Ten years ago, Warner Music’s Top 5 superstars generated 15% of its revenue. Today, that number has been reduced to 5%.

By | November 23, 2022

MBW’s Stat Of The Week is a sequence through which we spotlight a single knowledge level that deserves the eye of the worldwide music business. Stat Of the Week is backed by Cinq Music Group, a technology-driven report label, distribution and rights administration firm.

Some of the dramatic impacts streaming has had on the recording business is the democratization of listening.

The logic goes like this: Within the pre-Spotify previous, customers needed to make an engaged determination about which report they wished to purchase subsequent. This transactional shopping for determination was restrained and largely guided by the media and broadcast channels – the legendary “gatekeepers” – who have been restricted within the variety of artists they might suggest to the unwashed greats.

These days, no transactional buy determination is required. No shopper must “gamble” their cash on a brand new, untested disc – simply load it up on Spotify/YouTube Music/Apple Music, and so forth., hit play, and see if it is in.

In the event that they prefer it, they will maintain listening. If they do not, they could simply skate to a different auditory delight.

12 months after 12 months, this phenomenon dramatically dilutes the focus of complete music listening claimed by a handful of the world’s greatest megastars.

In consequence, in any given 12 months, a rising share of the overall variety of streams strikes away from the Prime 10 greatest hits and right into a a lot wider vary of artists within the “class common” with vital fanbases, however not essentially breaking the charts. .

MBW has launched this stat just a few occasions this 12 months, nevertheless it bears repeating: based on our calculations of Luminate’s numbers, the highest 10 streaming audio tracks within the US in H1 2022 have been performed cumulatively 1 billion occasions lower than they have been in H1 2019 (2.74 billion towards 3.81 billion).

The impression of streaming on reside exercise

This phenomenon just isn’t unique to the recording business.

In an upcoming interview at Music Enterprise around the globe Yearbook 2022/2023Jay Marciano, CEO and President of AEG Presents, notes that the democratization of listening on streaming companies has had a big impression on his firm’s “bars and theaters” enterprise – i.e. venues that usually maintain tons of, relatively than hundreds, of ticket holders.

“A membership that will do 100 reveals a 12 months in 2012 is now doing 180 a 12 months,” says Marciano. “It is a direct results of there being extra expertise [with a viable fanbase] obtainable. It is an incredible by-product of the advantages of streaming.

“A membership that will do 100 reveals a 12 months in 2012 is now doing 180 reveals a 12 months.”

Jay Marciano, AEG presents

He provides: “What’s new is how usually followers go [these] reveals: the statistic quoted years in the past was that the common viewers attends reveals at 1 level one thing per 12 months.

“In our expertise, on the stage of golf equipment and theaters [today]the place the general public is principally made up of twenty-two to 32 12 months olds, it’s extra like eight occasions a 12 months.

Warner Music Group

Warner’s “portfolio” technique

All of this, in flip, has impacted the A&R technique of main music firms.

You could recall that in September, outgoing Warner Music Group CEO Steve Cooper famous that – because of streaming – his firm had shifted in direction of a “portfolio” A&R technique.

“What we’ve got achieved over the previous few years is cut back our [financial] dependancy to superstars. lowering this dependency has allowed us to proceed to strengthen our method to A&R, which is the long-term improvement of artists.

Steve Cooper, talking in September

This technique, Cooper defined, meant that WMG now unfold its A&R price range amongst a wider vary of artists, lowering the corporate’s “monetary dependence on superstars”.

Or to place it one other means: Warner invests a smaller proportion of its rising A&R price range every year on a handful of worldwide stars, and distributes a bigger proportion of that price range on artists who’ve but to bother the Prime 5 of the world. Billboard Scorching 100.

A significant new knowledge level to play with

Talking on Warner Music Group’s calendar third quarter earnings name on Tuesday (November 22), Cooper supplied us with a stark statistic that mirrored the enterprise actuality of the above tendencies.

He stated: “Ten years in the past, our high 5 artists generated greater than 15% of our bodily and digital recorded music income. In 2022, they generated simply over 5%.”

