-generated music: People will enjoy making it.
this you have genius Already out of the bottle. You can sue, opt out, or try to eliminate all AI startups. But that doesn’t address their appeal and benefits to the average consumer.
“What is the ultimate problem for copyright owners of AI-generated music? People will enjoy making it.
General consumers will use open source developed models Artificial intelligence content generation Future local.
They’ll be able to create endless short audio clips in their mother’s basement, which may gain traction on social media platforms and then lead to the release of full-length versions of their songs on streaming services.
They might end up performing in front of real fans with barely any musical background.
Who is the “listener”? Who is a “music producer”? who cares!
How can music copyright holders sue/stop ordinary individuals from creating and distributing millions of music tracks without any loss?
How to stop people from using locally running, open source trained AI music models?
Opportunities: Changes in the business models of major companies
this Major Music Rights Holders Today, they have leveraged their strengths to help maintain their market share.
Looking at Apple Music’s decision, there is no doubt that it was “convinced” by the major giants to launch 1.1X spatial audio Improve spending – bring effective 10% off overnight Future royalties from the vast majority of rights holders and artists.
For independent rights holders like me, this is a disappointing decision. Deep-pocketed major record labels and/or multinational rights holders are virtually the only ones capable of overhauling their catalogs on a large scale. spatial audio.
This is your business: apple Did what it needed to do to please the people it needed to please.
“Music copyright holders need change their focus compete attentionrelying on those who can better influence, manage and amplify social media and streaming algorithms.
However, such measures are not enough to completely “prevent” the threats of tomorrow. For this they must Both offense and defense.
Music rights holders need change their focus compete attentionrelying on those who can better influence, manage and amplify social media and streaming algorithms.
Some ways to achieve this include: (I) Managing micro-influencers; (two) run popular social media pages; (three) Directly manage brand or artist audiences; (Four) Expand digital marketing campaigns to drive traffic to platforms that trigger algorithms; (five) Build a curated ecosystem, such as playlists or reusable attention assets.
Another area of opportunity for the major? DDevelop A&R algorithms Identify potential audio content on social media platforms, including snippets, which can then Developed into a popular streaming song (also known as “Internet song”).
While I continue to see some companies resist change in these ways, I’m noticing that some are paying attention – e.g. move and Create a music group.
create Particularly well-positioned to benefit from the evolving music industry landscape in the coming years.
Currently has more than 100 viewers One billion active fans Across TikTok, Instagram, YouTube and streaming playlists, create building one’s own “Attention Assets” Move quickly in the new landscape.
The company has established new labels such as “Broke,” which has generated incredible 15+ million It’s only been a few short months since its launch, with daily live broadcasts.
Rights and artist partners will Dominating the music industry of tomorrow Now not only do these assets need to be created, but they also need to be extended.global music business
