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Today is the start of Data Week at Trapital. We’re breaking down two recent industry reports with the people behind them. On today’s episode, we’re discussing MIDiA Research’s 2024 Global Recorded Music Report with CEO Mark Mulligan. It’s a snapshot of the state of the industry. You can listen to us here or read below for one of our key takeaways on the global south.
The Rise of the Global South
My three big takeaways from my talk with Mark Mulligan:
- The best way to counteract the growth slowdown in streaming is to focus on expanded rights, such as merchandise, sponsorships, live events, NIL (name, image, likeness), and other fan-driven monetization opportunities.
- Growth in streaming is still strong in the global south, but the volume of streams exceeds the value of those streams.
- Revenue from streaming will grow faster if Taylor Swift releases cover versions of Michael Jackson's Off The Wall, Thriller, and Bad and calls them (Taylor's Version)
OK, fine. The third one isn't true but the first two are!
The first makes sense in broad strokes. It's Universal Music Group's Streaming 2.0 in a nutshell. But the top-tier superstars don't need record labels to push their expanded rights.
Drake already has a partnership with Nike. Tyler The Creator has Golf Wang and Golf Le Fleur. Travis Scott has Cactus Jack, which generated over $100 million through his McDonald's collaboration alone. Beyonce's team at Parkwood can call any Dow 30 company to strike a deal. It's another example of the Coachella dynamic: The top artists can go direct and do better on their own, so the company is left with the next tier of artists.
But the next tier doesn't need to be the major label's B-team in the Western world. The next tier can be the A-team from the global south.
The streaming revenue in the global south may still be emerging, but the fans who have the willingness to pay in those regions have already done so. In fact, the gap in streaming pricing is greater than the gap in concert pricing. Lollapalooza Brazil is 57% of the price of Lollapalooza Chicago, while Spotify in Brazil is 37% of the price of Spotify in the U.S. This pricing disparity suggests that fans in global markets have more spending capacity than streaming services currently tap into. People show up for the superstar tours and music festivals. An aggressive push for expanded rights for these artists is likely already underway, but that's where the focus should be.
Bad Bunny may be hard to secure at this point given all of his multimedia and commerce-related partnerships, but there are plenty more to choose from. Unlike the U.S., the market isn't saturated, so the ceiling for the next big artist is much higher.
The East Asian giants in music, like HYBE and Avex, do expand rights better than most. However there are cultural differences in East Asian countries and the fan-artist relationship. Those things may not be transferrable to the global south, but each region in the global south will have its own customs and traditions. There's great opportunity and value in the region. It just takes a long-term vision and patience.
The balance for the major (and minor) labels is to gain traction with expanded rights without positioning it as a "360 deal," which many artists may avoid out of principle. When I spoke with Mark, his vision was that the labels would act as more of an "agent" to connect the talent to those opportunities. It makes sense. If it's not their expertise, then they can be the plug to make the deal happen.
Depending on the artist, their manager, talent agent, attorney, and record label may all act as the "agents" for these types of deals, but frankly, the overlapping roles on an artist's "team" is another story for another day!
Listen to the full episode with me and Mark Mulligan to hear his prediction about why an "independent label revolt" might be underway in the next two years, plus more on:
- the relentless grind of social media promotion
- Japan's massive labels within gaming companies
- MIDiA Research’s 2024 Global Recorded Music Report
Listen here: Spotify | Apple Podcasts | Overcast
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