To clarify this to you once more: the highest 5 promoting artists from one of many main report labels, as a subset, have seen their cumulative share of income generated by that main report label decreased by two-thirds over the course of of the final 10 years.

The place have these two-thirds gone? We’ll get to that — as a result of it is a bit extra nuanced than “all of them disappeared into the ‘center class’ of artists that MBW cannot cease babbling about.”

“Ten years in the past, our high 5 artists generated greater than 15% of our bodily and digital recorded music income. In 2022, they generated simply over 5%.”

Steve Cooper, talking this week

For now, let’s maintain our eyes on the worth, sift by some SEC filings, and do the numbers.

In keeping with Warner Music Group’s annual tax stories, WMG’s bodily and digital recorded music revenues (i.e. CDs, vinyl, downloads and streaming royalties mixed) have been $3.868 billion in fiscal 12 months 2022 (the 12 months by the top of September of this 12 months).

A decade earlier, in fiscal 12 months 2012 (the 12 months ending September 2012), the equal determine at WMG was $1.830 billion.

(Only a second, please, to marvel at the truth that, below Steve Cooper’s management, that determine has greater than double in 10 years at WMG…and again to the maths.)

Beneath you may see what the ballpark percentages Steve Cooper introduced this week – RE: Warner’s Prime 5 Annual Artists for Fiscal Years 2022 and 2012 – appear to be in (i) actual cash phrases and (ii) as a pie chart. [Click on the chart to view numbers.]

The take away key?

In keeping with MBW’s calculations of Steve Cooper’s figures, Warner Music Group’s high 5 recorded music artists in fiscal 12 months 2012 seem to have cumulatively generated a higher sum annual digital and bodily royalties (≈ $274.5 million) than WMG’s high 5 equal artists generated in FY2022 (≈$193.4 million).

It is not only a decline in income share; it is a drop in actual income generated.

This, keep in mind, represents a ten-year interval when WMG’s general recorded music royalties greater than doubled ($1.83 billion in 2012 vs. $3.87 billion in fiscal 12 months 2022).

A rising center class – and a brand new definition of “famous person”

Steve Cooper took the time on Tuesday to clarify a number of the causal causes behind Warner’s high 5 artist income share decline over the previous decade.

He famous that along with dropping share to “center class” artists – as described above – the present clutch of high superstars are additionally battling for viewing share with (I) artists from many extra international locations than ever earlier than, and (ii) artists from totally different eras.

Point out (ii) was summarized this 12 months by the Warner Music-distributed Run up that hill by Kate Bush, which was formally the most well-liked hit on the earth on Spotify this summer time after showing on Netflix Unusual issues.

Point out (I) is summed up while you take a look at the vary of main league stars from totally different components of the world who’ve signed with Warner labels in recent times – together with Anita (Brazil), who was simply nominated for a Grammy for Greatest New Artist in 2023, in addition to Burna Boy (Nigeria), Twice (South Korea), and Paulo London (Argentina).

“Ten years in the past, we have been an Anglocentric firm. At present, we’re a really international music leisure firm.

Steve Cooper, WMG

Certainly, this week, Warner introduced a worldwide take care of Dalia Mubarak, described by WMG as certainly one of “probably the most influential feminine superstars within the Center East”.

Steve Cooper stated on Tuesday’s earnings name, “As we broaden and deepen our roster of artists and prioritize a holistic method to nationwide music, the composition of our income has developed…We “We additionally proved as soon as once more that music can come from wherever and resonate in all places. Not solely are we creating Anglo-Saxon blockbusters, but in addition superstars of their house areas.”

Cooper added: “Ten years in the past we have been an Anglo-centric firm. At present, we’re a really international music leisure firm, working in over 70 international locations.

5 Music Group’s repertoire has received Grammy Awards, dozens of RIAA Gold and Platinum certifications, and quite a few No. 1 positions on quite a lot of Billboard charts. His repertoire contains heavy hitters like Dangerous Bunny, Janet Jackson, Daddy Yankee, TI, Sean Kingston, Anuel and tons of extra.The music business around the globe