MBW Reacts is Music Business Worldwide's series of analytical commentary written in response to recent major entertainment events and news articles.only MBW+ subscribers Get unlimited access to these articles. MBW Reacts is supported by JKBX, a technology platform that provides consumers with access to music rights as an asset class. The article below was originally published in January MBW+ monthly review email, Issued exclusively to MBW+ subscribers.
Earlier this month, our founder and CEO learned that: distro kid, philip kaplanhad been “moved upstairs” for the role of company chairman. phil bauer was appointed president at the same time DIY distributor“taking over day-to-day leadership duties.”
This news was announced just over two years later. distro kid Appraised at an outrageous price $1.3 billionin August 2021 following investment from a private equity firm. Insight Partners.
I said it was bubbly. $1.3 billion The valuation is clearly “Revolutionary Future” Where will the “pie” of music streaming copyright fees fall? It will be sliced thinner and thinner. Among the rapidly changing mass of independent artists. Logic: Every year, Millions of “DIY” tracks and artists Cumulatively will increase market share spotify etc., at the ongoing expense of three major music companies.
distro kid – And its proud processing “30-40% of all new music in the world [by volume]” –It was right in the heart of this promised land.
But now things have changed.budding “Revolutionary future” Especially for DIY distributors. spotify.
These policies are inspired by: Universal Music Group's 'artist-centric' streaming strategy – We see some relative regression in streaming royalties. unpopular Artists (and machine-made “noise”) are relatively The Popular artists.
What is Spotify's most controversial new policy? Starting this quarter (Q1 2024), No longer pay royalties for recorded music For trucks of Less than 1,000 views The service will then begin for 12 months.
new data from luminate Indicates the number of trucks mainly distributed by DIY aggregators such as: distro kid, this plan will demonetize. As MBW recently reported, 158.6 million track received Viewed less than 1,000 times It will be available on all on-demand audio streaming services in 2023.
If you dig deeper into this number, it's almost unthinkable 113 million Tracks received somewhere between 1 play vs. 1,000 plays.had Spotify The new policy will take effect from the first quarter of 2023. none these 113 million Neither the truck nor its distributor would have received a single penny in royalties from the world's largest subscription streaming platform.
Spotify Less than 1,000 views Changes have no direct effect distro kids Own Net Revenue: DK's pricing model involves charging “DIY” artists a flat subscription fee, which is collected by the artist. 100% of their royalty income. But in a world notorious for low profit margins, DIY distributionplatforms like distro kid You can no longer rely too much on automatic/recurring income from bulk DIY music uploads. Instead, they realized they had to further enhance their value-added services for “aspiring professional” artists. (look: distro kids Last year, we acquired a successful promotional/website building independent artist services company. band zoogle. )
and it is in this World – “Distributor” providing Substantive marketing, promotion and financing So-called 'middle class' Independent artists with significant fan bases – can expect blockbuster prices. M&A activities It will gradually increase in 2024.
I heard rumors that the company will be headquartered in San Francisco in late 2023. empire Maybe someday I'll be able to sell while chatting. Valuation of $1 billion It's ringing everywhere. now, sound cloud joined the fray. Earlier this month, SoundCloud CEO Eliah Seaton The company confirmed to MBW that it may sell or take on outside investment in the coming months.
According to the report, sound cloud Board of Directors/Owners – esp. rain group and Temasek – I consulted with investment bank To start yet another sales process over $1 billion Price tags were posted all over the place.
To those who have looked at SoundCloud's annual financial forecast for 2023, the numbers may seem fantastical. Euro 288 million euro In revenue.be positive EBITDA of 2 million euros. But of course, sound cloud is more than just a third party distributor/service company. It is also a platform in its own right, providing music directly to consumers (a.k.a. D2C).
and in between sound cloud It may have lost the grip it once had on shaping the zeitgeist ( “Sound Cloud Rap” It looks like it has fossilized and gone back to the past. Before TikTok ), it is noteworthy that both leaders universal music group (Sir Lucian Grainge) and warner music group (Robert Kinkle) nods about the importance of growth. Each D2C business This month, I wrote another New Year's note to my staff.
Elsewhere in the world of “quality” artist and label distribution, believe –Currently negotiating with potential private backers to take the business off the stock market. Since the change in 2021, Believe’s public rating has been USD 1 billion and USD 2 billion or more. We are currently at the lower end of that range.
nevertheless, believe Its value has increased significantly compared to summer 2017. Nikkei Shimbun suggested – erroneously – that the company was the seller. sony music. Looking back, what is the most interesting part of that report? At the time, Believe was valued at USD 445 million mark.
Any of the three major music companies is now 500 million dollars move for believe What about those days?
What about B2B distribution and distribution specialists for independent labels like ? fugue – sold to downtown In 2020, at a price that seems no better $40 million, and today it is understood to be worth many times more?or audio saladPartnering with clients such as Secretly Group, ATO Records, and Mad Decent; SESAC In the first quarter of last year?
Any of the three major companies looking to quickly increase their market share? Carry out the act of sabotage called distribution acquisition For the rest of 2024?
perhaps warner music group's streaming recorded music revenue currently hovers at just over half that amount. universalwouldn't be a bad bet.
For what it's worth, Warner's Robert Kinkle He said this in his New Year's letter to staff (bold is mine): “We are building a large and efficient distribution infrastructure. Fundamentally and efficiently growing a large “middle class” of artists Meanwhile, our frontline labels can continue to focus on the artists with the most potential. ”
whether WMG Whether it does so by building automated technology solutions, putting aside cash for acquisitions, or both remains to be seen.
There's one thing we know for sure. Kinkle Not afraid to approve big checks for opportunistic acquisitions.
W.M.G. The company's latest annual financial report shows the acquisition. 51% Elliott Grainge's 10,000 projects August 2023 at base purchase price. $102 millionand $98 million Transferred on the date of acquisition.
JKBX (pronounced “jukebox”) unlocks shared value from what people love by giving consumers access to music as an asset class. This is called a royalty share. In other words, JKBX allows you to invest in music the same way you invest in stocks and other securities.world music business
