Hi Sleepwell, a thousand thanks for writing this. Someone posted a link to this under the PSTH subreddit and I'm so glad I caught it. This is very informative. I have a couple questions I would love to get your thoughts on, if you don't mind me asking.
Very broadly, what are your thoughts on Universal Music Group as an investment?
I was originally sold on the strong IP that UMG has, and more importantly their "know-how" of making a star. While it continuously gets easier to publish music online, the fact that this is a benefit to everyone results in it not being a benefit. In fact, that led me to the belief that UMG's ability to "make a star" by knowing how to promote/market is what upholds their importance and future success - their "moat". But with the advent of new technologies, such as Spotify, I am starting to wonder how defendable this "moat" really is. Thanks to technology, middlemen in any industry are increasingly being cut out, much like you alluded to, and I don't see how music is an exception. The Discovery feature that you mentioned even seems to be the beginning of exactly this. As Spotify is the platform that the users interact with, don't they have the power to one day choose which songs to promote? Thereby replacing what I had originally thought to be UMG's greatest asset - their knowledge of effective promotion?
From the other posts I've made asking for other's opinion on this I've gotten some counter arguments that UMG does a lot more than that and therefore will always be relevant. I don't completely disagree with that, but as an investment, I have to consider their future relative to today at the price I'm paying for today. In addition, I don't see the other services they provide as very defendable. Financing, for example, can very easily be Spotify's next path at vertically integrating itself within the industry.
I apologize for the length post, but would really like to hear your thoughts. Thanks!
Hi - This is a great article, well written and clear. Can you pls share your thoughts on how NFTs may potentially change the dynamics of the industry with I assume giving greater tools to the artist. I am particularly interested in how this will impact the labels and likely timeline/probability of changes in market dynamics. Many thanks! Jason
Hi Sleepwell..Thanks so much for this writing..Could you write one more piece which is focus on how song been streaming in the video format?I mean such as platform like VEVO,Youtube Twitch etc..Audio and Video/visual format should be some different right?Thanks...
Hey gibson, sure I think that's an interesting subject I can look more deeply into it. May not be a full-blown piece but could do a thread on it, depends on the resources I find behind this (data not as easy to come across).
YT largely has agreements with the music labels and other rights-holders to share some ad-revenue with them when a video with music is monetized, but there are lots of criticisms in terms of how much they end up paying.
VEVO shut down, used to be owned by the major labels but they just couldn't compete with YT. You'll still see the logo in some older videos but it's largely a thing of the past now.
Twitch is one I want to do more work on, I know artists do things like live concerts etc over the platform, in that case only a Publishing royalty is paid out so the Master recording doesn't really get anything. If another video uses the sound recording of a song, I'm guessing there's a rev share agreement on there too so they are able to license those legally.
Thanks so much for your reply..so busy to miss the timely feedback:-)
Now in 2023 I may add one more point how you view Roblox 's position in the future of media biz(I mean how music industry find its role to play in the Metaverse world(Metaverse is a overhyped theme IMO but this is something new development quite interesting to watch..
I understand you know Spanish... actually I learned most about the royalties from a very popular creator on Youtube https://www.youtube.com/watch?v=YmaLdu9LKg0 and he did a very good job at explaining for people who have no idea 😇 your post is super well written, well done. I think many have recently subscribed to you this week, including me!
Hi Author, I really liked the way your decoded such a complex topic on streaming royalties. It helped to clear so many unanswered questions I had. Thanks a lot for this. I know lots of handwork, research and thought process have gone into this article.
I have one follow up question on this:
Q- A DSP like Spotify has multiple ways (radio station, on-demand, curated playlist) to stream a song on its platform.
My question is whether there is any difference in calculation of royalty fees to publishers for each of these multiple ways of streaming?
Thanks for the question Basudev, the simple answer is that all of those ways to stream a song have the same value or cost to Spotify, doesn't matter where you actually listened to the song in terms of playlist or searching for it etc. What actually determines a different rate per stream is basically two things: the geography and whether it came from an ad-supported or premium sub (which each have different plans). There are different calculations for each of these, for example Spotify needs a specific local license to operate in different countries each of which have their own rules. That's more specific to the publishing side which tends to be more govt regulated/overseen. The recorded music part is typically dealt with directly with the labels or whoever owns the masters.
I will add that a new initiative Spotify is embarking on will change this a bit, by lowering the royalty rates they pay. This is going to be called Discovery Mode and it will be a promotional tool available for Artists as a way to promote a song by placing it in a Radio or Playlist and the streams it generates will come with a lower royalty payment (and increase margins for Spotify). This is currently being rolled out.
Marvelous article, thank you! Coming from Eagle Point Cap.
