For the last few years, Barclays’ annual research reports about the music industry reflected the challenges of a business in transition — or, more specifically, one that had slowed a rapid decline but had not returned to growth. In 2014, as track sales fell, the bank’s report declared that “Streaming Killed the Download Star”; the 2015 edition was titled “Swimming Upstream.” But the bank’s latest research report, published in October and titled “Dancing Days Are Here Again,” starts with much better news: “2016 is the year recorded music appears to be turning a corner.”
However, it’s not time to pop the bubbly just yet. As streaming grows, sales of downloads and CDs are plunging — by 22.1 percent and 12.7 percent, respectively, in the first nine months of 2016, according to Nielsen Music — and it still remains to be seen just how many casual fans will pony up for subscriptions when music is available for free on YouTube and Spotify’s ad-supported tier. While streaming has been great for the major labels, its economics are rarely as rewarding for songwriters, publishers and even some labels and artists. And so far, none of the companies in the streaming business are making money.
In other words, if this is a turnaround, then it’s a fragile one. “We’re in recovery,” says Michael Nash, Universal Music Group executive vp digital strategy. “It’s one day at a time.”
Another insightful post by the author of Free Ride! We’re looking forward to Mr. Levine turning his attention to the racketeering at Facebook.
As Spotify begins to prepare for an IPO, which sources say the company is planning for late 2017, the relationship between the Swedish streaming giant and its trifecta of major-label frenemies (Universal Music Group, Sony Music Entertainment and Warner Music Group) is going through some drama.
Finding compromise is more important than ever for both sides. Spotify needs the majors’ vast catalogs and without long-term deals in place, it would be hard for the company to go public — which it essentially has to do in order to satisfy the terms of a financing deal.