Last week, MBW demonstrated the extent to which catalogue recordings are dominating the commercial music business – and vastly overpowering the market share of new releases.
According to the latest stats, ‘old’ music claimed 62% of all audio streams in the US last year and a commanding 74% of video streams.
Such data begs the question: is the record industry’s all-encompassing obsession with breaking new artists a wise response to the realities of the modern music business?
Or should the world’s largest labels, in fact, be dedicating more resources to the music which is empirically generating by far the most money?
It’s a debate that’s very much been on the mind of Hartwig Masuch, CEO of BMG.
The leader of the Bertelsmann-owned company is certainly not a naysayer about the importance of frontline A&R, having seen his company bring through the likes of Jack Savoretti (UK), Max Giesinger (Germany), Francesco Gabbani (Italy) and the pan-European hit LP in recent years.
Yet, with a publishing catalogue in excess of 1.9m copyrights and a recorded music vault that contains highly bankable masters from the likes of Sanctuary, Mute and Vagrant, BMG proudly splits its most influential resources between catalogue and new artists – with the emphasis on the former.
Discussing the industry’s institutional focus on frontline artists, Masuch suggests that it too often seems to come from a desire to dominate chart market share – rather than a reaction to true market economics.
“If you focus so much of your capacity and resources on such a small part of the total picture [as frontline repertoire], you might miss a big opportunity.”
Hartwig Masuch, BMG
“If you focus so much of your capacity and resources on such a small part of the total picture, you might miss a big opportunity,” he says.
“We estimate that around 70% of [global revenue generation] on Spotify comes from catalogue releases. If you add to that the incredible value being generated by high-price collectors’ items – and catalogue’s domination of vinyl – the direction of travel is clear.
“If you then also count new releases from very established artists, you’re looking at a very significant part of the market.”
BMG has long been a friendly company to artists with big-selling catalogues who wish to continue to sell contemporary albums.
It’s why it’s never had a ‘heritage’ division, and has instead committed its priority marketing team to fresh efforts from the likes of Blink-182, Rick Astley, Janet Jackson and – coming soon – Blondie (pictured), A Perfect Circle, At The Drive-In, Texas, Nickelback, Kylie Minogue and Avril Lavigne.
“We don’t create ‘legacy’ departments because we see new records from these artists as simply a natural progression of a career.”
Hartwig Masuch, BMG
“For us, it’s a question of respect combined with commercial assessment,” says Masuch.
“We don’t create ‘legacy’ departments because we see new records from these artists as simply a natural progression of a 10, 20, 30-year old career.
“Of course the 35th album might not be as popular as the classic second album. But it’s a realistic discussion to at least acknowledge they both come from the same creator.”
Case in point: according to Vivendi’s latest financial results, The Rolling Stones were amongst Universal Music Group’s five biggest revenue-generating acts of 2016 – alongside the likes of Justin Bieber and Drake – despite only releasing their latest album, Blue & Lonesome, in December.
Masuch’s comments come in the wake of awards season in the music business, where the likes of The Grammys and The Brits focus almost exclusively on the achievements of frontline music, despite the majority of global sales being tied to long-established recordings.
From a simple commercial standpoint, consider this: according to Hits Daily Double’s (very useful) weekly Song Revenue Chart, the top 50 tracks in the US market generate (across streams and downloads) around $3.5m every seven days.
“the corporate focus on new, untried talent in the music business is completely disproportionate to the results… it would be incomprehensible in any other industry.”
Hartwig Masuch, BMG
Now, ponder how much industry attention, investment and focus these records currently warrant at the major labels in particular.
The kicker: according to RIAA figures, the US recorded music business generated $2.4bn on a wholesale basis in the first half of 2016 – not including publishing revenues.
Extrapolated on the same timeframe, those weekly top 50 songs would have claimed just $91m, or 3.8% of the market’s total revenue pie.
“If you look at the industry as a whole, the corporate focus on new, untried talent is completely disproportionate to the results,” says Masuch.
“Conversely the lack of respect and effort put into artists the public has already decided they love would be incomprehensible in any other industry.”
Masuch stresses that he still believes new artists are a vital part of the picture – and that they can, with reasonable A&R investment, create the lasting and lucrative catalogue of the future.
“Our reason for investing in new artists is not to massively increase our market share overnight, but to create lasting careers.”
Hartwig Masuch, BMG
His wider point is about wastefulness – and whether the long-standing cult of fixating on new artist signings, when only a minority ever recoup their labels deals, is ripe for change.
“We will always work on new artists, but with the right expectations,” says Masuch. “Our reason for investing in new artists is not to massively increase our market share overnight, but to create lasting careers.
“We’re not shying away from creating new, contemporary repertoire, but we think to work with established artists based on their catalogue, and not treating them as a lower priority, is an absolute must as well.”Music Business Worldwide