Hi Sleepwell, a thousand thanks for writing this. Someone posted a link to this under the PSTH subreddit and I'm so glad I caught it. This is very informative. I have a couple questions I would love to get your thoughts on, if you don't mind me asking.
Very broadly, what are your thoughts on Universal Music Group as an investment?
I was originally sold on the strong IP that UMG has, and more importantly their "know-how" of making a star. While it continuously gets easier to publish music online, the fact that this is a benefit to everyone results in it not being a benefit. In fact, that led me to the belief that UMG's ability to "make a star" by knowing how to promote/market is what upholds their importance and future success - their "moat". But with the advent of new technologies, such as Spotify, I am starting to wonder how defendable this "moat" really is. Thanks to technology, middlemen in any industry are increasingly being cut out, much like you alluded to, and I don't see how music is an exception. The Discovery feature that you mentioned even seems to be the beginning of exactly this. As Spotify is the platform that the users interact with, don't they have the power to one day choose which songs to promote? Thereby replacing what I had originally thought to be UMG's greatest asset - their knowledge of effective promotion?
From the other posts I've made asking for other's opinion on this I've gotten some counter arguments that UMG does a lot more than that and therefore will always be relevant. I don't completely disagree with that, but as an investment, I have to consider their future relative to today at the price I'm paying for today. In addition, I don't see the other services they provide as very defendable. Financing, for example, can very easily be Spotify's next path at vertically integrating itself within the industry.
I apologize for the length post, but would really like to hear your thoughts. Thanks!
Hi - This is a great article, well written and clear. Can you pls share your thoughts on how NFTs may potentially change the dynamics of the industry with I assume giving greater tools to the artist. I am particularly interested in how this will impact the labels and likely timeline/probability of changes in market dynamics. Many thanks! Jason
Why doesn't SPOT just become a label or acquire one?
they are not allowed by the record labels, per their agreements.
Hi Sleepwell..Thanks so much for this writing..Could you write one more piece which is focus on how song been streaming in the video format?I mean such as platform like VEVO,Youtube Twitch etc..Audio and Video/visual format should be some different right?Thanks...
Hey gibson, sure I think that's an interesting subject I can look more deeply into it. May not be a full-blown piece but could do a thread on it, depends on the resources I find behind this (data not as easy to come across).
YT largely has agreements with the music labels and other rights-holders to share some ad-revenue with them when a video with music is monetized, but there are lots of criticisms in terms of how much they end up paying.
VEVO shut down, used to be owned by the major labels but they just couldn't compete with YT. You'll still see the logo in some older videos but it's largely a thing of the past now.
Twitch is one I want to do more work on, I know artists do things like live concerts etc over the platform, in that case only a Publishing royalty is paid out so the Master recording doesn't really get anything. If another video uses the sound recording of a song, I'm guessing there's a rev share agreement on there too so they are able to license those legally.
Thanks for the feedback
Thanks so much for your reply..so busy to miss the timely feedback:-)
Now in 2023 I may add one more point how you view Roblox 's position in the future of media biz(I mean how music industry find its role to play in the Metaverse world(Metaverse is a overhyped theme IMO but this is something new development quite interesting to watch..
I understand you know Spanish... actually I learned most about the royalties from a very popular creator on Youtube https://www.youtube.com/watch?v=YmaLdu9LKg0 and he did a very good job at explaining for people who have no idea 😇 your post is super well written, well done. I think many have recently subscribed to you this week, including me!
thanks very much Mikel! I do speak spanish and am a fan of him, he does a great job indeed! an inspiration.
Hi Author, I really liked the way your decoded such a complex topic on streaming royalties. It helped to clear so many unanswered questions I had. Thanks a lot for this. I know lots of handwork, research and thought process have gone into this article.
I have one follow up question on this:
Q- A DSP like Spotify has multiple ways (radio station, on-demand, curated playlist) to stream a song on its platform.
My question is whether there is any difference in calculation of royalty fees to publishers for each of these multiple ways of streaming?
Thanks for the question Basudev, the simple answer is that all of those ways to stream a song have the same value or cost to Spotify, doesn't matter where you actually listened to the song in terms of playlist or searching for it etc. What actually determines a different rate per stream is basically two things: the geography and whether it came from an ad-supported or premium sub (which each have different plans). There are different calculations for each of these, for example Spotify needs a specific local license to operate in different countries each of which have their own rules. That's more specific to the publishing side which tends to be more govt regulated/overseen. The recorded music part is typically dealt with directly with the labels or whoever owns the masters.
I will add that a new initiative Spotify is embarking on will change this a bit, by lowering the royalty rates they pay. This is going to be called Discovery Mode and it will be a promotional tool available for Artists as a way to promote a song by placing it in a Radio or Playlist and the streams it generates will come with a lower royalty payment (and increase margins for Spotify). This is currently being rolled out.
I hope this helps