When Spotify announced its Q2 results last month, it revealed a stat which caused a lot of chatter in the music business: 43,000 artists, said the streaming company, are now sharing 90% of all plays on – and therefore 90% of all money from – its platform.
This 43,000 figure was significantly up on the same number (30,000) given by Spotify a year prior. The suggestion: we are witnessing an ever-growing segment of artists who are able to make a living through streaming.
Kobalt and its recorded music arm, AWAL, have long predicted this trend.
Kobalt founder and Chairman, Willard Ahdritz, has argued that – thanks to streaming – an expanding “middle tier” of independent artists is now increasingly claiming a share of industry revenue that was once the exclusive preserve of a handful of major label megastars.
“Hundreds of AWAL artists have made this $100,000 annual revenue earning very quickly with us, while dozens have rocketed right through to million-dollar annual streaming payouts.”
Willard Ahdritz, AWAL
Today (August 19), AWAL delivers a new stat that pours fuel on the fire of this narrative.
According to the company, “hundreds” of its artists each generated over $100,000 in annual streaming revenue over the last year (to end of June 2020). This figure was up 40% year-on-year, says AWAL.
Kobalt hasn’t confirmed exactly how many artists reached the earnings threshold within that 40% growth, but we can hazard a guess.
If ‘hundreds’ inevitably means over 200 but under 1,000, then a 40% increase means somewhere between 90 and 286 additional AWAL-signed artists earned $100k-plus in the period compared to the prior 12 months.
Importantly, AWAL only works with independent artists who own their own copyrights, offering services such as marketing, radio promo, A&R, distribution and more.
Ahdritz suggests that, going off a 10X multiple, those AWAL artists pulling in $100,000 from streaming each year have now also built catalogs (i.e. owned assets) worth $1m.
Said Ahdritz: “Hundreds of AWAL artists have made this $100,000 annual revenue earning very quickly with us, while dozens have rocketed right through to million-dollar annual streaming payouts.
“Lucrative streaming royalty payouts and catalog values no longer favor a select few as this pie is rapidly growing for artists, provided the artist has an AWAL-like deal in place. This is further validation the recorded music industry is in full transformation.”
“These artists are now millionaires in terms of their assets.”
Willard Ahdritz, Kobalt
And this pattern of industry transformation, says Ahdritz, is accelerating.
Speaking to MBW for this article, Ahdritz predicted that over 100,000 artists around the world would be earning more than $100,000 from music streaming, per year, by 2025.
“And it’s not just about the cash flow,” says Ahdritz. “These artists are now millionaires in terms of their assets. So in addition to their streaming income, we’re starting to see [independent] artists able to say, ‘I’m going to sell some of my rights and buy a studio, or buy a house.’ There is real value creation happening here.”
Always good for a memorable industry soundbite, in the past Ahdritz has likened the odds of an act succeeding via a traditional major label deal as “The Hunger Games… where 20 artists go in and only one gets out alive”.
With a nod to a hip-hop classic, he dubs AWAL’s latest stats as proof that today’s independent artists can instead “get rich… and not die trying.”
Lonny Olinick, CEO of AWAL, echoes Ahdritz’s optimism for the future growth of the “middle tier” of artists on streaming services.
AWAL works with artists including Lauv, FINNEAS, Little Simz, Steve Lacy, girl in red, Gerry Cinnamon and Nick Cave & The Bad Seeds, in addition to thousands of others, at varying levels of income.
“Our goal is to have the vast majority of [AWAL’s] artists earn a living one way or another; that’s really the focus on the platform,” said Olinick, noting that even artists earning $25,000 or $50,000 per year from streaming revenues may then be able to top these revenues up towards a six-figure “salary” via merchandise and live ticket sales. (In a non-pandemic year, obviously.)
“Artists are looking for the opportunity to stay independent, the opportunity to own their rights, and the opportunity to create the art that they want – without a ceiling on what’s possible,” added Olinick. “The $100,000 figure is important, but the most important figure here is that multiple millions of dollars are flowing into the system, which is encouraging artists to take a different approach.”
“Our goal is to have the vast majority of [AWAL’s] artists earn a living one way or another; that’s really the focus on the platform.”
Lonny Olinick, AWAL
What Olinick means by “a different approach”, of course, is artists rejecting record company deals that attempt to acquire long-term ownership of their future recording rights – and instead signing with a company like AWAL.
Olinick’s certainly right about “multiple millions”: Not only did AWAL itself pull in over $111m in revenues in its previous financial year (up 86% YoY), but at the top of 2020, Raine Group forecast that the record music of independent artists – including artists working with service companies like AWAL – would generate more than $2bn over the course of this year.
Added Olinick: “The structure we have built allows for artists to add gasoline to their fire. The data shows us it’s clearly paying off for many AWAL artists, with many going from tens of thousands in streaming revenue to hundreds of thousands or millions, in just one year with us.
“Artists are demonstrating they can both stay independent and build a global, successful career with our support in marketing, creative, synch, funding, audience development, radio promotion and more.
“This is only the beginning. Our unique model is causing a ripple-like effect across the industry as artists, managers and lawyers see our roster’s success.”
Lonny Olinick, AWAL
“This is only the beginning. Our unique model is causing a ripple-like effect across the industry as artists, managers and lawyers see our roster’s success.
“Artists no longer have to make tradeoffs for their future financial security to reach their full potential.”Music Business Worldwide